Graphic Packaging Q3 profit falls as cost inflation cuts margin

Graphic Packaging (GPK) said on Nov. 3 that third-quarter net sales were $2.19 billion and adjusted earnings were $0.23 per share, both in line with estimates.

Net income fell to $22 million, or 7 cents per diluted share, from $142 million, or 48 cents, a year earlier. Net charges from non-recurring and special items and amortization of purchased intangibles totaled $45 million in the quarter.

Net sales rose $2 million from a year earlier. A 1% gain in volume and mix, worth $19 million, was partly offset by a 1% decline in price, worth $15 million.

Here's how the company did:

• Net sales: $2.19 billion, up $2 million from a year earlier, in line with the $2.19 billion expected
• Adjusted EPS: $0.23 vs. $0.58 a year earlier, in line with the $0.23 expected
• Diluted EPS: 7 cents vs. 48 cents a year earlier
• Adjusted EBITDA: $289 million vs. $383 million a year earlier

President and CEO Robbert Rietbroek said the company had drove year-over-year revenue and volume growth in the quarter. He also pointed to a sequential gain in margin.

Rietbroek said, “Our decisive actions to enhance and optimize the business this year support continued margin improvement, strong cash flow generation, and a return to EBITDA growth next year.”

Costs and margins

Adjusted EBITDA, which strips out business combinations and other special items, was $289 million, down from $383 million a year earlier. Adjusted EBITDA margin was 13.2%, compared with 17.5% in the third quarter of 2025.

The company attributed the $94 million decline to $83 million of higher commodity input and operating cost inflation, $15 million of unfavorable price and $3 million of lower volume and mix. Favorable foreign exchange of $5 million and positive net performance of $2 million partly offset those costs.

Adjusted EBITDA margin expanded sequentially for the second consecutive quarter, the company said.

Cash flow and debt

Capital expenditures were $64 million in the quarter, compared with $267 million a year earlier.

Net debt was $5.18 billion at the end of the quarter, compared with $5.33 billion in fourth quarter 2025. The net leverage ratio was 4.8 times, up from 3.8 times in fourth quarter 2025.

For the first nine months of 2026, net cash provided by operating activities was $295 million. Adjusted cash flow was $314 million, an increase of $646 million from the first nine months of 2025.

The company returned about $98 million to stockholders in the first nine months of 2026 through regular dividends.

According to its SEC filings, net income swung from a loss of $43.0 million in the first quarter of 2026 to a profit of $24.0 million in the second quarter.

2026 outlook

The company expects 2026 net sales of about $8.6 billion, adjusted EBITDA of about $1.05 billion and adjusted EPS of $0.65.

On Aug. 4, the company had given 2026 ranges of $8.4 billion to $8.6 billion for net sales, $1.05 billion to $1.25 billion for adjusted EBITDA and $0.65 to $0.90 for adjusted EPS. The release places net sales at the high end of the earlier range.

The company continues to expect 2026 adjusted cash flow of $600 million to $700 million, up from $169 million in 2025. It also continues to expect 2026 capital spending below $450 million.