Graphic Packaging Holding Company today reported results for the fourth quarter and full year 2023.
Net Income for fourth quarter 2023 was $196 million, or $0.64 per share, based upon 308.5 million weighted average diluted shares. This compares to fourth quarter 2022 Net Income of $156 million, or $0.50 per share, based upon 309.4 million weighted average diluted shares.
The fourth quarters of 2023 and 2022 were impacted by a net $16 million and a net $10 million of special charges, respectively. When adjusting for special charges and amortization of purchased intangibles, Adjusted Net Income for the fourth quarter of 2023 was $230 million, or $0.75 per diluted share. This compares to fourth quarter 2022 Adjusted Net Income of $181 million, or $0.59 per diluted share.
For the full year 2023, Net Income was $723 million, or $2.34 per share, based upon 309.1 million weighted average diluted shares. This compares to 2022 Net Income of $522 million, or $1.69 per share, based upon 309.5 million weighted average diluted shares.
Full year 2023 and 2022 were impacted by a net $109 million and a net $134 million of special charges, respectively, which are detailed in the attached Reconciliation of Non-GAAP Financial Measures table. When adjusting for special charges and amortization of purchased intangibles, Adjusted Net Income for the full year 2023 was $899 million, or $2.91 per diluted share. This compares to the full year 2022 Adjusted Net Income of $722 million, or $2.33 per diluted share.
Michael Doss, the Company's President and CEO said, "While 2023 was a year of transition for consumer packaging, it was one of outstanding execution for Graphic Packaging. We significantly expanded profitability, achieved strong earnings growth and delivered innovative sustainable packaging solutions that consumers prefer. Our disciplined approach and commitment to delivering results for customers was on full display during a year of well-chronicled inventory normalization for both retailers and consumer packaged goods companies.
"While we did experience 4% negative organic sales growth for the year, our innovation sales exceeded $200 million, and our overall performance was excellent. We are well positioned to return to positive organic sales growth in 2024, which has started to materialize in improved volumes quarter to date.
"Our innovation pipeline has never been stronger, and we expect to partner with both existing and new customers to bring more sustainable packaging solutions to the market in 2024 and beyond. We look forward to sharing details of our growth outlook and transformation to the global leader in sustainable consumer packaging at our investor meeting tomorrow, February 21st."
OPERATING RESULTS
Net Sales
Net Sales decreased 6% to $2,249 million in the fourth quarter of 2023, compared to $2,386 million in the prior year period. The $137 million decrease was driven by $198 million of unfavorable volume/mix. This was partially offset by $40 million of positive pricing and $21 million of favorable foreign exchange impact.
Net Sales decreased slightly to $9,428 million for the full year 2023, compared to $9,440 million in the prior year. The $12 million decrease was driven by $580 million of unfavorable volume/mix, partially offset by $556 million of positive pricing and $12 million of favorable foreign exchange impact.
EBITDA
EBITDA for the fourth quarter of 2023 was $444 million, $36 million higher than the fourth quarter of 2022. After adjusting both periods for business combinations and other special charges, Adjusted EBITDA was $457 million in the fourth quarter of 2023 versus $413 million in the fourth quarter of 2022. When comparing against the prior year quarter, Adjusted EBITDA in the fourth quarter of 2023 was positively impacted by $40 million in pricing, $11 million in commodity input cost deflation, $90 million in favorable net performance, and $5 million of favorable foreign exchange impact. This was partially offset by $64 million in unfavorable volume/mix and $38 million in labor, benefits and other inflation.
EBITDA for the full year 2023 was $1,795 million, $326 million higher than the full year 2022. After adjusting both periods for business combinations and other special charges, Adjusted EBITDA was $1,876 million for the full year 2023 versus $1,600 million in the full year 2022. When comparing against the prior year, Adjusted EBITDA for 2023 was positively impacted by $556 million in pricing, and $75 million in favorable net performance. This was partially offset by $171 million in unfavorable volume/mix, $169 million in labor, benefits and other inflation, $6 million in commodity input inflation, and $9 million of foreign exchange impact.
Other Results
Total Debt (Long-Term, Short-Term and Current Portion) decreased $212 million during the fourth quarter of 2023 to $5,396 million compared to the third quarter of 2023. Total Net Debt (Total Debt less Cash and Cash Equivalents) decreased $228 million during the fourth quarter of 2023 to $5,234 million compared to the third quarter of 2023.
The Company returned $48 million to stockholders, including $31 million in dividend payments and $17 million via share repurchases, in the fourth quarter of 2023. The Company's fourth quarter 2023 Net Leverage Ratio was 2.8x Adjusted EBITDA compared to 3.0x at the end of the third quarter 2023.
At December 31, 2023, the Company had available liquidity of approximately $1,433 million, including the undrawn availability under its global revolving credit facilities.
Net Interest Expense was $59 million in the fourth quarter of 2023, higher when compared to $54 million reported in the fourth quarter of 2022 due to higher interest rates. For full year 2023, net interest expense was $239 million compared to $197 million in 2022. Capital expenditures for the fourth quarter of 2023 were $212 million, higher when compared to $104 million in the fourth quarter of 2022 due to the Waco, Texas recycled paperboard manufacturing facility project. For full year 2023, capital expenditures were $804 million compared to $549 million in 2022.
Fourth quarter 2023 Income Tax Expense was $35 million, lower than $60 million in the fourth quarter of 2022. Full year 2023 Income Tax Expense was $210 million compared to a full year 2022 Income Tax Expense of $194 million.
Full Year 2024 Guidance
The Company's fiscal 2024 guidance, excluding the potential impact of announced Augusta paperboard manufacturing facility sale, is as follows:
Adjusted EBITDA is expected to be $1.750 billion to $1.950 billion.
Adjusted Earnings per Diluted Share is expected to be $2.50 to $3.00.
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