Graphic Packaging Holding Company, a leading provider of packaging solutions to food, beverage, foodservice, and other consumer products companies, reported Net Income for first quarter 2018 of $29.9 million, or $0.10 per share, based upon 311.3 million weighted average diluted shares.  This compares to first quarter 2017 Net Income of $37.0 million, or $0.12 per share, based on 314.1 million weighted average diluted shares.

First quarter 2018 Net Income was negatively impacted by a net $28.2 million of special charges that are detailed in the Reconciliation of Non-GAAP Financial Measures table.  When adjusting for these charges, Adjusted Net Income for the first quarter of 2018 was $58.1 million, or $0.19 per diluted share. This compares to first quarter 2017 Adjusted Net Income of $42.7 million or $0.14 per diluted share.

"We are very pleased with our performance in the first quarter following the new combination with the SBS mill and foodservice converting assets and are encouraged by the positive volume and productivity momentum in the business during the second quarter. First quarter Adjusted EBITDA of $231 million was in line with our expectations and results from the SBS mill and foodservice converting assets were solid," said President and CEO Michael Doss. "The business operated well in the quarter generating $17 million in performance improvements. Pricing improved by $6 million during the quarter reflecting the benefits of pricing initiatives executed in 2017. Importantly, we successfully implemented open market paperboard price increases across our coated recycled, coated unbleached kraft, and solid bleached sulfate paperboard grades in the first quarter 2018, which we expect will positively impact results in the second half of 2018 and in 2019. We remain focused on offsetting our commodity input cost inflation with pricing initiatives, consistent with our long term track record."

Operating Results

Net Sales

Net Sales increased 39% to $1,476.0 million in the first quarter of 2018, compared to $1,061.5 million in the prior year period.  The $414.5 million increase was driven by $359.5 million of revenue from the SBS mill and foodservice converting assets, $25.5 million of improved volume/mix related primarily to acquisitions, $24.0 million of favorable foreign exchange, and $5.5 million of higher pricing.

Attached is supplemental data highlighting Net Tons Sold for the first quarter of 2018 and for each quarter of 2017.

EBITDA

EBITDA for the first quarter of 2018 was $187.6 million, or $35.3 million higher than the first quarter of 2017.  After adjusting both periods for business combinations and other special charges, Adjusted EBITDA increased 43% to $230.8 million in the first quarter of 2018 from $160.9 million in the first quarter of 2017.  When comparing against the prior year quarter, Adjusted EBITDA in the first quarter of 2018 was positively impacted by $59.2 million of Adjusted EBITDA from the SBS mill and foodservice converting assets, $16.7 million of improved net operating performance, $5.5 million of higher pricing, $5.5 million of favorable exchange rates, and $0.8 million of favorable volume/mix. These benefits were partially offset by $15.0 million of commodity input cost inflation (primarily freight) and $2.8 million of other inflation (primarily labor and benefits).

Other Results

Total Debt (Long-Term, Short-Term and Current Portion) increased $824.8 million during the first quarter of 2018 to $3,111.8 million compared to the fourth quarter 2017, primarily reflecting $660 million of debt assumed from the combination with the SBS mill and foodservice converting assets. Total Net Debt (Total Debt, net of Cash and Cash Equivalents) increased $839.7 million during the first quarter of 2018 to $3,059.3 million compared to the fourth quarter 2017.  The Company's first quarter pro forma 2018 Net Leverage Ratio was 3.27 times Adjusted EBITDA compared to 3.12 times at the end of 2017.

At March 31, 2018, the Company had available global liquidity of $1,068.0 million, including the undrawn availability under its global revolving credit facilities.

Net Interest Expense was $28.8 million in the first quarter of 2018, up compared to the $21.3 million reported in the first quarter of 2017, primarily reflecting the $660 million of debt assumed and higher average borrowing rates.

Capital expenditures for the first quarter of 2018 were $92.1 million compared to $76.1 million in the first quarter of 2017.

First quarter 2018 Income Tax Expense was $5.1 million, compared to a $17.6 million expense in the first quarter of 2017. First quarter tax expense included a $4.2 million non-cash benefit related to the full-year impact from incorporating in slightly lower deferred state and local income tax assumptions for the Company following the combination with the SBS mill and foodservice converting assets.