GRAPHIC PACKAGING HOLDING CO

Previous wording

The Company serves a wide variety of consumer nondurables (consumer staples) markets, from food and beverage, to foodservice, to household products, beauty and heath care. It produces packaging solutions at over 100 locations in over 25 countries around the world, serving customers and brands ranging from local consumer products companies and retailers to the largest multinationals. The Company offers one of the most comprehensive ranges of packaging design, manufacture, and execution capabilities available. Graphic Packaging manufactures a significant amount of the paperboard that it uses to produce packaging solutions, mainly where it believes that self-manufacture provides it with a competitive advantage and allows the Company to deliver better, more consistent results for customers. The Company currently manufactures most of the paperboard it consumes in the Americas and purchases from third parties the majority of the paperboard it consumes in its Europe Paperboard Packaging segment.

Current wording

The Company serves a wide variety of consumer nondurables (consumer staples) markets, from food and beverage, to foodservice, household products, beauty and heath care. It produces packaging solutions at over 100 locations in over 25 countries around the world, serving customers and brands ranging from local consumer products companies and retailers to the largest multinationals. The Company offers one of the most comprehensive ranges of packaging design, manufacture, and execution capabilities available. Graphic Packaging manufactures a significant amount of the paperboard that it uses to produce packaging solutions, mainly where it believes that self-manufacture provides it with a competitive advantage and allows the Company to deliver better, more consistent results for customers. The Company currently manufactures most of the paperboard it consumes in the Americas and purchases from third parties the majority of the paperboard it consumes in its Europe Paperboard Packaging segment.

Previous wording

•During the second quarter of 2024, the Company decided to close multiple packaging facilities by the end of 2024. These are in addition to the multiple packaging facilities for which the Company decided to close by the end of 2023 and early 2024. Production from these facilities will be consolidated into our existing packaging network. Current Assets within the Condensed Consolidated Balance Sheet also includes $11 million relating to multiple packaging facilities, which met the held for sale criteria as of June 30, 2024.

Current wording

•During the second quarter of 2024, the Company decided to close multiple packaging facilities by the end of 2024. These are in addition to the multiple packaging facilities for which the Company decided to close by the end of 2023 and early 2024. Production from these facilities will be consolidated into our existing packaging network. Current Assets within the Condensed Consolidated Balance Sheet includes $11 million relating to multiple packaging facilities, which met the held for sale criteria as of September 30, 2024.

Previous wording

•During the third quarter of 2023, the Company decided to discontinue the project in Texarkana to modify an existing paperboard machine to add swing capacity between bleached and unbleached paperboard in order to focus growth investments in the strategic expansion of coated recycled paperboard capacity.

Current wording

•During the third quarter of 2023, the Company decided to discontinue its project in Texarkana to modify an existing paperboard machine to add swing capacity between bleached and unbleached paperboard in order to focus growth investments in the strategic expansion of coated recycled paperboard capacity.

Previous wording

The Company’s Net Sales for the three months ended June 30, 2024 decreased by $155 million or 6% to $2,237 million from $2,392 million for the three months ended June 30, 2023 due to the Augusta divestiture and related reduced open market paperboard volumes and pricing of bleached paperboard ($83 million), lower packaging volumes, mix, and pricing declines including pass through of lower input costs in Europe ($73 million), the divestiture of our two packaging facilities in Russia in 2023 ($26 million), and unfavorable foreign currency exchange ($15 million), partially offset by the acquisition of Bell in September 2023 ($42 million). Innovation sales growth was $51 million driven by conversions to our sustainable consumer packaging solutions. Lower packaging sales in food, health and beauty, and household markets were partially offset by higher packaging sales in the foodservice market.

Current wording

The Company’s Net Sales for the three months ended September 30, 2024 decreased by $133 million or 6% to $2,216 million from $2,349 million for the three months ended September 30, 2023 due to the Augusta divestiture and reduced open market paperboard volumes and pricing of bleached paperboard ($109 million), pricing declines, including pass through of lower input costs in Europe, partially offset by higher packaging volumes ($35 million) and the divestiture of our two packaging facilities in Russia in 2023 ($24 million). The decrease was partially offset by the acquisition of Bell in September 2023 ($33 million) and favorable foreign currency exchange ($2 million). Innovation sales growth was $54 million driven by conversions to our sustainable consumer packaging solutions. Lower packaging sales in food, beverage, and health and beauty markets were partially offset by higher packaging sales in foodservice and household markets.

Previous wording

Income from Operations for the six months ended June 30, 2024 increased $5 million or 1% to $602 million from $597 million for the six months ended June 30, 2023 primarily due to the gain from the Augusta divestiture of $75 million, offset by bleached paperboard price and volume declines (including due to the divestiture), and incremental planned maintenance expense. Excluding those items, the negative impact of lower price, packaging volumes, non-commodity (primarily labor and benefits) cost inflation, and foreign exchange were offset by performance, including cost savings from continuous improvements and other programs, and productivity improvements, including benefits from capital projects, favorable commodity deflation (primarily external board and energy, partially offset by secondary fiber), and the acquisition of Bell in September 2023. Income from Operations was also favorably impacted by a reduction in impairment charges related to the sale of our Russian operations in 2023 (refer to “Note 14 - Divestitures” in the Notes to Condensed Consolidated Financial Statements for additional information) and a reduction in accelerated depreciation related to the closures of several packaging and paperboard facilities of $17 million (refer to“Note 13 - Exit Activities”in the Notes to Condensed Consolidated Financial Statements for additional information).

Current wording

Income from Operations for the three months ended September 30, 2024 decreased $9 million or 3% to $278 million from $287 million for the three months ended September 30, 2023 primarily due to the Augusta divestiture and bleached paperboard price and volume declines and weather and power issues of $25 million. Excluding those items, the negative impact of lower pricing, the divestiture of our two packaging facilities in Russia in 2023 of $1 million, commodity inflation (primarily secondary fiber and byproducts, partially offset by external board and energy) and other inflation (primarily labor and benefits) were offset by performance, including cost savings from continuous improvements and other programs, and productivity improvements, including benefits from capital projects, favorable foreign currency exchange of $5 million, lower levels of planned maintenance and market downtime and the acquisition of Bell in September 2023 of $4 million. Income from Operations was also favorably impacted by a reduction in impairment charges related to the sale of our Russian operations in 2023 (refer to “Note 14 - Divestitures” in the Notes to Condensed Consolidated Financial Statements for additional information), a reduction in accelerated depreciation related to the closures of several packaging and paperboard facilities of $5 million, a reduction in accelerated depreciation and charges related to the Company's decision to decommission its K3 recycled paperboard machine, and a reduction in charges related to the discontinuation of the Texarkana swing capacity project (refer to “Note 13 - Exit Activities” in the Notes to Condensed Consolidated Financial Statements for additional information).

Previous wording

Interest Expense, Net was $60 million and $60 million for the three months ended June 30, 2024 and 2023, respectively, flat as compared to the prior year. As of June 30, 2024, approximately 30% of the Company’s total debt was subject to floating interest rates.

Current wording

Interest Expense, Net was $58 million and $62 million for the three months ended September 30, 2024 and 2023, respectively. Interest Expense, Net decreased due to lower debt balances. As of September 30, 2024, approximately 38% of the Company’s total debt was subject to floating interest rates.

Previous wording

During the three months ended June 30, 2024, the Company recognized Income Tax Expense of $74 million on Income before Income Taxes of $264 million. The effective tax rate for the six months ended June 30, 2024 is different from the statutory rate primarily due to the write off of non-deductible book goodwill associated with the divestiture of Augusta in addition to the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Current wording

During the three months ended September 30, 2024, the Company recognized Income Tax Expense of $55 million on Income before Income Taxes of $219 million. The effective tax rate for the three months ended September 30, 2024 is different from the statutory rate primarily due to a benefit from purchased tax credits in addition to the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Previous wording

During the three months ended June 30, 2023, the Company recognized Income Tax Expense of $57 million on Income before Income Taxes of $207 million. The effective tax rate for the six months ended June 30, 2023 is different from the statutory rate primarily due to the tax impact of the charges associated with the planned divestiture of the Company’s operations in Russia that resulted in no corresponding tax benefit and the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Current wording

During the three months ended September 30, 2023, the Company recognized Income Tax Expense of $54 million on Income before Income Taxes of $224 million. The effective tax rate for the three months ended September 30, 2023 is different from the statutory rate primarily due to the tax impact of the charges associated with the planned divestiture of the Company’s operations in Russia that resulted in no corresponding tax benefit and the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Previous wording

FIRST SIX MONTHS OF 2024 COMPARED WITH FIRST SIX MONTHS OF 2023

Current wording

FIRST NINE MONTHS OF 2024 COMPARED WITH FIRST NINE MONTHS OF 2023

Previous wording

The Company’s Net Sales for the six months ended June 30, 2024 decreased by $334 million or 7% to $4,496 million from $4,830 million for the six months ended June 30, 2023 due to lower open market paperboard volumes and pricing, primarily bleached paperboard including the impact of the Augusta divestiture, the divestiture of our two packaging facilities in Russia in 2023 ($54 million), lower packaging volumes and pricing declines including pass through of lower input costs in Europe, and unfavorable foreign currency exchange, partially offset by the acquisition of Bell in September 2023 ($85 million). Innovation sales growth was $88 million driven by conversions to our sustainable consumer packaging solutions. Lower packaging sales in food, health and beauty, and household markets were partially offset by higher packaging sales in foodservice and beverage markets.

Current wording

The Company’s Net Sales for the nine months ended September 30, 2024 decreased by $467 million or 7% to $6,712 million from $7,179 million for the nine months ended September 30, 2023 due to the Augusta divestiture and reduced open market paperboard volumes and pricing of bleached paperboard, lower packaging volumes, pricing declines, including pass through of lower input costs in Europe, the divestiture of our two packaging facilities in Russia in 2023 ($78 million) and unfavorable foreign currency exchange ($10 million), partially offset by the acquisition of Bell in September 2023 ($118 million). Innovation sales growth was $142 million driven by conversions to our sustainable consumer packaging solutions. Lower packaging sales in food, household, and health and beauty markets were partially offset by higher packaging sales in foodservice and beverage markets.

Previous wording

Income from Operations for the three months ended June 30, 2024 increased $57 million or 21% to $324 million from $267 million for the three months ended June 30, 2023 primarily due to the gain from the Augusta divestiture of $75 million, offset by bleached paperboard price and volume declines (including due to the divestiture), and incremental planned maintenance expense. Excluding those items, the negative impact of lower price, packaging volumes, non-commodity (primarily labor and benefits) cost inflation, and foreign exchange were offset by performance, including cost savings from continuous improvements and other programs, and productivity improvements, including benefits from capital projects, favorable commodity deflation (primarily external board and energy, partially offset by secondary fiber), and the acquisition of Bell in September 2023. Income from Operations was also favorably impacted by a reduction in impairment charges related to the sale of our Russian operations in 2023 (refer to “Note 14 - Divestitures” in the Notes to Condensed Consolidated Financial Statements for additional information) and a reduction in accelerated depreciation related to the closures of several packaging and paperboard facilities of $27 million (refer to “Note 13 - Exit Activities” in the Notes to Condensed Consolidated Financial Statements for additional information).

Current wording

Income from Operations for the nine months ended September 30, 2024 decreased $4 million or 0.5% to $880 million from $884 million for the nine months ended September 30, 2023 primarily due to the Augusta divestiture and bleached paperboard price and volume declines, weather and power issues of $25 million and incremental planned maintenance expense and market downtime, offset by the gain from the Augusta divestiture of $75 million. Excluding those items, the negative impact of lower pricing, packaging volumes, non-commodity (primarily labor and benefits) cost inflation, were offset by performance, including cost savings from continuous improvement and other programs, and productivity improvements, including benefits from capital projects, innovation sales growth, favorable commodity deflation (primarily external board and energy, partially offset by secondary fiber) and the acquisition of Bell in September 2023. Income from Operations was also favorably impacted by a reduction in impairment charges related to the sale of our Russian operations in 2023 (refer to “Note 14 - Divestitures” in the Notes to Condensed Consolidated Financial Statements for additional information), a reduction in accelerated depreciation related to the closures of several packaging and paperboard facilities of $22 million, a reduction in accelerated depreciation and charges related to the Company's decision to decommission its K3 recycled paperboard machine, and a reduction in charges related to the discontinuation of the Texarkana swing capacity project (refer to “Note 13 - Exit Activities” in the Notes to Condensed Consolidated Financial Statements for additional information).

Previous wording

Interest Expense, Net was $119 million and $118 million for the six months ended June 30, 2024 and 2023, respectively. Interest Expense, Net increased due to higher interest rates, partially offset by lower debt balances.

Current wording

Interest Expense, Net was $177 million and $180 million for the nine months ended September 30, 2024 and 2023, respectively. Interest Expense, Net decreased due to lower debt balances.

Previous wording

During the six months ended June 30, 2024, the Company recognized Income Tax Expense of $127 million on Income before Income Taxes of $482 million. The effective tax rate for the six months ended June 30, 2024 is different from the statutory rate primarily due to the write off of non-deductible book goodwill associated with the divestiture of Augusta as well as discrete tax adjustments including a tax benefit of $3 million related to excess tax benefits on restricted stock units that vested during the period, and the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Current wording

During the nine months ended September 30, 2024, the Company recognized Income Tax Expense of $182 million on Income before Income Taxes of $701 million. The effective tax rate for the nine months ended September 30, 2024 is different from the statutory rate primarily due to the write off of non-deductible book goodwill associated with the divestiture of Augusta and a benefit from purchased tax credits as well as discrete tax adjustments, including a tax benefit of $3 million related to excess tax benefits on restricted stock units that vested during the period, and the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Previous wording

During the six months ended June 30, 2023, the Company recognized Income Tax Expense of $121 million on Income before Income Taxes of $478 million. The effective tax rate for the six months ended June 30, 2023 is different from the statutory rate primarily due to the tax impact of the charges associated with the planned divestiture of the Company’s operations in Russia that result in no corresponding tax benefit, a tax benefit of $2 million related to excess tax benefits on restricted stock that vested during the period, an increase in the Company’s valuation allowance against a portion of its net deferred tax assets in Sweden and the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Current wording

During the nine months ended September 30, 2023, the Company recognized Income Tax Expense of $175 million on Income before Income Taxes of $702 million. The effective tax rate for the nine months ended September 30, 2023 is different from the statutory rate primarily due to the tax impact of the charges associated with the planned divestiture of the Company’s operations in Russia that result in no corresponding tax benefit, a tax benefit of $2 million related to excess tax benefits on restricted stock that vested during the period, an increase in the Company’s valuation allowance against a portion of its net deferred tax assets in Sweden and the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Previous wording

(e)Includes gain from Augusta Divestiture in 2024. See “Note 14 - Divestitures” in the Notes to Condensed Consolidated Financial Statements for further information.

Current wording

(e)Includes gain from Augusta divestiture for the nine months ended September, 30 2024 period. See “Note 14 - Divestitures” in the Notes to Condensed Consolidated Financial Statements for further information.

Previous wording

Second Quarter 2024 Compared to Second Quarter 2023

Current wording

Third Quarter 2024 Compared to Third Quarter 2023

Previous wording

Net Sales decreased due to lower packaging volumes and pricing, partially offset by innovation sales growth driven by conversions to our sustainable consumer packaging solutions and the acquisition of Bell in September 2023. Lower packaging sales in food and household markets were partially offset by higher packaging sales in the foodservice market.

Current wording

Net Sales decreased due to lower pricing, partially offset by innovation sales growth driven by conversions to our sustainable consumer packaging solutions and the acquisition of Bell in September 2023. Lower packaging sales in food and beverage markets were partially offset by higher packaging sales in foodservice and household markets.

Previous wording

Income from Operations increased due to commodity deflation, and cost savings from continuous improvement and other programs. The commodity deflation was primarily related to external board, which is passed through to our customers, partially offset by other inflation (primarily labor and benefits). Income from Operations was also favorably impacted by higher volumes and a reduction in impairment charges related to the sale of our Russian operations in 2023. Refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information, offset by lower pricing and mix.

Current wording

Income from Operations increased due to higher packaging volumes, commodity deflation and cost savings from continuous improvement and other programs. The commodity deflation was primarily related to external board, which is passed through to our customers, partially offset by other inflation (primarily labor and benefits). Income from Operations was also favorably impacted by a reduction in impairment charges related to the sale of our Russian operations in 2023. Refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information and unfavorably impacted by lower pricing.

Previous wording

Income from Operations increased due to the gain from the Augusta divestiture (refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information) and productivity improvements, including benefits from capital projects. The increase was partially offset by lower pricing, production and sales of open market paperboard primarily bleached, higher levels of maintenance downtime, mix and commodity and other inflation (primarily secondary fiber and labor and benefits offset by energy and freight). Income from Operations was also favorably impacted by a reduction in accelerated depreciation related to the closure of Tama (refer to“Note 13 - Exit Activities”in the Notes to Condensed Consolidated Financial Statements for additional information).

Current wording

Income from Operations decreased due to lower pricing and production and sales of open market paperboard, primarily bleached, weather and power issues, and commodity and other inflation (primarily secondary fiber and labor and benefits offset by energy and wood). The decrease was partially offset by lower levels of planned maintenance and market downtime, productivity improvements, including benefits from capital projects. Income from Operations was also favorably impacted by a reduction in accelerated depreciation and charges related to the Company's decision to decommission its K3 recycled paperboard machine, and a reduction of charges related to the discontinuation of the Texarkana swing capacity project.

Previous wording

First Six Months of 2024 Compared to First Six Months of 2023

Current wording

First Nine Months of 2024 Compared to First Nine Months of 2023

Previous wording

Net Sales decreased due to lower packaging volumes and pricing, partially offset by innovation sales growth driven by conversions to our sustainable consumer packaging solutions and the acquisition of Bell in September 2023. Lower packaging sales in food and household markets were partially offset by higher packaging sales in foodservice and beverage markets.

Current wording

Net Sales decreased due to lower pricing and packaging volumes, partially offset by innovation sales growth driven by conversions to our sustainable consumer packaging solutions, and the acquisition of Bell in September 2023. Lower packaging sales in food and household markets were partially offset by higher packaging sales in foodservice and beverage markets.

Previous wording

Income from Operations decreased due to lower pricing and packaging volumes, incremental planned maintenance expenses, higher accelerated depreciation and charges related to the closures of several packaging facilities (refer to“Note 13 - Exit Activities” in the Notes to Condensed Consolidated Financial Statements for additional information), commodity inflation (primarily secondary fiber) and other inflation (primarily labor and benefits). These decreases were partially offset by performance, primarily due to cost savings from continuous improvement and other programs, productivity improvements, including benefits from capital projects, innovation sales growth, and the acquisition of Bell in September 2023.

Current wording

Income from Operations decreased due to lower pricing and packaging volumes, higher levels of planned maintenance and market downtime, weather and power issues and commodity inflation (primarily secondary fiber and byproducts, partially offset by energy, wood and chemicals) and other inflation (primarily labor and benefits). These decreases were partially offset by performance, including cost savings from continuous improvement and other programs, and productivity improvements, including benefits from capital projects, innovation sales growth, and the acquisition of Bell in September 2023. Income from Operations was also favorably impacted by reductions in accelerated depreciation and charges related to the closures of several packaging facilities (refer to “Note 13 - Exit Activities” in the Notes to Condensed Consolidated Financial Statements for additional information).

Previous wording

Net Sales decreased due to lower pricing including pass through of lower input costs, the divestiture of our two packaging facilities in Russia in 2023, unfavorable foreign currency exchange and mix, partially offset by innovation sales growth driven by conversions to our sustainable consumer packaging solutions and higher volumes. Higher packaging volumes in beverage, foodservice, and food markets were partially offset by lower packaging volumes in health and beauty and household markets.

Current wording

Net Sales decreased due to lower pricing, predominantly due to pass through of lower input costs, the divestiture of our two packaging facilities in Russia in 2023 and unfavorable foreign currency exchange, partially offset by innovation sales growth driven by conversions to our sustainable consumer packaging solutions and higher volumes. Lower packaging sales in food, health and beauty, and household markets were partially offset by higher packaging sales in the beverage market.

Previous wording

Income from Operations was relatively consistent with increases due to commodity deflation, cost savings from continuous improvement and other programs, and higher volumes. The commodity deflation was primarily related to external board, which is passed through to our customers, partially offset by other inflation (primarily labor and benefits). Income from Operations was also favorably impacted by a reduction in impairment charges related to the sale of our Russian operations in 2023. Refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information, offset by lower pricing and mix.

Current wording

Income from Operations increased due to higher packaging volumes, commodity deflation and cost savings from continuous improvement and other programs. The commodity deflation was primarily related to external board, which is passed through to our customers, partially offset by other inflation (primarily labor and benefits). Income from Operations was also favorably impacted by a reduction in impairment charges related to the sale of our Russian operations in 2023 (refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information) and unfavorably impacted by lower pricing.

Previous wording

Income from Operations increased due to the gain from the Augusta divestiture (refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information) and productivity improvements, including benefits from capital projects. The increase was partially offset by lower pricing, production and sales of open market paperboard primarily bleached, higher levels of maintenance and market downtime, mix, and commodity and other inflation (primarily secondary fiber and labor and benefits offset by energy, chemicals and freight). Income from Operations was also favorably impacted by a reduction in accelerated depreciation related to the closure of Tama (refer to“Note 13 - Exit Activities”in the Notes to Condensed Consolidated Financial Statements for additional information).

Current wording

Income from Operations increased due to the gain from the Augusta divestiture (refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information) and productivity improvements, including benefits from capital projects, offset by bleached paperboard price and volume declines (including due to the Augusta divestiture). The increase was partially offset by lower pricing, higher levels of maintenance and market downtime, and commodity and other inflation (primarily secondary fiber, byproduct and labor and benefits offset by energy, chemicals and freight). Income from Operations was also favorably impacted by reductions in accelerated depreciation related to the closure of Tama (refer to“Note 13 - Exit Activities”in the Notes to Condensed Consolidated Financial Statements for additional information), a reduction in accelerated depreciation and charges related to the Company's decision to decommission its K3 recycled paperboard machine, and a reduction in charges related to the discontinuation of the Texarkana swing capacity project.

Previous wording

Net cash provided by operating activities for the first six months of 2024 totaled $164 million compared to $291 million for the same period in 2023. The decrease was mainly due to lower cash generated from operations offset by less use of cash for working capital. Pension contributions were $4 million for the first six months of 2024 and 2023.

Current wording

Net cash provided by operating activities for the first nine months of 2024 totaled $351 million compared to $702 million for the same period in 2023. The decrease was mainly due to the payment of taxes associated with the sale of Augusta, lower cash generated from operations and a higher level of cash used for working capital. Pension contributions for the first nine months of 2024 and 2023 were $11 million and $13 million, respectively.

Previous wording

Net cash provided by investing activities for the first six months of 2024 totaled $175 million compared to $437 million used in for the same period in 2023. The Company had capital spending of $580 million ($553 million was capitalized) and $385 million ($395 million was capitalized) in 2024 and 2023, respectively. The increase in capital spending was driven by the construction of the Company's new recycled paperboard manufacturing facility in Waco, Texas. For further discussion of the Company's new recycled paperboard manufacturing facility and continued investments made as part of the integration of acquisitions, see “Note 13 - Exit Activities” in the Notes to the Condensed Consolidated Financial Statements. On May 1, 2024, the Company completed the sale to Clearwater Paper Corporation of the Augusta Paperboard Manufacturing Facility for total cash consideration of $711 million. For further discussion of the Company's Divestiture of the Augusta Paperboard Manufacturing Facility, see “Note 14 - Divestitures” in the Notes to the Condensed Consolidated Financial Statements. Net cash receipts related to the accounts receivable securitization and sale programs were $46 million and $51 million in 2024 and 2023, respectively. In the prior year the Company completed the acquisition of Tama on January 31, 2023, from Greif Packaging LLC for approximately $100 million. For further discussion of the Tama acquisition, see “Note 3 - Business Combinations” in the Notes to the Condensed Consolidated Financial Statements.

Current wording

Net cash used in investing activities for the first nine months of 2024 totaled $102 million compared to $875 million used in for the same period in 2023. The Company had capital spending of $893 million ($840 million was capitalized) and $592 million ($590 million was capitalized) in 2024 and 2023, respectively. The increase in capital spending was driven by the construction of the Company's new recycled paperboard manufacturing facility in Waco, Texas. For further discussion of the Company's new recycled paperboard manufacturing facility, see “Note 13 - Exit Activities” in the Notes to the Condensed Consolidated Financial Statements. On May 1, 2024, the Company completed the sale to Clearwater Paper Corporation of the Augusta Paperboard Manufacturing Facility for total cash consideration of $711 million. For further discussion of the Company's Divestiture of the Augusta Paperboard Manufacturing Facility, see “Note 14 - Divestitures” in the Notes to the Condensed Consolidated Financial Statements. Net cash receipts related to the accounts receivable securitization and sale programs were $83 million in 2024 and 2023. In the prior year the Company completed the acquisition of Tama on January 31, 2023, from Greif Packaging LLC for approximately $100 million. The Company also completed the acquisition of Bell Incorporated, adding three packaging facilities in Sioux Falls, South Dakota and Groveport, Ohio for $264 million on September 8, 2023 including cash acquired of $3 million. For further discussion of the Company's acquired coated recycled paperboard manufacturing facility and converting facilities, see “Note 3 - Business Combinations” in the Notes to the Condensed Consolidated Financial Statements.

Previous wording

Net cash used in financing activities for the first six months of 2024 totaled $368 million compared to net cash provided by of $131 million for the same period in 2023. Current year financing activities include a debt drawing of the new incremental term facilities which consist of a $50 million Incremental Term A-5 Facility (the “Incremental A-5 Loan”), a $200 million Incremental Term A-6 Facility (the “Incremental Term A-6 Loan”), an offering of $500 million aggregate principal amount of 6.375% Senior Unsecured Notes due 2032. The net proceeds were used by the Company to repay a portion of the outstanding borrowings under its senior secured revolving credit facility. The Company also drew $400 million from the senior secured domestic revolving credit facilities and used the proceeds, together with cash on hand, to redeem it's 0.821% Senior Notes due in 2024. For further discussion of the Company's newly acquired debt and redemption, see “Note 4 - Debt” in the Notes to the Condensed Consolidated Financial Statements. Other current year activities include borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $200 million and payments on debt of $19 million. The Company also paid dividends of $61 million and withheld $23 million of restricted stock units to satisfy tax withholding obligations related to the payout of restricted stock units. In the prior year the Company also made borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $29 million, and payments on debt of $10 million. The Company also paid dividends and distributions of $61 million and withheld $20 million of restricted stock units to satisfy tax withholding payments related to the payout of restricted stock units.

Current wording

Net cash used in financing activities for the first nine months of 2024 totaled $280 million compared to net cash provided by of $188 million for the same period in 2023. Current year financing activities include a debt drawing of the new incremental term facilities which consist of a $50 million Incremental Term A-5 Facility (the “Incremental A-5 Loan”), a $200 million Incremental Term A-6 Facility (the “Incremental Term A-6 Loan”), an offering of $500 million aggregate principal amount of 6.375% Senior Unsecured Notes due 2032. The net proceeds were used by the Company to repay a portion of the outstanding borrowings under its senior secured revolving credit facility. The Company also drew $400 million from the senior secured domestic revolving credit facilities and used the proceeds, together with cash on hand, to redeem it's 0.821% Senior Notes due in 2024. The Company also on August 14, 2024 drew $300 million from the senior secured domestic revolving credit facilities and used the proceeds to redeem its 4.125% Senior Notes due in 2024. For further discussion of the Company's newly acquired debt and redemptions, see “Note 4 - Debt” in the Notes to the Condensed Consolidated Financial Statements. Other current year activities include borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $200 million and payments on debt of $19 million. The Company also paid dividends of $91 million and withheld $24 million of restricted stock units to satisfy tax withholding obligations related to the payout of restricted stock units. In the prior year the Company made borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $37 million, and payments on debt of $18 million. The Company also paid dividends and distributions of $92 million and withheld $22 million of restricted stock units to satisfy tax withholding payments related to the payout of restricted stock units.

Previous wording

(a)Includes Net Sales to Nonguarantor Subsidiaries of $317 million.

Current wording

(a)Includes Net Sales to Nonguarantor Subsidiaries of $468 million.

Previous wording

The Company expects its material cash requirements for the next six months will be for: capital expenditures, periodic required income tax payments, periodic interest and debt service payments on associated debt, as discussed in “Note 5 - Debt” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K, lease agreements which have fixed lease payment obligations, as discussed in “Note 6 - Leases” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K, and minimum purchase commitments as discussed in “Note 13 - Commitments” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K along with ongoing operating costs, working capital, share repurchases and dividend payments. The Company expects its primary sources of liquidity to be cash flows from sales and operating activities in the normal course of operations and availability from its revolving credit facilities, as needed. The Company expects that these sources will be sufficient to fund ongoing cash requirements for the foreseeable future, including at least the next twelve months.

Current wording

The Company expects its material cash requirements for the next three months will be for: capital expenditures, periodic required income tax payments, periodic interest and debt service payments on associated debt, as discussed in “Note 5 - Debt” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K, lease agreements which have fixed lease payment obligations, as discussed in “Note 6 - Leases” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K, and minimum purchase commitments as discussed in “Note 13 - Commitments” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K along with ongoing operating costs, working capital, share repurchases and dividend payments. The Company expects its primary sources of liquidity to be cash flows from sales and operating activities in the normal course of operations and availability from its revolving credit facilities, as needed. The Company expects that these sources will be sufficient to fund ongoing cash requirements for the foreseeable future, including at least the next twelve months.

Previous wording

Principal and interest payments under the term loan facilities and the revolving credit facilities, together with principal and interest payments on the Company's 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029, 3.75% Senior Notes due 2030 and 6.375% Notes due 2032 (the “Notes”), represent liquidity requirements for the Company. Based upon current levels of operations, anticipated cost savings and expectations as to future growth, the Company believes that cash generated from operations, together with amounts available under its revolving credit facilities and other available financing sources, will be adequate to permit the Company to meet its debt service obligations, necessary capital expenditure program requirements and ongoing operating costs and working capital needs, although no assurance can be given in this regard. The Company's future financial and operating performance, ability to service or refinance its debt and ability to comply with the covenants and restrictions contained in its debt agreements (see “Covenant Restrictions” below) will be subject to future economic conditions, including conditions in the credit markets, and to financial, business and other factors, many of which are beyond the Company's control, and will be substantially dependent on the selling prices and demand for the Company's products, raw material and energy costs, and the Company's ability to successfully implement its overall business and profitability strategies.

Current wording

Principal and interest payments under the term loan facilities and the revolving credit facilities, together with principal and interest payments on the Company's 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029, 3.75% Senior Notes due 2030 and 6.375% Notes due 2032 (the “Notes”), represent liquidity requirements for the Company. Based upon current levels of operations, anticipated cost savings and expectations as to future growth, the Company believes that cash generated from operations, together with amounts available under its revolving credit facilities and other available financing sources, will be adequate to permit the Company to meet its debt service obligations, necessary capital expenditure program requirements and ongoing operating costs and working capital needs, although no assurance can be given in this regard. The Company's future financial and operating performance, ability to service or refinance its debt and ability to comply with the covenants and restrictions contained in its debt agreements (see “Covenant Restrictions” below) will be subject to future economic conditions, including conditions in the credit markets, and to financial, business and other factors, many of which are beyond the Company's control, and will be substantially dependent on the selling prices and demand for the Company's products, raw material and energy costs, and the Company's ability to successfully implement its overall business and profitability strategies.

Previous wording

The Company has entered into agreements to sell, on a revolving basis, certain trade accounts receivable to third party financial institutions. Transfers under these agreements meet the requirements to be accounted for as sales in accordance with the Transfers and Servicing topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”). The loss on sale is included in Other Expense, Net in the Condensed Consolidated Statements of Operations. The following table summarizes the activity under these programs for the six months ended June 30, 2024 and 2023, respectively:

Current wording

The Company has entered into agreements to sell, on a revolving basis, certain trade accounts receivable to third party financial institutions. Transfers under these agreements meet the requirements to be accounted for as sales in accordance with the Transfers and Servicing topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”). The loss on sale is included in Other Expense, Net in the Condensed Consolidated Statements of Operations. The following table summarizes the activity under these programs for the nine months ended September 30, 2024 and 2023, respectively:

Previous wording

Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, were $781 million and $770 million as of June 30, 2024 and December 31, 2023, respectively.

Current wording

Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, were $788 million and $770 million as of September 30, 2024 and December 31, 2023, respectively.

Previous wording

The Company also participates in supply chain financing arrangements offered by certain customers that qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the six months ended June 30, 2024 and 2023, the Company sold receivables of $516 million and $591 million, respectively, related to these arrangements.

Current wording

The Company also participates in supply chain financing arrangements offered by certain customers that qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the nine months ended September 30, 2024 and 2023, the Company sold receivables of $793 million and $869 million, respectively, related to these arrangements.

Previous wording

The Company has arranged a supplier finance program (“SFP”) with a financial intermediary, which provides certain suppliers the option to be paid by the financial intermediary earlier than the due date on the applicable invoice. The transactions are at the sole discretion of both the suppliers and financial institution, and the Company is not a party to the agreements and has no economic interest in the supplier’s decision to sell a receivable. The range of payment terms negotiated by the Company with its suppliers is consistent, irrespective of whether a supplier participates in the program. The agreement with the financial intermediary does not require the Company to provide assets pledged as security or other forms of guarantees for the supplier finance program. Amounts due to the Company’s suppliers that elected to participate in the SFP program are included in Accounts Payable on the Company's Condensed Consolidated Balance Sheets and payments made under the SFP program are reflected in Cash Flows from Operating Activities in the Company's Condensed Consolidated Statements of Cash Flows. Accounts payable included $31 million and $30 million payable to suppliers who elected to participate in the SFP program as of June 30, 2024 and December 31, 2023, respectively.

Current wording

The Company has arranged a supplier finance program (“SFP”) with a financial intermediary, which provides certain suppliers the option to be paid by the financial intermediary earlier than the due date on the applicable invoice. The transactions are at the sole discretion of both the suppliers and financial institution, and the Company is not a party to the agreements and has no economic interest in the supplier’s decision to sell a receivable. The range of payment terms negotiated by the Company with its suppliers is consistent, irrespective of whether a supplier participates in the program. The agreement with the financial intermediary does not require the Company to provide assets pledged as security or other forms of guarantees for the supplier finance program. Amounts due to the Company’s suppliers that elected to participate in the SFP program are included in Accounts Payable on the Company's Condensed Consolidated Balance Sheets and payments made under the SFP program are reflected in Cash Flows from Operating Activities in the Company's Condensed Consolidated Statements of Cash Flows. Accounts payable included $32 million and $30 million payable to suppliers who elected to participate in the SFP program as of September 30, 2024 and December 31, 2023, respectively.

Previous wording

The Current Credit Agreement requires that the Company maintain a maximum Consolidated Total Leverage Ratio of less than 4.25 to 1.00. At June 30, 2024, the Company was in compliance with such covenant and the ratio was 2.70 to 1.00.

Current wording

The Current Credit Agreement requires that the Company maintain a maximum Consolidated Total Leverage Ratio of less than 4.25 to 1.00. At September 30, 2024, the Company was in compliance with such covenant and the ratio was 2.85 to 1.00.

Previous wording

The Company must also comply with a minimum Consolidated Interest Expense Ratio of 3.00 to 1.00. At June 30, 2024, the Company was in compliance with such covenant and the ratio was 7.50 to 1.00.

Current wording

The Company must also comply with a minimum Consolidated Interest Expense Ratio of 3.00 to 1.00. At September 30, 2024, the Company was in compliance with such covenant and the ratio was 7.39 to 1.00.

Previous wording

The Company performed its annual goodwill impairment tests as of October 1, 2023. The Company concluded that all reporting units with goodwill have a fair value that exceeds their carrying value, and thus goodwill was not impaired. The Europe reporting unit had a fair value that exceeded its respective carrying value by 26%, whereas all other reporting units exceeded by more than 90%. The Europe reporting unit had goodwill totaling $477 million at June 30, 2024.

Current wording

The Company performed its annual goodwill impairment tests as of October 1, 2023. The Company concluded that all reporting units with goodwill have a fair value that exceeds their carrying value, and thus goodwill was not impaired. The Europe reporting unit had a fair value that exceeded its respective carrying value by 26%, whereas all other reporting units exceeded by more than 90%. The Europe reporting unit had goodwill totaling $500 million at September 30, 2024.