Graphic Packaging says Waco project on track

Graphic Packaging released its second quarter 2023 earnings last week, highlighting its commitment to recycled paperboard as its $1 billion investment in its packaging infrastructure progresses.

The Atlanta-based packaging manufacturer saw its net sales increase 1 percent to $2.4 billion compared with last year’s second quarter while its net income increased 127 percent to $150 million and its adjusted earnings before interest, taxes, depreciation and amortization increase 14 percent to $453 million.

Inventory destocking by retailers has impacted the recovered paper industry throughout the first half of the year, however, and Graphic Packaging was no exception.

The company’s net organic sales growth is down 1.8 percent over the past six months and down 4.2 percent the past three months, but Graphic Packaging says it is confident in its ability to drive future organic growth through its investments in renewable and recyclable packaging.

“In the middle of last year, many [retailers] accumulated supplies to insulate themselves from potential shortages,” Graphic Packaging President and CEO Mike Doss said during the company’s second-quarter earnings call. “Twelve months later, we are seeing the offsetting effect of that buildup and slower organic sales as retailers and customers work through their inventory.

“Looking ahead, we believe retailer destocking will be a relatively short-term headwind with normal customer order patterns and organic growth expected to return in the fourth quarter of this year.”

Graphic Packaging also provided an update to its planned coated recycled paperboard mill in Waco, Texas, which it says is progressing and on track to start up in late 2025.

Key mill management roles have been filled and 85 percent of the facility’s equipment has been ordered, and on the construction front, the finished goods warehouse foundation and floor pads are completed and the concrete has been poured for the recycled fiber warehouse floor.

“We believe the strategically located Waco recycled paperboard mill will also deliver tremendous cost tremendous cost and quality benefits when completed,” Doss said, adding that the site is on track to become “another cornerstone for our optimized mill system.”

As part of its earnings calls, Graphic Packaging also announced its acquisition of Sioux Falls, South Daktota-based packaging manufacturer Bell Incorporated. The deal, which is expected to close in the fourth quarter of this year, includes three packaging facilities that consume approximately 95,000 tons of paperboard annually.

“The acquisition of Bell Incorporated … is another example of a strategic investment we are making in our packaging network,” Doss said.

“Our confidence in the long-term strength of the demand for renewable and recyclable fiber-based packaging is high.”