Graphic Packaging Holding Company reported second quarter 2025 net income of $104 million, or $0.34 per diluted share, a decrease from $190 million, or $0.62 per diluted share, in Q2 2024. Adjusted net income was $128 million, or $0.42 per diluted share, compared to $183 million, or $0.60 per diluted share, in the prior year.
Net sales for the second quarter decreased 1% to $2,204 million, down from $2,237 million in the same quarter last year. This decline was primarily due to a $40 million impact from the Augusta divestiture and reduced open market sales, partially offset by a $20 million favorable foreign exchange impact. Adjusted EBITDA decreased to $336 million from $402 million in Q2 2024, with the Adjusted EBITDA Margin falling to 15.3% from 18.0%.
The decline in Adjusted EBITDA was driven by a $23 million decrease in price, $26 million in labor and benefits inflation, $10 million in input cost inflation, and a $5 million impact from the Augusta divestiture. Net Performance was negative by $13 million due to inventory reduction and production inefficiencies, partially offset by $11 million favorable foreign exchange.
The company's net leverage ratio increased to 3.7x from 3.0x in Q4 2024, with total debt at $5,859 million. Capital expenditures in Q2 2025 were $228 million. Graphic Packaging returned approximately $177 million to stockholders in the first six months of 2025, including $111 million from repurchasing approximately 5.0 million shares.
For the full year 2025, the company updated its guidance, now expecting net sales between $8.4 billion and $8.6 billion, adjusted EBITDA between $1.45 billion and $1.55 billion, and adjusted EPS between $1.90 and $2.20. Full-year 2025 capital spending is now expected to be approximately $850 million, an increase due to higher Waco facility costs, but this is anticipated to be offset by lower cash taxes and reduced working capital, leaving 2025 free cash flow unchanged. The Waco project remains on schedule for a fourth-quarter 2025 start and is expected to contribute an incremental $80 million in EBITDA in both 2026 and 2027.
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