10-Q · May 5, 2026
Graphic Packaging (GPK) delivered a solid Q1 for 2026 with a revenue increase of 2% YoY to $2.156B, surpassing estimates by approximately 4.3%. However, income from operations dropped sharply by 91% to $19M due to…
Earnings analysis · 10-Q
GPK earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Q2 revenue was broadly stable at $2.188 billion, down 1% year over year, but operating income fell 51% to $95 million as lower pricing, inflation and production curtailments compressed operating margin to 4.34%.…
Read full summary
Q2 revenue was broadly stable at $2.188 billion, down 1% year over year, but operating income fell 51% to $95 million as lower pricing, inflation and production curtailments compressed operating margin to 4.34%. Americas revenue and both operating segments' profits declined, with International revenue growth insufficient to offset its profit deterioration. Cash flow was weaker in the first half, leverage remained elevated at 4.37x, and an unremediated material weakness in controls over capital-expenditure authorization remains a material governance concern.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Operating margin
- 4.34%
What stood out
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Innovation partly offsets 1% sales decline
Q2 net sales were $2.188 billion, down $16 million, or 1%, from $2.204 billion a year earlier. Innovation sales grew $40 million, led by sustainable consumer-packaging solutions, while packaging volumes were relatively flat.
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International revenue outgrows Americas
International Paperboard Packaging revenue rose $19 million to $579 million from $560 million, supported by foreign exchange, volume/mix and innovation conversions. This contrasted with a $24 million decline in Americas Paperboard Packaging sales to $1.487 billion.
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Capex declines sharply after Waco build
First-half capital spending fell to $223 million from $541 million in the prior-year period as Waco construction spending normalized. Of 2026 spending, $145 million was for capacity and process improvements.
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Liquidity coverage remains covenant-compliant
Management expects its operating cash flow and revolver availability to cover cash requirements for at least the next 12 months. It reported compliance with a 4.37x total-leverage ratio and a 4.86x interest-coverage ratio at June 30, 2026.
What to watch
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Operating profit and margin contracted sharply
Q2 income from operations fell $98 million, or 51%, to $95 million from $193 million, reducing operating margin to 4.34% from 8.76%. Management cited $36 million of commodity inflation, $24 million of labor-and-benefits inflation, lower pricing and production curtailments.
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Higher interest burden pressures earnings
Net income declined to $24 million in Q2 2026 from $104 million in Q2 2025, while net interest expense increased to $68 million from $53 million. Approximately 34% of total debt was floating-rate at June 30, 2026.
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Cash generation weakened; receivables reliance rises
Six-month operating cash flow decreased to $45 million from $93 million, while capital spending was $223 million. The company also used receivables programs extensively, selling and derecognizing $1.881 billion of receivables during the first half.
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Elevated leverage and tighter covenant restrictions
The February 2026 credit-agreement amendment raised the maximum leverage covenant to 5.00x through December 31, 2026; actual leverage was 4.37x at June 30, leaving 0.63x of headroom. The amendment also limits annual share repurchases to $65 million.
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Material weakness remains unremediated
Disclosure controls were ineffective at June 30, 2026 because of a material weakness involving Board communication on capital expenditures. Management says new controls were implemented in Q2, but they have not operated long enough to conclude remediation.
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No formal risk updates; special charges persist
There were no material changes to the formal risk factors disclosed in the 2025 Form 10-K. However, the filing recorded $13 million of impairment charges from the Croatia-business sale and $40 million of charges from discontinuing automated-roll-warehouse projects.
Management's outlook
The 10-Q does not provide quantitative revenue or EPS guidance. Management states that operating cash flow and revolving-credit availability are expected to fund requirements for at least the next 12 months.
Earlier filings 4
10-K · March 2, 2026
Graphic Packaging emphasizes a strategy focused on sustainable, circular paperboard packaging, innovation (3,100+ patents) and cost/portfolio optimization (facility closures and divestitures). In 2025 the company…
10-K · February 12, 2025
Graphic Packaging (GPK) emphasizes scale, vertical integration and sustainable packaging innovation while executing portfolio rationalization (facility closures) and selective M&A/divestitures. Material corporate…
10-Q · October 31, 2023
Graphic Packaging reported Q3 net sales of $2,349 million, down $102 million versus Q3 2022, while gross margin expanded to ~23.4% and operating margin ticked up to ~12.2%. Q3 net income was $170 million ($0.55 diluted…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.