Professional Documents
Culture Documents
Graham Packaging
Credit Suisse Global Paper & Packaging Conference
February 2011
Disclaimer
This presentation contains "forward-looking statements" within the meaning of the federal securities laws. All statements other than statements of
historical facts included in this presentation, including statements regarding our future financial position, economic performance and results of
operations, as well as our business strategy, budgets and projected costs and plans and objectives of management for future operations are forward-
looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology, such as "may,"
"will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or similar terminology. These forward-looking statements are not historical
facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by
management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-
looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to
predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations
may prove to have been materially different from the results expressed or implied by such forward-looking statements. Unless otherwise required by
law, we also disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the
forward-looking statements made in this presentation.
Important factors that could cause actual results to differ materially from our expectations include, without limitation: increased competition in our
industry which could lead to a decline in prices of plastic packaging; our ability to develop product innovations and improve our production technology
and expertise; infringement of our proprietary technology; our dependence on significant customers and the risk that customers will not purchase our
products in the amounts expected by us under their requirements contracts; that the majority of our sales are made pursuant to requirements
contracts; our exposure to fluctuations in resin prices and our dependence on resin supplies; risks associated with our international operations; our
recovery of the carrying value of our long-lived assets; our realization of the carrying value of our goodwill and other identifiable intangible assets; our
dependence on key management and the material adverse effect that could result from the loss of their services; our ability to successfully integrate
our business with those of other businesses that we may acquire; risks associated with a significant portion of our employees being covered by
collective bargaining agreements; our dependence on additional blow molding equipment in order to be able to expand our operations; risks
associated with environmental regulation and liabilities; risks associated with being deemed an "investment company" under the 1940 Act, as a result
of our ownership of Graham Packaging Holdings Company; our recent net losses; our indebtedness, which could adversely affect our cash flow and
our ability to operate and grow our business; that despite our current levels of indebtedness, we may incur additional debt in the future, which could
increase the risks associated with our leverage; the terms of our debt instruments, which restrict the manner in which we conduct our business and
may limit our ability to implement elements of our business strategy; our inability to renew or replace our debt facilities on favorable terms or at all;
payments to our existing owners for certain tax benefits we may claim; and the acquisition of voting power in our company greater than the voting
power owned by Blackstone may trigger an event of default under our credit agreement.
All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these
cautionary statements. You should evaluate all forward-looking statements made in this presentation in the context of these risks and uncertainties.
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Today’s Presenters
Mark Burgess
Chief Executive Officer
David Bullock
Chief Financial Officer
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Graham Packaging – At A Glance
#1 supplier of value-added custom plastic containers based on sales
Technology-driven packaging company delivering innovation for global consumer products customers
– Design features / performance characteristics / barrier properties
– Package design innovation / light-weighting / use of recycled resin
Global operations with presence in North America, South America, Europe and Asia
8,200 employees in 15 countries and 98 facilities (approximately 1/3 of which are on-site facilities)
LTM Net Sales and Adjusted EBITDA of approximately $2.5bn and $504mm, respectively
Financial Objectives
350
Consistent EBITDA growth
Note: Free cash flow defined as net cash from operating activities less net cash from investing activities.
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Investment Highlights
Long history as leading innovator in plastic containers
Global Leader in Value-Added
Plastic Packaging Focus on customers’ sustainability agenda
Attractive Margins Superior margins, strong free cash flow generation and debt reduction
and Strong Free Cash Flow
Attractive cost structure with resin cost pass-through
Generation
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Leader in Value-Added Custom Plastic Containers
$2.5
Estimated
$2.3 Market Product Examples with
$2.2
Segment Position #1 Position
Hot-fill juice
$2.0 Food &
Sports drinks
Beverage
Yogurt drinks
$1.3
Chemical Dish detergent
$1.0
Personal Care Hair care
$0.8
& Specialty Skin care
$0.6
$0.5 $0.5
$0.5
$0.0
Graham Amcor Rigid Plastipak Consolidated Alpla Silgan Constar
Packaging* Plastic Container Plastics
* Graham Packaging revenue figure includes Liquid Container Source: Company estimates for North American market.
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A Leader in the Most Attractive Markets
Alpla
Amcor/Ball
Consolidated Container
Constar
Plastipak
Silgan
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Superior Technology with Long History of Innovation
Global
Technology
Technology GlobalLeader
Leader
Hot-fill PET bottles & processes
Hot-fill PET wide mouth jars & processes Wide-Mouth, Hot-Fill PET Aseptic Shelf-Stable
PET Barrier: Monosorb™, SurFresh™,
SurBond™, multilayer
Retortable PP bottles & jars
Multi-layer polyolefins
Post consumer recycled resin & processes
High speed extrusion blow molding wheels Multi-Layer Beer Inverted Ketchup
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Graham Has Led Major Conversions to Plastic Containers
Beer
Nutritional
Snacks
2.5%
Paper &
Board 1.8%
31%
Flexible
Plastics
20%
Consumption rates in Asia, Latin America and Eastern Europe are poised for high growth
Source: Growth Rates – Pira International
Note: Plant statistics as of December 31, 2010
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Loyal, Long-Standing Customer Relationships with Leading CPGs
A leading supplier to blue chip multi-national Consumer Packaged Goods companies (CPGs)
Note: Reflects length of relationships with Graham Packaging and predecessor companies.
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On-Site Model Creates Strong Relationships
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Our Products Drive Customers’ Sustainability Agenda
Reduction of ecological footprint through…
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Focus on Operational Excellence 6.0% 5.7%
5.0%
4.3%
3.9%
Initiatives 4.0%
3.1%
3.0%
Quality Safety
# of Injuries
Incident Rate
10MM units sold 3.0
250 # Lost Time
2.0
Target (-25% YoY) LT-Incident Rate 2.5
# of Complaints
200
1.5
R-Incident Rate 2.0
150
1.0 1.5
100
1.0
0.5
50 0.5
0.0 0 0.0
Aug-05 Jan-06 Jun-06 Nov-06 May-07 Oct-07 Mar-08 Aug-08 Feb-09 Jul-09 Dec-09 2005 2006 2007 2008 2009
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Acquisitions – Focus on Strategic Fit
Adjacent Geographies
Adjacent Markets
End markets where our existing technology can bring a competitive advantage
Adjacent Technologies
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Liquid Container - Acquisition Rationale
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World Class Management Team Has Delivered Results
Peter Lennox, 48
2000 Reduced leverage from 6.1x to 4.3x
Executive VP and GM,
Global Food & Beverage
David Cargile, 49 More than doubled ROCE from 11% to 24%
Senior VP, 1987
Global Tech and GM of Proprietary Machinery
Established joint venture in India, operations in
Martin Sauer, 56 China
2000
SVP Global Procurement
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Corporate Strategy
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Main Drivers for Stable Financial Performance
Strong Demand Exposure to top-tier, middle-tier and lower-tier price points as well as private labels
Characteristics Blue chip customer base with long-term relationships (20 years on average)
Top 20 customers are under long-term contracts
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Margin Stability from Pass-through of Resin Costs
$520 100¢
101¢ $504
500 93¢
96¢
88¢ $479
480 87¢ 92¢ $470 $474 90
82¢ 85¢ $463 84¢ 83¢
$455 $455 $459 83¢
460 82¢ 83¢ $453 $450
80¢ 78¢
Adjusted EBITDA ($mm)
340 50
320
300 40
Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
LTM Adjusted EBITDA PET, Bottle Resin Polyethylene High Density Resin
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Industry Leading Margins
Adjusted EBITDA Margin
25%
20% 19%
20
16%
14% 14% 14% 13%
15
10
0
Graham Aptar Graham Amcor* Silgan Crown Ball
Today FY2006
16%
14%
12%
12 11% 10% 10%
9%
8%
8
0
Graham Aptar Silgan Ball Crown Amcor* Graham
Today FY2006
Source: Company filings. Represents 2010 data.
* Amcor data reflects LTM as of 06/30/2010
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Strong Focus on Capital Efficiency
25.0%
Assumes full year of
25% 23.5% Liquid Container
21.9%
19.5%
20
14.5%
15
11.5%
10
0
2006 2007 2008 2009 2010
$175 15%
Capex (157)
$51mm in inventory destocking $148
150 from 2005 stocking initiative put
in place in response to 12 (1)
hurricanes Change in Net Working Capital (1)
$124
125
Free Cash Flow ($mm)
7.0x
Net Debt / Covenant Compliance EBITDA (x)
Reduced leverage
$1,500
by 1.5x post-Liquid acquisition $1,385
6.1x
6.0
5.7x 1,250
5.3x
1,000
$865
5.0 4.8x
4.6x 750
4.3x 500
4.0 Ex. Liq.
$253 $250
250
$38 $24 $20
$9
3.0 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Industry Leadership
Objectives:
Strong Free Cash Flow Generation
Global leader in custom plastic packaging
Superior technology / history of innovation
New conversions
Global expansion
Growth alongside existing customers Accelerated
Opportunistic tuck-in acquisitions Earnings
Growth
Focus on Cash
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Appendix
Reconciliation of Adjusted and Covenant Compliance EBITDA
AFE / startup expenses / other administrative expenses 19.0 9.6 10.0 12.8 11.5 3.0
Covenant Compliance EBITDA $417.8 $441.6 $462.8 $475.3 $515.9 $128.1
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