DELAWARE, Ohio, June 7, 2023 /PRNewswire/ -- Greif, Inc. (NYSE: GEF, GEF.B), a global leader in industrial packaging products and services, today announced second quarter 2023 results.
Second Quarter Financial Highlights include (all results compared to the second quarter of 2022 unless otherwise noted):
- Net income of $111.2 million or $1.90 per diluted Class A share decreased compared to net income of $125.1 million or $2.09 per diluted Class A share. Net income, excluding the impact of adjustments(1), of $103.8 million or $1.77 per diluted Class A share decreased compared to net income, excluding the impact of adjustments, of $144.9 million or $2.41 per diluted Class A share.
- Adjusted EBITDA(2) of $228.6 million decreased by $22.4 million compared to Adjusted EBITDA of $251.0 million.
- Net cash provided by operating activities increased by $71.6 million to $210.8 million. Adjusted free cash flow(3) increased by $70.7 million to a source of $185.5 million.
- Total debt of $2,289.2 million increased by $189.3 million primarily due to funds needed for the Centurion Container LLC ("Centurion") and Lee Container acquisitions completed in fiscal Q2 2023 and Q1 2023, respectively, partially offset by the funds received from the Tama, IA mill divestiture in Q1 2023. Net debt(4) increased by $139.5 million to $2,130.7 million. Our leverage ratio(5) increased to 2.25x from 2.11x sequentially, which is within our targeted leverage ratio range of 2.0x - 2.5x, and increased from 2.12x in the prior year quarter.
Strategic Actions and Announcements
- On March 31, 2023, we completed the previously announced transaction increasing our ownership stake in Centurion from approximately 10% to 80% in an all-cash transaction for $145.0 million. The one-month of contribution from Centurion is reported within the second quarter 2023 Global Industrial Packaging segment results, and our revised guidance includes the expected contribution from Centurion for the remainder of the year.
CEO Commentary
"The past three months have truly showcased the remarkable effectiveness of our Build to Last strategy," commented Ole Rosgaard, President and Chief Executive Officer of Greif. "Despite operating in an environment of ongoing demand uncertainties, our teams have remained agile and resolutely focused on delivering exceptional value to our shareholders. They have successfully implemented cost rationalization measures within our system, driving robust cash flow generation and achieving the highest-ever second-quarter free cash flow in our company's history. Additionally, we have achieved the second-highest second-quarter EBITDA, surpassing all quarters except the historic Q2 2022 comparative against which this quarter's performance is measured. I am immensely proud of our teams, who continue to demonstrate unwavering dedication, motivation, and excellence in their work."
Build to Last Mission Progress
Customer satisfaction is a key component of our mission to deliver Legendary Customer Service. Our consolidated CSI(6) score was 94.1 at the end of the second quarter 2023. Paper Packaging & Services CSI score was 92.8, and Global Industrial Packaging CSI score was 95.6, which exceeded Greif's aspirational target of 95.0. We thank our customers for their continued feedback which is critical to helping us achieve our vision to be the best performing customer service company in the world.
Recently, Greif attended Interpack, a premier global packaging trade show in Dusseldorf, Germany. During the exhibition Greif collaborated with many of our customers using our Interactive Green Tool, which helps our customers make more informed, data-driven and sustainable decisions related to their packaging products. Collaborative and sustainability-linked partnerships with our customers help Protect our Future and Create Thriving Communities for the broader global communities in which our products are used.
Greif is also dedicated to Creating Thriving Communities for our world-class global colleagues. During the quarter, the Company completed its 6th annual Colleague Engagement Survey administered by Gallup. Based on feedback received from this survey, the Company's overall engagement score increased, and the Company is again recognized within the top quartile of all manufacturing companies, which highlights the extraordinary commitment of our diverse, talented and engaged colleagues.
In addition, at the end of May 2023, Greif was named to Newsweek's first-ever Top 100 Global Most Loved Workplaces list. Greif has been consistently ranked as a Top 100 US Most Loved Workplace and is now excited that Newsweek has expanded their scope to the global platform, providing Greif the opportunity to showcase our exemplary dedication to our colleagues.
During the quarter, we published our 14th Annual Sustainability Report. This report highlights our goals and milestones achieved related to all elements of our sustainability journey: Delivering Superior Customer Experience; Reducing Our Footprint, Addressing Risk; Valuing Our People; Advancing Circular Economy; and Financial Performance & Profitable Growth. We encourage engagement and feedback from our investor community as we seek to continually progress our Build to Last mission of Protecting Our Future. More information can be found at https://www.greif.com/sustainability-2022/about-our-report/.
In addition to the financial strength demonstrated through the Q2 2023 overall financial results, in May we signed a new $300.0 million senior secured credit agreement (the "2023 Credit Agreement") with a syndicate of banks from the Farm Credit System led by CoBank. The proceeds of this 2023 Credit Agreement were used to refinance an equivalent amount of outstanding borrowings on our revolver, freeing up immediate capacity on our revolver to allow for further inorganic and organic growth aligned to our Build to Last strategy.
(1) |
Adjustments that are excluded from net income before adjustments and from earnings per diluted Class A share before adjustments are restructuring charges, debt extinguishment charges, acquisition and integration related costs, non-cash asset impairment charges, (gain) loss on disposal of properties, plants, equipment and businesses, net. |
(2) |
Adjusted EBITDA is defined as net income, plus interest expense, net, plus debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization expense, plus restructuring charges, plus acquisition and integration related costs, plus non-cash asset impairment charges, plus (gain) loss on disposal of properties, plants, equipment and businesses, net. |
(3) |
Adjusted free cash flow is defined as net cash provided by operating activities, less cash paid for purchases of properties, plants and equipment, plus cash paid for acquisition and integration related costs, plus cash paid for integration related Enterprise Resource Planning (ERP) systems and equipment, plus cash paid for debt issuance costs, plus cash paid for taxes related to Tama, Iowa mill divestment. |
(4) |
Net debt is defined as total debt less cash and cash equivalents. |
(5) |
Leverage ratio for the periods indicated is defined as net debt divided by trailing twelve month EBITDA, each as calculated under the terms of the Company's Second Amended and Restated Credit Agreement dated as of March 1, 2022, filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2022 (the "2022 Credit Agreement"). |
(6) |
Customer satisfaction index (CSI) tracks a variety of internal metrics designed to enhance the customer experience in dealing with Greif. |
Note: A reconciliation of the differences between all non-GAAP financial measures used in this release with the most directly comparable GAAP financial measures is included in the financial schedules that are a part of this release. These non-GAAP financial measures are intended to supplement and should be read together with our financial results. They should not be considered an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of this financial information should not place undue reliance on these non-GAAP financial measures.
Segment Results (all results compared to the second quarter of 2022 unless otherwise noted)
Net sales are impacted mainly by the volume of primary products(7) sold, selling prices, product mix and the impact of changes in foreign currencies against the U.S. Dollar. The table below shows the percentage impact of each of these items on net sales for our primary products for the second quarter of 2023 as compared to the prior year quarter for the business segments with manufacturing operations. Net sales from Lee Container and Centurion's primary products are not included in the table below, but will be included in the Global Industrial Packaging segment starting in the first quarter and second quarter of fiscal 2024 respectively.
Net Sales Impact - Primary Products |
Global Industrial Packaging |
Paper Packaging & Services |
|
Currency Translation |
(1.2) % |
(0.1) % |
|
Volume |
(15.8) % |
(22.0) % |
|
Selling Prices and Product Mix |
(6.7) % |
2.4 % |
|
Total Impact of Primary Products |
(23.7) % |
(19.7) % |
Global Industrial Packaging
Net sales decreased by $223.5 million to $748.2 million primarily due to lower volumes and lower average selling prices. Additionally, there was approximately $59.5 million of prior year net sales attributable to the Flexible Products & Services business, which was sold on March 31, 2022.
Gross profit decreased by $7.4 million to $177.9 million. The decrease in gross profit was primarily due to the same factors that impacted net sales, partially offset by lower raw material, transportation and manufacturing costs.
Operating profit increased by $3.3 million to $111.3 million primarily due to a $9.8 million gain recognized on our previously held interest in Centurion and to gain on disposal of properties, plants and equipment, partially offset by the same factors that impacted gross profit. Additionally, there was a $6.5 million offset due to prior year operating profit attributable to the Flexible Products & Services business. Adjusted EBITDA decreased by $9.7 million to $121.2 million primarily due to the same factors that impacted gross profit.
Paper Packaging & Services
Net sales decreased by $134.5 million to $554.8 million primarily due to lower volumes.
Gross profit decreased by $19.4 million to $131.4 million. The decrease in gross profit was primarily due to the same factors that impacted net sales, partially offset by lower raw material, transportation and manufacturing costs.
Operating profit decreased by $12.5 million to $67.6 million primarily due to the same factors that impacted gross profit, partially offset by lower SG&A expenses. Adjusted EBITDA decreased by $12.5 million to $104.9 million primarily due to the same factors that impacted operating profit.
Tax Summary
During the second quarter, we recorded an income tax rate of 25.3 percent and a tax rate excluding the impact of adjustments of 27.0 percent. Note that the application of FIN 18 frequently causes fluctuations in our quarterly effective tax rates. For fiscal 2023, we expect our tax rate and our tax rate excluding adjustments to be towards the high-end of our 23.0 to 27.0 percent range.
Dividend Summary
On June 5, 2023, the Board of Directors declared quarterly cash dividends of $0.50 per share of Class A Common Stock and $0.75 per share of Class B Common Stock. Dividends are payable on July 1, 2023, to stockholders of record at the close of business on June 19, 2023.
(7) |
Primary products are manufactured steel, plastic and fibre drums; new and reconditioned intermediate bulk containers; linerboard, containerboard, corrugated sheets and corrugated containers; and boxboard and tube and core products. |
Company Outlook
(in millions) |
Fiscal 2023 Outlook |
Adjusted EBITDA |
$780 - $830 |
Adjusted free cash flow |
$390 - $440 |
Note: Fiscal 2023 net income, the most directly comparable GAAP financial measure to Adjusted EBITDA, is not provided in this release due to the potential for one or more of the following, the timing and magnitude of which we are unable to reliably forecast: restructuring-related activities; acquisition and integration related costs; non-cash pension settlement charges; non-cash asset impairment charges due to unanticipated changes in the business; gains or losses on the disposal of businesses or properties, plants and equipment, net. No reconciliation of the 2023 guidance of Adjusted EBITDA, a non-GAAP financial measure which excludes restructuring charges, acquisition and integration costs, non-cash asset impairment charges, non-cash pension settlement charges, and (gain) loss on the disposal of properties, plants, equipment and businesses, net, is included in this release because, due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible, we are unable to quantify certain amounts that would be required to be included in net income, the most directly comparable GAAP financial measure, without unreasonable efforts. A reconciliation of the 2023 guidance of adjusted free cash flow to fiscal 2023 forecasted net cash provided by operating activities, the most directly comparable GAAP financial measure, is included in this release.
Conference Call
The Company will host a conference call to discuss second quarter 2023 results on June 8, 2023, at 8:30 a.m. Eastern Time (ET). Participants may access the call using the following online registration link: https://register.vevent.com/register/BIcc0c8e2a494a4ab69dce0942b5301cfe. Registrants will receive a confirmation email containing dial in details and a unique conference call code for entry. Phone lines will open at 8:00 a.m. ET on June 8, 2023. A digital replay of the conference call will be available two hours following the call on the Company's web site at http://investor.greif.com.
Investor Relations contact information
Matt Leahy, Vice President, Corporate Development & Investor Relations, 740-549-6158. [email protected]
About Greif
Greif is a global leader in industrial packaging products and services and is pursuing its vision: to be the best performing customer service company in the world. The Company produces steel, plastic and fibre drums, intermediate bulk containers, reconditioned containers, jerrycans and other small plastics, containerboard, uncoated recycled paperboard, coated recycled paperboard, tubes and cores and a diverse mix of specialty products. The Company also manufactures packaging accessories and provides filling, packaging and other services for a wide range of industries. In addition, Greif manages timber properties in the southeastern United States. The Company is strategically positioned in over 35 countries to serve global as well as regional customers. Additional information is on the Company's website at www.greif.com.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "may," "will," "expect," "intend," "estimate," "anticipate," "aspiration," "objective," "project," "believe," "continue," "on track" or "target" or the negative thereof and similar expressions, among others, identify forward-looking statements. All forward-looking statements are based on assumptions, expectations and other information currently available to management. Such forward-looking statements are subject to certain risks and uncertainties that could cause the Company's actual results to differ materially from those forecasted, projected or anticipated, whether expressed or implied. The most significant of these risks and uncertainties are described in Part I of the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2022. The Company undertakes no obligation to update or revise any forward-looking statements.
Although the Company believes that the expectations reflected in forward-looking statements have a reasonable basis, the Company can give no assurance that these expectations will prove to be correct. Forward-looking statements are subject to risks and uncertainties that could cause the Company's actual results to differ materially from those forecasted, projected or anticipated, whether expressed in or implied by the statements. Such risks and uncertainties that might cause a difference include, but are not limited to, the following: (i) historically, our business has been sensitive to changes in general economic or business conditions, (ii) our global operations subject us to political risks, instability and currency exchange that could adversely affect our results of operations, (iii) the current and future challenging global economy and disruption and volatility of the financial and credit markets may adversely affect our business, (iv) the COVID-19 pandemic could continue to impact any combination of our business, financial condition, results of operations and cash flows, (v) the continuing consolidation of our customer base and suppliers may intensify pricing pressure, (vi) we operate in highly competitive industries, (vii) our business is sensitive to changes in industry demands and customer preferences, (viii) raw material, price fluctuations, global supply chain disruptions and increased inflation may adversely impact our results of operations, (ix) energy and transportation price fluctuations and shortages may adversely impact our manufacturing operations and costs, (x) we may not successfully implement our business strategies, including achieving our growth objectives, (xi) we may encounter difficulties or liabilities arising from acquisitions or divestitures, (xii) we may incur additional rationalization costs and there is no guarantee that our efforts to reduce costs will be successful, (xiii) several operations are conducted by joint ventures that we cannot operate solely for our benefit, (xiv) certain of the agreements that govern our joint ventures provide our partners with put or call options, (xv) our ability to attract, develop and retain talented and qualified employees, managers and executives is critical to our success, (xvi) our business may be adversely impacted by work stoppages and other labor relations matters, (xvii) we may be subject to losses that might not be covered in whole or in part by existing insurance reserves or insurance coverage and general insurance premium and deductible increases, (xviii) our business depends on the uninterrupted operations of our facilities, systems and business functions, including our information technology and other business systems, (xix) a security breach of customer, employee, supplier or Company information and data privacy risks and costs of compliance with new regulations may have a material adverse effect on our business, financial condition, results of operations and cash flows, (xx) we could be subject to changes to our tax rates, the adoption of new U.S. or foreign tax legislation or exposure to additional tax liabilities, (xxi) full realization of our deferred tax assets may be affected by a number of factors, (xxii) we have a significant amount of goodwill and long-lived assets which, if impaired in the future, would adversely impact our results of operations, (xxiii) our pension and postretirement plans are underfunded and will require future cash contributions and our required future cash contributions could be higher than we expect, each of which could have a material adverse effect on our financial condition and liquidity, (xxiv) changing climate, global climate change regulations and greenhouse gas effects may adversely affect our operations and financial performance, (xxv) we may be unable to achieve our greenhouse gas emission reduction targets by 2030, (xxvi) legislation/regulation related to environmental and health and safety matters and corporate social responsibility could negatively impact our operations and financial performance, (xxvii) product liability claims and other legal proceedings could adversely affect our operations and financial performance, (xxviii) we may incur fines or penalties, damage to our reputation or other adverse consequences if our employees, agents or business partners violate, or are alleged to have violated, anti-bribery, competition or other laws.
The risks described above are not all-inclusive, and given these and other possible risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. For a detailed discussion of the most significant risks and uncertainties that could cause our actual results to differ materially from those forecasted, projected or anticipated, see "Risk Factors" in Part I, Item 1A of our most recently filed Form 10-K and our other filings with the Securities and Exchange Commission.
All forward-looking statements made in this news release are expressly qualified in their entirety by reference to such risk factors. Except to the limited extent required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
GREIF, INC. AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME UNAUDITED |
|||||||
Three months ended April 30, |
Six months ended April 30, |
||||||
(in millions, except per share amounts) |
2023 |
2022 |
2023 |
2022 |
|||
Net sales |
$ 1,308.9 |
$ 1,667.3 |
$ 2,579.9 |
$ 3,231.6 |
|||
Cost of products sold |
997.1 |
1,328.6 |
2,016.5 |
2,603.2 |
|||
Gross profit |
311.8 |
338.7 |
563.4 |
628.4 |
|||
Selling, general and administrative expenses |
137.2 |
147.4 |
276.6 |
299.0 |
|||
Restructuring charges |
2.4 |
3.7 |
4.8 |
7.2 |
|||
Acquisition and integration related costs |
4.6 |
2.0 |
12.1 |
3.6 |
|||
Non-cash asset impairment charges |
1.3 |
— |
1.8 |
62.4 |
|||
(Gain) loss on disposal of properties, plants and equipment, net |
(5.0) |
(0.3) |
(5.0) |
(1.7) |
|||
(Gain) loss on disposal of businesses, net |
(9.8) |
(4.2) |
(64.4) |
(4.2) |
|||
Operating profit |
181.1 |
190.1 |
337.5 |
262.1 |
|||
Interest expense, net |
23.4 |
13.2 |
46.2 |
30.3 |
|||
Debt extinguishment charges |
— |
25.4 |
— |
25.4 |
|||
Other (income) expense, net |
2.9 |
(4.4) |
6.2 |
(2.4) |
|||
Income before income tax expense and equity earnings of unconsolidated affiliates, net |
154.8 |
155.9 |
285.1 |
208.8 |
|||
Income tax expense |
39.1 |
29.9 |
76.8 |
65.5 |
|||
Equity earnings of unconsolidated affiliates, net of tax |
(0.3) |
(0.7) |
(0.8) |
(2.0) |
|||
Net income |
116.0 |
126.7 |
209.1 |
145.3 |
|||
Net income attributable to noncontrolling interests |
(4.8) |
(1.6) |
(8.0) |
(9.9) |
|||
Net income attributable to Greif, Inc. |
$ 111.2 |
$ 125.1 |
$ 201.1 |
$ 135.4 |
|||
Basic earnings per share attributable to Greif, Inc. common shareholders: |
|||||||
Class A common stock |
$ 1.91 |
$ 2.11 |
$ 3.46 |
$ 2.28 |
|||
Class B common stock |
$ 2.88 |
$ 3.15 |
$ 5.19 |
$ 3.40 |
|||
Diluted earnings per share attributable to Greif, Inc. common shareholders: |
|||||||
Class A common stock |
$ 1.90 |
$ 2.09 |
$ 3.44 |
$ 2.27 |
|||
Class B common stock |
$ 2.88 |
$ 3.15 |
$ 5.19 |
$ 3.40 |
|||
Shares used to calculate basic earnings per share attributable to Greif, Inc. |
|||||||
Class A common stock |
25.8 |
26.6 |
25.7 |
26.6 |
|||
Class B common stock |
21.5 |
22.0 |
21.6 |
22.0 |
|||
Shares used to calculate diluted earnings per share attributable to Greif, Inc. |
|||||||
Class A common stock |
26.2 |
26.8 |
26.0 |
26.8 |
|||
Class B common stock |
21.5 |
22.0 |
21.6 |
22.0 |
|||
GREIF, INC. AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED
|
|||
(in millions) |
April 30, 2023 |
October 31, 2022 |
|
ASSETS |
|||
Current assets |
|||
Cash and cash equivalents |
$ 158.5 |
$ 147.1 |
|
Trade accounts receivable |
727.0 |
749.1 |
|
Inventories |
400.2 |
403.3 |
|
Other current assets |
196.0 |
199.9 |
|
1,481.7 |
1,499.4 |
||
Long-term assets |
|||
Goodwill |
1,649.8 |
1,464.5 |
|
Intangible assets |
762.8 |
576.2 |
|
Operating lease assets |
272.1 |
254.7 |
|
Other long-term assets |
227.5 |
220.1 |
|
2,912.2 |
2,515.5 |
||
Properties, plants and equipment |
1,517.6 |
1,455.0 |
|
$ 5,911.5 |
$ 5,469.9 |
||
LIABILITIES AND EQUITY |
|||
Current liabilities |
|||
Accounts payable |
$ 502.4 |
$ 561.3 |
|
Short-term borrowings |
2.3 |
5.7 |
|
Current portion of long-term debt |
80.8 |
71.1 |
|
Current portion of operating lease liabilities |
50.9 |
48.9 |
|
Other current liabilities |
301.0 |
360.9 |
|
937.4 |
1,047.9 |
||
Long-term liabilities |
|||
Long-term debt |
2,206.1 |
1,839.3 |
|
Operating lease liabilities |
224.6 |
209.4 |
|
Other long-term liabilities |
575.8 |
563.2 |
|
3,006.5 |
2,611.9 |
||
Redeemable noncontrolling interests |
52.7 |
15.8 |
|
Equity |
|||
Total Greif, Inc. equity |
1,879.8 |
1,761.3 |
|
Noncontrolling interests |
35.1 |
33.0 |
|
Total equity |
1,914.9 |
1,794.3 |
|
$ 5,911.5 |
$ 5,469.9 |
||
GREIF, INC. AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED |
|||||||
Three months ended April 30, |
Six months ended April 30, |
||||||
(in millions) |
2023 |
2022 |
2023 |
2022 |
|||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||
Net income |
$ 116.0 |
$ 126.7 |
$ 209.1 |
$ 145.3 |
|||
Depreciation, depletion and amortization |
56.6 |
54.6 |
111.7 |
114.0 |
|||
Asset impairments |
1.3 |
— |
1.8 |
62.4 |
|||
Other non-cash adjustments to net income |
(0.4) |
(13.3) |
(40.8) |
5.9 |
|||
Debt extinguishment charges |
— |
22.6 |
— |
22.6 |
|||
Operating working capital changes |
31.4 |
(63.1) |
37.7 |
(121.2) |
|||
Decrease in cash from changes in other assets and liabilities |
5.9 |
11.7 |
(75.8) |
(67.4) |
|||
Net cash (used in) provided by operating activities |
210.8 |
139.2 |
243.7 |
161.6 |
|||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||
Acquisitions of companies, net of cash acquired |
(145.6) |
— |
(447.5) |
— |
|||
Purchases of properties, plants and equipment |
(41.8) |
(30.5) |
(91.1) |
(75.0) |
|||
Proceeds from the sale of properties, plant and equipment and businesses, |
6.4 |
147.5 |
112.5 |
147.5 |
|||
Payments for deferred purchase price of acquisitions |
— |
— |
(21.7) |
(4.7) |
|||
Other |
(0.9) |
(8.5) |
(3.2) |
(5.1) |
|||
Net cash (used in) provided by investing activities |
(181.9) |
108.5 |
(451.0) |
62.7 |
|||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||||
Proceeds on long-term debt, net |
58.0 |
(196.3) |
361.2 |
(112.3) |
|||
Dividends paid to Greif, Inc. shareholders |
(29.0) |
(27.4) |
(57.9) |
(54.6) |
|||
Payments for debt extinguishment and issuance costs |
— |
(20.8) |
— |
(20.8) |
|||
Payments for share repurchases |
(41.8) |
— |
(59.6) |
— |
|||
Tax withholding payments for stock-based awards |
(1.3) |
— |
(13.7) |
— |
|||
Other |
(9.8) |
(6.6) |
(14.4) |
(9.4) |
|||
Net cash (used in) provided by financing activities |
(23.9) |
(251.1) |
215.6 |
(197.1) |
|||
Effects of exchange rates on cash |
(7.5) |
(24.5) |
3.1 |
(43.1) |
|||
Net increase (decrease) in cash and cash equivalents |
(2.5) |
(27.9) |
11.4 |
(15.9) |
|||
Cash and cash equivalents, beginning of period |
161.0 |
136.6 |
147.1 |
124.6 |
|||
Cash and cash equivalents, end of period |
$ 158.5 |
$ 108.7 |
$ 158.5 |
$ 108.7 |
|||
GREIF, INC. AND SUBSIDIARY COMPANIES FINANCIAL HIGHLIGHTS BY SEGMENT UNAUDITED |
|||||||
Three months ended April 30, |
Six months ended April 30, |
||||||
(in millions) |
2023 |
2022 |
2023 |
2022 |
|||
Net sales: |
|||||||
Global Industrial Packaging |
$ 748.2 |
$ 971.7 |
$ 1,454.0 |
$ 1,920.8 |
|||
Paper Packaging & Services |
554.8 |
689.3 |
1,115.0 |
1,299.3 |
|||
Land Management |
5.9 |
6.3 |
10.9 |
11.5 |
|||
Total net sales |
$ 1,308.9 |
$ 1,667.3 |
$ 2,579.9 |
$ 3,231.6 |
|||
Gross profit: |
|||||||
Global Industrial Packaging |
$ 177.9 |
$ 185.3 |
$ 303.2 |
$ 362.4 |
|||
Paper Packaging & Services |
131.4 |
150.8 |
255.6 |
261.6 |
|||
Land Management |
2.5 |
2.6 |
4.6 |
4.4 |
|||
Total gross profit |
$ 311.8 |
$ 338.7 |
$ 563.4 |
$ 628.4 |
|||
Operating profit: |
|||||||
Global Industrial Packaging |
$ 111.3 |
$ 108.0 |
$ 157.2 |
$ 139.0 |
|||
Paper Packaging & Services |
67.6 |
80.1 |
176.7 |
118.4 |
|||
Land Management |
2.2 |
2.0 |
3.6 |
4.7 |
|||
Total operating profit |
$ 181.1 |
$ 190.1 |
$ 337.5 |
$ 262.1 |
|||
EBITDA(8): |
|||||||
Global Industrial Packaging |
$ 131.5 |
$ 131.8 |
$ 195.7 |
$ 182.8 |
|||
Paper Packaging & Services |
100.8 |
115.3 |
243.3 |
191.5 |
|||
Land Management |
2.8 |
2.7 |
4.8 |
6.2 |
|||
Total EBITDA |
$ 235.1 |
$ 249.8 |
$ 443.8 |
$ 380.5 |
|||
Adjusted EBITDA(9): |
|||||||
Global Industrial Packaging |
$ 121.2 |
$ 130.9 |
$ 193.0 |
$ 245.1 |
|||
Paper Packaging & Services |
104.9 |
117.4 |
195.6 |
197.9 |
|||
Land Management |
2.5 |
2.7 |
4.5 |
4.8 |
|||
Total adjusted EBITDA |
$ 228.6 |
$ 251.0 |
$ 393.1 |
$ 447.8 |
|||
(8) |
EBITDA is defined as net income, plus interest expense, net, plus income tax expense, plus depreciation, depletion and amortization. However, because the Company does not calculate net income by segment, this table calculates EBITDA by segment with reference to operating profit by segment, which, as demonstrated in the table of Consolidated EBITDA, is another method to achieve the same result. See the reconciliations in the table of Segment EBITDA. |
(9) |
Adjusted EBITDA is defined as net income, plus interest expense, net, plus debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization expense, plus restructuring charges, plus acquisition and integration related costs, plus non-cash asset impairment charges, plus (gain) loss on disposal of properties, plants, equipment and businesses, net. |
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP RECONCILIATION CONSOLIDATED ADJUSTED EBITDA UNAUDITED |
|||||||
Three months ended April 30, |
Six months ended April 30, |
||||||
(in millions) |
2023 |
2022 |
2023 |
2022 |
|||
Net income |
$ 116.0 |
$ 126.7 |
$ 209.1 |
$ 145.3 |
|||
Plus: Interest expense, net |
23.4 |
13.2 |
46.2 |
30.3 |
|||
Plus: Debt extinguishment charges |
— |
25.4 |
— |
25.4 |
|||
Plus: Income tax expense |
39.1 |
29.9 |
76.8 |
65.5 |
|||
Plus: Depreciation, depletion and amortization expense |
56.6 |
54.6 |
111.7 |
114.0 |
|||
EBITDA |
$ 235.1 |
$ 249.8 |
$ 443.8 |
$ 380.5 |
|||
Net income |
$ 116.0 |
$ 126.7 |
$ 209.1 |
$ 145.3 |
|||
Plus: Interest expense, net |
23.4 |
13.2 |
46.2 |
30.3 |
|||
Plus: Debt extinguishment charges |
— |
25.4 |
— |
25.4 |
|||
Plus: Income tax expense |
39.1 |
29.9 |
76.8 |
65.5 |
|||
Plus: Other expense (income), net |
2.9 |
(4.4) |
6.2 |
(2.4) |
|||
Plus: Equity earnings of unconsolidated affiliates, net of tax |
(0.3) |
(0.7) |
(0.8) |
(2.0) |
|||
Operating profit |
$ 181.1 |
$ 190.1 |
$ 337.5 |
$ 262.1 |
|||
Less: Other expense (income), net |
2.9 |
(4.4) |
6.2 |
(2.4) |
|||
Less: Equity earnings of unconsolidated affiliates, net of tax |
(0.3) |
(0.7) |
(0.8) |
(2.0) |
|||
Plus: Depreciation, depletion and amortization expense |
56.6 |
54.6 |
111.7 |
114.0 |
|||
EBITDA |
$ 235.1 |
$ 249.8 |
$ 443.8 |
$ 380.5 |
|||
Plus: Restructuring charges |
2.4 |
3.7 |
4.8 |
7.2 |
|||
Plus: Acquisition and integration related costs |
4.6 |
2.0 |
12.1 |
3.6 |
|||
Plus: Non-cash asset impairment charges |
1.3 |
— |
1.8 |
62.4 |
|||
Plus: (Gain) loss on disposal of properties, plants, equipment, and businesses, net |
(14.8) |
(4.5) |
(69.4) |
(5.9) |
|||
Adjusted EBITDA |
$ 228.6 |
$ 251.0 |
$ 393.1 |
$ 447.8 |
|||
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP RECONCILIATION SEGMENT ADJUSTED EBITDA(10) UNAUDITED |
|||||||
Three months ended April 30, |
Six months ended April 30, |
||||||
(in millions) |
2023 |
2022 |
2023 |
2022 |
|||
Global Industrial Packaging |
|||||||
Operating profit |
111.3 |
108.0 |
157.2 |
139.0 |
|||
Less: Other (income) expense, net |
3.3 |
(4.3) |
6.9 |
(2.4) |
|||
Less: Equity earnings of unconsolidated affiliates, net of tax |
(0.3) |
(0.7) |
(0.8) |
(2.0) |
|||
Plus: Depreciation and amortization expense |
23.2 |
18.8 |
44.6 |
39.4 |
|||
EBITDA |
$ 131.5 |
$ 131.8 |
$ 195.7 |
$ 182.8 |
|||
Plus: Restructuring charges |
0.8 |
2.7 |
2.9 |
4.8 |
|||
Plus: Acquisition and integration related costs |
2.5 |
— |
7.5 |
— |
|||
Plus: Non-cash asset impairment charges |
1.0 |
— |
1.5 |
62.4 |
|||
Plus: (Gain) loss on disposal of properties, plants, equipment and businesses, net |
(14.6) |
(3.6) |
(14.6) |
(4.9) |
|||
Adjusted EBITDA |
$ 121.2 |
$ 130.9 |
$ 193.0 |
$ 245.1 |
|||
Paper Packaging & Services |
|||||||
Operating profit |
67.6 |
80.1 |
176.7 |
118.4 |
|||
Less: Other (income) expense, net |
(0.4) |
(0.1) |
(0.7) |
— |
|||
Plus: Depreciation and amortization expense |
32.8 |
35.1 |
65.9 |
73.1 |
|||
EBITDA |
$ 100.8 |
$ 115.3 |
$ 243.3 |
$ 191.5 |
|||
Plus: Restructuring charges |
1.6 |
1.0 |
1.9 |
2.4 |
|||
Plus: Acquisition and integration related costs |
2.1 |
2.0 |
4.6 |
3.6 |
|||
Plus: Non-cash asset impairment charges |
0.3 |
— |
0.3 |
— |
|||
Plus: (Gain) loss on disposal of properties, plants, equipment and businesses, net |
0.1 |
(0.9) |
(54.5) |
0.4 |
|||
Adjusted EBITDA |
$ 104.9 |
$ 117.4 |
$ 195.6 |
$ 197.9 |
|||
Land Management |
|||||||
Operating profit |
2.2 |
2.0 |
3.6 |
4.7 |
|||
Plus: Depreciation and depletion expense |
0.6 |
0.7 |
1.2 |
1.5 |
|||
EBITDA |
$ 2.8 |
$ 2.7 |
$ 4.8 |
$ 6.2 |
|||
Plus: (Gain) loss on disposal of properties, plants, equipment and businesses, net |
(0.3) |
— |
(0.3) |
(1.4) |
|||
Adjusted EBITDA |
$ 2.5 |
$ 2.7 |
$ 4.5 |
$ 4.8 |
|||
Consolidated EBITDA |
$ 235.1 |
$ 249.8 |
$ 443.8 |
$ 380.5 |
|||
Consolidated adjusted EBITDA |
$ 228.6 |
$ 251.0 |
$ 393.1 |
$ 447.8 |
|||
(10) |
Adjusted EBITDA is defined as net income, plus interest expense, net, plus income tax expense, plus depreciation, depletion and amortization expense, plus restructuring charges, plus acquisition and integration related costs, plus non-cash asset impairment charges, plus (gain) loss on disposal of properties, plants, equipment and businesses, net. However, because the Company does not calculate net income by segment, this table calculates adjusted EBITDA by segment with reference to operating profit by segment, which, as demonstrated in the table of consolidated adjusted EBITDA, is another method to achieve the same result. |
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP RECONCILIATION ADJUSTED FREE CASH FLOW(11) UNAUDITED |
|||||||
Three months ended April 30, |
Six months ended April 30, |
||||||
(in millions) |
2023 |
2022 |
2023 |
2022 |
|||
Net cash provided by operating activities |
$ 210.8 |
$ 139.2 |
$ 243.7 |
$ 161.6 |
|||
Cash paid for purchases of properties, plants and equipment |
(41.8) |
(30.5) |
(91.1) |
(75.0) |
|||
Free cash flow |
$ 169.0 |
$ 108.7 |
$ 152.6 |
$ 86.6 |
|||
Cash paid for acquisition and integration related costs |
4.6 |
2.0 |
12.1 |
3.6 |
|||
Cash paid for integration related ERP systems and equipment(12) |
1.0 |
1.3 |
2.3 |
3.0 |
|||
Cash paid for debt issuance costs(13) |
— |
2.8 |
— |
2.8 |
|||
Cash paid for taxes related to Tama, Iowa mill divestment |
$ 10.9 |
$ — |
$ 10.9 |
$ — |
|||
Adjusted free cash flow |
$ 185.5 |
$ 114.8 |
$ 177.9 |
$ 96.0 |
|||
(11) |
Adjusted free cash flow is defined as net cash provided by operating activities, less cash paid for purchases of properties, plants and equipment, plus cash paid for acquisition and integration related costs, plus cash paid for integration related ERP systems and equipment, plus cash paid for debt issuance costs, plus cash paid for taxes related to Tama, Iowa mill divestment. |
(12) |
Cash paid for integration related ERP systems and equipment is defined as cash paid for ERP systems and equipment required to bring the acquired facilities to Greif's standards. |
(13) |
Cash paid for debt issuance costs is defined as cash payments for debt issuance related expenses included within net cash used in operating activities. |
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP RECONCILIATION NET INCOME, CLASS A EARNINGS PER SHARE AND TAX RATE BEFORE ADJUSTMENTS UNAUDITED
|
|||||||||||||
(in millions, except for per share amounts) |
Income before |
Income |
Equity |
Non-Controlling |
Net Attributable |
Diluted |
Tax Rate |
||||||
Three months ended April 30, 2023 |
$ 154.8 |
$ 39.1 |
$ (0.3) |
$ 4.8 |
$ 111.2 |
$ 1.90 |
25.3 % |
||||||
Restructuring charges |
2.4 |
0.5 |
— |
— |
1.9 |
0.03 |
|||||||
Acquisition and integration related costs |
4.6 |
1.1 |
— |
— |
3.5 |
0.07 |
|||||||
Non-cash asset impairment charges |
1.3 |
0.3 |
— |
— |
1.0 |
0.01 |
|||||||
(Gain) loss on disposal of properties, plants, equipment and businesses, net |
(14.8) |
(1.0) |
— |
— |
(13.8) |
(0.24) |
|||||||
Excluding adjustments |
$ 148.3 |
$ 40.0 |
$ (0.3) |
$ 4.8 |
$ 103.8 |
$ 1.77 |
27.0 % |
||||||
Three months ended April 30, 2022 |
$ 155.9 |
$ 29.9 |
$ (0.7) |
$ 1.6 |
$ 125.1 |
$ 2.09 |
19.2 % |
||||||
Restructuring charges |
3.7 |
0.9 |
— |
— |
2.8 |
0.04 |
|||||||
Debt extinguishment charges |
25.4 |
6.2 |
— |
— |
19.2 |
0.32 |
|||||||
Acquisition and integration related costs |
2.0 |
0.5 |
— |
— |
1.5 |
0.03 |
|||||||
(Gain) loss on disposal of properties, plants, equipment and businesses, net |
(4.5) |
(0.7) |
— |
(0.1) |
(3.7) |
(0.07) |
|||||||
Excluding adjustments |
$ 182.5 |
$ 36.8 |
$ (0.7) |
$ 1.5 |
$ 144.9 |
$ 2.41 |
20.2 % |
||||||
Six months ended April 30, 2023 |
$ 285.1 |
$ 76.8 |
$ (0.8) |
$ 8.0 |
$ 201.1 |
$ 3.44 |
26.9 % |
||||||
Restructuring charges |
4.8 |
1.1 |
— |
0.1 |
3.6 |
0.06 |
|||||||
Acquisition and integration related costs |
12.1 |
2.9 |
— |
— |
9.2 |
0.16 |
|||||||
Non-cash asset impairment charges |
1.8 |
0.4 |
— |
— |
1.4 |
0.02 |
|||||||
Gain on disposal of properties, plants, equipment and businesses, net |
(69.4) |
(19.8) |
— |
— |
(49.6) |
(0.85) |
|||||||
Excluding adjustments |
$ 234.4 |
$ 61.4 |
$ (0.8) |
$ 8.1 |
$ 165.7 |
$ 2.83 |
26.2 % |
||||||
Six months ended April 30, 2022 |
$ 208.8 |
$ 65.5 |
$ (2.0) |
$ 9.9 |
$ 135.4 |
$ 2.27 |
31.4 % |
||||||
Restructuring charges |
7.2 |
1.7 |
— |
— |
5.5 |
0.09 |
|||||||
Debt extinguishment charges |
25.4 |
6.2 |
— |
— |
19.2 |
0.32 |
|||||||
Acquisition and integration related costs |
3.6 |
0.9 |
— |
— |
2.7 |
0.05 |
|||||||
Non-cash asset impairment charges |
62.4 |
— |
— |
— |
62.4 |
1.05 |
|||||||
(Gain) loss on disposal of properties, plants, equipment and businesses, net |
(5.9) |
(1.0) |
— |
(0.2) |
(4.7) |
(0.09) |
|||||||
Excluding adjustments |
$ 301.5 |
$ 73.3 |
$ (2.0) |
$ 9.7 |
$ 220.5 |
$ 3.69 |
24.3 % |
||||||
The impact of income tax expense and non-controlling interest on each adjustment is calculated based on tax rates and ownership percentages specific to each applicable entity. |
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP RECONCILIATION NET DEBT UNAUDITED
|
|||||
(in millions) |
April 30, 2023 |
January 31, 2023 |
April 30, 2022 |
||
Total debt |
$ 2,289.2 |
$ 2,229.3 |
$ 2,099.9 |
||
Cash and cash equivalents |
(158.5) |
(161.0) |
(108.7) |
||
Net debt |
$ 2,130.7 |
$ 2,068.3 |
$ 1,991.2 |
||
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP RECONCILIATION LEVERAGE RATIO UNAUDITED
|
|||
Trailing twelve month credit agreement EBITDA (in millions) |
Trailing Twelve |
Trailing Twelve |
Trailing Twelve |
Net income |
$ 457.8 |
$ 468.5 |
$ 422.7 |
Plus: Interest expense, net |
77.1 |
66.9 |
71.1 |
Plus: Debt extinguishment charges |
— |
25.4 |
25.4 |
Plus: Income tax expense |
148.4 |
139.2 |
62.6 |
Plus: Depreciation, depletion and amortization expense |
214.3 |
212.3 |
230.3 |
EBITDA |
$ 897.6 |
$ 912.3 |
$ 812.1 |
Plus: Restructuring charges |
10.6 |
11.9 |
15.2 |
Plus: Acquisition and integration related costs |
17.2 |
14.6 |
8.9 |
Plus: Non-cash asset impairment charges |
10.4 |
9.1 |
69.8 |
Plus: Non-cash pension settlement charges |
— |
— |
0.5 |
Plus: Incremental COVID-19 costs, net |
— |
— |
1.5 |
Plus: (Gain) loss on disposal of properties, plants, equipment, and businesses, net |
(73.0) |
(62.7) |
(11.1) |
Plus: Timberland gains, net |
— |
— |
— |
Adjusted EBITDA |
$ 862.8 |
$ 885.2 |
$ 896.9 |
Credit agreement adjustments to EBITDA(14) |
19.0 |
21.7 |
(36.7) |
Credit agreement EBITDA |
$ 881.8 |
$ 906.9 |
$ 860.2 |
Adjusted net debt (in millions) |
For the Period Ended |
For the Period Ended |
For the Period Ended |
Total debt |
$ 2,289.2 |
$ 2,229.3 |
$ 2,099.9 |
Cash and cash equivalents |
(158.5) |
(161.0) |
(108.7) |
Net debt |
$ 2,130.7 |
$ 2,068.3 |
$ 1,991.2 |
Credit agreement adjustments to debt(15) |
(145.7) |
(150.5) |
(165.5) |
Adjusted net debt |
$ 1,985.0 |
$ 1,917.8 |
$ 1,825.7 |
Leverage ratio |
2.25x |
2.11x |
2.12x |
(14) |
Adjustments to EBITDA are specified by the 2022 Credit Agreement and include certain timberland gains, equity earnings of unconsolidated affiliates, net of tax, certain acquisition savings, deferred financing costs, capitalized interest, income and expense in connection with asset dispositions, and other items. |
(15) |
Adjustments to net debt are specified by the 2022 Credit Agreement and include the European accounts receivable program, letters of credit, and balances for swap contracts. |
GREIF, INC. AND SUBSIDIARY COMPANIES PROJECTED 2023 GUIDANCE RECONCILIATION ADJUSTED FREE CASH FLOW UNAUDITED |
||
Fiscal 2023 Guidance Range |
||
(in millions) |
Scenario 1 |
Scenario 2 |
Net cash provided by operating activities |
$ 542.3 |
$ 611.3 |
Cash paid for purchases of properties, plants and equipment |
(203.0) |
(224.0) |
Free cash flow |
$ 339.3 |
$ 387.3 |
Cash paid for acquisition and integration related costs |
20.0 |
21.0 |
Cash paid for integration related ERP systems and equipment |
9.0 |
10.0 |
Cash paid for taxes related to Tama, Iowa mill divestment |
21.7 |
21.7 |
Adjusted free cash flow |
$ 390.0 |
$ 440.0 |
SOURCE Greif, Inc.
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