|
|
|
|
Item 2.02.
|
Results of Operations and Financial Condition.
|
On December 4, 2019, Greif, Inc. (the “Company”) issued a press release (the “Earnings Release”) announcing the financial results for its fiscal year and fourth quarter ended October 31, 2019. The full text of the Earnings Release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The Earnings Release included the following non-GAAP financial measures (the “non-GAAP Measures”):
|
|
|
|
(i)
|
the Company's net income, excluding the impact of adjustments, for the fiscal year 2019 and the fiscal year 2018, which is equal to the Company's consolidated net income for the applicable period plus restructuring charges, plus acquisition-related costs, plus debt extinguishment charges, plus non-cash asset impairment charges, plus non-cash pension settlement charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, less the net tax expense (benefit) resulting from the Tax Cut and Jobs Act of 2017 (the "Tax Reform Act"), each net of tax, noncontrolling interest and equity earnings of unconsolidated affiliates and on a consolidated basis for the applicable period;
|
|
|
|
|
(ii)
|
the Company's earnings per diluted Class A share, excluding the impact of adjustments, for the fiscal year 2019 and the fiscal year 2018, which is equal to earnings per diluted Class A share of the Company for the applicable period plus restructuring charges, plus acquisition-related costs, plus debt extinguishment charges, plus non-cash asset impairment charges, plus non-cash pension settlement charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, less the net tax expense (benefit) resulting from the Tax Reform Act, each net of tax, noncontrolling interest and equity earnings of unconsolidated affiliates and on a consolidated basis for the applicable period;
|
|
|
|
|
(iii)
|
the Company's consolidated Adjusted EBITDA for the fiscal year 2019 and the fiscal year 2018, which is equal to the Company's consolidated net income for the applicable period plus interest expense, net, including debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization expense, plus restructuring charges, plus acquisition-related costs, plus non-cash asset impairment charges, plus non-cash pension settlement charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each on a consolidated basis for the applicable period;
|
|
|
|
|
(iv)
|
the Company's consolidated adjusted free cash flow for the fiscal year 2019 and the fiscal year 2018, which is equal to the Company's consolidated net cash provided by operating activities for the applicable period, plus cash paid for acquisition-related costs, plus cash paid for debt issuance costs, plus an additional one-time $65.0 million contribution made by the Company to its U.S. defined benefit plan during the third quarter of 2018, plus cash paid for acquisition-related ERP systems, less cash paid for purchases of properties, plants and equipment for the applicable period;
|
|
|
|
|
(v)
|
the Company's net debt as of October 31, 2019 and April 30, 2019, which is equal to the Company's consolidated total debt less cash and cash equivalents for the applicable period.
|
|
|
|
|
(vi)
|
the Company's net income, excluding the impact of adjustments, for the fourth quarter of 2019 and the fourth quarter of 2018, which is equal to the Company's consolidated net income for the applicable period plus restructuring charges, plus acquisition-related costs, plus non-cash asset impairment charges, plus non-cash pension settlement charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, less the net tax expense (benefit) resulting from the Tax Reform Act, each net of tax, noncontrolling interest and equity earnings of unconsolidated affiliates and on a consolidated basis for the applicable period;
|
|
|
|
|
(vii)
|
the Company's earnings per diluted Class A share, excluding the impact of adjustments, for the fourth quarter of 2019 and the fourth quarter of 2018, which is equal to earnings per diluted Class A share of the Company for the applicable period plus restructuring charges, plus acquisition-related costs, plus non-cash asset impairment charges, plus non-cash pension settlement charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, less the net tax expense (benefit) resulting from the Tax Reform Act, each net of tax, noncontrolling interest and equity earnings of unconsolidated affiliates and on a consolidated basis for the applicable period;
|
|
|
|
|
(viii)
|
the Company's consolidated Adjusted EBITDA for the fourth quarter of 2019 and the fourth quarter of 2018, which is equal to the Company's consolidated net income for the applicable period plus interest expense, net, including debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization expense, plus restructuring charges, plus acquisition-related costs, plus non-cash asset impairment charges,
|
plus non-cash pension settlement charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each on a consolidated basis for the applicable period;
|
|
|
|
(ix)
|
the Company's consolidated adjusted free cash flow for the fourth quarter of 2019 and the fourth quarter of 2018, which is equal to the Company's consolidated net cash provided by operating activities for the applicable period, plus cash paid for acquisition-related costs, plus cash paid for acquisition-related ERP systems, less cash paid for purchases of properties, plants and equipment for the applicable period;
|
|
|
|
|
(x)
|
the Company's income tax rate, excluding the impact of adjustments, for the fourth quarter of 2019, which is equal to the Company's consolidated tax expense for such period plus the tax expense (benefit) of restructuring charges, plus the tax expense (benefit) of acquisition-related costs, plus the tax expense (benefit) of non-cash asset impairment charges, plus the net tax expense (benefit) resulting from the Tax Reform Act, less the tax expense (benefit) of gains on disposal of properties, plants, equipment and businesses, net, divided by the Company's consolidated income before income tax expense and equity earnings of unconsolidated affiliates, net for such period plus restructuring charges, plus acquisition-related costs, plus non-cash impairment charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, plus the net tax expense (benefit) resulting from the Tax Reform Act, each on a consolidated basis for such period;
|
|
|
|
|
(xi)
|
net sales excluding foreign currency translation for the Company's Rigid Industrial Packaging & Services business segment for the fourth quarter of 2019 and the fourth quarter of 2018, which is equal to that business segment's net sales for the applicable quarter, after adjusting such sales for the fourth quarter of 2019 for foreign currency translation;
|
|
|
|
|
(xii)
|
Adjusted EBITDA for the Company’s Rigid Industrial Packaging & Services business segment for the fourth quarter of 2019 and the fourth quarter of 2018, which is equal to that business segment’s operating profit less other (income) expense, net, less non-cash pension settlement charges, less equity earnings of unconsolidated affiliates, net of tax, plus depreciation and amortization expense, plus restructuring charges, plus acquisition-related costs, plus non-cash asset impairment charges, plus non-cash pension settlement charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each for the applicable period;
|
|
|
|
|
(xiii)
|
Adjusted EBITDA for the Company’s Paper Packaging & Services business segment for the fourth quarter of 2019 and the fourth quarter of 2018, which is equal to that business segment’s operating profit less other (income) expense, net, plus depreciation and amortization expense, plus restructuring charges, plus acquisition-related costs, plus non-cash asset impairment charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each for the applicable period;
|
|
|
|
|
(xiv)
|
net sales excluding foreign currency translation for the Company's Flexible Products & Services business segment for the fourth quarter 2019 and the fourth quarter of 2018, which is equal to that business segment's net sales for the applicable quarter, after adjusting such sales for the fourth quarter of 2019 for foreign currency translation;
|
|
|
|
|
(xv)
|
Adjusted EBITDA for the Company’s Flexible Products & Services business segment for the fourth quarter of 2019 and the fourth quarter of 2018, which is equal to that business segment’s operating profit less other (income) expense, net, plus depreciation and amortization expense, plus restructuring charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each for the applicable period; and
|
|
|
|
|
(xvi)
|
Adjusted EBITDA for the Company’s Land Management business segment for the fourth quarter of 2019 and the fourth quarter of 2018, which is equal to that business segment’s operating profit plus depreciation, depletion and amortization expense, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each for the applicable period.
|
The Earnings Release also included the following forward-looking non-GAAP measures:
|
|
|
|
(i)
|
the Company's fiscal year 2020 Class A earnings per share before adjustments guidance, which is equal to earnings per diluted Class A share of the Company for such period plus restructuring charges, plus acquisition-related costs, plus non-cash asset impairment charges, plus non-cash pension settlement charges, plus debt extinguishment charges, plus the net tax expense (benefit) resulting from the Tax Reform Act, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each net of tax, noncontrolling interest and equity earnings of unconsolidated affiliates and on a consolidated basis for such period; and
|
|
|
|
|
(ii)
|
the Company's fiscal year 2020 projected adjusted free cash flow guidance, which is equal to the Company's consolidated net cash provided by operating activities for such period, plus cash paid for acquisition-related costs, plus cash paid for debt issuance costs, plus cash paid for acquisition-related ERP systems, less cash paid
|
for purchases of properties, plants and equipment for such period. A reconciliation of this forward-looking non-GAAP financial measure was included in the Earnings Release.
No reconciliation of the forward-looking non-GAAP financial measures was included in the Earnings Release for item (i) 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, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measures without unreasonable efforts.
The following table is a reconciliation of the GAAP financial measure Total Debt to the non-GAAP financial measure Net Debt.
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
October 31, 2019
|
|
April 30, 2019
|
|
Total Debt
|
$
|
2,751.9
|
|
|
$
|
2,942.5
|
|
|
Cash and cash equivalents
|
(77.3
|
)
|
|
(89.8
|
)
|
|
Net Debt(1)
|
$
|
2,674.6
|
|
|
$
|
2,852.7
|
|
(1)Net debt is defined as total debt less cash and cash equivalents.
Management of the Company uses the non-GAAP Measures to evaluate ongoing operations and believes that these non-GAAP Measures are useful to investors. The exclusion of the impact of the identified adjustments (restructuring charges, acquisition- related costs, non-cash asset impairment charges, non-cash pension settlement charges, debt extinguishment charges, disposals of properties, plants, equipment and businesses, net, and the tax benefit resulting from the Tax Reform Act) enable management and investors to perform meaningful comparisons of current and historical performance of the Company. Management of the Company also believes that the exclusion of the impact of the identified adjustments provides a stable platform on which to compare the historical performance of the Company and that investors desire this information. Management believes that the use of consolidated adjusted free cash flow, which excludes cash paid for capital expenditures, acquisition-related costs and cash paid for debt issuance costs from the Company's consolidated net cash provided by operating activities, provides additional information on which to evaluate the cash flow generated by the Company and believes that this is information that investors find valuable. The non-GAAP Measures are intended to supplement and should be read together with our financial results. The non-GAAP Measures 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 the non-GAAP Measures.