Greif, Inc. (NYSE: GEF, GEF.B), a world leader in industrial
packaging products and services, today announced third quarter 2018
results.
Third Quarter Highlights include (all results compared to the
third quarter of 2017 unless otherwise noted):
- Net sales increased by $50.3 million to
$1,012.1 million.
- Gross profit increased by $30.0 million
to $217.1 million.
- Operating profit increased by $23.5
million to $114.0 million and operating profit before special
items1 increased by $23.2 million to $117.7 million.
- Net income of $67.7 million or $1.15
per diluted Class A share increased compared to net income of $43.9
million or $0.74 per diluted Class A share. Net income, excluding
the impact of special items, of $70.9 million or $1.20 per diluted
Class A share increased compared to net income, excluding the
impact of special items, of $49.7 million or $0.85 per diluted
Class A share.
- Net cash provided by operating
activities decreased by $38.3 million to $51.3 million. The $38.3
million decrease included a one-time $65.0 million U.S pension
contribution. Free cash flow excluding the additional U.S. pension
contribution2 increased by $16.4 million to $80.6 million.
- Increased quarterly cash dividends to
$0.44 per share on Class A Common Stock and $0.66 per share on
Class B Common Stock, an increase of 4.8 percent from dividends
paid in the second quarter of 2018.
“Greif delivered solid third quarter results, with stronger year
over year operating profit before special items, earnings and free
cash flow,” said Greif’s President and Chief Executive Officer,
Pete Watson. “Our Paper Packaging and Flexible Products segments
continue to demonstrate strong results. Our Rigid Packaging segment
experienced strong demand across much of the portfolio, but was
impacted by the continuation of rising raw material costs and
unique headwinds in certain regions of our global business. At the
same time, the improved overall performance of our diversified
portfolio leads us to increase our Fiscal 2018 Class A EPS before
special items guidance range to $3.53 - $3.69. In addition, we are
pleased that earlier this week our Board of Directors approved an
increased quarterly dividend, which reflects our ongoing commitment
to shareholder returns and the confidence we have in our global
business.”
____
(1) A summary of all special items that are excluded from
operating profit before special items, from net income before
special items, and from earnings per diluted Class A share before
special items is set forth in the Selected Financial Highlights
table following the Company Outlook in this release. (2) Free cash
flow excluding the additional U.S. pension contribution is defined
as net cash provided by operating activities, excluding the
additional one-time $65.0 million contribution made by the Company
to its U.S. defined benefit plan (the “additional U.S. pension
contribution”) during the third quarter of 2018, less cash paid for
purchases of properties, plants and equipment. The additional U.S.
pension contribution will provide certain tax advantages to the
Company as a result of the Tax Cuts and Jobs Act ("Tax Reform
Act").
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.
Customer Service
The Company's consolidated CSI3 score for the third quarter of
2018 improved to 87.4, with the largest improvement again recorded
in FPS, which generated a 12 percent improvement versus the prior
year quarter. Our objective is that each business segment delivers
a CSI score of 95 or better. Our Paper Packaging & Services
segment is above that threshold.
We are currently making plans to conduct our next NPS4 survey
and anticipate launching it late in our fiscal 2018 fourth quarter
or at the beginning of fiscal 2019. Our aspiration is to
consistently achieve an NPS score of 55. We continue to leverage
the increased customer interactions that accompany each survey into
additional enhancements for our customers and better strategic
insight into their business needs.
Segment Results (all results compared to the third quarter of
2017 unless otherwise noted)
Net sales are impacted mainly by the volume of primary products5
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 third quarter of 2018 as compared to the
prior year quarter for the business segments with manufacturing
operations:
Rigid Industrial
Packaging &
Paper Packaging &
Flexible Products
Net Sales Impact
- Primary Products
Services
Services
& Services % % %
Currency
Translation (0.6 )% — 2.7 %
Volume (1.2 )% 6.6 % 7.1 %
Selling Prices and Product Mix 3.7 % 7.8 % 8.9
%
Total Impact of Primary Products 1.9 % 14.4 %
18.7 %
Rigid Industrial Packaging & Services
Net sales increased by $13.2 million to $687.6 million. Net
sales excluding foreign currency translation increased by $17.6
million due primarily to a 3.7 percent increase in selling prices
on our primary products as a result of strategic pricing decisions
and contractual price changes, partially offset by significantly
weaker demand from European agricultural customers due to weather,
impacts from events in Brazil and continued value over volume
decisions in China.
Gross profit increased by $1.8 million to $138.8 million. The
increase in gross profit included a $4.6 million freight expense
adjustment and improved manufacturing efficiencies, partially
offset by the continuation of rising raw material costs and the
timing of contractual pass through arrangements. The $4.6 million
freight expense adjustment included the reversal of $2.4 million of
fiscal 2018 freight expenses and $2.2 million of freight expenses
related to prior periods.
Operating profit decreased by $3.3 million to $62.0 million.
Operating profit before special items decreased by $4.1 million to
$66.1 million, due to an increase in the segment's selling, general
& administrative ("SG&A") expense. The prior year third
quarter results included a value-added tax refund of $2.9 million
related to the resolution of a Brazilian tax issue originating in
1991.
Paper Packaging & Services
Net sales increased by $29.7 million to $236.0 million. The
increase was due to higher selling prices resulting from increases
in published containerboard pricing, higher volumes and stronger
specialty sales.
Gross profit increased by $25.8 million to $59.5 million. The
increase in gross profit was primarily due to higher containerboard
prices and lower old corrugated container input costs, partially
offset by an increase in transportation costs.
Operating profit increased by $24.7 million to $44.1 million.
Operating profit before special items increased by $24.8 million to
$44.4 million due to the same factors that impacted gross profit,
partially offset by an increase in the segment's SG&A
expense.
Flexible Products & Services
Net sales increased by $8.7 million to $82.6 million. Net sales
excluding foreign currency translation increased by $7.1 million
due to strategic pricing decisions, product mix and higher
volumes.
Gross profit increased by $3.0 million to $16.7 million due
primarily due to the same factors that impacted net sales and
improved manufacturing efficiencies.
Operating profit increased by $2.7 million to $5.8 million.
Operating profit before special items increased by $3.2 million to
$5.8 million. The improvement in operating profit before special
items was due primarily to the same factors that impacted gross
profit and foreign currency translation.
Land Management
Net sales decreased by $1.3 million to $5.9 million.
Operating profit decreased by $0.6 million to $2.1 million.
Operating profit before special items decreased by $0.7 million to
$1.4 million.
Dividend Summary
On August 28, 2018, the Board of Directors declared quarterly
cash dividends of $0.44 per share of Class A Common Stock and $0.66
per share of Class B Common Stock. Dividends are payable on October
1, 2018, to stockholders of record at the close of business on
September 17, 2018.
Tax Summary
During the third quarter, the Company recorded an income tax
rate of 26.6 percent and a tax rate excluding the impact of special
items of 26.4 percent. The Company continues to expect its tax rate
excluding the impact of special items to range between 28.0 and
32.0 percent for fiscal 2018.
As of July 31, 2018, the Company's accounting for the Tax Reform
Act is provisional and work is progressing. For example, as it
relates to transition tax, the Company continues to analyze the
earnings and profits and tax pools of its foreign subsidiaries. The
Company has recorded as of that date a provisional estimate for the
following items: a provisional tax benefit related to the
revaluation of deferred tax assets and liabilities of $69.3
million; and a provisional tax expense as a result of the accrual
for the transition tax liability of $35.9 million. Adjustments to
the provisional estimates will be recorded and disclosed
prospectively during the measurement period and may differ
materially from these provisional amounts, due to, among other
items, additional analyses, changes in interpretations and
assumptions previously made by the Company, new or additional
regulatory guidance that may be issued, and actions the Company may
take as a result of the Tax Reform Act.
Company Outlook
Fiscal 2018 Outlook Fiscal 2018 Outlook
(in millions, except per share
amounts)
Reported at Q2 Reported at Q3 Comments
SG&A expense $395 - $415 No change N/A Interest expense $50 -
$55 No change N/A Other expense, net $15 - $20 No change N/A Tax
rate excluding the impact of special items 28 - 32% No change N/A
Class A earnings per share before special
items
$3.45 - $3.70 $3.53 - $3.69
Improved price/cost in containerboard;
accelerated FPS performance
Capital expenditures $120 - $140 No change N/A Free cash flow
excluding the additional U.S. pension contribution $200 - $220 No
change N/A
Note: Full year 2018 Class A earnings per share and tax rate
guidance on a GAAP basis are 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: gains or
losses on the disposal of businesses, timberland or properties,
plants and equipment, net, non-cash asset impairment charges due to
unanticipated changes in the business, restructuring-related
activities, non-cash pension settlement charges or acquisition
costs, and the income tax effects of these items and other income
tax-related events. No reconciliation of the fiscal year 2018 Class
A earnings per share before special items guidance or tax rate
excluding the impact of special items guidance, both non-GAAP
financial measures which exclude gains and losses on the disposal
of businesses, timberland and properties, plants and equipment,
non-cash pension settlement charges, acquisition costs,
restructuring and impairment charges and provisional tax net
benefits resulting from the Tax Reform Act, 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 the most
directly comparable GAAP financial measure without unreasonable
efforts. A reconciliation of 2018 free cash flow guidance excluding
the additional pension contribution to forecasted net cash provided
by operating activities, the most directly comparable GAAP
financial measure, is included in this release.
(3) Customer satisfaction index (CSI) tracks a variety of
internal metrics designed to enhance the customer experience in
dealing with Greif. (4) Net Promoter Score (NPS) is a survey
conducted by a third party that measures how likely a customer is
to recommend Greif as a business partner. NPS scores are developed
by subtracting the percentage of detractors a business has from the
percentage of its promoters. (5) Primary products are manufactured
steel, plastic and fibre drums; intermediate bulk containers;
linerboard, medium, corrugated sheets and corrugated containers;
and 1&2 loop and 4 loop flexible intermediate bulk containers.
GREIF, INC. AND SUBSIDIARY COMPANIES
SELECTED FINANCIAL HIGHLIGHTS
UNAUDITED
Three months ended July 31, Nine months
ended July 31, (in millions, except for per share amounts)
2018 2017 2018
2017
Selected Financial
Highlights
Net sales $ 1,012.1 $ 961.8 $ 2,886.1 $ 2,670.1 Gross
profit 217.1 187.1 584.1 532.3 Gross profit margin 21.5 % 19.5 %
20.2 % 19.9 % Operating profit 114.0 90.5 267.2 237.6 Operating
profit before special items 117.7 94.5 278.4 246.1 EBITDA(6) 142.2
116.1 350.1 293.5 EBITDA before special items 146.3 121.1 361.7
327.6 Net cash provided by operating activities 51.3 89.6 55.8
105.1 Adjusted net cash provided by operating activities
116.3
89.6
120.8
105.1 Free cash flow(7) 15.6 64.2 (36.2 ) 40.0 Free cash flow
excluding the additional U.S. pension contribution
80.6
64.2
28.8
40.0 Net income attributable to Greif, Inc. 67.7 43.9 169.3 85.3
Diluted Class A earnings per share attributable to Greif, Inc. $
1.15 $ 0.74 $ 2.88 $ 1.45 Diluted Class A earnings per share
attributable to Greif, Inc. before special items $ 1.20 $ 0.85 $
2.45 $ 1.97
Special
items
Restructuring charges $ 3.7 $ 3.9 $ 13.8 $ 8.7 Acquisition-related
costs 0.5 — 0.7 —
Non-cash asset impairment charges
0.8 2.0 4.1 5.9 Non-cash pension settlement charge 0.4 1.0 0.4 25.6
Gain on disposal of properties, plants and equipment and
businesses, net (1.3 ) (1.9 ) (7.4 ) (6.1 ) Provisional tax net
benefit resulting from the Tax Reform Act — — (33.4 )
— Total special items $ 4.1 $ 5.0 $ (21.8 ) $
34.1
July 31, 2018 October 31, 2017
July 31, 2017 October 31, 2016 Operating working
capital(8) $ 394.0 $ 327.3 $ 395.6 $ 304.6
(6)
EBITDA is defined as net income, plus interest expense, net,
plus income tax expense, plus depreciation, depletion and
amortization.
(7)
Free cash flow is defined as net cash provided by operating
activities less cash paid for purchases of properties, plants and
equipment.
(8)
Operating working capital is defined as trade accounts receivable
plus inventories less accounts payable.
Conference Call
The Company will host a conference call to discuss the third
quarter of 2018 results on August 30, 2018, at 8:30 a.m. Eastern
Time (ET). To participate, domestic callers should call
833-231-8265. The Greif ID is 4580819. The number for international
callers is +1-647-689-4110. Phone lines will open at 8:00 a.m. ET.
The conference call will also be available through a live webcast,
including slides, which can be accessed at
http://investor.greif.com by clicking on the Events and
Presentations tab and searching under the events calendar. A replay
of the conference call will be available on the Company’s website
approximately two hours following the call.
About Greif
Greif is a global leader in industrial packaging products and
services and is pursuing its vision to become the world’s best
performing customer service company in industrial packaging. The
Company produces steel, plastic, fibre, flexible, corrugated, and
reconditioned containers, intermediate bulk containers,
containerboard and packaging accessories, and provides filling,
packaging and industrial packaging reconditioning services for a
wide range of industries. Greif also manages timber properties in
the southeastern United States. The Company is strategically
positioned with production facilities in over 40 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, 2017. 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) we
may not successfully implement our business strategies, including
achieving our growth objectives, (iii) our operations subject
us to currency exchange and political risks that could adversely
affect our results of operations, (iv) the current and future
challenging global economy and disruption and volatility of the
financial and credit markets may adversely affect our business,
(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, (viii) raw material and energy
price fluctuations and shortages may adversely impact our
manufacturing operations and costs, (ix) geopolitical conditions,
including direct or indirect acts of war or terrorism, could have a
material adverse effect on our operations and financial results,
(x) we may encounter difficulties arising from acquisitions,
(xi) in connection with acquisitions or divestitures, we may
become subject to liabilities, (xii) we may incur additional
restructuring costs and there is no guarantee that our efforts to
reduce costs will be successful, (xiii) we could be subject to
changes in our tax rates, the adoption of new U.S. of foreign tax
legislation or exposure to additional tax liabilities,
(xiv) full realization of our deferred tax assets may be
affected by a number of factors, (xv) several operations are
conducted by joint ventures that we cannot operate solely for our
benefit, (xvi) certain of the agreements that govern our joint
ventures provide our partners with put or call options,
(xvii) our ability to attract, develop and retain talented and
qualified employees, managers and executives is critical to our
success, (xviii) our business may be adversely impacted by
work stoppages and other labor relations matters, (xix) we may
not successfully identify illegal immigrants in our workforce,
(xx) 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, (xxi) we may be subject to losses that might not be
covered in whole or in part by existing insurance reserves or
insurance coverage, (xxii) our business depends on the
uninterrupted operations of our facilities, systems and business
functions, including our information technology (IT) and other
business systems, (xxiii) a security breach of customer,
employee, supplier or Company information may have a material
adverse effect on our business, financial condition and results of
operations, (xxiv) legislation/regulation related to
environmental and health and safety matters and corporate social
responsibility could negatively impact our operations and financial
performance, (xxv) product liability claims and other legal
proceedings could adversely affect our operations and financial
performance, (xxvi) 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, (xxvii) changing
climate, climate change regulations and greenhouse gas effects may
adversely affect our operations and financial performance, (xxviii)
the frequency and volume of our timber and timberland sales will
impact our financial performance, (xxix) changes in U.S. generally
accepted accounting principles (U.S. GAAP) and SEC rules and
regulations could materially impact our reported results, (xxx) if
the Company fails to maintain an effective system of internal
control, the Company may not be able to accurately report financial
results or prevent fraud, and (xxxi) the Company has a significant
amount of goodwill and long-lived assets which, if impaired in the
future, would adversely impact our results of operations. 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 July 31, Nine months
ended July 31, (in millions, except per share amounts)
2018 2017 2018
2017 Net sales $ 1,012.1 $ 961.8 $ 2,886.1 $
2,670.1 Cost of products sold 795.0 774.7 2,302.0
2,137.8 Gross profit 217.1 187.1 584.1 532.3 Selling,
general and administrative expenses 99.9 92.6 306.4 286.2
Restructuring charges 3.7 3.9 13.8 8.7 Non-cash asset impairment
charges 0.8 2.0 4.1 5.9 Gain on disposal of properties, plants and
equipment, net (1.4 ) (1.1 ) (7.5 ) (3.9 ) (Gain) loss on disposal
of businesses, net 0.1 (0.8 ) 0.1 (2.2 ) Operating
profit 114.0 90.5 267.2 237.6 Interest expense, net 12.1 13.7 38.4
46.7 Non-cash pension settlement charge 0.4 1.0 0.4 25.6 Other
expense, net 4.8 1.4 15.0 8.2 Income
before income tax expense and equity earnings of unconsolidated
affiliates, net 96.7 74.4 213.4 157.1 Income tax expense 25.7 27.2
31.2 62.0 Equity earnings of unconsolidated affiliates, net of tax
(1.0 ) (0.3 ) (1.8 ) (0.3 ) Net income 72.0 47.5 184.0 95.4 Net
income attributable to noncontrolling interests (4.3 ) (3.6 ) (14.7
) (10.1 ) Net income attributable to Greif, Inc. $ 67.7 $
43.9 $ 169.3 $ 85.3
Basic earnings per
share attributable to Greif, Inc. common shareholders: Class A
Common Stock $ 1.15 $ 0.74 $ 2.88 $ 1.45 Class B Common Stock $
1.72 $ 1.12 $ 4.31 $ 2.17
Diluted earnings per share
attributable to Greif, Inc. common shareholders: Class A Common
Stock $ 1.15 $ 0.74 $ 2.88 $ 1.45 Class B Common Stock $ 1.72 $
1.12 $ 4.31 $ 2.17
Shares used to calculate basic earnings per
share attributable to Greif, Inc. common shareholders: Class A
Common Stock 25.9 25.8 25.9 25.8 Class B Common Stock 22.0 22.0
22.0 22.0
Shares used to calculate diluted earnings per share
attributable to Greif, Inc. common shareholders: Class A Common
Stock 25.9 25.8 25.9 25.8 Class B Common Stock 22.0
22.0 22.0 22.0
GREIF, INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(in millions)
July 31, 2018 October
31, 2017 ASSETS CURRENT ASSETS Cash and cash equivalents
$ 100.9 $ 142.3 Trade accounts receivable 469.2 447.0 Inventories
334.4 279.5 Other current assets 170.7 125.7 1,075.2 994.5
LONG-TERM ASSETS Goodwill 785.5 785.4 Intangible assets 85.3 98.0
Assets held by special purpose entities 50.9 50.9 Other long-term
assets 120.9 115.1 1,042.6 1,049.4 PROPERTIES, PLANTS
AND EQUIPMENT 1,181.6 1,188.4 $ 3,299.4 $ 3,232.3
LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable
$ 409.6 $ 399.2 Short-term borrowings 5.5 14.5 Current portion of
long-term debt 15.0 15.0 Other current liabilities 250.1
259.2 680.2 687.9 LONG-TERM LIABILITIES Long-term debt
1,020.1 937.8 Liabilities held by special purpose entities 43.3
43.3 Other long-term liabilities 363.8 484.3 1,427.2
1,465.4 REDEEMABLE NONCONTROLLING INTERESTS 34.6 31.5 EQUITY
Total Greif, Inc. equity 1,115.2 1,010.9
Noncontrolling interests 42.2 36.6 1,157.4 1,047.5 $
3,299.4 $ 3,232.3
GREIF, INC. AND
SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
UNAUDITED
Three months ended July 31, Nine months
ended July 31, (in millions)
2018
2017 2018 2017 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $ 72.0 $ 47.5 $
184.0 $ 95.4 Depreciation, depletion and amortization 32.4 27.7
96.5 89.4 Asset impairments 0.8 2.0 4.1 5.9 Pension settlement loss
0.4 1.0 0.4 25.6 Other non-cash adjustments to net income (4.2 )
(1.1 ) (77.3 ) (9.9 ) Operating working capital changes 12.9 (3.8 )
(72.3 ) (96.1 ) Deferred purchase price on sold receivables (7.5 )
(9.1 ) (32.3 ) (30.8 ) Increase (decrease) in cash from changes in
other assets and liabilities (55.5 ) 25.4 (47.3 ) 25.6
Net cash provided by operating activities 51.3 89.6
55.8 105.1 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of properties, plants and equipment (35.7 )
(25.4 ) (92.0 ) (65.1 ) Purchases of and investments in timber
properties (1.7 ) (1.9 ) (6.6 ) (7.3 ) Proceeds from the sale of
properties, plants and equipment, businesses, timberland and other
assets 3.0 5.7 12.9 13.8 Proceeds on insurance recoveries —
— — 0.4 Net cash used in investing activities
(34.4 ) (21.6 ) (85.7 ) (58.2 ) CASH FLOWS FROM FINANCING
ACTIVITIES: Proceeds from (payments on) debt, net 4.6 (38.2 ) 69.5
27.3 Dividends paid to Greif, Inc. shareholders (24.7 ) (24.7 )
(74.0 ) (73.9 ) Other (1.1 ) (0.6 ) (4.5 ) (4.1 ) Net cash used in
financing activities (21.2 ) (63.5 ) (9.0 ) (50.7 )
Reclassification of cash to assets held for sale — 0.4 — (5.5 )
Effects of exchange rates on cash (3.0 ) 2.7 (2.5 ) 0.2
Net increase (decrease) in cash and cash equivalents (7.3 )
7.6 (41.4 ) (9.1 ) Cash and cash equivalents, beginning of period
108.2 87.0 142.3 103.7 Cash and cash
equivalents, end of period $ 100.9 $ 94.6 $ 100.9
$ 94.6
GREIF, INC. AND
SUBSIDIARY COMPANIES FINANCIAL HIGHLIGHTS BY SEGMENT
UNAUDITED
Three months ended July 31, Nine months
ended July 31, (in millions)
2018
2017 2018 2017 Net sales:
Rigid Industrial Packaging & Services $ 687.6 $
674.4 $ 1,965.7 $ 1,860.2 Paper Packaging & Services 236.0
206.3 653.7 577.9 Flexible Products & Services 82.6 73.9 246.7
210.2 Land Management 5.9 7.2 20.0 21.8 Total
net sales $ 1,012.1 $ 961.8 $ 2,886.1 $
2,670.1
Gross profit: Rigid Industrial Packaging &
Services $ 138.8 $ 137.0 $ 374.1 $ 383.3 Paper Packaging &
Services 59.5 33.7 152.7 101.9 Flexible Products & Services
16.7 13.7 49.5 39.1 Land Management 2.1 2.7 7.8
8.0 Total gross profit $ 217.1 $ 187.1 $ 584.1
$ 532.3
Operating profit: Rigid Industrial Packaging
& Services $ 62.0 $ 65.3 $ 140.4 $ 164.2 Paper Packaging &
Services 44.1 19.4 105.0 59.7 Flexible Products & Services 5.8
3.1 14.0 5.5 Land Management 2.1 2.7 7.8 8.2
Total operating profit $ 114.0 $ 90.5 $ 267.2
$ 237.6
EBITDA(9): Rigid Industrial Packaging
& Services $ 78.3 $ 80.3 $ 189.1 $ 198.5 Paper Packaging &
Services 52.8 26.9 129.9 73.4 Flexible Products & Services 7.8
4.9 20.0 9.7 Land Management 3.3 4.0 11.1 11.9
Total EBITDA $ 142.2 $ 116.1 $ 350.1 $ 293.5
EBITDA before special items: Rigid Industrial Packaging
& Services $ 82.8 $ 85.8 $ 202.4 $ 223.5 Paper Packaging &
Services 53.1 27.5 130.2 83.9 Flexible Products & Services 7.8
4.4 20.3 10.6 Land Management 2.6 3.4 8.8 9.6
Total EBITDA before special items
$
146.3
$ 121.1 $ 361.7 $ 327.6
(9)
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.
GREIF, INC. AND SUBSIDIARY
COMPANIES FINANCIAL HIGHLIGHTS BY GEOGRAPHIC REGION
UNAUDITED
Three months ended July 31, Nine months
ended July 31, (in millions)
2018
2017 2018 2017 Net sales:
United States $ 506.0 $ 463.7 $ 1,402.2 $ 1,306.2
Europe, Middle East and Africa 372.6 359.4 1,074.6 970.8 Asia
Pacific and other Americas 133.5 138.7 409.3
393.1 Total net sales $ 1,012.1 $ 961.8 $ 2,886.1
$ 2,670.1
Gross profit: United States $ 125.6 $ 97.4
$ 323.9 $ 277.1 Europe, Middle East and Africa 69.9 65.9 198.7
189.5 Asia Pacific and other Americas 21.6 23.8 61.5
65.7
Total gross profit
$ 217.1 $ 187.1 $ 584.1 $ 532.3
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO
NON-GAAP RECONCILIATION OPERATING WORKING CAPITAL
UNAUDITED
(in millions)
July 31, 2018 October
31, 2017 Trade accounts receivable $ 469.2 $ 447.0 Plus:
inventories 334.4 279.5 Less: accounts payable 409.6 399.2
Operating working capital $ 394.0 $ 327.3
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO
NON-GAAP RECONCILIATION
CONSOLIDATED EBITDA(10)
UNAUDITED
Three months ended July 31, Nine months
ended July 31, (in millions)
2018 2017
2018 2017 Net income $ 72.0 $
47.5 $ 184.0 $ 95.4 Plus: Interest expense, net 12.1 13.7
38.4 46.7 Plus: Income tax expense 25.7 27.2 31.2 62.0 Plus:
Depreciation, depletion and amortization expense 32.4 27.7
96.5 89.4 EBITDA $ 142.2 $ 116.1
$ 350.1 $ 293.5 Net income $ 72.0 $ 47.5 $ 184.0 $
95.4 Plus: Interest expense, net 12.1 13.7 38.4 46.7 Plus: Income
tax expense 25.7 27.2 31.2 62.0 Plus: Non-cash pension settlement
charge 0.4 1.0 0.4 25.6 Plus: Other expense, net 4.8 1.4 15.0 8.2
Plus: Equity earnings of unconsolidated affiliates, net of tax (1.0
) (0.3 ) (1.8 ) (0.3 ) Operating profit 114.0 90.5 267.2 237.6
Less: Non-cash pension settlement charge 0.4 1.0 0.4 25.6 Less:
Other expense, net 4.8 1.4 15.0 8.2 Less: Equity earnings of
unconsolidated affiliates, net of tax (1.0 ) (0.3 ) (1.8 ) (0.3 )
Plus: Depreciation, depletion and amortization expense 32.4
27.7 96.5 89.4 EBITDA $ 142.2 $ 116.1
$ 350.1 $ 293.5
(10)
EBITDA is defined as net income, plus interest expense, net,
plus income tax expense, plus depreciation, depletion and
amortization. As demonstrated in this table, EBITDA can also be
calculated with reference to operating profit.
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP
TO NON-GAAP RECONCILIATION
SEGMENT EBITDA(11)
UNAUDITED
Three months ended July 31, Nine months
ended July 31, (in millions)
2018
2017 2018 2017 Rigid
Industrial Packaging & Services Operating
profit $ 62.0 $ 65.3 $ 140.4 $ 164.2 Less: Non-cash pension
settlement charge 0.4 0.6 0.4 15.3 Less: Other expense, net 4.8 1.5
14.9 7.4 Less: Equity earnings of unconsolidated affiliates, net of
tax (1.0 ) (0.3 ) (1.8 ) (0.3 ) Plus: Depreciation and amortization
expense 20.5 16.8 62.2
56.7 EBITDA $ 78.3 $ 80.3 $ 189.1 $ 198.5 Restructuring
charges 3.3 3.7 13.1 7.6 Acquisition-related costs 0.5 — 0.7 —
Non-cash asset impairment charges 0.8 2.0 4.1 5.6 Non-cash pension
settlement charge 0.4 0.6 0.4 15.3 Gain on disposal of properties,
plants, equipment, and businesses, net (0.5 ) (0.8 )
(5.0 ) (3.5 ) EBITDA before special items $ 82.8
$ 85.8 $ 202.4 $ 223.5
Paper Packaging & Services Operating profit $ 44.1 $
19.4 $ 105.0 $ 59.7 Less: Non-cash pension settlement charge — 0.4
— 10.1 Less: Other expense, net 0.2 (0.1 ) 0.7 (0.1 ) Plus:
Depreciation and amortization expense 8.9 7.8
25.6 23.7 EBITDA $ 52.8 $ 26.9 $ 129.9
$ 73.4 Restructuring charges 0.3 — 0.3 0.3 Non-cash pension
settlement charge — 0.4 — 10.1 Loss on disposal of
properties, plants, equipment, net — 0.2
— 0.1 EBITDA before special items $
53.1 $ 27.5 $ 130.2 $
83.9
Flexible Products & Services Operating
profit $ 5.8 $ 3.1 $ 14.0 $ 5.5 Less: Non-cash pension settlement
charge — — — 0.1 Less: Other (income) expense, net (0.2 ) — (0.6 )
0.9 Plus: Depreciation and amortization expense 1.8
1.8 5.4 5.2 EBITDA $ 7.8 $ 4.9 $
20.0 $ 9.7 Restructuring charges 0.1 0.2 0.4 0.8 Non-cash asset
impairment charges — — — 0.3 Non-cash pension settlement charge — —
— 0.1 Gain on disposal of properties, plants, equipment and
businesses, net (0.1 ) (0.7 ) (0.1 ) (0.3 )
EBITDA before special items $ 7.8 $ 4.4
$ 20.3 $ 10.6
Land Management Operating
profit $ 2.1 $ 2.7 $ 7.8 $ 8.2 Less: Non-cash pension settlement
charge — — — 0.1 Plus: Depreciation, depletion and amortization
expense 1.2 1.3 3.3 3.8
EBITDA $ 3.3 $ 4.0 $ 11.1 $ 11.9 Non-cash pension settlement
charge — — — 0.1 Gain on disposal of properties, plants, equipment,
net (0.7 ) (0.6 ) (2.3 ) (2.4 ) EBITDA before
special items $ 2.6 $ 3.4 $ 8.8
$ 9.6 Consolidated EBITDA $ 142.2 $
116.1 $ 350.1 $ 293.5
Consolidated EBITDA before special items $ 146.3 $
121.1 $ 361.7 $ 327.6
(11)
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.
GREIF, INC. AND SUBSIDIARY
COMPANIES GAAP TO NON-GAAP RECONCILIATION FREE CASH
FLOW
UNAUDITED
Three months ended July 31, Nine months
ended July 31, (in millions)
2018
2017 2018 2017 Net cash
provided by operating activities $ 51.3 $ 89.6 $ 55.8
$ 105.1 Cash paid for purchases of properties, plants and
equipment (35.7 ) (25.4 ) (92.0 ) (65.1 )
Free cash flow $ 15.6 $ 64.2 $ (36.2 ) $ 40.0
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO
NON-GAAP RECONCILIATION FREE CASH FLOW EXCLUDING THE
ADDITIONAL U.S. PENSION CONTRIBUTION
UNAUDITED
Three months ended July 31, Nine months
ended July 31, (in millions)
2018
2017 2018 2017 Net cash
provided by operating activities $ 51.3 $ 89.6 $ 55.8
$ 105.1 Additional U.S. pension contribution 65.0
— 65.0 —
Adjusted net
cash provided by operating activities(12) $ 116.3 $ 89.6
$ 120.8 $ 105.1 Cash paid for purchases of properties, plants and
equipment (35.7 ) (25.4 ) (92.0 ) (65.1 )
Free cash flow excluding the additional U.S. pension
contribution $ 80.6 $ 64.2 $ 28.8
$ 40.0
(12)
Adjusted net cash provided by operating activities is
defined as net cash provided by operating activities excluding the
additional U.S. pension contribution.
GREIF, INC.
AND SUBSIDIARY COMPANIES PROJECTED 2018 GUIDANCE
RECONCILIATION FREE CASH FLOW EXCLUDING THE ADDITIONAL U.S.
PENSION CONTRIBUTION
UNAUDITED
Fiscal 2018 Guidance Range (in millions)
Scenario
1 Scenario 2 Net cash provided by operating
activities $ 255.0 $ 295.0 Additional U.S. pension
contribution 65.0 65.0
Adjusted net cash
provided by operating activities 320.0 360.0 Cash paid for
purchases of properties, plants and equipment (120.0 )
(140.0 )
Free cash flow excluding the additional U.S. pension
contribution $ 200.0 $ 220.0
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP
RECONCILIATION
SEGMENT OPERATING PROFIT BEFORE SPECIAL
ITEMS(13)
UNAUDITED
Three months ended July 31, Nine months
ended July 31, (in millions)
2018
2017 2018 2017 Operating
profit: Rigid Industrial Packaging & Services
$ 62.0 $ 65.3 $ 140.4 $ 164.2 Paper Packaging & Services 44.1
19.4 105.0 59.7 Flexible Products & Services 5.8 3.1 14.0 5.5
Land Management 2.1 2.7 7.8 8.2 Total
operating profit $ 114.0 $ 90.5 $ 267.2 $
237.6
Restructuring charges: Rigid Industrial
Packaging & Services $ 3.3 $ 3.7 $ 13.1 $ 7.6 Paper Packaging
& Services 0.3 — 0.3 0.3 Flexible Products & Services 0.1
0.2 0.4 0.8 Total restructuring charges
$ 3.7 $ 3.9 $ 13.8 $ 8.7
Acquisition-related costs: Rigid Industrial Packaging &
Services $ 0.5 $ — $ 0.7 $ — Total
acquisition-related costs $ 0.5 $ — $ 0.7 $ —
Non-cash asset impairment charges: Rigid Industrial
Packaging & Services $ 0.8 $ 2.0 $ 4.1 $ 5.6 Flexible Products
& Services — — — 0.3 Total non-cash
asset impairment charges $ 0.8 $ 2.0 $ 4.1 $
5.9
(Gain) loss on disposal of properties, plants,
equipment and businesses, net: Rigid Industrial Packaging &
Services $ (0.5 ) $ (0.8 ) $ (5.0 ) $ (3.5 ) Paper Packaging &
Services — 0.2 — 0.1 Flexible Products & Services (0.1 ) (0.7 )
(0.1 ) (0.3 ) Land Management (0.7 ) (0.6 ) (2.3 ) (2.4 ) Total
gain on disposal of properties, plants, equipment and businesses,
net $ (1.3 ) $ (1.9 ) $ (7.4 ) $ (6.1 )
Operating profit before
special items: Rigid Industrial Packaging & Services $ 66.1
$ 70.2 $ 153.3 $ 173.9 Paper Packaging & Services 44.4 19.6
105.3 60.1 Flexible Products & Services 5.8 2.6 14.3 6.3 Land
Management 1.4 2.1 5.5 5.8 Total
operating profit before special items $ 117.7 $ 94.5
$ 278.4 $ 246.1
(13)
Operating profit before special items is defined as
operating profit, plus restructuring charges, plus
acquisition-related costs, plus non-cash impairment charges, less
gain on disposal of properties, plants, equipment and businesses,
net.
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP
RECONCILIATION NET INCOME, CLASS A EARNINGS PER SHARE AND
TAX RATE BEFORE SPECIAL ITEMS
UNAUDITED
Income before
Income Tax
(Benefit)
Expense and
Equity
Equity Diluted
Earnings of
Income Tax Earnings of Non- Net Income
Class A (in millions, except
Unconsolidated
(Benefit) Unconsolidated Controlling
Attributable Earnings for per share amounts)
Affiliates, net
Expense Affiliates
Interest to Greif, Inc. Per
Share Tax Rate Three months ended July 31,
2018 $ 96.7 $ 25.7 $ (1.0 ) $ 4.3 $ 67.7 $ 1.15 26.6 % Gain on
disposal of properties, plants, equipment and businesses, net (1.3
) (0.2 ) — — (1.1 ) (0.02 ) Restructuring charges 3.7 0.9 — — 2.8
0.04 Acquisition-related costs 0.5 0.1 — — 0.4 0.01 Non-cash asset
impairment charges 0.8 — — — 0.8 0.02 Non-cash pension settlement
0.4 0.1 — —
0.3 — Excluding Special Items $
100.8 $ 26.6 $ (1.0 ) $ 4.3
$ 70.9 $ 1.20 26.4 %
Three months ended July 31, 2017 $ 74.4 $ 27.2 $ (0.3
) $ 3.6 $ 43.9 $ 0.74 36.6 % Gain on disposal of properties,
plants, equipment and businesses, net (1.9 ) (1.3 ) — (0.3 ) (0.3 )
— Restructuring charges 3.9 0.5 — 0.1 3.3 0.06 Non-cash asset
impairment charges 2.0 — — — 2.0 0.04 Non-cash pension settlement
charge 1.0 0.2 — —
0.8 0.01 Excluding
Special Items $ 79.4 $ 26.6 $ (0.3 )
$ 3.4 $ 49.7 $ 0.85
33.5 %
Nine months ended July 31, 2018 $ 213.4
$ 31.2 $ (1.8 ) $ 14.7 $ 169.3 $ 2.88 14.6 % Gain on disposal of
properties, plants, equipment and businesses, net (7.4 ) (0.9 ) — —
(6.5 ) (0.11 ) Restructuring charges 13.8 2.8 — 0.2 10.8 0.18
Acquisition-related costs 0.7 0.2 — — 0.5 0.01 Non-cash asset
impairment charges 4.1 0.7 — — 3.4 0.06 Non-cash pension settlement
charge 0.4 0.1 — — 0.3 — Provisional tax net benefit resulting from
the Tax Reform Act — 33.4 —
— (33.4 ) (0.57 )
Excluding Special Items $ 225.0 $ 67.5
$ (1.8 ) $ 14.9 $ 144.4 $ 2.45
30.0 %
Nine months ended July 31, 2017
$ 157.1 $ 62.0 $ (0.3 ) $ 10.1 $ 85.3 $ 1.45 39.5 % Gain on
disposal of properties, plants, equipment and businesses, net (6.1
) (2.3 ) — — (3.8 ) (0.06 ) Restructuring charges 8.7 (2.3 ) — 0.4
10.6 0.18 Non-cash asset impairment charges 5.9 — — 0.1 5.8 0.10
Non-cash pension settlement charge 25.6 8.1
— — 17.5 0.30
Excluding Special Items $ 191.2
$ 65.5 $ (0.3 ) $ 10.6 $ 115.4
$ 1.97 34.3 %
The impact of income tax expense and non-controlling interest on
each special item is calculated based on tax rates and ownership
percentages specific to each applicable entity. Included in the
nine months ended July 31, 2017 restructuring charges special item
is a $4.4 million income tax charge due to a change in assertions
related to unremitted foreign earnings as a result of the
restructuring of our intercompany debt portfolio.
GREIF, INC. AND SUBSIDIARY
COMPANIES
GAAP TO NON-GAAP RECONCILIATION
NET SALES TO NET SALES EXCLUDING THE
IMPACT OF
CURRENCY TRANSLATION
UNAUDITED
Three months ended July 31, Increase in
Increase in (in millions)
2018
2017 Net Sales ($) Net Sales (%)
Consolidated Net Sales $ 1,012.1 $ 961.8 $ 50.3 5.2 %
Currency Translation 2.8 N/A Net Sales Excluding the Impact
of Currency Translation $ 1,014.9 $ 961.8 $ 53.1 5.5 %
Rigid
Industrial Packaging & Services Net Sales $ 687.6 $ 674.4 $
13.2 2.0 % Currency Translation 4.4 N/A Net Sales Excluding
the Impact of Currency Translation $ 692.0 $ 674.4 $ 17.6 2.6 %
Flexible Products & Services Net Sales $ 82.6 $ 73.9 $
8.7 11.8 % Currency Translation (1.6 ) N/A Net Sales Excluding the
Impact of Currency Translation $ 81.0 $ 73.9 $ 7.1 9.6 %
Nine
months ended July 31, Increase in Increase in (in
millions)
2018 2017 Net Sales
($) Net Sales (%) Consolidated Net Sales $
2,886.1 $ 2,670.1 $ 216.0 8.1 % Currency Translation (68.8 ) N/A
Net Sales Excluding the Impact of Currency Translation $ 2,817.3 $
2,670.1 $ 147.2 5.5 %
Rigid Industrial Packaging &
Services Net Sales $ 1,965.7 $ 1,860.2 $ 105.5 5.7 % Currency
Translation (53.0 ) N/A Net Sales Excluding the Impact of Currency
Translation $ 1,912.7 $ 1,860.2 $ 52.5 2.8 %
Flexible Products
& Services Net Sales $ 246.7 $ 210.2 $ 36.5 17.4 % Currency
Translation (15.8 ) N/A Net Sales Excluding the Impact of Currency
Translation $ 230.9 $ 210.2 $ 20.7 9.8 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180829005758/en/
Greif, Inc.Matt Eichmann,
740-549-6067matt.eichmann@greif.com
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