Greif, Inc. (NYSE: GEF, GEF.B), a world leader in industrial
packaging products and services, today announced second quarter
2018 results.
Second Quarter Highlights include (all results compared to
the second quarter of 2017 unless otherwise noted):
- Net sales increased by $80.9 million to
$968.3 million.
- Gross profit increased by $13.4 million
to $195.3 million, despite being adversely impacted by an increase
in transportation costs of $7.0 million.
- Operating profit increased by $6.2
million to $87.7 million and operating profit before special items1
increased by $7.7 million to $92.6 million.
- Net income of $45.1 million or $0.77
per diluted Class A share increased compared to net income of $36.0
million or $0.61 per diluted Class A share. Net income, excluding
the impact of special items, of $44.7 million or $0.76 per diluted
Class A share increased compared to net income, excluding the
impact of special items, of $39.3 million or $0.67 per diluted
Class A share.
- Cash provided by operating activities
decreased by $1.4 million to $58.2 million. Free cash flow2
decreased by $11.3 million to $29.9 million.
“Greif delivered solid second quarter results,” said Greif’s
President and Chief Executive Officer, Pete Watson. “Sales,
operating profit before special items and earnings each increased
versus the prior year quarter, with particularly strong performance
seen in our Paper Packaging and Flexible Products segments relative
to the prior year quarter. Our Rigid Packaging segment was impacted
by customer operational interruptions, weather issues and rising
raw material costs. We continue to pass raw material costs along
via price adjustment mechanisms and expect an improved second half
performance from this segment. Looking ahead, the performance and
outlook for our diversified product portfolio leads us to increase
our Fiscal 2018 Class A EPS before special items guidance range to
$3.45 - $3.70 per share from $3.25 - $3.55 previously.”
______________________________________________
(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 is defined as net cash provided by operating
activities less cash paid for purchases of properties, plants and
equipment.
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 second quarter of
2018 improved to 87.2, with the largest improvement recorded in
FPS, which generated a 27 percent improvement versus the prior year
quarter. Our expectation is that each business segment delivers a
CSI score at 95 or better.
We finalized our sixth NPS4 survey during the second quarter of
2018 and received a consolidated Greif score of 46, which was down
slightly compared to the previous survey result. Our aspiration is
to achieve a score of 55 over time. We continue to leverage the
increased customer interactions that accompany each survey as they
lead to additional actions with our customers and ultimately better
strategic insight into their businesses.
Segment Results (all results compared to the second 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 second 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 5.2 % — 13.1 %
Volume (2.8 )% 6.4 % 8.4 %
Selling Prices and Product
Mix 4.5 % 6.7 % 5.9 %
Total Impact of Primary
Products 6.9 % 13.1 % 27.4 %
Rigid Industrial Packaging & Services
Net sales increased by $38.4 million to $662.7 million. Net
sales excluding foreign currency translation increased by $5.8
million due primarily to a 4.5 percent increase in selling prices
on our primary products as a result of strategic pricing decisions
and increases in index prices, partially offset by customer
operational interruptions, weather and our value over volume
decisions.
Gross profit decreased by $9.0 million to $124.9 million. The
decrease in gross profit was primarily due to the continuation of
rising raw material costs, the timing of contractual pass through
arrangements and an increase in manufacturing and transportation
costs.
Operating profit decreased by $8.9 million to $47.2 million.
Operating profit before special items decreased by $7.8 million to
$52.5 million, due primarily to the same factors that impacted
gross profit, partially offset by a decrease in the segment's
selling, general & administrative ("SG&A") expense.
Paper Packaging & Services
Net sales increased by $25.2 million to $213.9 million. The
increase was due to higher selling prices due to increases in
published containerboard pricing and higher volumes.
Gross profit increased by $17.0 million to $49.9 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 $12.7 million to $33.0 million.
Operating profit before special items increased by $12.4 million to
$33.0 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 $17.5 million to $84.1 million. Net sales
excluding foreign currency translation increased by $9.2 million
due to strategic pricing decisions, product mix and higher
volumes.
Gross profit increased by $5.3 million to $17.6 million due
primarily due to the same factors that impacted net sales in
addition to improved transportation and manufacturing
efficiencies.
Operating profit increased by $3.2 million to $5.0 million.
Operating profit before special items increased by $2.9 million to
$5.0 million. The improvement in operating profit before special
items was due primarily to the same factors that impacted gross
profit, partially offset by an increase in the segment's SG&A
expense.
Land Management
Net sales decreased by $0.2 million to $7.6 million.
Operating profit decreased by $0.8 million to $2.5 million.
Operating profit before special items increased by $0.2 million to
$2.1 million.
Dividend Summary
On June 5, 2018, the Board of Directors declared quarterly cash
dividends of $0.42 per share of Class A Common Stock and $0.63 per
share of Class B Common Stock. Dividends are payable on July 1,
2018, to stockholders of record at the close of business on June
18, 2018.
Tax Summary
Our second quarter tax rate was 29.2 percent. Our second quarter
tax rate excluding the impact of special items was 34.2 percent,
which was above our previously reported fiscal 2018 guidance range
of 28 - 32 percent, due to additional reserves for uncertain tax
positions and out of period adjustments that added approximately
$3.0 million to our second quarter tax expense.
We expect our full year tax rate excluding the impact of special
items to range between 28 - 32 percent, as we expect the discrete
expenses that impacted our second quarter results to be offset by
tax benefits booked ratably later in this fiscal year. We also
continue to assess our provisional estimate for the Tax Cuts and
Jobs Act. During the second quarter, we booked a $4.3 million
increase to the provisional net tax benefit that was recorded
during our first quarter and that was also treated as a special
item. Looking ahead, there will likely be refinements to our
provisional estimate which would be booked later this fiscal
year.
Company Outlook
Fiscal 2018 Outlook Fiscal 2018 Outlook
(in millions, except per share
amounts)
Reported at Q1 Reported at Q2
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
$3.25 - $3.55 $3.45 - $3.70 Improved price/cost in containerboard;
accelerated FPS performance Capital expenditures $100 - $120 $120 -
$140 New growth projects Free cash flow $200 - $220 No change N/A
Note: 2018 Class A earnings per share and tax rate guidance 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 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 April 30,
Six months ended April 30, (in millions, except for per
share amounts)
2018 2017
2018 2017
Selected Financial
Highlights
Net sales $ 968.3 $ 887.4 $ 1,874.0 $ 1,708.3 Gross
profit 195.3 181.9 367.0 345.2 Gross profit margin 20.2 % 20.5 %
19.6 % 20.2 % Operating profit 87.7 81.5 153.2 147.1 Operating
profit before special items 92.6 84.9 160.7 151.6 EBITDA(6) 118.4
108.2 207.9 177.4 EBITDA before special items 123.3 112.7 215.4
206.5 Cash provided by operating activities 58.2 59.6 4.5 15.5 Free
cash flow 29.9 41.2 (51.8 ) (24.2 ) Net income attributable to
Greif, Inc. 45.1 36.0 101.6 41.4 Diluted Class A earnings per share
attributable to Greif, Inc. $ 0.77 $ 0.61 $ 1.73 $ 0.71 Diluted
Class A earnings per share attributable to Greif, Inc. before
special items $ 0.76 $ 0.67 $ 1.25 $ 1.12
Special
items
Restructuring charges $ 6.0 $ 5.1 $ 10.1 $ 4.8 Acquisition-related
costs — — 0.2 — Non-cash asset impairment charges 0.4 2.0 3.3 3.9
Non-cash pension settlement charge — 1.1 — 24.6 Gain on disposal of
properties, plants and equipment and businesses, net (1.5 ) (3.7 )
(6.1 ) (4.2 ) Provisional tax net benefit resulting from the Tax
Reform Act (4.3 ) — (33.4 ) — Total special items $
0.6 $ 4.5 $ (25.9 ) $ 29.1
April 30,
2018 October 31, 2017 April 30, 2017 October
31, 2016 Operating working capital(7) $ 420.6 $ 327.3 $ 390.1 $
304.6 (6) EBITDA is defined as net income, plus interest
expense, net, plus income tax expense, plus depreciation, depletion
and amortization. (7) 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 second
quarter of 2018 results on June 7, 2018, at 8:30 a.m. Eastern Time
(ET). To participate, domestic callers should call 833-231-8265.
The Greif ID is 9545489. 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 April 30, Six months
ended April 30, (in millions, except per share amounts)
2018 2017 2018
2017 Net sales $ 968.3 $ 887.4 $ 1,874.0 $ 1,708.3
Cost of products sold 773.0 705.5 1,507.0
1,363.1 Gross profit 195.3 181.9 367.0 345.2 Selling,
general and administrative expenses 102.7 97.0 206.5 193.6
Restructuring charges 6.0 5.1 10.1 4.8 Non-cash asset impairment
charges 0.4 2.0 3.3 3.9 Gain on disposal of properties, plants and
equipment, net (1.5 ) (1.8 ) (6.1 ) (2.8 ) Gain on disposal of
businesses, net — (1.9 ) — (1.4 ) Operating profit
87.7 81.5 153.2 147.1 Interest expense, net 13.0 14.3 26.3 33.0
Non-cash pension settlement charge — 1.1 — 24.6 Other expense, net
2.5 3.2 10.2 6.8 Income before income
tax expense and equity earnings of unconsolidated affiliates, net
72.2 62.9 116.7 82.7 Income tax expense 21.1 23.0 5.5 34.8 Equity
earnings of unconsolidated affiliates, net of tax (0.8 ) —
(0.8 ) — Net income 51.9 39.9 112.0 47.9 Net income
attributable to noncontrolling interests (6.8 ) (3.9 ) (10.4 ) (6.5
) Net income attributable to Greif, Inc. $ 45.1 $ 36.0
$ 101.6 $ 41.4
Basic earnings per share
attributable to Greif, Inc. common shareholders: Class A Common
Stock $ 0.77 $ 0.61 $ 1.73 $ 0.71 Class B Common Stock $ 1.14 $
0.92 $ 2.58 $ 1.05
Diluted earnings per share attributable to
Greif, Inc. common shareholders: Class A Common Stock $ 0.77 $
0.61 $ 1.73 $ 0.71 Class B Common Stock $ 1.14 $ 0.92 $ 2.58 $ 1.05
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)
April 30, 2018 October
31, 2017 ASSETS CURRENT ASSETS Cash and cash equivalents
$ 108.2 $ 142.3 Trade accounts receivable 463.4 447.0 Inventories
352.9 279.5 Other current assets 164.1 125.7 1,088.6
994.5 LONG-TERM ASSETS Goodwill 798.3 785.4 Intangible assets 90.7
98.0 Assets held by special purpose entities 50.9 50.9 Other
long-term assets 128.4 115.1 1,068.3 1,049.4
PROPERTIES, PLANTS AND EQUIPMENT 1,189.9 1,188.4 $ 3,346.8
$ 3,232.3
LIABILITIES AND EQUITY CURRENT LIABILITIES
Accounts payable $ 395.7 $ 399.2 Short-term borrowings 8.8 14.5
Current portion of long-term debt 15.0 15.0 Other current
liabilities 247.6 259.2 667.1 687.9 LONG-TERM
LIABILITIES Long-term debt 1,020.5 937.8 Liabilities held by
special purpose entities 43.3 43.3 Other long-term liabilities
452.8 484.3 1,516.6 1,465.4 REDEEMABLE NONCONTROLLING
INTERESTS 33.8 31.5 EQUITY Total Greif, Inc.
equity 1,086.5 1,010.9 Noncontrolling interests 42.8
36.6 1,129.3 1,047.5 $ 3,346.8 $ 3,232.3
GREIF, INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
Three months ended April 30, Six months
ended April 30, (in millions)
2018
2017 2018 2017 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $ 51.9 $ 39.9 $
112.0 $ 47.9 Depreciation, depletion and amortization 32.4 31.0
64.1 61.7 Asset impairments 0.4 2.0 3.3 3.9 Pension settlement loss
— 1.1 — 24.6 Other non-cash adjustments to net income (5.5 ) 1.5
(73.1 ) (8.8 ) Operating working capital changes (19.9 ) (27.2 )
(85.2 ) (92.3 ) Deferred purchase price on sold receivables (1.9 )
1.4 (24.8 ) (21.7 ) Increase in cash from changes in other assets
and liabilities 0.8 9.9 8.2 0.2 Net
cash provided by operating activities 58.2 59.6 4.5
15.5 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases
of properties, plants and equipment (28.3 ) (18.4 ) (56.3 ) (39.7 )
Purchases of and investments in timber properties (2.3 ) (3.3 )
(4.9 ) (5.4 ) Proceeds from the sale of properties, plants and
equipment, businesses, timberland and other assets 2.5 5.6 9.9 8.1
Proceeds on insurance recoveries — 0.4 — 0.4
Net cash used in investing activities (28.1 ) (15.7 ) (51.3
) (36.6 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from
(payments on) debt, net 15.5 (32.2 ) 64.9 65.5 Dividends paid to
Greif, Inc. shareholders (24.8 ) (24.7 ) (49.3 ) (49.2 ) Other (3.0
) (3.0 ) (3.4 ) (3.5 ) Net cash provided by (used in) financing
activities (12.3 ) (59.9 ) 12.2 12.8 Reclassification
of cash to assets held for sale — (5.9 ) — (5.9 ) Effects of
exchange rates on cash (3.9 ) 2.1 0.5 (2.5 ) Net
increase (decrease) in cash and cash equivalents 13.9 (19.8 ) (34.1
) (16.7 ) Cash and cash equivalents, beginning of period 94.3
106.8 142.3 103.7 Cash and cash
equivalents, end of period $ 108.2 $ 87.0 $ 108.2
$ 87.0
GREIF, INC. AND
SUBSIDIARY COMPANIES FINANCIAL HIGHLIGHTS BY SEGMENT
UNAUDITED
Three months ended April 30, Six months
ended April 30, (in millions)
2018
2017 2018 2017 Net sales:
Rigid Industrial Packaging & Services $ 662.7 $
624.3 $ 1,278.1 $ 1,185.8 Paper Packaging & Services 213.9
188.7 417.7 371.6 Flexible Products & Services 84.1 66.6 164.1
136.3 Land Management 7.6 7.8 14.1 14.6 Total
net sales $ 968.3 $ 887.4 $ 1,874.0 $ 1,708.3
Gross profit: Rigid Industrial Packaging & Services $
124.9 $ 133.9 $ 235.3 $ 246.3 Paper Packaging & Services 49.9
32.9 93.2 68.2 Flexible Products & Services 17.6 12.3 32.8 25.4
Land Management 2.9 2.8 5.7 5.3 Total gross
profit $ 195.3 $ 181.9 $ 367.0 $ 345.2
Operating profit: Rigid Industrial Packaging & Services
$ 47.2 $ 56.1 $ 78.4 $ 98.9 Paper Packaging & Services 33.0
20.3 60.9 40.3 Flexible Products & Services 5.0 1.8 8.2 2.4
Land Management 2.5 3.3 5.7 5.5 Total
operating profit $ 87.7 $ 81.5 $ 153.2 $ 147.1
EBITDA(8): Rigid Industrial Packaging &
Services $ 66.3 $ 72.5 $ 110.8 $ 118.2 Paper Packaging &
Services 41.1 27.4 77.1 46.5 Flexible Products & Services 7.4
3.6 12.2 4.8 Land Management 3.6 4.7 7.8 7.9
Total EBITDA $ 118.4 $ 108.2 $ 207.9 $ 177.4
EBITDA before special items: Rigid Industrial Packaging
& Services $ 71.6 $ 77.3 $ 119.6 $ 137.7 Paper Packaging &
Services 41.1 28.2 77.1 56.4 Flexible Products & Services 7.4
3.9 12.5 6.2 Land Management 3.2 3.3 6.2 6.2
Total EBITDA before special items $ 123.3 $ 112.7 $
215.4 $ 206.5 (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.
GREIF, INC. AND SUBSIDIARY
COMPANIES
FINANCIAL HIGHLIGHTS BY GEOGRAPHIC REGION
UNAUDITED
Three months ended April 30, Six months
ended April 30, (in millions)
2018
2017 2018 2017 Net sales:
United States $ 463.5 $ 434.5 $ 896.2 $ 842.5 Europe,
Middle East and Africa 370.7 325.5 702.0 611.4 Asia Pacific and
other Americas 134.1 127.4 275.8 254.4 Total
net sales $ 968.3 $ 887.4 $ 1,874.0 $ 1,708.3
Gross profit: United States $ 106.8 $ 94.5 $ 198.3 $ 179.7
Europe, Middle East and Africa 70.8 67.8 128.8 123.6 Asia Pacific
and other Americas 17.7 19.6 39.9 41.9 Total
gross profit $ 195.3 $ 181.9 $ 367.0 $ 345.2
GREIF, INC. AND SUBSIDIARY COMPANIES
GAAP TO NON-GAAP RECONCILIATION OPERATING WORKING
CAPITAL
UNAUDITED
(in millions)
April 30, 2018 October
31, 2017 Trade accounts receivable $ 463.4 $ 447.0 Plus:
inventories 352.9 279.5 Less: accounts payable 395.7 399.2
Operating working capital $ 420.6 $ 327.3
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO
NON-GAAP RECONCILIATION
CONSOLIDATED EBITDA(9)
UNAUDITED
Three months ended April 30, Six months
ended April 30, (in millions)
2018
2017 2018 2017 Net income $ 51.9
$ 39.9 $ 112.0 $ 47.9 Plus: Interest expense, net
13.0 14.3 26.3 33.0 Plus: Income tax expense 21.1 23.0 5.5 34.8
Plus: Depreciation, depletion and amortization expense 32.4
31.0 64.1 61.7 EBITDA $ 118.4 $ 108.2 $
207.9 $ 177.4 Net income $ 51.9 $ 39.9 $ 112.0 $ 47.9 Plus:
Interest expense, net 13.0 14.3 26.3 33.0 Plus: Income tax expense
21.1 23.0 5.5 34.8 Plus: Non-cash pension settlement charge — 1.1 —
24.6 Plus: Other expense, net 2.5 3.2 10.2 6.8 Plus: Equity
earnings of unconsolidated affiliates, net of tax (0.8 ) —
(0.8 ) — Operating profit 87.7 81.5 153.2 147.1 Less: Non-cash
pension settlement charge — 1.1 — 24.6 Less: Other expense, net 2.5
3.2 10.2 6.8 Less: Equity earnings of unconsolidated affiliates,
net of tax (0.8 ) — (0.8 ) — Plus: Depreciation, depletion and
amortization expense 32.4 31.0 64.1 61.7
EBITDA $ 118.4 $ 108.2 $ 207.9 $ 177.4
(9) 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(10)
UNAUDITED
Three months ended April 30, Six months
ended April 30, (in millions)
2018
2017 2018 2017 Rigid
Industrial Packaging & Services Operating
profit $ 47.2 $ 56.1 $ 78.4 $ 98.9 Less: Non-cash pension
settlement charge — 0.6 — 14.7 Less: Other expense, net 2.8 3.5
10.1 5.9 Less: Equity earnings of unconsolidated affiliates, net of
tax (0.8 ) — (0.8 ) — Plus: Depreciation and amortization expense
21.1 20.5 41.7 39.9
EBITDA $ 66.3 $ 72.5 $ 110.8 $ 118.2 Restructuring charges
6.0 4.4 9.8 3.9 Acquisition-related costs — — 0.2 — Non-cash asset
impairment charges 0.4 2.0 3.3 3.6 Non-cash pension settlement
charge — 0.6 — 14.7 Gain on disposal of properties, plants,
equipment, and businesses, net (1.1 ) (2.2 ) (4.5 )
(2.7 ) EBITDA before special items $ 71.6 $
77.3 $ 119.6 $ 137.7
Paper
Packaging & Services Operating profit $ 33.0 $ 20.3 $ 60.9
$ 40.3 Less: Non-cash pension settlement charge — 0.5 — 9.7 Less:
Other expense, net 0.3 — 0.5 — Plus: Depreciation and amortization
expense 8.4 7.6 16.7 15.9
EBITDA $ 41.1 $ 27.4 $ 77.1 $ 46.5 Restructuring charges —
0.3 — 0.3 Non-cash pension settlement charge — 0.5 — 9.7
Gain on disposal of properties, plants, equipment, net —
— — (0.1 ) EBITDA before special
items $ 41.1 $ 28.2 $ 77.1
$ 56.4
Flexible Products & Services
Operating profit $ 5.0 $ 1.8 $ 8.2 $ 2.4 Less: Non-cash pension
settlement charge — — — 0.1 Less: Other (income) expense, net (0.6
) (0.3 ) (0.4 ) 0.9 Plus: Depreciation and amortization expense 1.8
1.5 3.6 3.4 EBITDA
$ 7.4 $ 3.6 $ 12.2 $ 4.8 Restructuring charges — 0.4 0.3 0.6
Non-cash asset impairment charges — — — 0.3 Non-cash pension
settlement charge — — — 0.1 (Gain) loss on disposal of properties,
plants, equipment and businesses, net — (0.1 )
— 0.4 EBITDA before special items $ 7.4
$ 3.9 $ 12.5 $ 6.2
Land Management Operating profit $ 2.5 $ 3.3 $ 5.7 $ 5.5
Less: Non-cash pension settlement charge — — — 0.1 Plus:
Depreciation, depletion and amortization expense 1.1
1.4 2.1 2.5 EBITDA $ 3.6 $ 4.7 $
7.8 $ 7.9 Non-cash pension settlement charge — — — 0.1 Gain on
disposal of properties, plants, equipment, net (0.4 ) (1.4 )
(1.6 ) (1.8 ) EBITDA before special items $ 3.2
$ 3.3 $ 6.2 $ 6.2
Consolidated EBITDA $ 118.4 $ 108.2 $
207.9 $ 177.4 Consolidated EBITDA before
special items $ 123.3 $ 112.7 $ 215.4
$ 206.5 (10) 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(11)
UNAUDITED
Three months ended April 30, Six months
ended April 30, (in millions)
2018
2017 2018 2017 Net cash
provided by operating activities $ 58.2 $ 59.6 $ 4.5
$ 15.5 Cash paid for purchases of properties, plants and
equipment (28.3 ) (18.4 ) (56.3 ) (39.7 )
Free Cash Flow $ 29.9 $ 41.2
$ (51.8 ) $ (24.2 ) (11) Free Cash Flow
is defined as net cash provided by operating activities less cash
paid for purchases of properties, plants and equipment.
GREIF, INC. AND SUBSIDIARY COMPANIES PROJECTED
2018 GUIDANCE RECONCILIATION FREE CASH FLOW
UNAUDITED Fiscal 2018 Guidance Range (in
millions)
Scenario 1 Scenario 2 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 $ 200.0
$ 220.0
GREIF, INC. AND
SUBSIDIARY COMPANIES GAAP TO NON-GAAP RECONCILIATION
SEGMENT OPERATING PROFIT BEFORE SPECIAL
ITEMS(12)
UNAUDITED
Three months ended April 30, Six months
ended April 30, (in millions)
2018
2017 2018 2017 Operating
profit: Rigid Industrial Packaging & Services
$ 47.2 $ 56.1 $ 78.4 $ 98.9 Paper Packaging & Services 33.0
20.3 60.9 40.3 Flexible Products & Services 5.0 1.8 8.2 2.4
Land Management 2.5 3.3 5.7 5.5 Total
operating profit $ 87.7 $ 81.5 $ 153.2 $ 147.1
Restructuring charges: Rigid Industrial Packaging
& Services $ 6.0 $ 4.4 $ 9.8 $ 3.9 Paper Packaging &
Services — 0.3 — 0.3 Flexible Products & Services — 0.4
0.3 0.6 Total restructuring charges $ 6.0
$ 5.1 $ 10.1 $ 4.8
Acquisition-related costs: Rigid Industrial Packaging &
Services $ — $ — $ 0.2 $ — Total
acquisition-related costs $ — $ — $ 0.2 $ —
Non-cash asset impairment charges: Rigid Industrial
Packaging & Services $ 0.4 $ 2.0 $ 3.3 $ 3.6 Flexible Products
& Services — — — 0.3 Total non-cash
asset impairment charges $ 0.4 $ 2.0 $ 3.3 $
3.9
(Gain) loss on disposal of properties, plants,
equipment and businesses, net: Rigid Industrial Packaging &
Services $ (1.1 ) $ (2.2 ) $ (4.5 ) $ (2.7 ) Paper Packaging &
Services — — — (0.1 ) Flexible Products & Services — (0.1 ) —
0.4 Land Management (0.4 ) (1.4 ) (1.6 ) (1.8 ) Total gain on
disposal of properties, plants, equipment and businesses, net $
(1.5 ) $ (3.7 ) $ (6.1 ) $ (4.2 )
Operating profit before
special items: Rigid Industrial Packaging & Services $ 52.5
$ 60.3 $ 87.2 $ 103.7 Paper Packaging & Services 33.0 20.6 60.9
40.5 Flexible Products & Services 5.0 2.1 8.5 3.7 Land
Management 2.1 1.9 4.1 3.7
Total operating profit before special items $ 92.6 $
84.9 $ 160.7 $ 151.6 (12)
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
Equity Income Tax Income Tax earnings
of Non- Net Income Diluted Class
(Benefit) (Benefit) unconsolidated
Controlling Attributable A Earnings
(in millions, except for per share
amounts)
Expense, net Expense
affiliates Interest to Greif,
Inc. Per Share Tax Rate Three
months ended April 30, 2018 $ 72.2 $ 21.1 $ (0.8 ) $ 6.8 $ 45.1
$ 0.77 29.2 % Gain on disposal of properties, plants, equipment and
businesses, net (1.5 ) (0.4 ) — — (1.1 ) (0.02 ) Restructuring
charges 6.0 1.4 — — 4.6 0.08 Non-cash asset impairment charges 0.4
— — — 0.4 0.01 Provisional tax net benefit resulting from the Tax
Reform Act — 4.3 — —
(4.3 ) (0.08 ) Excluding Special
Items $ 77.1 $ 26.4 $ (0.8 ) $
6.8 $ 44.7 $ 0.76 34.2 %
Three months ended April 30, 2017 $ 62.9 $ 23.0 $ — $
3.9 $ 36.0 $ 0.61 36.6 % Gain on disposal of properties, plants,
equipment and businesses, net (3.7 ) (0.7 ) — — (3.0 ) (0.05 )
Restructuring charges 5.1 1.4 — 0.2 3.5 0.06 Non-cash asset
impairment charges 2.0 — — (0.2 ) 2.2 0.04 Non-cash pension
settlement charge 1.1 0.5 —
— 0.6 0.01
Excluding Special Items $ 67.4 $ 24.2 $
— $ 3.9 $ 39.3 $ 0.67
35.9 %
Six months ended April 30, 2018
$ 116.7 $ 5.5 $ (0.8 ) $ 10.4 $ 101.6 $ 1.73 4.7 % Gain on disposal
of properties, plants, equipment and businesses, net (6.1 ) (0.7 )
— — (5.4 ) (0.09 ) Restructuring charges 10.1 1.9 — 0.2 8.0 0.14
Acquisition-related costs 0.2 0.1 — — — 0.1 — Non-cash asset
impairment charges 3.3 0.7 — — 2.6 0.04 Provisional tax net benefit
resulting from the Tax Reform Act — 33.4
— — (33.4 ) (0.57 )
Excluding Special Items $ 124.2 $ 40.9
$ (0.8 ) $ 10.6 $ 73.5
$ 1.25 32.9 %
Six months ended April
30, 2017 $ 82.7 $ 34.8 $ — $ 6.5 $ 41.4 $ 0.71 42.1 % Gain on
disposal of properties, plants, equipment and businesses, net (4.2
) (0.9 ) — 0.2 (3.5 ) (0.06 ) Restructuring charges 4.8 (2.9 ) —
0.4 7.3 0.13 Non-cash asset impairment charges 3.9 — — 0.1 3.8 0.06
Non-cash pension settlement charge 24.6 7.9
— — 16.7 0.28
Excluding Special Items $ 111.8
$ 38.9 $ — $ 7.2 $ 65.7
$ 1.12 34.8 % 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 six months
ended April 30, 2017 restructuring charges special item is a $4.4
million income tax charge due to a change in assertions related to
unremitted foreign earnings as a result of the restructuring of our
intercompany debt portfolio.
GREIF, INC. AND SUBSIDIARY
COMPANIES
GAAP TO NON-GAAP RECONCILIATION
NET SALES TO NET SALES EXCLUDING THE
IMPACT OF
CURRENCY TRANSLATION
UNAUDITED
Three months ended April 30,
Increase in Increase in (in millions)
2018 2017 Net Sales ($)
Net Sales (%) Consolidated Net Sales $ 968.3 $ 887.4
$ 80.9 9.1 % Currency Translation (40.9 ) N/A Net Sales Excluding
the Impact of Currency Translation $ 927.4 $ 887.4 $ 40.0 4.5 %
Rigid Industrial Packaging & Services Net Sales $ 662.7
$ 624.3 $ 38.4 6.2 % Currency Translation (32.6 ) N/A Net Sales
Excluding the Impact of Currency Translation $ 630.1 $ 624.3 $ 5.8
0.9 %
Flexible Products & Services Net Sales $ 84.1 $
66.6 $ 17.5 26.3 % Currency Translation (8.3 ) N/A Net Sales
Excluding the Impact of Currency Translation $ 75.8 $ 66.6 $ 9.2
13.8 %
Six months ended April 30, Increase in
Increase in (in millions)
2018
2017 Net Sales ($) Net Sales (%)
Consolidated Net Sales $ 1,874.0 $ 1,708.3 $ 165.7 9.7 %
Currency Translation (71.6 ) N/A Net Sales Excluding the Impact of
Currency Translation $ 1,802.4 $ 1,708.3 $ 94.1 5.5 %
Rigid
Industrial Packaging & Services Net Sales $ 1,278.1 $
1,185.8 $ 92.3 7.8 % Currency Translation (57.4 ) N/A Net Sales
Excluding the Impact of Currency Translation $ 1,220.7 $ 1,185.8 $
34.9 2.9 %
Flexible Products & Services Net Sales $
164.1 $ 136.3 $ 27.8 20.4 % Currency Translation (14.2 ) N/A Net
Sales Excluding the Impact of Currency Translation $ 149.9 $ 136.3
$ 13.6 10.0 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180606006364/en/
Greif, Inc.Matt Eichmann,
740-549-6067matt.eichmann@greif.com
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