DELAWARE, Ohio, Feb. 27,
2019 /PRNewswire/ -- Greif, Inc. (NYSE: GEF, GEF.B), a
world leader in industrial packaging products and services, today
announced first quarter 2019 results.
First Quarter Highlights include (all results compared to the
first quarter of 2018 unless otherwise noted):
- Net sales decreased by $8.7
million to $897.0
million.
- Gross profit increased by $1.1
million to $172.8
million.
- Net income of $29.7 million or
$0.51 per diluted Class A share
decreased compared to net income of $56.5
million or $0.96 per diluted
Class A share. Net income, excluding the impact of
adjustments(1), of $38.3
million or $0.65 per diluted
Class A share increased compared to net income, excluding the
impact of adjustments, of $28.8
million or $0.49 per diluted
Class A share. Adjusted EBITDA(2) increased by
$14.2 million to $106.3 million.
- Net cash used in operating activities decreased by $44.1 million to $9.6
million. Adjusted Free Cash Flow(3)
increased by $45.9 million to a use
of $35.6 million.
- On December 20, 2018, announced
an agreement to acquire Caraustar Industries, Inc., and completed
the transaction on February 11,
2019.
- Announced Investor Day 2019 will be held on June 26, 2019 in New
York City.
"Greif delivered solid financial performance in fiscal first
quarter 2019, despite being negatively impacted by the continuation
of market softness in discrete regions of our global portfolio,"
said Pete Watson, Greif's President
and Chief Executive Officer. "First quarter Adjusted EBITDA rose by
roughly 15 percent versus the prior year quarter, while Class A
earnings per share, excluding the impact of adjustments, increased
by more than 33 percent. Performance was particularly strong in our
Paper Packaging & Services segment due to a favorable
price/cost environment and solid unit demand, and in our Flexible
Products & Services segment due to customer service
improvements and solid operating performance.
"On February 11, 2019, Greif completed the acquisition of
Caraustar Industries for cash consideration of $1.8 billion.
Caraustar is a vertically integrated paper packaging company and
operates a business with close operational adjacency to Greif's
existing mill operations. The company is a leader in the production
of uncoated recycled paperboard and coated recycled paperboard,
operates one of the largest recovered fiber businesses in the U.S
and is a leading manufacturer of tube and core products for
industrial uses. Caraustar shares our vision of providing
industry-leading customer service and has a long tenured domestic
blue-chip customer base," Watson continued.
"The acquisition of Caraustar will drive significant value
creation for Greif shareholders by enhancing Greif's margins and
EBITDA and by strengthening and balancing our portfolio.
Caraustar's strong free cash flow, combined with Greif's existing
free cash generation, will permit rapid de-leveraging and enhance
our longer term financial flexibility. The business is an excellent
cultural fit and we welcome our new 4,000 colleagues to the global
Greif team."
(1)A summary of all adjustments that are excluded
from net income before adjustments and from earnings per diluted
Class A share before adjustments are set forth in the Selected
Financial Highlights table following the Company Outlook in this
release.
(2)Adjusted EBITDA is defined as net income, plus
interest expense, net, plus income tax expense, plus depreciation,
depletion and amortization expense, plus restructuring charges,
plus acquisition-related costs, plus non-cash impairment charges,
less (gain) loss on disposal of properties, plants, equipment and
businesses, net.
(3)Adjusted free cash flow is defined as net cash
provided by operating activities, plus cash paid for
acquisition-related costs, plus the additional pension contribution
made in Q3 2018, 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
CSI(4) score improved
by roughly three percent versus the prior year quarter.
Greif's objective is that each business segment delivers a CSI
score of 95.0 or better. The Paper Packaging & Services segment
is currently above that threshold at 96.0 and the Flexible Products
& Services segment is close with a CSI score of 93.0. CSI for
the Rigid Industrial Packaging & Services segment was roughly
flat to the prior year quarter at 91.0. The Company's focus on CSI
adds discipline to the business, improves business insights,
strengthens customer relationships and fosters a better
understanding of their unique needs.
Reporting metrics
In conjunction with first quarter results, the Company will be
utilizing Adjusted EBITDA more frequently in its public
disclosures. Management believes Adjusted EBITDA is a more useful
metric for disclosure because it is commonly used within the
packaging industry and closely aligns to the metric used in our
long term incentive plan. Please see the tables accompanying this
release for a reconciliation between Adjusted EBITDA and operating
profit by segment.
Segment Results (all results compared to the first quarter of
2018 unless otherwise noted)
Net sales are impacted mainly by the volume of primary
products(5) 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 first quarter of 2019
as compared to the prior year quarter for the business segments
with manufacturing operations:
Net Sales Impact -
Primary Products
|
Rigid Industrial
Packaging &
Services
|
|
Paper Packaging &
Services
|
|
Flexible Products
&
Services
|
|
%
|
|
%
|
|
%
|
Currency
Translation
|
(5.1)
|
%
|
|
—
|
|
|
(4.5)
|
%
|
Volume
|
(3.5)
|
%
|
|
1.4
|
%
|
|
(2.5)
|
%
|
Selling Prices and
Product Mix
|
5.8
|
%
|
|
5.4
|
%
|
|
3.9
|
%
|
Total Impact of
Primary Products
|
(2.8)
|
%
|
|
6.8
|
%
|
|
(3.1)
|
%
|
Rigid Industrial Packaging & Services
Net sales decreased by $17.5
million to $597.9
million. Net sales excluding foreign currency
translation increased by $5.5 million
due primarily to a 5.8 percent increase in selling prices on our
primary products as a result of strategic pricing decisions,
partially offset by continued softness in certain regions.
Gross profit decreased by $11.8
million to $98.6 million. The
decrease in gross profit was primarily due to the same factors that
impacted net sales.
Operating profit decreased by $7.9
million to $23.3 million.
Adjusted EBITDA increased by $0.7
million to $48.7 million, due
to SG&A efficiencies, partially offset by lower gross profit
and the negative impact of foreign currency translation.
Paper Packaging & Services
Net sales increased by $13.5
million to $217.3 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 $10.6
million to $53.9 million. The
increase in gross profit was primarily due to higher containerboard
prices, lower old corrugated container input costs and improved
manufacturing efficiencies.
Operating profit increased by $7.4
million to $35.3 million.
Adjusted EBITDA increased by $10.5
million to $46.5 million due
to the same factors that impacted gross profit.
Flexible Products & Services
Net sales decreased by $4.9
million to $75.1 million. Net
sales excluding foreign currency translation decreased by
$1.1 million due to market softness
in parts of Europe.
Gross profit increased by $2.2
million to $17.4 million
primarily due to improved manufacturing efficiencies, partially
offset by decreased net sales.
Operating profit increased by $2.8
million to $6.0 million.
Adjusted EBITDA increased by $2.8
million to $7.9 million. The
improvement in Adjusted EBITDA was primarily due to the same
factors that impacted gross profit and the positive impact of
foreign currency translation.
Land Management
Net sales increased by $0.2
million to $6.7 million.
Operating profit decreased by $0.6
million to $2.6 million.
Adjusted EBITDA increased by $0.2
million to $3.2 million.
Dividend Summary
On February 26, 2019, 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 April 1,
2019, to stockholders of record at the close of business on
March 18, 2019.
Tax Summary
During the first quarter, the Company recorded an income tax
rate of 35.9 percent and a tax rate excluding the impact of
adjustments of 30.1 percent. As previously disclosed, the
application of FIN 18 may cause fluctuations in our quarterly
effective tax rates. For Fiscal 2019, the Company expects its tax
rate to range between 29-33 percent and its tax rate excluding
adjustments to range between 28-32 percent.
Company Outlook
The Company completed its acquisition of Caraustar Industries,
Inc. on February 11, 2019. Fiscal
2019 outlook has been updated to include the acquired Caraustar
business, the results of which will be recorded within the Paper
Packaging & Services segment going forward.
(in millions,
except per share amounts)
|
Fiscal 2019
Outlook
Reported at Q4
|
Fiscal 2019
Outlook
Reported at Q1
|
Class A earnings per
share before special items
|
$3.55 -
$3.95
|
$3.60 -
$4.00
|
Adjusted Free Cash
Flow
|
$175 -
$205
|
$215 -
$245
|
Note: 2019 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 2019
Class A earnings per share before adjustments guidance or tax rate
excluding the impact of adjustments 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, and
restructuring and impairment charges, 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 2019 adjusted free cash flow
guidance to forecasted net cash provided by operating activities,
the most directly comparable GAAP financial measure, is included in
this release.
(4)Customer satisfaction index (CSI) tracks a variety
of internal metrics designed to enhance the customer experience in
dealing with Greif.
(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
January 31,
|
(in millions,
except for per share amounts)
|
2019
|
|
2018
|
Selected Financial
Highlights
|
|
|
|
Net sales
|
$
|
897.0
|
|
|
$
|
905.7
|
|
Gross
profit
|
172.8
|
|
|
171.7
|
|
Gross profit
margin
|
19.3
|
%
|
|
19.0
|
%
|
Operating
profit
|
67.2
|
|
|
65.5
|
|
EBITDA(6)
|
98.8
|
|
|
89.5
|
|
Adjusted
EBITDA(7)
|
106.3
|
|
|
92.1
|
|
Net cash provided by
operating activities
|
(9.6)
|
|
|
(53.7)
|
|
Adjusted Free cash
flow(8)
|
(35.6)
|
|
|
(81.5)
|
|
Net income
attributable to Greif, Inc.
|
29.7
|
|
|
56.5
|
|
Diluted Class A
earnings per share attributable to Greif, Inc.
|
$
|
0.51
|
|
|
$
|
0.96
|
|
Adjusted Diluted
Class A earnings per share attributable to Greif,
Inc.
|
$
|
0.65
|
|
|
$
|
0.49
|
|
Adjustments
|
|
|
|
Restructuring
charges
|
$
|
3.7
|
|
|
$
|
4.1
|
|
Acquisition-related
costs
|
2.6
|
|
|
0.2
|
|
Non-cash asset
impairment charges
|
2.1
|
|
|
2.9
|
|
Gain on disposal of
properties, plants and equipment and businesses, net
|
(0.9)
|
|
|
(4.6)
|
|
Tax net expense
(benefit) resulting from the Tax Reform Act
|
(1.8)
|
|
|
29.1
|
|
Total
Adjustments
|
$
|
5.7
|
|
|
$
|
31.7
|
|
|
|
|
|
|
January 31,
2019
|
|
October 31,
2018
|
Operating working
capital(9)
|
$
|
511.0
|
|
|
$
|
342.4
|
|
(6)EBITDA is defined as net income, plus interest
expense, net, plus income tax expense, plus depreciation, depletion
and amortization.
(7)Adjusted EBITDA is defined as net income, plus
interest expense, net, plus income tax expense, plus depreciation,
depletion and amortization expense, plus restructuring charges,
plus acquisition-related costs, plus non-cash impairment
charges, less (gain) loss on disposal of properties,
plants, equipment and businesses, net.
(8)Adjusted free cash flow is defined as net cash
provided by operating activities, plus cash paid for
acquisition-related costs, plus the additional pension contribution
made in Q3 2018, less cash paid for purchases of properties, plants
and equipment.
(9)Operating working capital is defined as trade
accounts receivable plus inventories less accounts payable. During
the first quarter of 2019, the Company amended its European and
Singapore receivables purchase
facilities to effectively convert the trade accounts receivable
sales transactions to debt transactions secured by certain trade
accounts receivable. The amendments resulted in an increase in
trade receivables of $92.1 million as
of January 31, 2019.
Conference Call
The Company will host a conference call to discuss the first
quarter of 2019 results on February 28,
2019, at 8:30 a.m. Eastern
Time (ET). To participate, domestic callers should call
833-231-8265. The Greif ID is 7186283. 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.
Investor Day 2019
Investor Day 2019 will be held on Wednesday, June 26, 2019 at the Sofitel Hotel in
New York City. Registration and
breakfast will commence at 8 a.m. ET
and the event will commence at 9 a.m.
ET. Greif's President and Chief Executive Officer
Pete Watson, Chief Financial Officer
Larry Hilsheimer and various other
senior operational leaders will provide an overview of the Company;
discuss ongoing business performance and strategy; review the
recently announced Caraustar acquisition and its linkage to Greif's
strategy; and conduct a forum for questions and answers. A
webcast for the event will also be conducted and details will be
provided in June 2019.
About Greif
Greif is a global leader in industrial packaging products and
services and is pursuing its vision: in industrial packaging, be
the best performing customer service company in the world. The
Company produces steel, plastic and fibre drums, intermediate bulk
containers, reconditioned containers, flexible products,
containerboard, uncoated recycled paperboard, coated recycled
paperboard, tubes and cores and a diverse mix of specialty
products. The Company also manufactures packaging accessories and
provides filling, packaging and other services for a wide range of
industries. Greif also manages timber properties in the
southeastern United States. The
Company is strategically positioned 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, 2018. 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 transformation and 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) changes in U.S. trade policies could
impact the cost of imported goods into the U.S., which may
materially impact our revenues or
increase our operating costs, (x) the results of the United Kingdom's referendum on withdrawal from
the European Union may have a negative effect on global economic
conditions, financial markets and our business, (xi) geopolitical
conditions, including direct or indirect acts of war or terrorism,
could have a material adverse effect on our operations and
financial results, (xii) we may encounter difficulties arising from
acquisitions, (xiii) in connection with acquisitions or
divestitures, we may become subject to liabilities, (xiv) we may
incur additional restructuring costs and there is no guarantee that
our efforts to reduce costs will be successful, (xv) we could be
subject to changes in our tax
rates, the adoption of new U.S. or foreign tax legislation
or exposure to additional tax liabilities, (xvi) full realization
of our deferred tax assets may be affected by a number of factors,
(xvii) several operations are conducted by joint ventures that we
cannot operate solely for our benefit, (xviii) certain of the
agreements that govern our joint ventures provide our partners with
put or call options, (xix) our ability to attract, develop and
retain talented and qualified employees, managers and executives is
critical to our success, (xx) our business may be adversely
impacted by work stoppages and other labor relations matters, (xxi)
we may not successfully identify illegal immigrants in our
workforce, (xxii) 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, (xxiii) we may be subject to losses that
might not be covered in whole or in part by existing insurance
reserves or insurance coverage, (xxiv) our business depends on the
uninterrupted operations of our facilities, systems and business
functions, including our information technology and other business
systems, (xxv) 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, (xxvi)
legislation/regulation related to environmental and health and
safety matters and corporate social responsibility could negatively
impact our operations and financial performance, (xxvii) product
liability claims and other legal proceedings could adversely affect
our operations and financial performance, (xxviii) we may incur
fines or penalties, damage to our reputation or other adverse
consequences if our employees, agents or business partners violate,
or are alleged to have violated, anti-bribery, competition or other
laws, (xxix) changing climate, climate change regulations and
greenhouse gas effects may adversely affect our operations and
financial performance, (xxx) the frequency and volume of our timber
and timberland sales will impact our financial performance, (xxxi)
changes in U.S. generally accepted accounting principles (U.S.
GAAP) and SEC rules and regulations could materially impact our
reported results, (xxxii) 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
(xxxiii) 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.
Contact:
Matt Eichmann
740-549-6067
matt.eichmann@greif.com
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
UNAUDITED
|
|
|
|
Three months ended
January 31,
|
(in millions,
except per share amounts)
|
2019
|
|
2018
|
Net sales
|
$
|
897.0
|
|
|
$
|
905.7
|
|
Cost of products
sold
|
724.2
|
|
|
734.0
|
|
Gross
profit
|
172.8
|
|
|
171.7
|
|
Selling, general and
administrative expenses
|
98.1
|
|
|
103.6
|
|
Restructuring
charges
|
3.7
|
|
|
4.1
|
|
Acquisition-related
costs
|
2.6
|
|
|
0.2
|
|
Non-cash asset
impairment charges
|
2.1
|
|
|
2.9
|
|
Gain on disposal of
properties, plants and equipment, net
|
(0.9)
|
|
|
(4.6)
|
|
Operating
profit
|
67.2
|
|
|
65.5
|
|
Interest expense,
net
|
11.7
|
|
|
13.3
|
|
Other (income)
expense, net
|
(0.2)
|
|
|
7.7
|
|
Income before income
tax expense and equity earnings of unconsolidated affiliates,
net
|
55.7
|
|
|
44.5
|
|
Income tax expense
(benefit)
|
20.0
|
|
|
(15.6)
|
|
Equity earnings of
unconsolidated affiliates, net of tax
|
(0.1)
|
|
|
—
|
|
Net income
|
35.8
|
|
|
60.1
|
|
Net income
attributable to noncontrolling interests
|
(6.1)
|
|
|
(3.6)
|
|
Net income
attributable to Greif, Inc.
|
$
|
29.7
|
|
|
$
|
56.5
|
|
Basic earnings per
share attributable to Greif, Inc. common
shareholders:
|
|
|
|
Class A common
stock
|
$
|
0.51
|
|
|
$
|
0.96
|
|
Class B common
stock
|
$
|
0.75
|
|
|
$
|
1.44
|
|
Diluted earnings
per share attributable to Greif, Inc. common
shareholders:
|
|
|
|
Class A common
stock
|
$
|
0.51
|
|
|
$
|
0.96
|
|
Class B common
stock
|
$
|
0.75
|
|
|
$
|
1.44
|
|
Shares used to
calculate basic earnings per share attributable to Greif, Inc.
common shareholders:
|
|
|
|
Class A common
stock
|
26.0
|
|
|
25.8
|
|
Class B common
stock
|
22.0
|
|
|
22.0
|
|
Shares used to
calculate diluted earnings per share attributable to Greif, Inc.
common shareholders:
|
|
|
|
Class A common
stock
|
26.0
|
|
|
25.8
|
|
Class B common
stock
|
22.0
|
|
|
22.0
|
|
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
UNAUDITED
|
|
|
|
|
(in
millions)
|
January 31,
2019
|
|
October 31,
2018
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
84.5
|
|
|
$
|
94.2
|
|
Trade accounts
receivable
|
561.4
|
|
|
456.7
|
|
Inventories
|
326.6
|
|
|
289.5
|
|
Other current
assets
|
137.6
|
|
|
136.3
|
|
|
1,110.1
|
|
|
976.7
|
|
LONG-TERM
ASSETS
|
|
|
|
Goodwill
|
778.2
|
|
|
776.0
|
|
Intangible
assets
|
77.4
|
|
|
80.6
|
|
Assets held by
special purpose entities
|
50.9
|
|
|
50.9
|
|
Other long-term
assets
|
100.5
|
|
|
118.7
|
|
|
1,007.0
|
|
|
1,026.2
|
|
PROPERTIES, PLANTS
AND EQUIPMENT
|
1,183.1
|
|
|
1,191.9
|
|
|
$
|
3,300.2
|
|
|
$
|
3,194.8
|
|
LIABILITIES AND
EQUITY
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Accounts
payable
|
$
|
377.0
|
|
|
$
|
403.8
|
|
Short-term
borrowings
|
6.4
|
|
|
7.3
|
|
Current portion of
long-term debt
|
18.8
|
|
|
18.8
|
|
Other current
liabilities
|
204.2
|
|
|
240.3
|
|
|
606.4
|
|
|
670.2
|
|
LONG-TERM
LIABILITIES
|
|
|
|
Long-term
debt
|
1,060.5
|
|
|
884.1
|
|
Liabilities held by
special purpose entities
|
43.3
|
|
|
43.3
|
|
Other long-term
liabilities
|
394.6
|
|
|
407.5
|
|
|
1,498.4
|
|
|
1,334.9
|
|
REDEEMABLE
NONCONTROLLING INTERESTS
|
23.9
|
|
|
35.5
|
|
EQUITY
|
|
|
|
Total Greif, Inc.
equity
|
1,119.2
|
|
|
1,107.8
|
|
Noncontrolling
interests
|
52.3
|
|
|
46.4
|
|
|
1,171.5
|
|
|
1,154.2
|
|
|
$
|
3,300.2
|
|
|
$
|
3,194.8
|
|
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
UNAUDITED
|
|
|
|
Three months ended
January 31,
|
(in
millions)
|
2019
|
|
2018
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Net income
|
$
|
35.8
|
|
|
$
|
60.1
|
|
Depreciation,
depletion and amortization
|
31.3
|
|
|
31.7
|
|
Asset
impairments
|
2.1
|
|
|
2.9
|
|
Other non-cash
adjustments to net income
|
(2.4)
|
|
|
(31.7)
|
|
Operating working
capital changes
|
(45.5)
|
|
|
(65.3)
|
|
Deferred purchase
price on sold receivables
|
(6.9)
|
|
|
(22.9)
|
|
Increase (decrease)
in cash from changes in other assets and liabilities
|
(24.0)
|
|
|
(28.5)
|
|
Net cash used in
operating activities
|
(9.6)
|
|
|
(53.7)
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
Purchases of
properties, plants and equipment
|
(26.0)
|
|
|
(28.0)
|
|
Purchases of and
investments in timber properties
|
(0.9)
|
|
|
(2.6)
|
|
Proceeds from the
sale of properties, plants and equipment, businesses, timberland
and other assets
|
2.3
|
|
|
7.4
|
|
Proceeds on insurance
recoveries
|
0.2
|
|
|
—
|
|
Net cash used in
investing activities
|
(24.4)
|
|
|
(23.2)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
Proceeds from
(payments on) debt, net
|
61.0
|
|
|
49.4
|
|
Dividends paid to
Greif, Inc. shareholders
|
(25.7)
|
|
|
(24.5)
|
|
Other
|
(12.3)
|
|
|
(0.4)
|
|
Net cash provided by
financing activities
|
23.0
|
|
|
24.5
|
|
Reclassification of
cash to assets held for sale
|
(0.4)
|
|
|
—
|
|
Effects of exchange
rates on cash
|
1.7
|
|
|
4.4
|
|
Net increase
(decrease) in cash and cash equivalents
|
(9.7)
|
|
|
(48.0)
|
|
Cash and cash
equivalents, beginning of period
|
94.2
|
|
|
142.3
|
|
Cash and cash
equivalents, end of period
|
$
|
84.5
|
|
|
$
|
94.3
|
|
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
FINANCIAL
HIGHLIGHTS BY SEGMENT
|
UNAUDITED
|
|
|
|
Three months ended
January 31,
|
(in
millions)
|
2019
|
|
2018
|
Net
sales:
|
|
|
|
Rigid Industrial
Packaging & Services
|
$
|
597.9
|
|
|
$
|
615.4
|
|
Paper
Packaging & Services
|
217.3
|
|
|
203.8
|
|
Flexible
Products & Services
|
75.1
|
|
|
80.0
|
|
Land
Management
|
6.7
|
|
|
6.5
|
|
Total net
sales
|
$
|
897.0
|
|
|
$
|
905.7
|
|
Gross
profit:
|
|
|
|
Rigid Industrial
Packaging & Services
|
$
|
98.6
|
|
|
$
|
110.4
|
|
Paper
Packaging & Services
|
53.9
|
|
|
43.3
|
|
Flexible
Products & Services
|
17.4
|
|
|
15.2
|
|
Land
Management
|
2.9
|
|
|
2.8
|
|
Total gross
profit
|
$
|
172.8
|
|
|
$
|
171.7
|
|
Operating
profit:
|
|
|
|
Rigid Industrial
Packaging & Services
|
$
|
23.3
|
|
|
$
|
31.2
|
|
Paper
Packaging & Services
|
35.3
|
|
|
27.9
|
|
Flexible
Products & Services
|
6.0
|
|
|
3.2
|
|
Land
Management
|
2.6
|
|
|
3.2
|
|
Total operating
profit
|
$
|
67.2
|
|
|
$
|
65.5
|
|
EBITDA(10):
|
|
|
|
Rigid Industrial
Packaging & Services
|
$
|
43.2
|
|
|
$
|
44.5
|
|
Paper
Packaging & Services
|
44.0
|
|
|
36.0
|
|
Flexible
Products & Services
|
7.9
|
|
|
4.8
|
|
Land
Management
|
3.7
|
|
|
4.2
|
|
Total
EBITDA
|
$
|
98.8
|
|
|
$
|
89.5
|
|
Adjusted
EBITDA(11):
|
|
|
|
Rigid Industrial
Packaging & Services
|
$
|
48.7
|
|
|
$
|
48.0
|
|
Paper
Packaging & Services
|
46.5
|
|
|
36.0
|
|
Flexible
Products & Services
|
7.9
|
|
|
5.1
|
|
Land
Management
|
3.2
|
|
|
3.0
|
|
Total Adjusted
EBITDA
|
$
|
106.3
|
|
|
$
|
92.1
|
|
(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. See the reconciliations in the table of Segment
EBITDA.
(11)Adjusted EBITDA is defined as net income, plus
interest expense, net, plus income tax expense, plus depreciation,
depletion and amortization expense, plus restructuring charges,
plus acquisition-related costs, plus non-cash impairment charges,
less (gain) loss on disposal of properties, plants, equipment and
businesses, net.
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
FINANCIAL
HIGHLIGHTS BY GEOGRAPHIC REGION
|
UNAUDITED
|
|
|
|
Three months ended
January 31,
|
(in
millions)
|
2019
|
|
2018
|
Net
sales:
|
|
|
|
United
States
|
$
|
457.6
|
|
|
$
|
432.7
|
|
Europe, Middle East
and Africa
|
311.0
|
|
|
331.3
|
|
Asia Pacific and
other Americas
|
128.4
|
|
|
141.7
|
|
Total net
sales
|
$
|
897.0
|
|
|
$
|
905.7
|
|
Gross
profit:
|
|
|
|
United
States
|
$
|
100.8
|
|
|
$
|
91.5
|
|
Europe, Middle East
and Africa
|
54.2
|
|
|
58.0
|
|
Asia Pacific and
other Americas
|
17.8
|
|
|
22.2
|
|
Total gross
profit
|
$
|
172.8
|
|
|
$
|
171.7
|
|
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
GAAP TO NON-GAAP
RECONCILIATION
|
CONSOLIDATED
ADJUSTED EBITDA(12)
|
UNAUDITED
|
|
|
|
Three months ended
January 31,
|
(in
millions)
|
2019
|
|
2018
|
Net income
|
$
|
35.8
|
|
|
$
|
60.1
|
|
Plus: Interest
expense, net
|
11.7
|
|
|
13.3
|
|
Plus: Income tax
expense
|
20.0
|
|
|
(15.6)
|
|
Plus: Depreciation,
depletion and amortization expense
|
31.3
|
|
|
31.7
|
|
EBITDA
|
$
|
98.8
|
|
|
$
|
89.5
|
|
Net income
|
$
|
35.8
|
|
|
$
|
60.1
|
|
Plus: Interest
expense, net
|
11.7
|
|
|
13.3
|
|
Plus: Income tax
expense
|
20.0
|
|
|
(15.6)
|
|
Plus: Other (income)
expense, net
|
(0.2)
|
|
|
7.7
|
|
Plus: Equity earnings
of unconsolidated affiliates, net of tax
|
(0.1)
|
|
|
—
|
|
Operating
profit
|
$
|
67.2
|
|
|
$
|
65.5
|
|
Less: Other (income)
expense, net
|
(0.2)
|
|
|
7.7
|
|
Less: Equity earnings
of unconsolidated affiliates, net of tax
|
(0.1)
|
|
|
—
|
|
Plus: Depreciation,
depletion and amortization expense
|
31.3
|
|
|
31.7
|
|
EBITDA
|
$
|
98.8
|
|
|
$
|
89.5
|
|
Plus: Restructuring
charges
|
3.7
|
|
|
4.1
|
|
Plus:
Acquisition-related costs
|
2.6
|
|
|
0.2
|
|
Plus: Non-cash asset
impairment charges
|
2.1
|
|
|
2.9
|
|
Less: (Gain) loss on
disposal of properties, plants, equipment, and businesses,
net
|
(0.9)
|
|
|
(4.6)
|
|
Adjusted
EBITDA
|
$
|
106.3
|
|
|
$
|
92.1
|
|
(12)Adjusted EBITDA is defined as net income, plus
interest expense, net, plus income tax expense, plus depreciation,
depletion and amortization expense, plus restructuring charges,
plus acquisition-related costs, plus non-cash impairment charges,
less (gain) loss on disposal of properties, plants,
equipment and businesses, net.
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
GAAP TO NON-GAAP
RECONCILIATION
|
SEGMENT ADJUSTED
EBITDA(13)
|
UNAUDITED
|
|
Three months ended
January 31,
|
(in
millions)
|
2019
|
|
2018
|
Rigid Industrial
Packaging & Services
|
|
|
|
Operating
profit
|
23.3
|
|
|
31.2
|
|
Less: Other (income)
expense, net
|
(0.1)
|
|
|
7.3
|
|
Less: Equity earnings
of unconsolidated affiliates, net of tax
|
(0.1)
|
|
|
—
|
|
Plus: Depreciation
and amortization expense
|
19.7
|
|
|
20.6
|
|
EBITDA
|
$
|
43.2
|
|
|
$
|
44.5
|
|
Plus: Restructuring
charges
|
3.6
|
|
|
3.8
|
|
Plus:
Acquisition-related costs
|
0.1
|
|
|
0.2
|
|
Plus: Non-cash asset
impairment charges
|
2.1
|
|
|
2.9
|
|
Less: (Gain)
loss disposal of properties, plants, equipment, and
businesses, net
|
(0.3)
|
|
|
(3.4)
|
|
Adjusted
EBITDA
|
$
|
48.7
|
|
|
$
|
48.0
|
|
Paper
Packaging & Services
|
|
|
|
Operating
profit
|
35.3
|
|
|
27.9
|
|
Less: Other expense,
net
|
0.1
|
|
|
0.2
|
|
Plus: Depreciation
and amortization expense
|
8.8
|
|
|
8.3
|
|
EBITDA
|
$
|
44.0
|
|
|
$
|
36.0
|
|
Plus: Restructuring
charges
|
0.1
|
|
|
—
|
|
Plus:
Acquisition-related costs
|
2.5
|
|
|
—
|
|
Less:
(Gain) loss on disposal of properties, plants, equipment,
net
|
(0.1)
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
46.5
|
|
|
$
|
36.0
|
|
Flexible
Products & Services
|
|
|
|
Operating
profit
|
6.0
|
|
|
3.2
|
|
Less: Other (income)
expense, net
|
(0.2)
|
|
|
0.2
|
|
Plus: Depreciation
and amortization expense
|
1.7
|
|
|
1.8
|
|
EBITDA
|
$
|
7.9
|
|
|
$
|
4.8
|
|
Plus: Restructuring
charges
|
—
|
|
|
0.3
|
|
Adjusted
EBITDA
|
$
|
7.9
|
|
|
$
|
5.1
|
|
Land
Management
|
|
|
|
Operating
profit
|
2.6
|
|
|
3.2
|
|
Plus: Depreciation,
depletion and amortization expense
|
1.1
|
|
|
1.0
|
|
EBITDA
|
$
|
3.7
|
|
|
$
|
4.2
|
|
Plus: Timberland
gains
|
—
|
|
|
—
|
|
Less: (Gain)
loss on disposal of properties, plants, equipment,
net
|
(0.5)
|
|
|
(1.2)
|
|
Adjusted
EBITDA
|
$
|
3.2
|
|
|
$
|
3.0
|
|
Consolidated
EBITDA
|
$
|
98.8
|
|
|
$
|
89.5
|
|
Consolidated Adjusted
EBITDA
|
$
|
106.3
|
|
|
$
|
92.1
|
|
(13) Adjusted EBITDA is defined as net income, plus
interest expense, net, plus income tax expense, plus depreciation,
depletion and amortization expense, plus restructuring charges,
plus acquisition-related costs, plus non-cash impairment charges,
less (gain) loss on disposal of properties, plants, equipment and
businesses, net. However, because the Company does not calculate
net income by segment, this table calculates Adjusted EBITDA by
segment with reference to operating profit by segment, which, as
demonstrated in the table of Consolidated Adjusted EBITDA, is
another method to achieve the same result.
GREIF, INC AND
SUBSIDIARY COMPANIES
|
GAAP TO NON-GAAP
RECONCILIATION
|
ADJUSTED FREE CASH
FLOW(14)
|
UNAUDITED
|
|
Three months ended
January 31,
|
(in
millions)
|
2019
|
|
2018
|
Net cash used in
operating activities
|
$
|
(9.6)
|
|
|
$
|
(53.7)
|
|
Cash paid for
purchases of properties, plants and equipment
|
(26.0)
|
|
|
(28.0)
|
|
Free cash
flow
|
$
|
(35.6)
|
|
|
$
|
(81.7)
|
|
Cash paid for
acquisition-related costs
|
—
|
|
|
0.2
|
|
Adjusted free cash
flow
|
$
|
(35.6)
|
|
|
$
|
(81.5)
|
|
(14)Adjusted free cash flow is defined as net cash
provided by operating activities, plus cash paid for
acquisition-related costs, plus the additional pension contribution
made in Q3 2018, less cash paid for purchases of properties, plants
and equipment.
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
GAAP TO NON-GAAP
RECONCILIATION
|
NET INCOME, CLASS
A EARNINGS PER SHARE AND TAX RATE BEFORE
ADJUSTMENTS
|
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions,
except for per share amounts)
|
Income before
Income Tax
(Benefit)
Expense and
Equity
Earnings of
Unconsolidated
Affiliates, net
|
|
Income
Tax
(Benefit)
Expense
|
|
Equity
Earnings
|
|
Non-
Controlling
Interest
|
|
Net
Income
Attributable
to
Greif, Inc.
|
|
Diluted
Class A
Earnings
Per
Share
|
|
Tax
Rate
|
Three months ended
January 31, 2019
|
$
|
55.7
|
|
|
$
|
20.0
|
|
|
$
|
(0.1)
|
|
|
$
|
6.1
|
|
|
$
|
29.7
|
|
|
$
|
0.51
|
|
|
35.9%
|
Gain on disposal of
properties, plants, equipment and businesses, net
|
(0.9)
|
|
|
(0.2)
|
|
|
—
|
|
|
(0.1)
|
|
|
(0.6)
|
|
|
(0.01)
|
|
|
|
Restructuring
charges
|
3.7
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
0.04
|
|
|
|
Acquisition-related
costs
|
2.6
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
0.04
|
|
|
|
Non-cash asset
impairment charges
|
2.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|
0.04
|
|
|
|
Tax net benefit
resulting from the Tax Reform Act
|
—
|
|
|
(1.8)
|
|
|
|
|
—
|
|
|
1.8
|
|
|
0.03
|
|
|
|
Excluding
Adjustments
|
$
|
63.2
|
|
|
$
|
19.0
|
|
|
$
|
(0.1)
|
|
|
$
|
6.0
|
|
|
$
|
38.3
|
|
|
$
|
0.65
|
|
|
30.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
January 31, 2018
|
$
|
44.5
|
|
|
$
|
(15.6)
|
|
|
$
|
—
|
|
|
$
|
3.6
|
|
|
$
|
56.5
|
|
|
$
|
0.96
|
|
|
(35.1)%
|
Gain on disposal of
properties, plants, equipment and businesses, net
|
(4.6)
|
|
|
(0.3)
|
|
|
—
|
|
|
—
|
|
|
(4.3)
|
|
|
(0.07)
|
|
|
|
Restructuring
charges
|
4.1
|
|
|
0.5
|
|
|
—
|
|
|
0.2
|
|
|
3.4
|
|
|
0.06
|
|
|
|
Acquisition-related
costs
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
|
Non-cash asset
impairment charges
|
2.9
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
0.03
|
|
|
|
Tax net benefit
resulting from the Tax Reform Act
|
—
|
|
|
29.1
|
|
|
—
|
|
|
—
|
|
|
(29.1)
|
|
|
(0.49)
|
|
|
|
Excluding
Adjustments
|
$
|
47.1
|
|
|
$
|
14.5
|
|
|
$
|
—
|
|
|
$
|
3.8
|
|
|
$
|
28.8
|
|
|
$
|
0.49
|
|
|
30.8%
|
The impact of income tax expense and non-controlling interest on
each adjustment is calculated based on tax rates and ownership
percentages specific to each applicable entity.
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
GAAP TO NON-GAAP
RECONCILIATION
|
NET SALES TO NET
SALES EXCLUDING THE IMPACT OF
|
CURRENCY
TRANSLATION
|
UNAUDITED
|
|
|
|
|
|
|
|
Three months ended
January 31,
|
|
|
|
|
(in
millions)
|
2019
|
|
2018
|
|
Increase in
Net Sales ($)
|
|
Increase in
Net Sales (%)
|
Consolidated
|
|
|
|
|
|
|
|
Net Sales
|
$
|
897.0
|
|
|
$
|
905.7
|
|
|
$
|
(8.7)
|
|
|
(1.0)%
|
Currency
Translation
|
26.8
|
|
|
N/A
|
|
|
|
|
|
Net Sales Excluding
the Impact of Currency Translation
|
$
|
923.8
|
|
|
$
|
905.7
|
|
|
$
|
18.1
|
|
|
2.0%
|
Rigid Industrial
Packaging & Services
|
|
|
|
|
|
|
|
Net Sales
|
$
|
597.9
|
|
|
$
|
615.4
|
|
|
$
|
(17.5)
|
|
|
(2.8)%
|
Currency
Translation
|
23.0
|
|
|
N/A
|
|
|
|
|
|
Net Sales Excluding
the Impact of Currency Translation
|
$
|
620.9
|
|
|
$
|
615.4
|
|
|
$
|
5.5
|
|
|
0.9%
|
Flexible
Products & Services
|
|
|
|
|
|
|
|
Net Sales
|
$
|
75.1
|
|
|
$
|
80.0
|
|
|
$
|
(4.9)
|
|
|
(6.1)%
|
Currency
Translation
|
3.8
|
|
|
N/A
|
|
|
|
|
|
Net Sales Excluding
the Impact of Currency Translation
|
$
|
78.9
|
|
|
$
|
80.0
|
|
|
$
|
(1.1)
|
|
|
(1.4)%
|
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
PROJECTED 2019
GUIDANCE RECONCILIATION
|
ADJUSTED
FREE CASH FLOW
|
UNAUDITED
|
|
Fiscal 2019
Guidance Range
|
(in
millions)
|
Scenario
1
|
|
Scenario
2
|
Net cash provided
by operating activities
|
$
|
350.0
|
|
|
$
|
400.0
|
|
Cash paid for
purchases of properties, plants and equipment
|
(170.0)
|
|
|
(190.0)
|
|
Free cash
flow
|
$
|
180.0
|
|
|
$
|
210.0
|
|
Cash paid for
acquisition-related costs and debt extinguishment
|
$
|
35.0
|
|
|
$
|
35.0
|
|
Adjusted free cash
flow
|
$
|
215.0
|
|
|
$
|
245.0
|
|
GREIF, INC. AND
SUBSIDIARY COMPANIES
|
PROJECTED 2019 KEY
METRICS
|
UNAUDITED
|
|
|
|
(in
millions)
|
Fiscal 2019
Outlook
Reported at Q4
|
Fiscal 2019
Outlook
Reported at Q1
|
Depreciation &
amortization expense
|
$125 -
$130
|
$195 -
$205
|
Interest
expense
|
$50 - $55
|
$120 -
$130
|
Other expense,
net
|
$15 - $20
|
No change
|
Net income
attributable to noncontrolling interest
|
$18 - $22
|
No change
|
Tax rate excluding
the impact of special items
|
28% - 32%
|
No change
|
Capital
expenditures
|
$130 -
$150
|
$170 -
$190
|
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SOURCE Greif, Inc.