Greif Reports Fourth Quarter and Fiscal 2023 Results

Greif, Inc. (NYSE: GEF, GEF.B), a world leader in industrial packaging products and services, today announced fourth quarter and fiscal 2023 results.

Fourth Quarter Results Include (all results compared to the fourth quarter 2022 unless otherwise noted):

• Net income of $67.8 million or $1.16 per diluted Class A share compared to net income of $99.5 million or $1.67 per diluted Class A share. Net income, excluding the impact of adjustments⁽¹⁾, of $90.9 million or $1.56 per diluted Class A share compared to net income, excluding the impact of adjustments, of $109.0 million or $1.83 per diluted Class A share.
• Adjusted EBITDA⁽²⁾ of $199.2 million, a decrease of $19.5 million, compared to Adjusted EBITDA of $218.7 million.
• Net cash provided by operating activities decreased by $83.1 million to $203.5 million. Adjusted free cash flow⁽³⁾ decreased by $98.3 million to $136.2 million.

Fiscal Year Results Include (all results compared to the fiscal year 2022 unless otherwise noted):

• Net income of $359.2 million or $6.15 per diluted Class A share compared to net income of $376.7 million or $6.30 per diluted Class A share. Net income, excluding the impact of adjustments, of $358.7 million or $6.14 per diluted Class A share compared to net income, excluding the impact of adjustments, of $471.2 million or $7.87 per diluted Class A share.
• Adjusted EBITDA of $818.8 million, a decrease of $98.7 million, compared to Adjusted EBITDA of $917.5 million.
• Net cash provided by operating activities decreased by $8.0 million to $649.5 million. Adjusted free cash flow decreased by $25.1 million to $481.2 million.
• Total debt increased by $299.0 million to $2,215.1 million related to acquisitions closed during the year. Net debt⁽⁴⁾ increased by $265.2 million to $2,034.2 million. The Company’s leverage ratio⁽⁵⁾ increased to 2.2x from 1.73x and also from 2.17x sequentially, which is within our targeted leverage ratio range of 2.0x – 2.5x.
• The Company increased its quarterly dividend by 4% during the year, paying a record $116.5 million in cash dividends to stockholders in fiscal 2023.

Strategic Actions and Announcements

• Completed acquisition of 100% ownership interest in Reliance Products, Ltd., a leading producer of high-performance barrier and conventional blow molded jerrycans and small plastic containers in Canada, as of October 1, 2023.
• Signed definitive agreement to acquire 100% ownership interest in Ipackchem Group SAS, a global leader in premium barrier and non-barrier jerrycans and small plastic containers, from an affiliate of SK Capital Partners, in a cash transaction valued at $538⁽⁸⁾ million. The transaction will be funded through available capacity in the Company’s existing credit facilities and is expected to close by the end of the second quarter of the Company’s 2024 fiscal year, subject to various closing conditions, including governmental and regulatory clearances.

CEO Commentary

“I am deeply proud of our team and the results they delivered in fiscal 2023, in the face of market headwinds, which persisted over the balance of the year. Facing this historic volume adversity, our team worked collaboratively to take necessary and decisive action to deliver exceptional value for our customers and our shareholders. As a result of that work, I am pleased to share that 2023 was the second-best year in Greif’s 146-year history for recorded Adjusted EBITDA and Adjusted Free Cash Flow – a truly remarkable achievement. In addition, during the year we deployed over $550 million towards acquisitions and continued to resource ongoing internal initiatives to bolster our long-term trajectory and enhance shareholder value. As we continue to invest and advance our Build to Last strategy, I am humbled by our team’s execution and commitment, and excited about Greif’s future as we look ahead through 2024.”

Build to Last Mission Progress

Customer satisfaction is a key component of our mission to Deliver Legendary Customer Service. Our consolidated CSI⁽⁶⁾ score was 93.1 at the end of the fourth quarter 2023. Paper Packaging & Services CSI score was 92.6, and Global Industrial Packaging CSI score was 93.7. Additionally, we have recently completed our thirteenth wave NPS⁽⁷⁾ survey, receiving feedback from nearly five thousand customers globally for a net score of 68, a five percent improvement over the previous year survey which solidifies Greif as a leader in customer service within the manufacturing industry. We thank our customers for their continued feedback which is critical to helping us achieve our vision to be the best performing customer service company in the world, and we are proud to continue to earn positive feedback from our customers throughout a difficult global operating environment.

(1)	Adjustments that are excluded from net income before adjustments and from earnings per diluted Class A share before adjustments are restructuring charges, acquisition and integration related costs, non-cash asset impairment charges, non-cash pension settlement charges, and (gain) loss on disposal of properties, plants, equipment and businesses, net.
(2)	Adjusted EBITDA is defined as net income, plus interest expense, net, plus debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization expense, plus restructuring charges, plus acquisition and integration related costs, plus non-cash asset impairment charges, plus non-cash pension settlement charges, plus (gain) loss on disposal of properties, plants, equipment and businesses, net.
(3)	Adjusted free cash flow is defined as net cash provided by operating activities, less cash paid for purchases of properties, plants and equipment, plus cash paid for acquisition and integration related costs, plus cash paid for integration related Enterprise Resource Planning (“ERP”) systems and equipment, plus cash paid for debt issuance costs, plus cash proceeds redeployment related to replacement of non-operating corporate asset, plus cash paid for taxes related to Tama, Iowa mill divestment.
(4)	Net debt is defined as total debt less cash and cash equivalents.
(5)	Leverage ratio for the periods indicated is defined as net debt divided by trailing twelve month EBITDA, each as calculated under the terms of the Company’s Second Amended and Restated Credit Agreement dated as of March 1, 2022, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2022 (the “2022 Credit Agreement”).
(6)	Customer satisfaction index (“CSI”) tracks a variety of internal metrics designed to enhance the customer experience in dealing with Greif.
(7)	Net Promoter Score (“NPS”) is derived from a survey conducted by a third party that measures how likely a customer is to recommend Greif as a business partner. NPS scores are calculated by subtracting the percentage of detractors a business has from the percentage of its promoters.
(8)	Transaction value translated based on 1.05/1.00 EUR to USD exchange rate as of October 18, 2023, as disclosed in our press release dated October 31, 2023.

Note: A reconciliation of the differences between all non-GAAP financial measures used in this release with the most directly comparable GAAP financial measures is included in the financial schedules that are a part of this release. These non-GAAP financial measures are intended to supplement and should be read together with our financial results. They should not be considered an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of this financial information should not place undue reliance on these non-GAAP financial measures.

Segment Results (all results compared to the fourth quarter of 2022 unless otherwise noted)

Net sales are impacted mainly by the volume of primary products⁽⁹⁾ 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 fourth quarter of 2023 as compared to the prior year quarter for the business segments with manufacturing operations. Net sales from Lee Container, Centurion Container, ColePak and Reliance’s primary products are not included in the table below, but will be included in their respective segments starting in the first fiscal quarter for Lee Container, second fiscal quarter for Centurion Container and fourth fiscal quarter for ColePak and Reliance.

Net Sales Impact – Primary Products	Global Industrial Packaging	Paper Packaging & Services
Currency Translation	(2.2)%	—%
Volume	(10.1)%	(5.0)%
Selling Prices and Product Mix	(6.6)%	(9.9)%
Total Impact of Primary Products	(18.9)%	(14.9)%

Global Industrial Packaging

Net sales decreased by $103.9 million to $721.0 million primarily due to lower volumes and lower average selling prices as a result of contractual price adjustment mechanisms.

Gross profit increased by $1.9 million to $154.4 million due to lower raw material costs, largely offset by the same factors that impacted net sales.

Operating profit increased by $7.6 million to $75.1 million primarily due to the same factors that impacted gross profit. Adjusted EBITDA increased by $8.2 million to $104.2 million primarily due to the same factors that impacted gross profit.

Paper Packaging & Services 

Net sales decreased by $84.0 million to $581.6 million primarily due to lower volumes and lower average selling prices due to lower published containerboard and boxboard prices.

Gross profit decreased by $36.8 million to $118.8 million. The decrease in gross profit was primarily due to the same factors that impacted net sales, partially offset by lower old corrugated container and other raw material input costs, as well as lower transportation and manufacturing costs.

Operating profit decreased by $48.1 million to $35.3 million primarily due to the same factors that impacted gross profit, as well as a non-cash impairment charge and restructuring charges related to optimizing and rationalizing operations. Adjusted EBITDA decreased by $28.3 million to $92.5 million primarily due to the same factors that impacted gross profit, partially offset by lower selling, general and administrative costs.

Tax Summary

During the fourth quarter, we recorded an income tax rate of 12.0 percent and a tax rate excluding the impact of adjustments of 14.9 percent. Note that the application of accounting for income taxes often causes fluctuations in our quarterly effective tax rates. For the full year, we recorded an income tax rate of 23.8 percent and a tax rate excluding the impact of adjustments of 23.1 percent. 

Dividend Summary

On December 5, 2023, the Board of Directors declared quarterly cash dividends of $0.52 per share of Class A Common Stock and $0.77 per share of Class B Common Stock. Dividends are payable on January 1, 2024, to stockholders of record at the close of business on December 18, 2023.

(9)	Primary products are manufactured steel, plastic and fibre drums; new and reconditioned intermediate bulk containers; linerboard, containerboard, corrugated sheets and corrugated containers, boxboard and tube and core products.

Company Outlook

Given the deterioration of product demand in the past year and the degree of uncertainty in the forward looking macro-economic environment, we are unable to determine the trajectory of product demand for the upcoming fiscal year. As a result, we are providing only a low-end guidance estimate that is based on the continuation of demand trends reflected in the past year and the current price/cost factors in Paper Packaging and Services. The low-end guidance estimate does not factor in any contribution from the recently announced proposed acquisition of Ipackchem.

(in millions, except per share amounts)	Fiscal 2024 Low-End Guidance Estimate
Adjusted EBITDA	$585
Adjusted free cash flow	$200

Note: Fiscal 2024 net income guidance, the most directly comparable GAAP financial measure to Adjusted EBITDA, is not provided in this release due to the potential for one or more of the following, the timing and magnitude of which we are unable to reliably forecast: gains or losses on the disposal of businesses or properties, plants and equipment, net; non-cash asset impairment charges due to unanticipated changes in the business; restructuring-related activities; acquisition and integration related costs; and ongoing initiatives under our Build to Last strategy. No reconciliation of the 2024 low-end guidance estimate of Adjusted EBITDA, a non-GAAP financial measure which excludes restructuring charges, acquisition and integration related costs, non-cash asset impairment charges, and (gain) loss on the disposal of properties, plants, equipment and businesses, net, is included in this release because, due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible, we are unable to quantify certain amounts that would be required to be included in net income, the most directly comparable GAAP financial measure, without unreasonable efforts. A reconciliation of 2024 low-end guidance estimate of adjusted free cash flow to fiscal 2024 forecasted net cash provided by operating activities, the most directly comparable GAAP financial measure, is included in this release.

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About Greif

Greif is a global leader in industrial packaging products and services and is pursuing its vision: to be the best performing customer service company in the world. The Company produces steel, plastic and fibre drums, intermediate bulk containers, reconditioned containers, jerrycans and other small plastics, containerboard, uncoated recycled paperboard, coated recycled paperboard, tubes and cores and a diverse mix of specialty products. The Company also manufactures packaging accessories and provides filling, packaging and other services for a wide range of industries. In addition, Greif manages timber properties in the southeastern United States. The Company is strategically positioned in over 35 countries to serve global as well as regional customers. Additional information is on the Company’s website at www.greif.com.

Contact:

Matt Leahy – Vice President, Corporate Development & Investor Relations – Matthew.Leahy@Greif.com – (740) 549-6158

Source: Greif, Inc.