Greif Reports Fiscal Second Quarter 2024 Results

Greif, Inc., a global leader in industrial packaging products and services, announced fiscal second quarter 2024 results.

Fiscal Second Quarter 2024 Financial Highlights:
(all results compared to the second quarter of 2023 unless otherwise noted)

• Net income decreased 60.1% to $44.4 million or $0.77 per diluted Class A share compared to net income of $111.2 million or $1.90 per diluted Class A share. Net income, excluding the impact of adjustments⁽¹⁾, decreased 53.9% to $47.9 million or $0.82 per diluted Class A share compared to net income, excluding the impact of adjustments, of $103.8 million or $1.77 per diluted Class A share.
• Adjusted EBITDA⁽²⁾ decreased 25.7% to $169.9 million compared to Adjusted EBITDA of $228.6 million.
• Net cash provided by operating activities decreased by $123.3 million to $87.5 million. Adjusted free cash flow⁽³⁾ decreased by $126.5 million to a source of $59.0 million.
• Total debt of $2,916.1 million increased by $626.9 million, primarily to fund the acquisition of Ipackchem. Net debt⁽⁴⁾ increased by $589.4 million to $2,720.1 million. Our leverage ratio⁽⁵⁾ increased to 3.44x from 2.53x sequentially, and increased from 2.25x in the prior year quarter.

Strategic Actions and Announcements

• On March 26, 2024, Greif announced completion of its acquisition of Ipackchem. This acquisition is another key milestone in our strategic objective to grow a global leading platform in high-performance small plastic containers.
• Greif will host its Investor Day in New York City on December 11^th, 2024. Further information, including a save the date and formal invitations will be provided closer to the date.

CEO Commentary

“We are excited to present another quarter of solid progress on our Build to Last Strategy, including completing our Ipackchem acquisition and achieving multiple other milestones on our Build to Last missions,” stated Ole Rosgaard, Chief Executive Officer of Greif. “These missions, enabled by operating excellence, are structurally improving our operating efficiency, creating significant operating leverage as we saw continued signs of demand improvement in many of our key regions and end markets during the quarter. On the demand side, our second quarter results exceeded our expectations, however results were impacted by significant negative price or cost in our paper business from the continued delayed recognition of announced price increases. For the time being, we continue to monitor and manage the improving demand alongside our customers, while strictly managing costs to ensure value creation.”

Build to Last Mission Progress

Our customer satisfaction index (CSI)⁽⁶⁾ is a key metric we utilize to ensure continued customer service excellence, with a long-term goal of a CSI score greater than 95.0. Our consolidated CSI score was 92.6 at the end of the fiscal second quarter 2024. The CSI score for the Paper Packaging & Services business segment was 93.7 and for the Global Industrial Packaging segment was 91.4.

Each year Greif conducts a Gallup Engagement Survey as part of our mission to Create Thriving Communities through exemplary colleague engagement. In April we concluded our 2023 survey and achieved an engagement score of 84, which is again within the top quartile of all manufacturing organizations. Additionally, this year, due to our exemplary workplace culture, we are honored to have received from Gallup the 2024 Exceptional Workplace Award. Thank you to our over 14,000 colleagues globally for their continued passion for Greif and commitment to each other.

Aligned to our mission of Protecting Our Future, in April Greif released its 15^th annual Sustainability Report, which is available for review at https://www.greif.com/sustainability/. We encourage our investors to please review this report, which includes key milestones achieved in 2023 as well as an update on our progress towards our 2030 sustainability goals. 

⁽¹⁾ Adjustments that are excluded from net income before adjustments and from earnings per diluted Class A share before adjustments are acquisition and integration related costs, restructuring charges, non-cash asset impairment charges, (gain) loss on disposal of properties, plants and equipment, net, (gain) loss on disposal of businesses, net, and fiscal year-end change costs.

⁽²⁾ Adjusted EBITDA is defined as net income, plus interest expense, net, plus income tax (benefit) expense, plus depreciation, depletion and amortization expense, plus acquisition and integration related costs, plus restructuring charges, plus non-cash asset impairment charges, plus (gain) loss on disposal of properties, plants and equipment, net, plus (gain) loss on disposal of businesses, net, plus fiscal year-end change costs.

⁽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 taxes related to Tama, Iowa mill divestment, plus cash paid for fiscal year-end change costs.

⁽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⁾ CSI, an internal metric, is designed to enhance our customer’s experience.

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.

Fiscal Second Quarter 2024 Segment Results:
(all results compared to the second quarter of 2023 unless otherwise noted)

Net sales are impacted mainly by the volume of primary products⁽⁷⁾ sold, selling prices and 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 fiscal second quarter of 2024 as compared to the prior year quarter for the business segments with manufacturing operations. Net sales from completed acquisitions of Centurion Container, Reliance and Ipackchem’s primary products are not included in the table below, but will be included in their respective segments starting in the upcoming fiscal third quarter for Centurion Container, the fiscal first quarter of 2025 for Reliance and fiscal third quarter of 2025 for Ipackchem.

Global Industrial Packaging

Net sales increased by $56.6 million to $804.8 million primarily due to higher volumes, higher average selling prices and contribution from recent acquisitions.

Gross profit increased by $3.6 million to $181.5 million. The increase in gross profit was primarily due to the same factors that impacted net sales, offset by higher raw material, transportation and manufacturing costs.

Operating profit decreased by $27.9 million to $83.4 million primarily due to higher SG&A expenses related to higher compensation expenses, costs incurred for strategic investments, and amortization expenses from recent acquisitions, and a $9.8 million gain recognized during the second quarter of 2023 related to our previously held minority ownership interest in Centurion, partially offset by the same factors that impacted gross profit.

Adjusted EBITDA decreased by $2.9 million to $118.3 million primarily due to higher SG&A expenses, partially offset by the same factors that impacted gross profit.

Paper Packaging & Services

Net sales increased by $6.0 million to $560.8 million primarily due to higher volumes and contribution from recent acquisitions, partially offset by lower average selling prices.

Gross profit decreased by $45.4 million to $86.0 million. The decrease in gross profit was primarily due to higher raw material, transportation and manufacturing costs, partially offset by the same factors that impacted net sales.

Operating profit decreased by $55.0 million to $12.6 million primarily due to the same factors that impacted gross profit and higher SG&A expenses related to higher incentive expenses and costs incurred for strategic investments.

Adjusted EBITDA decreased by $55.9 million to $49.0 million primarily due to the same factors that impacted operating profit.

Tax Summary

During the second quarter, we recorded an income tax rate of 24.9 percent and a tax rate excluding the impact of adjustments of 25.0 percent. Note that the application of FIN 18 frequently causes fluctuations in our quarterly effective tax rates. For fiscal 2024, we expect our tax rate to range between 8.0 to 12.0 percent and our tax rate excluding adjustments to range between 10.0 to 14.0 percent.

Dividend Summary

On June 3, 2024, the Board of Directors declared quarterly cash dividends of $0.52 per share of Class A Common Stock and $0.78 per share of Class B Common Stock. Dividends are payable on July 1, 2024, to stockholders of record at the close of business on June 18, 2024. 

⁽⁷⁾ Primary products are manufactured steel, plastic and fibre drums; new and reconditioned intermediate bulk containers; jerrycans and other small plastics; linerboard, containerboard, corrugated sheets and corrugated containers; and boxboard and tube and core products.

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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.