Greif, Inc. Issues Fourth Quarter and Fiscal Year 2024 Earnings Release

Corrected fourth quarter 2024 net income, excluding adjustments, revised to $65.5 million and 2024 Class A diluted earnings per share, excluding adjustments, revised to $1.13

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

Fiscal Fourth Quarter 2024 Financial Highlights:

(all results compared to the fourth quarter 2023 unless otherwise noted)

Net income decreased 6.5% to $63.4 million or $1.08 per diluted Class A share compared to net income of $67.8 million or $1.16 per diluted Class A share. Net income, excluding the impact of adjustments⁽¹⁾, decreased 29.3% to $65.5 million or $1.13 per diluted Class A share compared to net income, excluding the impact of adjustments, of $92.6 million or $1.59 per diluted Class A share.
Adjusted EBITDA⁽²⁾decreased 2.0% to $197.6 million compared to Adjusted EBITDA of $201.6 million.
Net cash provided by operating activities decreased by $16.3 million to $187.2 million. Adjusted free cash flow⁽³⁾increased by $8.5 million to $144.7 million.

Fiscal Year Results Include:

(all results compared to the fiscal year 2023 unless otherwise noted):

Net income decreased 27.0% to $262.1 million or $4.52 per diluted Class A share compared to net income of $359.2 million or $6.15 per diluted Class A share. Net income, excluding the impact of adjustments, decreased 30.9% to $249.5 million or $4.31 per diluted Class A share compared to net income, excluding the impact of adjustments, of $361.2 million or $6.19 per diluted Class A share.
Adjusted EBITDA decreased 15.6% to $694.2 million compared to Adjusted EBITDA of $822.2 million.
Net cash provided by operating activities decreased by $293.5 million to $356.0 million. Adjusted free cash flow decreased by $291.4 million to $189.8 million.
Total debt increased by $525.5 million to $2,740.6 million. Net debt⁽⁴⁾ increased by $508.7 million to $2,542.9 million. The Company’s leverage ratio⁽⁵⁾ increased to 3.53x from 2.2x in the prior year quarter, and decreased from 3.64x sequentially.

Strategic Actions and Announcements

Hosting Investor Day on December 11, 2024, at Convene: 75 Rockefeller Plaza in New York City.
Completed previously announced business model optimization project to fully leverage our core competitive advantages and facilitate accelerated growth. This operating model change will result in the following four new reportable segments beginning in the first quarter of 2025: Customized Polymer Solutions; Durable Metal Solutions; Sustainable Fiber Solutions; and Integrated Solutions.
Related to our new segments, on Thursday, December 5, 2024, we will be releasing online the previous eight quarters of segment financial highlights to assist our investor community in modeling our new reportable segments. This information will be made available at our investor relations site https://investor.greif.com/.
Announcing targeted cost optimization effort to eliminate $100 million of structural costs from the business through a combination of SG&A rationalization, network optimization, and operating efficiency gains. More information on this effort will be provided at our upcoming Investor Day.

Commentary from CEO Ole Rosgaard

“I am pleased to report a solid fourth quarter and full year 2024 result, particularly in light of the continuation of this extended period of industrial contraction. While managing the business for the present, we also made significant strides under our Build to Last strategy towards the future, and our executive team and I look forward to sharing more information at our Investor Day next week. Our investors can expect an interactive and engaging half day session, and we highly encourage your in-person attendance as we look forward to 2025 and beyond.”

Build to Last Mission Progress

Recently completed our fourteenth wave NPS⁽⁶⁾survey, receiving feedback from nearly five thousand customers globally for a net score of 69, recognized as a world-class score within the manufacturing industry. At our upcoming Investor Day, we plan to further discuss the powerful correlation between NPS, an indicator of our Legendary Customer Service, and financial performance. We thank our customers for their continued feedback, which is critical in 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 acquisition and integration related costs, restructuring charges, non-cash asset impairment charges, non-cash pension settlement charges, (gain) loss on disposal of properties, plants and equipment, net, (gain) loss on disposal of businesses, net, and other 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 non-cash pension settlement charges, plus (gain) loss on disposal of properties, plants and equipment, net, plus (gain) loss on disposal of businesses, net, plus other 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 adjusted 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”). As calculated under the 2022 Credit Agreement, adjusted net debt was $2,452.3 million, $2,608.5 million, and $1,856.8 million as of October 31, 2024, July 31, 2024 and October 31, 2023, respectively, and trailing twelve month credit agreement EBITDA was $695.0 million, $717.2 million, and $845.9 million as of October 31, 2024, July 31, 2024 and October 31, 2023, respectively.

(6)	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.

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 2023 unless otherwise noted)

Net sales are impacted mainly by the volume of primary products⁽⁷⁾ 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 2024 as compared to the prior year quarter for the business segments with manufacturing operations. Net sales from completed acquisitions of Reliance Products Ltd. (“Reliance”) and Ipackchem Group SAS (“Ipackchem”) primary products are not included in the table below, but will be included in their respective segments starting in the fiscal first quarter of 2025 for Reliance and fiscal third quarter of 2025 for Ipackchem.

Global Industrial Packaging

Net sales increased by $65.9 million to $786.9 million primarily due to contributions from recent acquisitions and higher volumes.

Gross profit increased by $12.6 million to $167.0 million due to the same factors that impacted net sales, partially offset by higher raw material, labor and manufacturing costs.

Operating profit decreased by $0.1 million to $75.0 million primarily due to higher SG&A expenses from recent acquisitions, offset by the same factors that impacted gross profit. Adjusted EBITDA increased by $4.0 million to $109.4 million primarily due to the same factors that impacted gross profit, partially offset by higher SG&A expenses from recent acquisitions.

Paper Packaging & Services

Net sales increased by $42.9 million to $624.5 million primarily due to higher average selling prices as a result of higher published containerboard and boxboard prices.

Gross profit decreased by $0.1 million to $118.7 million primarily due to higher raw material and labor costs, offset by the same factors that impacted net sales.

Operating profit increased by $13.4 million to $48.7 million primarily due to lower non-cash impairment charges and restructuring charges related to optimizing and rationalizing operations in the prior year, partially offset by the same factors that impacted gross profit and higher SG&A expenses related to higher health, medical, incentive and pension expenses. Adjusted EBITDA decreased by $8.4 million to $85.3 million primarily due to the same factors that impacted gross profit and higher SG&A expenses related to higher health, medical, incentive and pension expenses.

Tax Summary

During the fourth quarter, we recorded an income tax rate of 21.8 percent and a tax rate excluding the impact of adjustments of 21.9 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 10.6 percent and a tax rate excluding the impact of adjustments of 7.4 percent.

Dividend Summary

On December 3, 2024, the Board of Directors declared quarterly cash dividends of $0.54 per share of Class A Common Stock and $0.80 per share of Class B Common Stock. Dividends are payable on January 1, 2025, to stockholders of record at the close of business on December 16, 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.

Company Outlook

Our markets have now experienced a multi-year period of industrial contraction, and we have not identified any compelling demand inflection on the horizon, despite slightly improved year over year volumes. While we believe we are well positioned for an eventual recovery of the industrial economy, at this time we believe it is appropriate to provide only low-end guidance based on the continuation of demand trends reflected in the past year, current price/cost factors in Paper Packaging and Services, and other identifiable discrete items which we will discuss during our fourth quarter earnings release call. Call-in details are provided below.

For full results click here.

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.

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