Greif Reports Fourth Quarter and Fiscal 2021 Results
Greif, Inc. (“Greif”), a world leader in industrial packaging products and services, today announced fourth quarter and fiscal 2021 results.
Fourth Quarter Results Include (all results compared to the fourth quarter 2020 unless otherwise noted)(1)
Net income of $104.5 million or $1.74 per diluted Class A share compared to net income of $44.4 million or $0.74 per diluted Class A share. Net income, excluding the impact of adjustments(2), of $115.4 million or $1.93 per diluted Class A share compared to net income, excluding the impact of adjustments, of $46.4 million or $0.78 per diluted Class A share. Adjusted EBITDA(3) increased by $56.8 million to $211.3 million.
Net cash provided by operating activities decreased by $63.1 million to $137.3 million. Adjusted free cash flow(4) decreased by $79.1 million to $94.8 million primarily as a result of inflationary raw material costs.
Total debt decreased by $261.4 million to $2,225.6 million. Net debt(5) decreased by $280.1 million to $2,101.0 million and decreased by $66.8 million sequentially from the third quarter of 2021. The Company’s leverage ratio(6) decreased to 2.49x compared to 3.66x, within our targeted leverage ratio range of 2.0x – 2.5x.
Fiscal Year Results Include (all results compared to the fiscal year 2020 unless otherwise noted)
Net income of $390.7 million or $6.54 per diluted Class A share compared to net income of $108.8 million or $1.83 per diluted Class A share. Net income, excluding the impact of adjustments, of $334.5 million or $5.60 per diluted Class A share compared to net income, excluding the impact of adjustments, of $190.9 million or $3.22 per diluted Class A share. Adjusted EBITDA increased by $121.6 million to $764.2 million.
Net cash provided by operating activities decreased by $58.7 million to $396.0 million. Adjusted free cash flow decreased by $72.1 million to $274.1 million.
The Company paid $105.8 million in cash dividends to stockholders in fiscal 2021.
Named to Newsweek’s Most Loved Workplaces list for 2021, ranking number 59 among the top 100 companies recognized for colleague happiness and satisfaction at work.
Pete Watson, Greif’s President and Chief Executive Officer, commented:
“The global Greif team delivered exceptional results in fiscal 2021 and overcame significant external challenges to deliver record net sales and profits for the full fiscal year,” said Pete Watson, Greif’s President and Chief Executive Officer. “In addition, we advanced our financial priorities, increasing our dividend and reaching our targeted leverage ratio range, while making notable progress on our ESG journey. Looking ahead, we remain well positioned to provide differentiated packaging solutions that generate value for our customers and shareholders.”
The Company’s consolidated CSI(7) score was 93.1 during the fourth quarter 2021 and was 93.2 on a trailing four quarter basis. Our long term objective is for each business segment to achieve a CSI score of 95.0 or greater.
CSI for the Global Industrial Packaging and Paper Packaging & Services segment were both approximately flat to the prior year quarter at 94.2 and 91.8, respectively.
In addition we completed our eleventh NPS(8) survey and achieved a score of 60.0 which represents a 7.0 point decline from our wave ten results. Detailed analysis of customer comments from wave eleven indicate the decline was largely due to poor communication about late customer deliveries caused by factors beyond our control within the supply chain. The Company is currently taking focused actions to enhance communications to better assist customers with order delivery planning.
Segment Results (all results compared to the fourth quarter of 2020 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 2021 as compared to the prior year quarter for the business segments with manufacturing operations.
Global Industrial Packaging
Net sales increased by $299.3 million to $951.6 million. Net sales excluding foreign currency translation increased by $292.0 million due primarily due to higher volumes and higher average sale prices.
Gross profit increased by $53.5 million to $184.3 million. The change in gross profit was primarily due to the same factors that impacted net sales, partially offset by higher raw material, manufacturing and transportation costs.
Operating profit increased by $38.9 million to $97.8 million. Adjusted EBITDA increased by $47.3 million to $121.4 million primarily due to the same factors that impacted gross profit.
Paper Packaging & Services
Net sales increased by $119.4 million to $621.7 million primarily due to higher volumes and higher published containerboard and boxboard prices.
Gross profit increased by $11.0 million to $109.8 million. The change in gross profit was primarily due to the same factors that impacted net sales, partially offset by higher raw material, manufacturing and transportation costs.
Operating profit increased by $11.2 million to $41.9 million. Adjusted EBITDA increased by $10.3 million to $87.7 million primarily due to the same factors that impacted gross profit.
Net sales decreased by $1.8 million to $4.9 million due primarily to reduced timber available for sale as a result of acreage sold in the second quarter.
Operating profit decreased by $0.4 million to $1.8 million. Adjusted EBITDA decreased by $0.8 million to $2.2 million.
During the fourth quarter, the Company recorded an income tax rate of 10.7 percent and a tax rate excluding the impact of adjustments of 11.3 percent. As previously disclosed, the application of FIN 18 often causes fluctuations in our quarterly effective tax rates. For the full year, the Company recorded an income tax rate of 14.5 percent and a tax rate excluding the impact of adjustments of 18.1 percent.
On December 7, 2021, the Board of Directors declared quarterly cash dividends of $0.46 per share of Class A Common Stock and $0.68 per share of Class B Common Stock. Dividends are payable on January 1, 2022, to stockholders of record at the close of business on December 17, 2021.
For the full fourth quarter results, click here.
(1) As previously reported, during the first quarter of 2021, the former Rigid Industrial Packaging & Services and Flexible Products & Services segments were combined into a single reportable segment now known as the Global Industrial Packaging segment. On February 24, 2021 the Company filed a Current Report on Form 8-K with the SEC to furnish certain historical GAAP and non-GAAP financial information in a revised presentation aligned with the Company’s new reportable segment structure.
(2) 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, incremental COVID-19 costs, net, (gain) loss on disposal of properties, plants, equipment and businesses, net and timberland gains, net.
(3) 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 and integration related costs, plus non-cash asset impairment charges, plus non-cash pension settlement charges, plus incremental COVID-19 costs, net, plus (gain) loss on disposal of properties, plants, equipment and businesses, net, less timberland gains, net.
(4) 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 incremental COVID-19 costs, net, plus cash paid for acquisition and integration related Enterprise Resource Planning (ERP) systems.
(5) Net debt is defined as total debt less cash and cash equivalents.
(6) Leverage ratio is defined as trailing twelve month EBITDA divided by net debt, each as calculated under the terms of the Company’s Amended and Restated Credit Agreement dated as of February 11, 2019, filed as Exhibit 10.1 on Form 8-K/A on March 26, 2020 (the “2019 Credit Agreement”).
(7) Customer satisfaction index (CSI) tracks a variety of internal metrics designed to enhance the customer experience in dealing with Greif.
(8) 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.
(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; and 1&2 loop and 4 loop flexible intermediate bulk containers.
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. In addition, Greif manages timber properties in the southeastern United States. The Company is strategically positioned in 40 countries to serve global as well as regional customers. Additional information is on the Company’s website at www.greif.com.
Matt Eichmann – Investor Relations – email@example.com – (740) 549-6067
Source: Greif, Inc.