Greif Reports First Quarter 2022 Results

Greif, Inc. (the “Company”), a global leader in industrial packaging products and services, today announced first quarter 2022 results.

First Quarter Financial Highlights include (all results compared to the first quarter of 2021 unless otherwise noted):

• Net income of $10.3 million or $0.18 per diluted Class A share decreased compared to net income of $23.4 million or $0.40 per diluted Class A share. Net income, excluding the impact of adjustments⁽¹⁾, of $75.6 million or $1.28 per diluted Class A share increased compared to net income, excluding the impact of adjustments, of $35.9 million or $0.61 per diluted Class A share.
• Adjusted EBITDA⁽²⁾ of $196.8 million, an increase of $58.3 million compared to Adjusted EBITDA of $138.5 million.
• Net cash provided by operating activities increased by $10.9 million to $22.4 million. Adjusted free cash flow⁽³⁾ decreased by $7.3 million to a use of $18.8 million.
• Total debt decreased by $242.6 million to $2,296.8 million. Net debt⁽⁴⁾ decreased by $260.9 million to $2,177.1 million. The Company’s leverage ratio⁽⁵⁾ decreased to 2.39x from 3.79x and from 2.49x at year-end.

Strategic Actions and Announcements

• Completed our planned Chief Executive Officer transition and announced new executive leadership team
• Announced a definitive agreement to divest our 50% equity interest in the Flexible Products & Services joint venture to Gulf Refined Packaging (“the FPS Divestiture”) for $123 million, subject to post-closing adjustments. The transaction is expected to close by March 31, 2022
• Redeemed our $500 million 6.5% 2027 senior notes on March 1 with proceeds from our refinanced credit facilities, which were expanded and extended for an additional 5 years and include an ESG-linked feature that ties our borrowing cost to Greif’s EcoVadis rating. The net result is a reduction in Greif’s anticipated annual interest expense of approximately $15 million
• Received a gold medal rating for Corporate Social Responsibility (“CSR”) performance from EcoVadis, a multinational CSR ratings agency, for the fourth year in a row
• Announced that Investor Day 2022 will be held on June 23, 2022 in New York City

CEO Commentary

“Our team delivered an outstanding first quarter,” said Ole Rosgaard, Greif’s President and Chief Executive Officer. “Through disciplined operational execution and a sharp focus on the areas within our control, we generated record financial results while navigating the still challenging and volatile operating environment. In addition, we solidified our leverage position and announced the agreement to sell our 50% ownership stake in Flexible Products and Services business for outstanding value. Looking ahead, we are increasing our Fiscal 2022 guidance based on our strong start and positive outlook for the remainder of the year.”

Customer Service

The Company’s consolidated CSI⁽⁶⁾ score was 93.7 during the fiscal first quarter and 93.6 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 segment was 94.7, flat to the prior year quarter.

CSI for the Paper Packaging & Services segment was 92.2, 3.9% higher than the prior year quarter.

Segment Results

Global Industrial Packaging

Net sales increased by $289.8 million to $949.1 million. Net sales excluding foreign currency translation increased by $315.2 million primarily due to higher volumes and higher average sales prices.

Gross profit increased by $46.8 million to $177.1 million. The increase in gross profit was primarily due to the same factors that impacted net sales, partially offset by higher raw material costs.

Operating profit decreased by $23.0 million to $31.0 million due to a $62.4 million non-cash impairment charge related to the anticipated FPS Divestiture, offset by the same factors that impacted gross profit. Adjusted EBITDA increased by $34.7 million to $114.2 million primarily due to the same factors that impacted gross profit.

Paper Packaging & Services

Net sales increased by $129.1 million to $610.0 million. Net sales excluding foreign currency translation increased by $128.9 million primarily due to higher volumes and higher published containerboard and boxboard prices.

Gross profit increased by $31.2 million to $110.8 million. The increase in gross profit was primarily due to the same factors that impacted net sales, partially offset by higher raw material, transportation and utility costs.

Operating profit increased by $24.0 million to $38.3 million. Adjusted EBITDA increased by $24.4 million to $80.5 million primarily due to the same factors that impacted gross profit.

Land Management

Net sales decreased by $1.1 million to $5.2 million due to less timber being available for sale as a result of acreage sold in the prior year.

Operating profit increased by $1.0 million to $2.7 million. Adjusted EBITDA decreased by $0.8 million to $2.1 million.

Tax Summary

During the first quarter, the Company recorded an income tax rate of 67.3 percent, which was significantly impacted by the non-deductible nature of the non-cash impairment recorded in the quarter for the anticipated FPS divestiture as well as the mix of jurisdictional income and less positive impact of discrete tax items. The Company’s tax rate excluding the impact of adjustments was 30.7 percent. Note that the application of FIN 18 frequently causes fluctuations in our quarterly effective tax rates. For fiscal 2022, the Company expects its tax rate to range between 28.0 and 32.0 percent and its tax rate excluding adjustments to range between 22.0 and 25.0 percent.

Dividend Summary

On March 1, 2022, the Board of Directors declared quarterly cash dividends of $0.46 per share of Class A Common Stock and $0.69 per share of Class B Common Stock. Dividends are payable on April 1, 2022, to stockholders of record at the close of business on March 17, 2022.

For the full first quarter results, click here.

(1) Adjustments that are excluded from net income before adjustments and from earnings per diluted Class A share before adjustments are restructuring charges, 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.

(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 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.

(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 integration related costs, plus cash paid for incremental COVID-19 costs, net, plus cash paid for integration related Enterprise Resource Planning (“ERP”) systems.

(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 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”).

(6) Customer satisfaction index (“CSI”) tracks a variety of internal metrics designed to enhance the customer experience in dealing with Greif.

(7) Primary products are manufactured steel, plastic and fibre drums; new and reconditioned intermediate bulk containers; 1&2 loop and 4 loop flexible intermediate bulk containers; linerboard, containerboard, corrugated sheets and corrugated containers; and boxboard and tube and core products.

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, 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 over 40 countries to serve global as well as regional customers. Additional information is on the Company’s website at www.greif.com.

Contact:

Matt Eichmann – Vice President External Relations & Sustainability – matt.eichmann@greif.com – (740) 549-6067

Source: Greif, Inc.