Greif Reports First Quarter 2024 Results

Greif, Inc. (“Greif”), a global leader in industrial packaging products and services, announced first quarter 2024 results.

First Quarter Financial Highlights include (all results compared to the first quarter of 2023 unless otherwise noted):

• Net income of $67.2 million or $1.17 per diluted Class A share decreased compared to net income of $89.9 million or $1.54 per diluted Class A share. Net income, excluding the impact of adjustments⁽¹⁾, of $72.8 million or $1.27 per diluted Class A share increased compared to net income, excluding the impact of adjustments, of $61.9 million or $1.06 per diluted Class A share.
• Adjusted EBITDA⁽²⁾ of $128.0 million decreased by $36.5 million compared to Adjusted EBITDA of $164.5 million.
• Net cash provided by operating activities decreased by $28.4 million to $4.5 million. Adjusted free cash flow⁽³⁾ decreased by $40.6 million to a use of $48.2 million.
• Total debt of $2,291.8 million increased by $62.5 million. Net debt⁽⁴⁾ increased by $44.2 million to $2,112.5 million. Our leverage ratio⁽⁵⁾ increased to 2.53x from 2.20x sequentially, and increased from 2.11x in the prior year quarter.

CEO Commentary

“Greif once again has produced solid financial results in a challenging operating environment,” said Ole Rosgaard, President and Chief Executive Officer of Greif. “Our team continues to navigate this extended slow demand environment, while making structural improvements to the business under our Build to Last Strategy. We will continue to focus on controlling what we can control while we invest for the future as we approach closing the Ipackchem acquisition and advance other exciting strategic initiatives.”

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 93.3 at the end of the first quarter 2024. The CSI score for the Paper Packaging & Services business segment was 92.7 and for the Global Industrial Packaging segment was 94.0. 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 during a difficult global operating environment.

We were pleased to announce in January the initial launch of our new customer digital portal. This digital platform was developed in collaboration with our customers and is designed to drive Legendary Customer Service through an enhanced customer experience and streamlined order interface. The portal is currently available for customers serviced from several of our US-based facilities, with the intention to make further enhancements and deploy it in U.S. operations and then globally.

As part of our ongoing efforts to Protect Our Future, we announced in January a partnership with Ionkraft, a German-based startup that has developed a unique, chemically inert and fully recyclable barrier technology for plastic containers. This partnership is designed to explore a game-changing innovation in packaging that will enable us to better serve our broad customer base in the Agrochemical industry and other industries.

(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, (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 expense, plus depreciation, depletion and amortization expense, plus restructuring charges, plus acquisition and integration related costs, 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.
(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.

Segment Results (all results compared to the first 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 first quarter of 2024 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 upcoming second quarter for Lee Container, third quarter for Centurion Container and first quarter of fiscal 2025 for ColePak and Reliance.

Global Industrial Packaging

Net sales decreased by $19.2 million to $686.6 million primarily due to lower volumes and lower average selling prices, partially offset by the full-quarter contribution from recent acquisitions.

Gross profit increased by $10.0 million to $135.3 million. The increase in gross profit was primarily due to lower raw material costs, partially offset by the same factors that impacted net sales and higher labor costs.

Operating profit increased by $5.0 million to $50.9 million primarily due to the same factors that impacted gross profit and lower integration costs, partially offset by higher SG&A expenses. Adjusted EBITDA decreased by $0.9 million to $70.9 million primarily due to higher SG&A expenses and higher foreign currency translation losses, partially offset by the same factors that impacted gross profit.

Paper Packaging & Services

Net sales decreased by $45.6 million to $514.6 million primarily due to lower volumes and lower average selling prices, partially offset by the full-quarter contribution from recent acquisitions.

Gross profit decreased by $39.8 million to $84.4 million. The decrease in gross profit was primarily due to the same factors that impacted net sales, partially offset by lower transportation and manufacturing costs.

Operating profit decreased by $92.3 million to $16.8 million primarily due to the same factors that impacted gross profit and the $54.6 million gain from the divestiture of Tama Paperboard, LLC during the first quarter of 2023. Adjusted EBITDA decreased by $35.2 million to $55.5 million primarily due to the same factors that impacted gross profit.

Tax Summary

During the first quarter, we recorded an income tax rate of negative 107.3 percent and a tax rate excluding the impact of adjustments of negative 85.1 percent resulting from one-time discrete tax benefits of $48.1 million related to the recognition of deferred tax assets due to the onshoring of certain non-U.S. intangible property. 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 6.0 to 10.0 percent and our tax rate excluding adjustments to range between 8.0 to 12.0 percent.

Dividend Summary

On February 26, 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 April 1, 2024, to stockholders of record at the close of business on March 18, 2024.

(7)	Primary products are manufactured steel, plastic and fibre drums; new and reconditioned intermediate bulk containers; linerboard, containerboard, corrugated sheets and corrugated containers; and 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 continue to be unable to determine the trajectory of product demand for the remainder of the fiscal year. As a result, we are providing only a low-end guidance estimate that is based on the continuation of demand trends we observed in the past year and the current price/cost factors in the Paper Packaging and Services business segment. The low-end guidance estimate does not factor in any contribution from the proposed acquisition of Ipackchem.

For the full first quarter 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.