Greif, Inc. (NYSE: GEF, GEF.B), a world leader in industrial
packaging products and services, today announced first quarter 2018
results.
First Quarter Highlights include (all results compared to the
first quarter of 2017 unless otherwise noted):
- Net sales increased by $84.8 million to
$905.7 million.
- Gross profit increased by $8.4 million
to $171.7 million.
- Operating profit decreased by $0.1
million to $65.5 million and operating profit before special items1
increased by $1.4 million to $68.1 million.
- Income tax expense decreased from $11.8
million to a benefit of $15.6 million. The results for the three
months ended January 31, 2018 included a provisional net tax
benefit of $29.1 million related to the recently enacted Tax Cuts
and Jobs Act of 2017 ("Tax Reform Act"). Please see the Tax Summary
section of this release for further discussion of tax changes.
- Net income of $56.5 million or $0.96
per diluted Class A share compared to net income of $5.4 million or
$0.10 per diluted Class A share. Net income, excluding the impact
of special items, of $28.8 million or $0.49 per diluted Class A
share compared to net income, excluding the impact of special
items, of $26.4 million or $0.45 per diluted Class A share.
- Cash used in operating activities
increased by $9.6 million to $53.7 million. Free cash flow2
decreased by $16.3 million to a use of $81.7 million.
“Greif delivered improved year over year results during the
fiscal first quarter, but our performance fell below our
expectations,” said Greif’s President and Chief Executive Officer,
Pete Watson. “Sales, operating profit before special items and
earnings each increased versus the prior year quarter, but were
negatively impacted by weaker than anticipated Rigid Industrial
Packaging & Services volumes in December caused by a temporary
winter slowdown. In addition, raw material costs continued to
accelerate, outpacing price adjustment mechanisms in that segment,
and we experienced increased transportation costs across our global
network. Despite these challenges, we achieved a positive January
performance and Rigid Industrial Packaging & Services volumes
have rebounded. We remain extremely confident in achieving our
Fiscal 2018 guidance.”
__________
(1) A summary of all special items that are excluded from
operating profit before special items, from net income before
special items, and from earnings per diluted Class A share before
special items is set forth in the Selected Financial Highlights
table following the Company Outlook in this release. (2) Free cash
flow is defined as net cash provided by operating activities less
cash paid for purchases of properties, plants and equipment.
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.
Customer Service
During the quarter, each of our three business segments with
manufacturing operations - Rigid Industrial Packaging &
Services (RIPS), Paper Packaging & Services (PPS) and Flexible
Products & Services (FPS) - reported year over year CSI3
improvements, with the largest in FPS, which generated a 27%
improvement versus the prior year quarter. Our expectation is the
each business segment delivers CSI at a 95 score or better.
We also finalized our fifth NPS4 survey during the quarter and
received a consolidated Greif score of 47, which is flat compared
to the previous surveys results. Our aspiration is to achieve a
score of 55 over time. We continue to leverage the increased
customer interactions that accompany each survey as they lead to
additional actions with our customers and ultimately better
strategic insight into their businesses.
Segment Results (all results compared to the first quarter of
2017 unless otherwise noted)
Net sales are impacted mainly by the volume of primary products5
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 first quarter of 2018 as compared to the
first quarter of 2017 for the business segments with manufacturing
operations:
Rigid Industrial
Packaging & Paper Packaging & Flexible
Products
Net Sales Impact
- Primary Products
Services Services
& Services % % %
Currency
Translation 4.7 % — 9.1 %
Volume (1.4 )% 1.2 % 2.3 %
Selling Prices and Product Mix 7.5 % 10.1 %
3.0 %
Total Impact of Primary Products 10.8 %
11.3 % 14.4 %
Rigid Industrial Packaging & Services
Net sales increased by $53.9 million to $615.4 million. Net
sales excluding foreign currency translation increased by $29.1
million due primarily to a 7.5 percent increase in selling prices
on our primary products as a result of strategic pricing decisions
and increases in index prices.
Gross profit decreased by $2.0 million to $110.4 million. The
decrease in gross profit was primarily due to the continuation of
rapidly rising raw material costs, the timing of contractual pass
through arrangements, a temporary winter slowdown and an increase
in transportation costs of $2.5 million.
Operating profit decreased by $11.6 million to $31.2 million.
Operating profit before special items decreased by $8.7 million to
$34.7 million, due primarily to the same factors that impacted
gross profit and an increase in this segment's selling, general
& administrative ("SG&A") expenses.
Paper Packaging & Services
Net sales increased by $20.9 million to $203.8 million. The
increase was due primarily to an increase in selling prices due to
increases in published containerboard pricing and increased sales
of specialty products.
Gross profit increased by $8.0 million to $43.3 million. The
increase in gross profit was primarily due to higher containerboard
prices and lower old corrugated container input costs, partially
offset by an increase in transportation costs of $2.3 million.
Operating profit increased by $7.9 million to $27.9 million.
Operating profit before special items increased by $8.0 million to
$27.9 million due to the same factors that impacted gross
profit.
Flexible Products & Services
Net sales increased by $10.3 million to $80.0 million. Net sales
excluding foreign currency translation increased by $4.4 million
due to strategic pricing decisions, product mix and higher
volumes.
Gross profit increased by $2.1 million to $15.2 million due
primarily due to the same factors that impacted net sales.
Operating profit increased by $2.6 million to $3.2 million.
Operating profit before special items increased by $1.9 million to
$3.5 million. The improvement in operating profit before special
items was due primarily to the same factors that impacted gross
profit in addition to effective SG&A expense control.
Land Management
Net sales decreased by $0.3 million to $6.5 million primarily
due to unusually severe winter weather in parts of the southeastern
United States.
Operating profit increased by $1.0 million to $3.2 million.
Operating profit before special items increased by $0.2 million to
$2.0 million.
Dividend Summary
On February 27, 2018, the Board of Directors declared quarterly
cash dividends of $0.42 per share of Class A Common Stock and $0.63
per share of Class B Common Stock. Dividends are payable on April
1, 2018, to stockholders of record at the close of business on
March 19, 2018.
Tax Summary
During the quarter, we recorded a provisional tax net benefit of
$29.1 million related to the enactment of the Tax Reform Act. The
provisional tax net benefit, which is being treated as a special
item, is the net benefit resulting from the remeasurement of
deferred tax balances for the new corporate rate, offset by the tax
liability incurred for the one-time deemed repatriation transition
tax. This provisional tax net benefit is subject to change. We will
not have any cash tax payment during the fiscal year regarding the
repatriation transition tax.
Company Outlook
(in millions, except per share amounts)
Original Fiscal2018
Outlook
Updated Fiscal2018
Outlook
Comments SG&A expense
$395 - $415
No change N/A Interest expense $50 - $55 No change N/A Other
expense, net $10 $15 - $20 Change in pension expected return on
assets assumption Tax rate excluding the impact of special items 30
- 34%
28 - 32%
Updated for Tax Reform Act Class A Earnings Per Share Before
Special Items $3.25 - $3.55 No change N/A Capital expenditures $100
- $120 No change N/A Free Cash Flow $200 - $220 No change N/A
Note: 2018 Class A Earnings per Share guidance is not provided
in this release due to the potential for one or more of the
following, the timing and magnitude of which we are unable to
reliably forecast: gains or losses on the disposal of businesses,
timberland or properties, plants and equipment, net, non-cash asset
impairment charges due to unanticipated changes in the business,
restructuring-related activities, non-cash pension settlement
charges or acquisition costs, and the income tax effects of these
items and other income tax-related events. No reconciliation of the
fiscal year 2018 Class A earnings per share guidance, a non-GAAP
financial measure which excludes gains and losses on the disposal
of businesses, timberland and properties, plants and equipment,
non-cash pension settlement charges, acquisition costs,
restructuring and impairment charges and provisional tax net
benefit resulting from the Tax Reform Act is included in this
release because, due to the high variability and difficulty in
making accurate forecasts and projections of some of the excluded
information, together with some of the excluded information not
being ascertainable or accessible, we are unable to quantify
certain amounts that would be required to be included in the most
directly comparable GAAP financial measure without unreasonable
efforts. A reconciliation of 2018 free cash flow guidance to
forecasted net cash provided by operating activities, the most
directly comparable GAAP financial measure, is included in this
release.
(3) Customer satisfaction index (CSI) tracks a variety of
internal metrics designed to enhance the customer experience in
dealing with Greif. (4) Net Promoter Score (NPS) is a survey
conducted by a third party that measures how likely a customer is
to recommend Greif as a business partner. NPS scores are developed
by subtracting the percentage of detractors a business has from the
percentage of its promoters. (5) Primary products are manufactured
steel, plastic and fibre drums; intermediate bulk containers;
linerboard, medium, corrugated sheets and corrugated containers;
and 1&2 loop and 4 loop flexible intermediate bulk containers.
GREIF, INC. AND SUBSIDIARY COMPANIES
SELECTED FINANCIAL HIGHLIGHTS
UNAUDITED
Three months ended January 31, (in millions, except
for per share amounts)
2018 2017
Selected Financial
Highlights
Net sales $ 905.7 $ 820.9 Gross profit 171.7 163.3 Gross
profit margin 19.0 % 19.9 % Operating profit 65.5 65.6 Operating
profit before special items 68.1 66.7 EBITDA(6) 89.5 69.2 EBITDA
before special items 92.1 93.8
Cash used in operating activities
(53.7 ) (44.1 ) Free cash flow (81.7 ) (65.4 ) Net income
attributable to Greif, Inc. 56.5 5.4 Diluted Class A earnings per
share attributable to Greif, Inc. $ 0.96 $ 0.10 Diluted Class A
earnings per share attributable to Greif, Inc. before special items
$ 0.49 $ 0.45
Special
items
Restructuring charges $ 4.1 $ (0.3 ) Acquisition-related costs 0.2
— Non-cash asset impairment charges 2.9 1.9 Non-cash pension
settlement charge — 23.5 Gain on disposal of properties, plants and
equipment and businesses, net (4.6 ) (0.5 ) Provisional tax net
benefit resulting from the Tax Reform Act (29.1 ) —
Total special items $ (26.5 ) $ 24.6
January 31, 2018 October 31, 2017 Operating working
capital(7)
$
407.2
$
327.3
(6) EBITDA is defined as net income, plus interest
expense, net, plus income tax (benefit) expense, plus depreciation,
depletion and amortization. (7) Operating working capital is
defined as trade accounts receivable plus inventories less accounts
payable.
Conference Call
The Company will host a conference call to discuss the first
quarter of 2018 results on March 1, 2018, at 8:30 a.m. Eastern Time
(ET). To participate, domestic callers should call 833-231-8265.
The Greif ID is 8160029. The number for international callers is
+1-647-689-4110. Phone lines will open at 8:00 a.m. ET. The
conference call will also be available through a live webcast,
including slides, which can be accessed at http://investor.greif.com by clicking on the
Events and Presentations tab and searching under the events
calendar. A replay of the conference call will be available on the
Company’s website approximately two hours following the call.
About Greif
Greif is a global leader in industrial packaging products and
services and is pursuing its vision to become the world’s best
performing customer service company in industrial packaging. The
Company produces steel, plastic, fibre, flexible, corrugated, and
reconditioned containers, intermediate bulk containers,
containerboard and packaging accessories, and provides filling,
packaging and industrial packaging reconditioning services for a
wide range of industries. Greif also manages timber properties in
the southeastern United States. The Company is strategically
positioned with production facilities in over 40 countries to serve
global as well as regional customers. Additional information is on
the Company’s website at www.greif.com.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
The words “may,” “will,” “expect,” “intend,” “estimate,”
“anticipate,” “aspiration,” “objective,” “project,” “believe,”
“continue,” “on track” or “target” or the negative thereof and
similar expressions, among others, identify forward-looking
statements. All forward-looking statements are based on
assumptions, expectations and other information currently available
to management. Such forward-looking statements are subject to
certain risks and uncertainties that could cause the Company’s
actual results to differ materially from those forecasted,
projected or anticipated, whether expressed or implied. The
most significant of these risks and uncertainties are described in
Part I of the Company’s Annual Report on Form 10-K for the fiscal
year ended October 31, 2017. The Company undertakes no
obligation to update or revise any forward-looking statements.
Although the Company believes that the expectations reflected in
forward-looking statements have a reasonable basis, the Company can
give no assurance that these expectations will prove to be correct.
Forward-looking statements are subject to risks and uncertainties
that could cause the Company’s actual results to differ materially
from those forecasted, projected or anticipated, whether expressed
in or implied by the statements. Such risks and uncertainties that
might cause a difference include, but are not limited to, the
following: (i) historically, our business has been sensitive
to changes in general economic or business conditions, (ii) we
may not successfully implement our business strategies, including
achieving our growth objectives, (iii) our operations subject
us to currency exchange and political risks that could adversely
affect our results of operations, (iv) the current and future
challenging global economy and disruption and volatility of the
financial and credit markets may adversely affect our business,
(v) the continuing consolidation of our customer base and
suppliers may intensify pricing pressure, (vi) we operate in
highly competitive industries, (vii) our business is sensitive
to changes in industry demands, (viii) raw material and energy
price fluctuations and shortages may adversely impact our
manufacturing operations and costs, (ix) geopolitical conditions,
including direct or indirect acts of war or terrorism, could have a
material adverse effect on our operations and financial results,
(x) we may encounter difficulties arising from acquisitions,
(xi) in connection with acquisitions or divestitures, we may
become subject to liabilities, (xii) we may incur additional
restructuring costs and there is no guarantee that our efforts to
reduce costs will be successful, (xiii) we could be subject to
changes in our tax rates, the adoption of new U.S. of foreign tax
legislation or exposure to additional tax liabilities,
(xiv) full realization of our deferred tax assets may be
affected by a number of factors, (xv) several operations are
conducted by joint ventures that we cannot operate solely for our
benefit, (xvi) certain of the agreements that govern our joint
ventures provide our partners with put or call options,
(xvii) our ability to attract, develop and retain talented and
qualified employees, managers and executives is critical to our
success, (xviii) our business may be adversely impacted by
work stoppages and other labor relations matters, (xix) we may
not successfully identify illegal immigrants in our workforce,
(xx) our pension and postretirement plans are underfunded and
will require future cash contributions and our required future cash
contributions could be higher than we expect, each of which could
have a material adverse effect on our financial condition and
liquidity, (xxi) we may be subject to losses that might not be
covered in whole or in part by existing insurance reserves or
insurance coverage, (xxii) our business depends on the
uninterrupted operations of our facilities, systems and business
functions, including our information technology (IT) and other
business systems, (xxiii) a security breach of customer,
employee, supplier or Company information may have a material
adverse effect on our business, financial condition and results of
operations, (xxiv) legislation/regulation related to
environmental and health and safety matters and corporate social
responsibility could negatively impact our operations and financial
performance, (xxv) product liability claims and other legal
proceedings could adversely affect our operations and financial
performance, (xxvi) we may incur fines or penalties, damage to
our reputation or other adverse consequences if our employees,
agents or business partners violate, or are alleged to have
violated, anti-bribery, competition or other laws, (xxvii) changing
climate, climate change regulations and greenhouse gas effects may
adversely affect our operations and financial performance, (xxviii)
the frequency and volume of our timber and timberland sales will
impact our financial performance, (xxix) changes in U.S. generally
accepted accounting principles (U.S. GAAP) and SEC rules and
regulations could materially impact our reported results, (xxx) if
the Company fails to maintain an effective system of internal
control, the Company may not be able to accurately report financial
results or prevent fraud, and (xxxi) the Company has a significant
amount of goodwill and long-lived assets which, if impaired in the
future, would adversely impact our results of operations. The risks
described above are not all-inclusive, and given these and other
possible risks and uncertainties, investors should not place undue
reliance on forward-looking statements as a prediction of actual
results. For a detailed discussion of the most significant risks
and uncertainties that could cause our actual results to differ
materially from those forecasted, projected or anticipated, see
“Risk Factors” in Part I, Item 1A of our most recently filed
Form 10-K and our other filings with the Securities and Exchange
Commission. All forward-looking statements made in this news
release are expressly qualified in their entirety by reference to
such risk factors. Except to the limited extent required by
applicable law, we undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
GREIF, INC. AND SUBSIDIARY COMPANIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
Three months ended January 31, (in millions, except
per share amounts)
2018 2017 Net sales
$ 905.7 $ 820.9 Cost of products sold 734.0 657.6
Gross profit 171.7 163.3 Selling, general and administrative
expenses 103.8 96.6 Restructuring charges 4.1 (0.3 ) Non-cash asset
impairment charges 2.9 1.9 Gain on disposal of properties, plants
and equipment, net (4.6 ) (1.0 ) Loss on disposal of businesses,
net — 0.5 Operating profit 65.5 65.6 Interest
expense, net 13.3 18.7 Non-cash pension settlement charge — 23.5
Other expense, net 7.7 3.6 Income before income tax
(benefit) expense, net 44.5 19.8 Income tax (benefit) expense (15.6
) 11.8 Net income 60.1 8.0 Net income attributable to
noncontrolling interests (3.6 ) (2.6 ) Net income attributable to
Greif, Inc. $ 56.5 $ 5.4
Basic earnings per share
attributable to Greif, Inc. common shareholders: Class A Common
Stock $ 0.96 $ 0.10 Class B Common Stock $ 1.44 $ 0.13
Diluted
earnings per share attributable to Greif, Inc. common
shareholders: Class A Common Stock $ 0.96 $ 0.10 Class B Common
Stock $ 1.44 $ 0.13
Shares used to calculate basic earnings per
share attributable to Greif, Inc. common shareholders: Class A
Common Stock 25.8 25.8 Class B Common Stock 22.0 22.0
Shares
used to calculate diluted earnings per share attributable to Greif,
Inc. common shareholders: Class A Common Stock 25.8 25.8 Class
B Common Stock 22.0 22.0
GREIF, INC. AND SUBSIDIARY COMPANIES CONDENSED
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(in millions)
January 31, 2018
October 31, 2017 ASSETS CURRENT ASSETS Cash and cash
equivalents $ 94.3 $ 142.3 Trade accounts receivable 448.7 447.0
Inventories 336.9 279.5 Other current assets 164.1
125.7 1,044.0 994.5 LONG-TERM ASSETS Goodwill 808.0 785.4
Intangible assets 95.9 98.0 Assets held by special purpose entities
50.9 50.9 Other long-term assets 126.1 115.1 1,080.9
1,049.4 PROPERTIES, PLANTS AND EQUIPMENT 1,203.2 1,188.4 $
3,328.1 $ 3,232.3
LIABILITIES AND EQUITY CURRENT
LIABILITIES Accounts payable $ 378.4 $ 399.2 Short-term borrowings
8.1 14.5 Current portion of long-term debt 15.0 15.0 Other current
liabilities 231.9 259.2 633.4 687.9 LONG-TERM
LIABILITIES Long-term debt 1,010.8 937.8 Liabilities held by
special purpose entities 43.3 43.3 Other long-term liabilities
480.6 484.3 1,534.7 1,465.4 REDEEMABLE NONCONTROLLING
INTERESTS 33.5 31.5 EQUITY Total Greif, Inc.
equity 1,087.5 1,010.9 Noncontrolling interests 39.0
36.6 1,126.5 1,047.5 $ 3,328.1 $ 3,232.3
GREIF, INC. AND SUBSIDIARY COMPANIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
Three months ended January 31, (in millions)
2018 2017 CASH FLOWS FROM OPERATING
ACTIVITIES: Net income $ 60.1 $ 8.0 Depreciation, depletion
and amortization 31.7 30.7 Asset impairments 2.9 1.9 Pension
settlement loss — 23.5 Other non-cash adjustments to net income
(67.6 ) (10.3 ) Operating working capital changes (65.3 ) (65.1 )
Deferred purchase price on sold receivables (22.9 ) (23.1 )
Increase (decrease) in cash from changes in other assets and
liabilities 7.4 (9.7 ) Net cash used in operating activities
(53.7 ) (44.1 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of
properties, plants and equipment (28.0 ) (21.3 ) Purchases of and
investments in timber properties (2.6 ) (2.1 ) Proceeds from the
sale of properties, plants and equipment, businesses, timberland
and other assets 7.4 2.5 Net cash used in investing
activities (23.2 ) (20.9 ) CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt, net 49.4 97.7 Dividends paid to Greif, Inc.
shareholders (24.5 ) (24.5 ) Other (0.4 ) (0.5 ) Net cash provided
by financing activities 24.5 72.7 Effects of exchange
rates on cash 4.4 (4.6 )
Net increase (decrease) in cash
and cash equivalents (48.0 ) 3.1 Cash and cash equivalents,
beginning of period 142.3 103.7 Cash and cash
equivalents, end of period $ 94.3 $ 106.8
GREIF, INC. AND SUBSIDIARY COMPANIES FINANCIAL
HIGHLIGHTS BY SEGMENT
UNAUDITED
Three months ended January 31, (in millions)
2018 2017 Net sales: Rigid
Industrial Packaging & Services $ 615.4 $ 561.5 Paper Packaging
& Services 203.8 182.9 Flexible Products & Services 80.0
69.7 Land Management 6.5 6.8 Total net sales $ 905.7
$ 820.9
Gross profit: Rigid Industrial Packaging &
Services $ 110.4 $ 112.4 Paper Packaging & Services 43.3 35.3
Flexible Products & Services 15.2 13.1 Land Management 2.8
2.5 Total gross profit $ 171.7 $ 163.3
Operating
profit: Rigid Industrial Packaging & Services $ 31.2 $ 42.8
Paper Packaging & Services 27.9 20.0 Flexible Products &
Services 3.2 0.6 Land Management 3.2 2.2 Total operating
profit $ 65.5 $ 65.6
EBITDA(8): Rigid
Industrial Packaging & Services $ 44.5 $ 45.7 Paper Packaging
& Services 36.0 19.1 Flexible Products & Services 4.8 1.2
Land Management 4.2 3.2 Total EBITDA $ 89.5 $ 69.2
EBITDA before special items: Rigid Industrial Packaging
& Services $ 48.0 $ 60.4 Paper Packaging & Services 36.0
28.2 Flexible Products & Services 5.1 2.3 Land Management 3.0
2.9 Total EBITDA before special items $ 92.1 $ 93.8
(8) EBITDA is defined as net income, plus interest
expense, net, plus income tax (benefit) expense, plus depreciation,
depletion and amortization. However, because the Company does not
calculate net income by segment, this table calculates EBITDA by
segment with reference to operating profit by segment, which, as
demonstrated in the table of Consolidated EBITDA, is another method
to achieve the same result. See the reconciliations in the table of
Segment EBITDA.
GREIF, INC. AND SUBSIDIARY
COMPANIES FINANCIAL HIGHLIGHTS BY GEOGRAPHIC REGION
UNAUDITED
Three months ended January 31, (in millions)
2018 2017 Net sales: United
States $ 432.7 $ 408.0 Europe, Middle East and Africa 331.3 285.9
Asia Pacific and other Americas 141.7 127.0 Total net sales
$ 905.7 $ 820.9
Gross profit: United States $ 91.5 $
85.2 Europe, Middle East and Africa 58.0 55.8 Asia Pacific and
other Americas 22.2 22.3 Total gross profit $ 171.7 $
163.3
GREIF, INC. AND SUBSIDIARY
COMPANIES GAAP TO NON-GAAP RECONCILIATION OPERATING
WORKING CAPITAL
UNAUDITED
(in millions)
January 31, 2018
October 31, 2017 Trade accounts receivable $ 448.7 $ 447.0
Plus: inventories 336.9 279.5 Less: accounts payable 378.4
399.2 Operating working capital $ 407.2 $ 327.3
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO
NON-GAAP RECONCILIATION
CONSOLIDATED EBITDA(9)
UNAUDITED
Three months ended January 31, (in millions)
2018 2017 Net income $ 60.1 $ 8.0 Plus:
Interest expense, net 13.3 18.7 Plus: Income tax (benefit) expense
(15.6 ) 11.8 Plus: Depreciation, depletion and amortization expense
31.7 30.7 EBITDA $ 89.5 $ 69.2 Net income $ 60.1 $
8.0 Plus: Interest expense, net 13.3 18.7 Plus: Income tax
(benefit) expense (15.6 ) 11.8 Plus: Non-cash pension settlement
charge — 23.5 Plus: Other expense, net 7.7 3.6 Operating
profit 65.5 65.6 Less: Non-cash pension settlement charge — 23.5
Less: Other expense, net 7.7 3.6 Plus: Depreciation, depletion and
amortization expense 31.7 30.7 EBITDA $ 89.5 $ 69.2
(9) EBITDA is defined as net income, plus interest
expense, net, plus income tax (benefit) expense, plus depreciation,
depletion and amortization. As demonstrated in this table, EBITDA
can also be calculated with reference to operating profit.
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO
NON-GAAP RECONCILIATION
SEGMENT EBITDA(10)
UNAUDITED
Three months ended January 31, (in millions)
2018 2017 Rigid Industrial Packaging &
Services Operating profit $ 31.2 $ 42.8 Less: Non-cash
pension settlement charge — 14.1 Less: Other expense, net 7.3 2.4
Plus: Depreciation and amortization expense 20.6 19.4
EBITDA $ 44.5 $ 45.7 Restructuring charges 3.8 (0.5 )
Acquisition-related costs 0.2 — Non-cash asset impairment charges
2.9 1.6 Non-cash pension settlement charge — 14.1 Gain on disposal
of properties, plants, equipment, and businesses, net (3.4 )
(0.5 ) EBITDA before special items $ 48.0 $ 60.4
Paper Packaging & Services Operating profit $
27.9 $ 20.0 Less: Non-cash pension settlement charge — 9.2 Less:
Other expense, net 0.2 — Plus: Depreciation and amortization
expense 8.3 8.3 EBITDA $ 36.0 $ 19.1 Non-cash
pension settlement charge — 9.2 Gain on disposal of properties,
plants, equipment, net — (0.1 ) EBITDA before special
items $ 36.0 $ 28.2
Flexible Products &
Services Operating profit $ 3.2 $ 0.6 Less: Non-cash pension
settlement charge — 0.1 Less: Other expense, net 0.2 1.2 Plus:
Depreciation and amortization expense 1.8 1.9
EBITDA $ 4.8 $ 1.2 Restructuring charges 0.3 0.2 Non-cash asset
impairment charges — 0.3 Non-cash pension settlement charge — 0.1
Loss on disposal of properties, plants, equipment and businesses,
net — 0.5 EBITDA before special items $ 5.1
$ 2.3
Land Management Operating profit
$ 3.2 $ 2.2 Less: Non-cash pension settlement charge — 0.1 Plus:
Depreciation, depletion and amortization expense 1.0
1.1 EBITDA $ 4.2 $ 3.2 Non-cash pension settlement charge —
0.1 Gain on disposal of properties, plants, equipment, net (1.2 )
(0.4 ) EBITDA before special items $ 3.0 $ 2.9
Consolidated EBITDA $ 89.5 $ 69.2
Consolidated EBITDA before special items $ 92.1 $
93.8 (10) EBITDA is defined as net income, plus
interest expense, net, plus income tax (benefit) expense, plus
depreciation, depletion and amortization. However, because the
Company does not calculate net income by segment, this table
calculates EBITDA by segment with reference to operating profit by
segment, which, as demonstrated in the table of Consolidated
EBITDA, is another method to achieve the same result.
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP
RECONCILIATION
FREE CASH FLOW(11)
UNAUDITED
Three months ended January 31, (in millions)
2018 2017
Net cash used in operating
activities
$ (53.7 ) $ (44.1 ) Cash paid for purchases of properties,
plants and equipment (28.0 ) (21.3 )
Free Cash Flow
$ (81.7 ) $ (65.4 ) (11) Free Cash Flow is
defined as net cash provided by operating activities less cash paid
for purchases of properties, plants and equipment.
GREIF, INC. AND SUBSIDIARY COMPANIES PROJECTED 2018
GUIDANCE RECONCILIATION FREE CASH FLOW
UNAUDITED
Fiscal 2018 Guidance Range (in millions)
Scenario 1 Scenario 2 Net cash provided by
operating activities $ 300.0 $ 340.0 Cash paid for
purchases of properties, plants and equipment (100.0 )
(120.0 )
Free Cash Flow $ 200.0 $ 220.0
GREIF, INC. AND SUBSIDIARY COMPANIES GAAP
TO NON-GAAP RECONCILIATION
SEGMENT OPERATING PROFIT BEFORE SPECIAL
ITEMS(12)
UNAUDITED
Three months ended January 31, (in millions)
2018 2017 Operating profit:
Rigid Industrial Packaging & Services $ 31.2 $ 42.8 Paper
Packaging & Services 27.9 20.0 Flexible Products & Services
3.2 0.6 Land Management 3.2 2.2 Total operating
profit $ 65.5 $ 65.6
Restructuring charges:
Rigid Industrial Packaging & Services $ 3.8 $ (0.5 ) Flexible
Products & Services 0.3 0.2 Total restructuring
charges $ 4.1 $ (0.3 )
Acquisition-related costs:
Rigid Industrial Packaging & Services $ 0.2 $ —
Total acquisition-related costs $ 0.2 $ —
Non-cash
asset impairment charges: Rigid Industrial Packaging &
Services $ 2.9 $ 1.6 Flexible Products & Services — 0.3
Total non-cash asset impairment charges $ 2.9 $ 1.9
(Gain) loss on disposal of properties, plants, equipment
and businesses, net: Rigid Industrial Packaging & Services
$ (3.4 ) $ (0.5 ) Paper Packaging & Services — (0.1 ) Flexible
Products & Services — 0.5 Land Management (1.2 ) (0.4 ) Total
gain on disposal of properties, plants, equipment and businesses,
net $ (4.6 ) $ (0.5 )
Operating profit before special items:
Rigid Industrial Packaging & Services $ 34.7 $ 43.4 Paper
Packaging & Services 27.9 19.9 Flexible Products & Services
3.5 1.6 Land Management 2.0 1.8 Total operating
profit before special items $ 68.1 $ 66.7 (12)
Operating profit before special items is defined as
operating profit, plus restructuring charges, plus
acquisition-related costs, plus non-cash impairment charges, less
gain on disposal of properties, plants, equipment and businesses,
net.
GREIF, INC. AND
SUBSIDIARY COMPANIES GAAP TO NON-GAAP RECONCILIATION
NET INCOME AND CLASS A EARNINGS PER SHARE BEFORE SPECIAL
ITEMS
UNAUDITED
Income before
Income Tax
Income Tax Non- Net Income Diluted Class
A
(Benefit)
(Benefit)
Controlling Attributable Earnings Per
(in millions, except for per share
amounts)
Expense, net
Expense
Interest to Greif, Inc.
Share Three months ended January 31, 2018 $ 44.5 $
(15.6 ) $ 3.6 $ 56.5 $ 0.96 Gain on disposal of properties, plants,
equipment and businesses, net (4.6 ) (0.3 ) — (4.3 ) (0.07 )
Restructuring charges 4.1 0.5 0.2 3.4 0.06 Acquisition-related
costs 0.2 0.1 — 0.1 — Non-cash asset impairment charges 2.9 0.7 —
2.2 0.03 Provisional tax net benefit resulting from the Tax Reform
Act — 29.1 — (29.1 )
(0.49 ) Excluding Special Items $ 47.1 $ 14.5
$ 3.8 $ 28.8 $ 0.49
Three months ended January 31, 2017 $ 19.8 $
11.8 $ 2.6 $ 5.4 $ 0.10 Gain on disposal of properties, plants,
equipment and businesses, net (0.5 ) (0.2 ) 0.2 (0.5 ) (0.01 )
Restructuring charges (0.3 ) (4.2 ) 0.1 3.8 0.06 Non-cash asset
impairment charges 1.9 — 0.4 1.5 0.03 Non-cash pension settlement
charge 23.5 7.3 — 16.2
0.27 Excluding Special Items $ 44.4
$ 14.7 $ 3.3 $ 26.4
$ 0.45
The impact of income tax expense and non-controlling interest on
each special item is calculated based on tax rates and ownership
percentages specific to each applicable entity. Included in the
quarter ended January 31, 2017 restructuring charges special item
is a $4.4 million income tax charge due to a change in assertions
related to unremitted foreign earnings as a result of the
restructuring of our intercompany debt portfolio. The tax rate
excluding the impact of special items for the first quarter of 2018
was 30.8 percent and in fiscal 2017 was 33.1 percent.
GREIF, INC. AND SUBSIDIARY COMPANIES
GAAP TO NON-GAAP RECONCILIATION NET SALES TO NET SALES
EXCLUDING THE IMPACT OF CURRENCY TRANSLATION
UNAUDITED
Three months ended January 31, Increase
in Increase in (in millions)
2018
2017 Net Sales ($) Net Sales (%)
Consolidated Net Sales $ 905.7 $ 820.9 $ 84.8 10.3 %
Currency Translation (30.7 ) N/A Net Sales Excluding the
Impact of Currency Translation $ 875.0 $ 820.9 $ 54.1 6.6 %
Rigid Industrial Packaging & Services Net Sales $ 615.4
$ 561.5 $ 53.9 9.6 % Currency Translation (24.8 ) N/A Net
Sales Excluding the Impact of Currency Translation $ 590.6 $ 561.5
$ 29.1 5.2 %
Flexible Products & Services Net Sales $
80.0 $ 69.7 $ 10.3 14.8 % Currency Translation (5.9 ) N/A
Net Sales Excluding the Impact of Currency Translation $ 74.1 $
69.7 $ 4.4 6.3 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180228006416/en/
Greif, Inc.Investor Relations Contact:Matt Eichmann,
740-549-6067matt.eichmann@greif.com
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