Greif Reports Third Quarter 2021 Results

DELAWARE, Ohio (September 1, 2021) – Greif, Inc. (NYSE: GEF, GEF.B), a global leader in industrial packaging products and services, today announced third quarter 2021 results.

Third Quarter Financial Highlights include (all results compared to the third quarter of 2020 unless otherwise noted)⁽¹⁾:

1. Record net sales of $1,490.8 million, an increase of $407.8 million compared to net sales of $1,083.0 million.
2. Net income of $113.0 million or $1.89 per diluted Class A share increased compared to net income of $20.7 million or $0.35 per diluted Class A share. Net income, excluding the impact of adjustments⁽²⁾, of $115.9 million or $1.93 per diluted Class A share increased compared to net income, excluding the impact of adjustments, of $50.1 million or $0.85 per diluted Class A share.
3. Record Adjusted EBITDA⁽³⁾ of $237.8 million, an increase of $78.4 million compared to Adjusted EBITDA of $159.4 million.
4. Net cash provided by operating activities decreased by $40.1 million to a source of $94.9 million. Adjusted free cash flow⁽⁴⁾ decreased by $42.5 million to a source of $64.1 million.
5. Total debt decreased by $370.0 million to $2,267.6 million. Net debt⁽⁵⁾ decreased by $371.3 million to $2,167.8 million and decreased by $35.2 million sequentially from the second quarter of 2021. The Company’s leverage ratio⁽⁶⁾ decreased to 2.8x compared to 3.7x.

Strategic Actions and Announcements

1. Announced that President and Chief Executive Officer Pete Watson will retire on February 1, 2022 and will be succeeded by Chief Operating Officer Ole Rosgaard. Also announced that Michael Gasser, current Chairman of the Board of Directors, will not stand for re-election at the Company’s 2022 annual meeting of stockholders and that Pete Watson will become Executive Chairman and Bruce Edwards will become the lead director of the Board of Directors at that time.
2. Increased fiscal year 2021 guidance for Class A earnings per share before adjustments and Adjusted Free Cash Flow.
3. Increased quarterly dividend by 2 cents to $0.46 per Common Class A share and by 3 cents to $0.69 per Common Class B share. These increases are effective for the next quarterly dividend payable on October 1, 2021, to stockholders of record at the close of business on September 17, 2021.
4. Repaid Euro 200 million of 7.375% senior notes by drawing on $225 million of available term loan borrowing under an existing credit agreement. The new borrowing matures in July 2026 and has an interest rate of approximately 2.0%.

CEO Commentary

“The Greif team delivered an exceptional third quarter,” said Pete Watson, Greif’s President and Chief Executive Officer. “In addition to strong operating results, we achieved record financial performance, reduced our debt and made meaningful progress towards achieving our targeted leverage ratio. While we continue to face significant inflationary conditions, COVID-19 related constraints and labor availability challenges, our underlying end markets are strong and we are executing with discipline to offset challenges and deliver on our commitments. Looking ahead, Greif is well-positioned for success as we continue to partner closely with our customers and drive enhanced value creation for our shareholders.”

(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 pension settlement charges (income), non-cash asset impairment 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 (income), plus incremental COVID-19 costs, net, plus (gain) loss on disposal of properties, plants, equipment and businesses, net, plus 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 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 10.29 to the Company’s Annual Report on Form 10-K for its fiscal year ended October 31, 2020 (the “2019 Credit Agreement”).

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.