Financial Performance & Profitable Growth
Focusing on the future while creating value today.
Highlights
- We returned a record $116.5 million in cash dividends to our stockholders, representing an increase of over 4 percent from 2022. We also completed our $150 million share repurchase program.
- Implementing a Power BI dashboard system has significantly improved real-time data availability, enabling swift changes in our operations in response to market changes.
- Greif identified three Must Win Battles within each of the four missions of our Build to Last Strategy. Of these, our Leadership Council has selected six critical battles to address in 2024. The Leadership Council will spearhead initiatives associated with these focus areas and monitor corresponding financial performance metrics.
- Our Global Operations Group launched a Lean Six Sigma Green Belt training program in 2023. Participants have implemented 83 projects throughout Greif that have already realized operational efficiencies and cost savings, many of which include an associated sustainability benefit.
Why Financial Performance & Profitable Growth Matters
The nexus between financial performance and sustainability is integral to Greif’s business strategy. Financial success is fundamental for our business, and we prioritize ensuring financial strength as one of the four Build to Last Strategy missions. Better financial performance significantly impacts colleagues by providing stability, increasing engagement and improving morale, opportunities and compensation. Guided by The Greif Way, we integrate sustainability into our operations as we recognize the opportunities it presents for strengthening sales, improving operational efficiency, mitigating risks, reducing costs and increasing value for stockholders. By prioritizing sustainability, we contribute to positive environmental and social impacts and enhance our long-term economic resilience, creating value for the company and our stakeholders.
Governance
Greif’s Board of Directors is responsible for overseeing and directing management in the long-term interest of our stockholders. The Board regularly monitors our operational execution and financial performance and discusses improvements and changes when appropriate. Execution of our strategic plans, including financial performance and profitable growth, is also overseen by the Board.
In alignment with our Build to Last Strategy, Greif identified three Must Win Battles within each of the four missions of our Build to Last Strategy. Of the 12 identified, our Leadership Council selected six critical battles to address in 2024. These include:
- Delivering the future with speed and intelligence through automation and digital tools.
- Customer service enhancement.
- Simplifying how we do business.
- Advancing 2030 sustainability goals.
- Enhancing data.
- Enhancing CapEx deployment.
Along with our Must Win Battle teams, the Leadership Council will spearhead initiatives associated with these focus areas and monitor corresponding financial performance metrics. The full implementation of these initiatives is scheduled to begin in 2024.
Greif aims to strengthen our business operations and improve performance by identifying opportunities to integrate sustainability into various aspects of our business. We have integrated sustainability data tracking in the Greif Business System 2.0 Enterprise Scorecard and incorporated environmental, social and governance considerations into our capital approval process. The capital approval process considers a project’s sustainability benefits, such as reduced energy use or increased use of recycled materials, allowing for better measurement, tracking and decision-making related to our sustainability impacts.
Our quarterly performance reviews highlight progress across various sustainability metrics, including environmental indicators like waste-to-landfill and energy consumption as well as social indicators such as colleague headcount and turnover.
In the face of a challenging financial market this year, Greif has demonstrated resilience through robust internal governance structures and agile decision-making processes. Implementing a Power BI dashboard system has significantly improved real-time data availability, enabling swift changes in our operations in response to market changes. This enhanced visibility into critical metrics has empowered our leadership to make informed and timely decisions, mitigating the impact on our business and positioning us to navigate financial uncertainties and changes with agility and efficiency.
Lean Six Sigma Training
The Global Operations Group launched a Lean Six Sigma Green Belt training program in 2023 to drive cost savings and operational efficiency. Two cohorts completed the training throughout the year, with participants drawn from our Global Industrial Packaging and Paper Packaging and Services businesses and various regions across the company. With the knowledge and skills gained from the training program, participants have implemented several projects across Greif that have already realized operational efficiencies and cost savings. As we look ahead to 2024, we are launching a Lean Six Sigma Black Belt training program for 10 colleagues. We anticipate continued success, with additional cohorts in both our Green Belt and Black Belt programs that will contribute to the realization of further savings by applying Lean Six Sigma methodologies.
Aligning with our vision to be the best performing customer service company in the world, we prioritize working with our customers to expand our product offerings and improve our product quality. The results of our efforts are demonstrated by our Customer Satisfaction Index and Net Promoter Score, which continued to increase in 2023. By collaborating with our customers and delivering innovative sustainable products, we emphasize our commitment to being valuable partners in our customers’ sustainability efforts and helping them achieve their goals. We continue to engage with customers to refine our services and gain strategic insights into their changing business needs. See the Innovation section of this report for additional information.
In March 2024, the U.S. Securities and Exchange Commission (SEC) adopted a rule to require registrants to include certain climate-related disclosures, such as greenhouse gas emission data with third-party attestation and climate-related financial statement metrics in a note to their audited financial statements. The SEC rule includes provisions related to the enhancement and standardization of climate-related disclosures which may require us to change our accounting policies, alter our operational policies and implement new systems or enhance existing systems to reflect new or amended financial reporting standards or to restate our published financial statements. We continue our efforts to prepare for the requirements set out by the new rule.
Goals, Progress & Performance
Greif boasts a rich legacy, with FY23 commemorating our 146th year of continuous operation. However, 2023 was not without its challenges, specifically a demanding market landscape that we expect will remain in the short-term. Several customer sectors faced a volume downturn, affecting our operations and financial performance. As our customers experienced reduced business activities, we focused on managing product pricing. The overall market challenges, coupled with the downturn in customer volumes and increased price sensitivity, have created a complex business environment that we navigated and adapted to throughout the year. Our efforts resulted in an adjusted EBITDA of $818.8 million and an adjusted free cash flow of $481 million. We returned a record $116.5 million in cash dividends to our stockholders, representing an increase of over 4 percent from 2022. We also completed our $150 million share repurchase program.
In 2022, we secured our first $2.4 billion sustainability-linked loan, with $1.8 billion tied to our sustainability performance, assessed through our EcoVadis score. As our sustainability strategy continues to evolve, we can customize internally set key performance indicators, enabling the loan structure to adapt in alignment with our targets.
Innovation is an integral driver of business success, enabling us to stay at the forefront of industry trends and meet evolving customer needs. Our collaborative approach to product innovation and lifecycle solutions helps us support our customers in solving their business challenges while lowering input costs and contributing to sustainability performance. Please visit our Innovation section for more information on how innovation supports our financial performance.
Greif completed several acquisitions over the course of FY23. In December 2022, we completed our acquisition of Lee Container through a $300 million transaction. The company is a leading manufacturer of high-performance barrier and conventional blow-molded containers, and we anticipate achieving at least $6 million in synergies and performance improvements within the 24 months following our acquisition. Additionally, we announced acquisitions of Reliance Products, a leading producer of high-performance barrier and conventional blow-molded jerrycans and small plastic containers in Canada. We also acquired 51 percent of the ownership interest in ColePak, North America’s second-largest paper partitions supplier. In April 2023, we finalized the acquisition of our joint venture, Centurion Container, a leader in North American intermediate bulk container and plastic drum reconditioning. For more details on our Centurion acquisition, please see the Circular Manufacturing section of this report. We continue to identify strategic acquisitions, and in March 2024, we finalized our acquisition of IPackChem, a global leader in premium barrier and non-barrier jerrycans and small plastic containers. This acquisition is another key step forward in executing our Build to Last strategy and helps unlock significant new capabilities and market opportunities to further grow as a world leader in high-performance small plastic containers and jerrycans.
During the first quarter of 2023, we finalized our divestment of our coated recycled paperboard mill in Tama, Iowa, for $54.6 million.
