Greif Reports Fourth Quarter and Fiscal 2022 Results

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

Fourth Quarter Results Include (all results compared to the fourth quarter 2021 unless otherwise noted):

• Net income of $99.5 million or $1.67 per diluted Class A share compared to net income of $104.5 million or $1.74 per diluted Class A share. Net income, excluding the impact of adjustments⁽¹⁾, of $109.0 million or $1.83 per diluted Class A share compared to net income, excluding the impact of adjustments, of $115.4 million or $1.93 per diluted Class A share.
  
• Adjusted EBITDA⁽²⁾ of $218.7 million, an increase of $7.4 million compared to Adjusted EBITDA of $211.3 million.
  
• Net cash provided by operating activities increased by $149.3 million to $286.6 million. Adjusted free cash flow⁽³⁾ increased by $139.7 million to a single quarter record of $234.5 million.
  
• Total debt decreased by $309.5 million to $1,916.1 million. Net debt⁽⁴⁾ decreased by $332.0 million to $1,769.0 million. The Company’s leverage ratio⁽⁵⁾ decreased to 1.73x from 1.99x sequentially, which is below our targeted leverage ratio range of 2.0x – 2.5x, and from 2.49x in the prior year quarter.

Fiscal Year Results Include (all results compared to the fiscal year 2021 unless otherwise noted):

• Net income of $376.7 million or $6.30 per diluted Class A share compared to net income of $390.7 million or $6.54 per diluted Class A share. Net income, excluding the impact of adjustments, of $471.2 million or $7.87 per diluted Class A share compared to net income, excluding the impact of adjustments, of $334.5 million or $5.60 per diluted Class A share.
  
• Adjusted EBITDA of $917.5 million, an increase of $153.3 million compared to Adjusted EBITDA of $764.2 million.
  
• Net cash provided by operating activities increased by $261.5 million to $657.5 million. Adjusted free cash flow increased by $232.2 million to a full year record of $506.3 million.
  
• The Company paid $111.3 million in cash dividends to stockholders in fiscal 2022.

Strategic Actions and Announcements

• Announced acquisition of Lee Container Corporation, Inc. a leader in the North American blow molded jerrycan industry in an all-cash transaction for $300.0 million, subject to customary closing conditions including regulatory clearances and before taking into consideration tax benefits with an estimated net present value of approximately $30.0 million.
  
• Repurchased approximately $11.0 million of Class B shares under the existing open market share repurchase program during the quarter.

CEO Commentary

“I am extremely proud of the results our colleagues delivered in 2022. This year has easily been the most successful in financial terms in Greif’s history, highlighted by our free cash flow generation of over $500 million, which serves as evidence of our powerful value creation engine through execution of the Build to Last strategy. We believe these outstanding results are driven by the high engagement among our teams, our focus on delivering legendary customer service, and our consistent commitment to a value over volume approach,” commented Ole Rosgaard, President and Chief Executive Officer of Greif. “I am also inspired by our team’s commitment to advancing our Build to Last strategy, and we made substantial progress on our missions this year. The expected acquisition of Lee Container will help further drive margin-accretive growth. I am excited about this new opportunity and look forward to the year ahead with our new Lee colleagues, following closing in December.”

Build to Last Mission Progress

Customer satisfaction surveys are a key component of our mission to deliver Legendary Customer Service. Our long-term objective is a trailing twelve-month CSI⁽⁶⁾ score of 95.0 or greater. Our consolidated CSI score was 93.8 at the end of the fourth quarter 2022, as compared to 92.2 in the prior year. CSI for the Global Industrial Packaging segment was 93.5, as compared to 93.1 in the prior year. CSI for the Paper Packaging & Services segment was 94.1, as compared to 91.8 in the prior year.

In addition, during the quarter we completed our twelfth NPS⁽⁷⁾ survey and achieved a score of 65.0, representing a five point improvement from our prior year survey. This result during a period of substantial economic volatility demonstrates the value of Greif’s customer service culture to sustain strong business relationships through the business cycle. The Company is proud of this result, and will continue to drive high quality customer engagement that advances our mission to Legendary Customer Service.

Creating a leading diversity, equity, and inclusion culture is a core component of our mission to Create Thriving Communities and is essential to the Company’s thought leadership and winning the war for talent. During the fourth quarter, the Company launched two new Colleague Resource Groups (“CRGs”), for a total of six CRGs, in an effort to further develop this leadership. During the quarter, our thriving internal culture was recognized by Newsweek, which ranked the Company #58 on its 2022 America’s Most Loved Workplaces publication.

Continuing to progress on the mission to Protect our Future, the Company expects to release our science-aligned 2030 sustainability targets before the end of the calendar year. Once released, these targets will be available at our sustainability page at https://www.greif.com/sustainability. During the quarter the Company received various accolades for sustainability leadership including: an AA ESG rating by MSCI, a Gold EcoVadis ranking, and #49 ranking on the Investor’s Business Daily Top 100 Best ESG Companies.

Segment Results (all results compared to the fourth quarter of 2021 unless otherwise noted)

Net sales are impacted mainly by the volume of primary products⁽⁸⁾ 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 fourth quarter of 2022 as compared to the prior year quarter for the business segments with manufacturing operations.

Net Sales Impact – Primary Products	Global Industrial Packaging		Paper Packaging & Services
	%		%
Currency Translation	(6.0) %		(0.1) %
Volume	(5.6) %		(10.4) %
Selling Prices and Product Mix	6.1 %		19.0 %
Total Impact of Primary Products	(5.5) %		8.5 %

Global Industrial Packaging

Net sales decreased by $126.7 million to $824.9 million primarily due to approximately $84.0 million of prior year net sales attributable to the Flexibles Products & Services business that was sold on April 1, 2022, negative foreign currency translation impacts of $84.1 million and lower volumes, offset by higher average selling prices.

Gross profit decreased by $31.8 million to $152.5 million. The decrease in gross profit was primarily due to the same factors that impacted net sales, partially offset by lower raw material, labor, and transportation costs.

Operating profit decreased by $30.3 million to $67.5 million primarily due to the same factors that impacted gross profit. Adjusted EBITDA decreased by $25.4 million to $96.0 million primarily due to the same factors that impacted operating profit.

Paper Packaging & Services 

Net sales increased by $43.9 million to $665.6 million primarily due to higher published containerboard and boxboard prices, partially offset by lower volumes.

Gross profit increased by $45.8 million to $155.6 million. The increase in gross profit was primarily due to the same factors that impacted net sales and lower raw material costs, partially offset by higher labor and manufacturing costs.

Operating profit increased by $41.5 million to $83.4 million primarily due to the same factors that impacted gross profit. Adjusted EBITDA increased by $33.1 million to $120.8 million primarily due to the same factors that impacted operating profit.

Tax Summary

During the fourth quarter, we recorded an income tax rate of 23.9 percent and a tax rate excluding the impact of adjustments of 25.9 percent. As previously disclosed, the application of FIN 18 often causes fluctuations in our quarterly effective tax rates. For the full year, we recorded an income tax rate of 26.1 percent and a tax rate excluding the impact of adjustments of 23.9 percent. 

Dividend Summary

On December 6, 2022, the Board of Directors declared quarterly cash dividends of $0.50 per share of Class A Common Stock and $0.74 per share of Class B Common Stock. Dividends are payable on January 1, 2023, to stockholders of record at the close of business on December 16, 2022.

(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, 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 debt extinguishment charges, 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, plus incremental COVID-19 costs, net, plus (gain) loss on disposal of properties, plants, equipment and businesses, net, plus timberland gains, 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 acquisition and integration related costs, plus cash paid for incremental COVID-19 costs, net, plus cash paid for integration related Enterprise Resource Planning (“ERP”) systems, plus cash proceeds redeployment related to replacement of non-operating corporate asset.
(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)	Customer satisfaction index (“CSI”) tracks a variety of internal metrics designed to enhance the customer experience in dealing with Greif.
(7)	Net Promoter Score (“NPS”) is derived from a survey conducted by a third party that measures how likely a customer is to recommend Greif as a business partner.  NPS scores are calculated by subtracting the percentage of detractors a business has from the percentage of its promoters.

(8)	Primary products are manufactured steel, plastic and fibre drums; new and reconditioned intermediate bulk containers; and linerboard, containerboard, corrugated sheets and corrugated containers, boxboard and tube and core products.

For the full fourth 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, 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, the Company 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.