Market Overview

Greif Reports Third Quarter 2018 Results

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Greif, Inc. (NYSE:GEF, GEF.B)), a world leader in industrial packaging
products and services, today announced third quarter 2018 results.

Third Quarter Highlights include (all results compared to the third
quarter of 2017 unless otherwise noted):

  • Net sales increased by $50.3 million to $1,012.1 million.
  • Gross profit increased by $30.0 million to $217.1 million.
  • Operating profit increased by $23.5 million to $114.0 million and
    operating profit before special items1 increased by $23.2
    million to $117.7 million.
  • Net income of $67.7 million or $1.15 per diluted Class A share
    increased compared to net income of $43.9 million or $0.74 per diluted
    Class A share. Net income, excluding the impact of special items, of
    $70.9 million or $1.20 per diluted Class A share increased compared to
    net income, excluding the impact of special items, of $49.7 million or
    $0.85 per diluted Class A share.
  • Net cash provided by operating activities decreased by $38.3 million
    to $51.3 million. The $38.3 million decrease included a one-time $65.0
    million U.S pension contribution. Free cash flow excluding the
    additional U.S. pension contribution2 increased by $16.4
    million to $80.6 million.
  • Increased quarterly cash dividends to $0.44 per share on Class A
    Common Stock and $0.66 per share on Class B Common Stock, an increase
    of 4.8 percent from dividends paid in the second quarter of 2018.

"Greif delivered solid third quarter results, with stronger year over
year operating profit before special items, earnings and free cash
flow," said Greif's President and Chief Executive Officer, Pete Watson.
"Our Paper Packaging and Flexible Products segments continue to
demonstrate strong results. Our Rigid Packaging segment experienced
strong demand across much of the portfolio, but was impacted by the
continuation of rising raw material costs and unique headwinds in
certain regions of our global business. At the same time, the improved
overall performance of our diversified portfolio leads us to increase
our Fiscal 2018 Class A EPS before special items guidance range to $3.53
- $3.69. In addition, we are pleased that earlier this week our Board of
Directors approved an increased quarterly dividend, which reflects our
ongoing commitment to shareholder returns and the confidence we have in
our global business."

____

(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 excluding the additional U.S. pension contribution is
defined as net cash provided by operating activities, excluding the
additional one-time $65.0 million contribution made by the Company
to its U.S. defined benefit plan (the "additional U.S. pension
contribution") during the third quarter of 2018, less cash paid for
purchases of properties, plants and equipment. The additional U.S.
pension contribution will provide certain tax advantages to the
Company as a result of the Tax Cuts and Jobs Act ("Tax Reform Act").

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

The Company's consolidated CSI3 score for the third quarter
of 2018 improved to 87.4, with the largest improvement again recorded in
FPS, which generated a 12 percent improvement versus the prior year
quarter. Our objective is that each business segment delivers a CSI
score of 95 or better. Our Paper Packaging & Services segment is above
that threshold.

We are currently making plans to conduct our next NPS4 survey
and anticipate launching it late in our fiscal 2018 fourth quarter or at
the beginning of fiscal 2019. Our aspiration is to consistently achieve
an NPS score of 55. We continue to leverage the increased customer
interactions that accompany each survey into additional enhancements for
our customers and better strategic insight into their business needs.

Segment Results (all results compared to the third 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 third quarter of 2018 as compared to the prior year quarter for the
business segments with manufacturing operations:

 

 

 

 

 

 

Rigid Industrial

Packaging &

Paper Packaging &

Flexible Products

Net Sales Impact - Primary Products

Services  

Services

  & Services
%   %   %
Currency Translation (0.6 )% 2.7 %
Volume (1.2 )% 6.6 % 7.1 %
Selling Prices and Product Mix 3.7 %   7.8 %   8.9 %
Total Impact of Primary Products 1.9 %   14.4 %   18.7 %
 

Rigid Industrial Packaging & Services

Net sales increased by $13.2 million to $687.6 million. Net sales
excluding foreign currency translation increased by $17.6 million due
primarily to a 3.7 percent increase in selling prices on our primary
products as a result of strategic pricing decisions and contractual
price changes, partially offset by significantly weaker demand from
European agricultural customers due to weather, impacts from events in
Brazil and continued value over volume decisions in China.

Gross profit increased by $1.8 million to $138.8 million. The increase
in gross profit included a $4.6 million freight expense adjustment and
improved manufacturing efficiencies, partially offset by the
continuation of rising raw material costs and the timing of contractual
pass through arrangements. The $4.6 million freight expense adjustment
included the reversal of $2.4 million of fiscal 2018 freight expenses
and $2.2 million of freight expenses related to prior periods.

Operating profit decreased by $3.3 million to $62.0 million. Operating
profit before special items decreased by $4.1 million to $66.1 million,
due to an increase in the segment's selling, general & administrative
("SG&A") expense. The prior year third quarter results included a
value-added tax refund of $2.9 million related to the resolution of a
Brazilian tax issue originating in 1991.

Paper Packaging & Services

Net sales increased by $29.7 million to $236.0 million. The increase was
due to higher selling prices resulting from increases in published
containerboard pricing, higher volumes and stronger specialty sales.

Gross profit increased by $25.8 million to $59.5 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.

Operating profit increased by $24.7 million to $44.1 million. Operating
profit before special items increased by $24.8 million to $44.4 million
due to the same factors that impacted gross profit, partially offset by
an increase in the segment's SG&A expense.

Flexible Products & Services

Net sales increased by $8.7 million to $82.6 million. Net sales
excluding foreign currency translation increased by $7.1 million due to
strategic pricing decisions, product mix and higher volumes.

Gross profit increased by $3.0 million to $16.7 million due primarily
due to the same factors that impacted net sales and improved
manufacturing efficiencies.

Operating profit increased by $2.7 million to $5.8 million. Operating
profit before special items increased by $3.2 million to $5.8 million.
The improvement in operating profit before special items was due
primarily to the same factors that impacted gross profit and foreign
currency translation.

Land Management

Net sales decreased by $1.3 million to $5.9 million.

Operating profit decreased by $0.6 million to $2.1 million. Operating
profit before special items decreased by $0.7 million to $1.4 million.

Dividend Summary

On August 28, 2018, the Board of Directors declared quarterly cash
dividends of $0.44 per share of Class A Common Stock and $0.66 per share
of Class B Common Stock. Dividends are payable on October 1, 2018, to
stockholders of record at the close of business on September 17, 2018.

Tax Summary

During the third quarter, the Company recorded an income tax rate of
26.6 percent and a tax rate excluding the impact of special items of
26.4 percent. The Company continues to expect its tax rate excluding the
impact of special items to range between 28.0 and 32.0 percent for
fiscal 2018.

As of July 31, 2018, the Company's accounting for the Tax Reform Act is
provisional and work is progressing. For example, as it relates to
transition tax, the Company continues to analyze the earnings and
profits and tax pools of its foreign subsidiaries. The Company has
recorded as of that date a provisional estimate for the following items:
a provisional tax benefit related to the revaluation of deferred tax
assets and liabilities of $69.3 million; and a provisional tax expense
as a result of the accrual for the transition tax liability of $35.9
million. Adjustments to the provisional estimates will be recorded and
disclosed prospectively during the measurement period and may differ
materially from these provisional amounts, due to, among other items,
additional analyses, changes in interpretations and assumptions
previously made by the Company, new or additional regulatory guidance
that may be issued, and actions the Company may take as a result of the
Tax Reform Act.

Company Outlook

 

  Fiscal 2018 Outlook   Fiscal 2018 Outlook  

(in millions, except per share amounts)

Reported at Q2 Reported at Q3 Comments
SG&A expense $395 - $415 No change N/A
Interest expense $50 - $55 No change N/A
Other expense, net $15 - $20 No change N/A
Tax rate excluding the impact of special items 28 - 32% No change N/A

Class A earnings per share before special items

$3.45 - $3.70 $3.53 - $3.69

Improved price/cost in containerboard; accelerated FPS performance

Capital expenditures $120 - $140 No change N/A
Free cash flow excluding the additional U.S. pension contribution $200 - $220 No change N/A

Note: Full year 2018 Class A earnings per share and tax rate guidance on
a GAAP basis are 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 before special items guidance or
tax rate excluding the impact of special items guidance, both non-GAAP
financial measures which exclude 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 benefits 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 excluding the
additional pension contribution 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 July 31,   Nine months ended July 31,
(in millions, except for per share amounts)   2018   2017   2018   2017

Selected Financial Highlights

   
Net sales $ 1,012.1 $ 961.8 $ 2,886.1 $ 2,670.1
Gross profit 217.1 187.1 584.1 532.3
Gross profit margin 21.5 % 19.5 % 20.2 % 19.9 %
Operating profit 114.0 90.5 267.2 237.6
Operating profit before special items 117.7 94.5 278.4 246.1
EBITDA(6) 142.2 116.1 350.1 293.5
EBITDA before special items 146.3 121.1 361.7 327.6
Net cash provided by operating activities 51.3 89.6 55.8 105.1
Adjusted net cash provided by operating activities

 

116.3

 

89.6

 

120.8

 

105.1
Free cash flow(7) 15.6 64.2 (36.2 ) 40.0
Free cash flow excluding the additional U.S. pension contribution

 

80.6

 

64.2

 

28.8

 

40.0
Net income attributable to Greif, Inc. 67.7 43.9 169.3 85.3
Diluted Class A earnings per share attributable to Greif, Inc. $ 1.15 $ 0.74 $ 2.88 $ 1.45
Diluted Class A earnings per share attributable to Greif, Inc.
before special items
$ 1.20 $ 0.85 $ 2.45 $ 1.97

Special items

Restructuring charges $ 3.7 $ 3.9 $ 13.8 $ 8.7
Acquisition-related costs 0.5 0.7

Non-cash asset impairment charges

0.8 2.0 4.1 5.9
Non-cash pension settlement charge 0.4 1.0 0.4 25.6
Gain on disposal of properties, plants and equipment and businesses,
net
(1.3 ) (1.9 ) (7.4 ) (6.1 )
Provisional tax net benefit resulting from the Tax Reform Act     (33.4 )  
Total special items $ 4.1   $ 5.0   $ (21.8 ) $ 34.1  
 
July 31, 2018 October 31, 2017 July 31, 2017 October 31, 2016
Operating working capital(8) $ 394.0 $ 327.3 $ 395.6 $ 304.6
 

(6)

  EBITDA is defined as net income, plus interest expense, net, plus
income tax expense, plus depreciation, depletion and amortization.

(7)

Free cash flow is defined as net cash provided by operating
activities less cash paid for purchases of properties, plants and
equipment.

(8)

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 third quarter of
2018 results on August 30, 2018, at 8:30 a.m. Eastern Time (ET). To
participate, domestic callers should call 833-231-8265. The Greif ID is
4580819. 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 July 31,   Nine months ended July 31,
(in millions, except per share amounts)   2018   2017   2018   2017
Net sales $ 1,012.1   $ 961.8 $ 2,886.1   $ 2,670.1
Cost of products sold 795.0   774.7   2,302.0   2,137.8  
Gross profit 217.1 187.1 584.1 532.3
Selling, general and administrative expenses 99.9 92.6 306.4 286.2
Restructuring charges 3.7 3.9 13.8 8.7
Non-cash asset impairment charges 0.8 2.0 4.1 5.9
Gain on disposal of properties, plants and equipment, net (1.4 ) (1.1 ) (7.5 ) (3.9 )
(Gain) loss on disposal of businesses, net 0.1   (0.8 ) 0.1   (2.2 )
Operating profit 114.0 90.5 267.2 237.6
Interest expense, net 12.1 13.7 38.4 46.7
Non-cash pension settlement charge 0.4 1.0 0.4 25.6
Other expense, net 4.8   1.4   15.0   8.2  
Income before income tax expense and equity earnings of
unconsolidated affiliates, net
96.7 74.4 213.4 157.1
Income tax expense 25.7 27.2 31.2 62.0
Equity earnings of unconsolidated affiliates, net of tax (1.0 ) (0.3 ) (1.8 ) (0.3 )
Net income 72.0 47.5 184.0 95.4
Net income attributable to noncontrolling interests (4.3 ) (3.6 ) (14.7 ) (10.1 )
Net income attributable to Greif, Inc. $ 67.7   $ 43.9   $ 169.3   $ 85.3  
Basic earnings per share attributable to Greif, Inc. common
shareholders:
Class A Common Stock $ 1.15 $ 0.74 $ 2.88 $ 1.45
Class B Common Stock $ 1.72 $ 1.12 $ 4.31 $ 2.17
Diluted earnings per share attributable to Greif, Inc. common
shareholders:
Class A Common Stock $ 1.15 $ 0.74 $ 2.88 $ 1.45
Class B Common Stock $ 1.72 $ 1.12 $ 4.31 $ 2.17
Shares used to calculate basic earnings per share attributable to
Greif, Inc. common shareholders:
Class A Common Stock 25.9 25.8 25.9 25.8
Class B Common Stock 22.0 22.0 22.0 22.0
Shares used to calculate diluted earnings per share attributable
to Greif, Inc. common shareholders:
Class A Common Stock 25.9 25.8 25.9 25.8
Class B Common Stock   22.0     22.0     22.0     22.0  
 
   
GREIF, INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

 
(in millions)   July 31, 2018   October 31, 2017
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 100.9 $ 142.3
Trade accounts receivable 469.2 447.0
Inventories 334.4 279.5
Other current assets 170.7   125.7
1,075.2 994.5
LONG-TERM ASSETS
Goodwill 785.5 785.4
Intangible assets 85.3 98.0
Assets held by special purpose entities 50.9 50.9
Other long-term assets 120.9   115.1
1,042.6   1,049.4
PROPERTIES, PLANTS AND EQUIPMENT 1,181.6   1,188.4
$ 3,299.4   $ 3,232.3
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $ 409.6 $ 399.2
Short-term borrowings 5.5 14.5
Current portion of long-term debt 15.0 15.0
Other current liabilities 250.1   259.2
680.2   687.9
LONG-TERM LIABILITIES
Long-term debt 1,020.1 937.8
Liabilities held by special purpose entities 43.3 43.3
Other long-term liabilities 363.8   484.3
1,427.2   1,465.4
REDEEMABLE NONCONTROLLING INTERESTS 34.6   31.5
EQUITY    
Total Greif, Inc. equity 1,115.2   1,010.9
Noncontrolling interests 42.2   36.6
1,157.4   1,047.5
$ 3,299.4   $ 3,232.3
 
   
GREIF, INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

 
Three months ended July 31,   Nine months ended July 31,
(in millions)   2018   2017   2018   2017
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 72.0 $ 47.5 $ 184.0 $ 95.4
Depreciation, depletion and amortization 32.4 27.7 96.5 89.4
Asset impairments 0.8 2.0 4.1 5.9
Pension settlement loss 0.4 1.0 0.4 25.6
Other non-cash adjustments to net income (4.2 ) (1.1 ) (77.3 ) (9.9 )
Operating working capital changes 12.9 (3.8 ) (72.3 ) (96.1 )
Deferred purchase price on sold receivables (7.5 ) (9.1 ) (32.3 ) (30.8 )
Increase (decrease) in cash from changes in other assets and
liabilities
(55.5 ) 25.4   (47.3 ) 25.6  
Net cash provided by operating activities 51.3   89.6   55.8   105.1  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of properties, plants and equipment (35.7 ) (25.4 ) (92.0 ) (65.1 )
Purchases of and investments in timber properties (1.7 ) (1.9 ) (6.6 ) (7.3 )
Proceeds from the sale of properties, plants and equipment,
businesses, timberland and other assets
3.0 5.7 12.9 13.8
Proceeds on insurance recoveries       0.4  
Net cash used in investing activities (34.4 ) (21.6 ) (85.7 ) (58.2 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) debt, net 4.6 (38.2 ) 69.5 27.3
Dividends paid to Greif, Inc. shareholders (24.7 ) (24.7 ) (74.0 ) (73.9 )
Other (1.1 ) (0.6 ) (4.5 ) (4.1 )
Net cash used in financing activities (21.2 ) (63.5 ) (9.0 ) (50.7 )
Reclassification of cash to assets held for sale 0.4 (5.5 )
Effects of exchange rates on cash (3.0 ) 2.7   (2.5 ) 0.2  
Net increase (decrease) in cash and cash equivalents (7.3 ) 7.6 (41.4 ) (9.1 )
Cash and cash equivalents, beginning of period 108.2   87.0   142.3   103.7  
Cash and cash equivalents, end of period $ 100.9   $ 94.6   $ 100.9   $ 94.6  
 
   
GREIF, INC. AND SUBSIDIARY COMPANIES
FINANCIAL HIGHLIGHTS BY SEGMENT

UNAUDITED

 
Three months ended July 31,   Nine months ended July 31,
(in millions)   2018   2017   2018   2017
Net sales:    
Rigid Industrial Packaging & Services $ 687.6 $ 674.4 $ 1,965.7 $ 1,860.2
Paper Packaging & Services 236.0 206.3 653.7 577.9
Flexible Products & Services 82.6 73.9 246.7 210.2
Land Management 5.9   7.2   20.0   21.8
Total net sales $ 1,012.1   $ 961.8   $ 2,886.1   $ 2,670.1
Gross profit:
Rigid Industrial Packaging & Services $ 138.8 $ 137.0 $ 374.1 $ 383.3
Paper Packaging & Services 59.5 33.7 152.7 101.9
Flexible Products & Services 16.7 13.7 49.5 39.1
Land Management 2.1   2.7   7.8   8.0
Total gross profit $ 217.1   $ 187.1   $ 584.1   $ 532.3
Operating profit:
Rigid Industrial Packaging & Services $ 62.0 $ 65.3 $ 140.4 $ 164.2
Paper Packaging & Services 44.1 19.4 105.0 59.7
Flexible Products & Services 5.8 3.1 14.0 5.5
Land Management 2.1   2.7   7.8   8.2
Total operating profit $ 114.0   $ 90.5   $ 267.2   $ 237.6
EBITDA(9):
Rigid Industrial Packaging & Services $ 78.3 $ 80.3 $ 189.1 $ 198.5
Paper Packaging & Services 52.8 26.9 129.9 73.4
Flexible Products & Services 7.8 4.9 20.0 9.7
Land Management 3.3   4.0   11.1   11.9
Total EBITDA $ 142.2   $ 116.1   $ 350.1   $ 293.5
EBITDA before special items:
Rigid Industrial Packaging & Services $ 82.8 $ 85.8 $ 202.4 $ 223.5
Paper Packaging & Services 53.1 27.5 130.2 83.9
Flexible Products & Services 7.8 4.4 20.3 10.6
Land Management 2.6   3.4   8.8   9.6

Total EBITDA before special items

$

146.3

  $ 121.1   $ 361.7   $ 327.6
 

(9)

  EBITDA is defined as net income, plus interest expense, net, plus
income tax 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 July 31,   Nine months ended July 31,
(in millions)   2018   2017   2018   2017
Net sales:    
United States $ 506.0 $ 463.7 $ 1,402.2 $ 1,306.2
Europe, Middle East and Africa 372.6 359.4 1,074.6 970.8
Asia Pacific and other Americas 133.5   138.7   409.3   393.1
Total net sales $ 1,012.1   $ 961.8   $ 2,886.1   $ 2,670.1
Gross profit:
United States $ 125.6 $ 97.4 $ 323.9 $ 277.1
Europe, Middle East and Africa 69.9 65.9 198.7 189.5
Asia Pacific and other Americas 21.6   23.8   61.5   65.7

Total gross profit

$ 217.1   $ 187.1   $ 584.1   $ 532.3
 
   
GREIF, INC. AND SUBSIDIARY COMPANIES
GAAP TO NON-GAAP RECONCILIATION
OPERATING WORKING CAPITAL

UNAUDITED

 
(in millions)   July 31, 2018   October 31, 2017
Trade accounts receivable $ 469.2 $ 447.0
Plus: inventories 334.4 279.5
Less: accounts payable 409.6   399.2
Operating working capital $ 394.0   $ 327.3
 
   
GREIF, INC. AND SUBSIDIARY COMPANIES
GAAP TO NON-GAAP RECONCILIATION

CONSOLIDATED EBITDA(10)

UNAUDITED

 
Three months ended July 31,   Nine months ended July 31,
(in millions) 2018   2017   2018   2017
Net income $ 72.0   $ 47.5 $ 184.0   $ 95.4
Plus: Interest expense, net 12.1 13.7 38.4 46.7
Plus: Income tax expense 25.7 27.2 31.2 62.0
Plus: Depreciation, depletion and amortization expense 32.4   27.7   96.5   89.4  
EBITDA $ 142.2   $ 116.1   $ 350.1   $ 293.5  
Net income $ 72.0 $ 47.5 $ 184.0 $ 95.4
Plus: Interest expense, net 12.1 13.7 38.4 46.7
Plus: Income tax expense 25.7 27.2 31.2 62.0
Plus: Non-cash pension settlement charge 0.4 1.0 0.4 25.6
Plus: Other expense, net 4.8 1.4 15.0 8.2
Plus: Equity earnings of unconsolidated affiliates, net of tax (1.0 ) (0.3 ) (1.8 ) (0.3 )
Operating profit 114.0 90.5 267.2 237.6
Less: Non-cash pension settlement charge 0.4 1.0 0.4 25.6
Less: Other expense, net 4.8 1.4 15.0 8.2
Less: Equity earnings of unconsolidated affiliates, net of tax (1.0 ) (0.3 ) (1.8 ) (0.3 )
Plus: Depreciation, depletion and amortization expense 32.4   27.7   96.5   89.4  
EBITDA $ 142.2   $ 116.1   $ 350.1   $ 293.5  

(10)

  EBITDA is defined as net income, plus interest expense, net, plus
income tax 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(11)

UNAUDITED

 
Three months ended July 31,   Nine months ended July 31,
(in millions)   2018   2017   2018   2017
Rigid Industrial Packaging & Services    
Operating profit $ 62.0 $ 65.3 $ 140.4 $ 164.2
Less: Non-cash pension settlement charge 0.4 0.6 0.4 15.3
Less: Other expense, net 4.8 1.5 14.9 7.4
Less: Equity earnings of unconsolidated affiliates, net of tax (1.0 ) (0.3 ) (1.8 ) (0.3 )
Plus: Depreciation and amortization expense 20.5     16.8     62.2     56.7  
EBITDA $ 78.3 $ 80.3 $ 189.1 $ 198.5
Restructuring charges 3.3 3.7 13.1 7.6
Acquisition-related costs 0.5 0.7
Non-cash asset impairment charges 0.8 2.0 4.1 5.6
Non-cash pension settlement charge 0.4 0.6 0.4 15.3
Gain on disposal of properties, plants, equipment, and businesses,
net
(0.5 )   (0.8 )   (5.0 )   (3.5 )
EBITDA before special items $ 82.8     $ 85.8     $ 202.4     $ 223.5  
Paper Packaging & Services
Operating profit $ 44.1 $ 19.4 $ 105.0 $ 59.7
Less: Non-cash pension settlement charge 0.4 10.1
Less: Other expense, net 0.2 (0.1 ) 0.7 (0.1 )
Plus: Depreciation and amortization expense 8.9     7.8     25.6     23.7  
EBITDA $ 52.8 $ 26.9 $ 129.9 $ 73.4
Restructuring charges 0.3 0.3 0.3
Non-cash pension settlement charge 0.4   10.1
Loss on disposal of properties, plants, equipment, net     0.2         0.1  
EBITDA before special items $ 53.1     $ 27.5     $ 130.2     $ 83.9  
Flexible Products & Services
Operating profit $ 5.8 $ 3.1 $ 14.0 $ 5.5
Less: Non-cash pension settlement charge 0.1
Less: Other (income) expense, net (0.2 ) (0.6 ) 0.9
Plus: Depreciation and amortization expense 1.8     1.8     5.4     5.2  
EBITDA $ 7.8 $ 4.9 $ 20.0 $ 9.7
Restructuring charges 0.1 0.2 0.4 0.8
Non-cash asset impairment charges 0.3
Non-cash pension settlement charge 0.1
Gain on disposal of properties, plants, equipment and businesses, net (0.1 )   (0.7 )   (0.1 )   (0.3 )
EBITDA before special items $ 7.8     $ 4.4     $ 20.3     $ 10.6  
Land Management
Operating profit $ 2.1 $ 2.7 $ 7.8 $ 8.2
Less: Non-cash pension settlement charge 0.1
Plus: Depreciation, depletion and amortization expense 1.2     1.3     3.3     3.8  
EBITDA $ 3.3 $ 4.0 $ 11.1 $ 11.9
Non-cash pension settlement charge 0.1
Gain on disposal of properties, plants, equipment, net (0.7 )   (0.6 )   (2.3 )   (2.4 )
EBITDA before special items $ 2.6     $ 3.4     $ 8.8     $ 9.6  
Consolidated EBITDA $ 142.2     $ 116.1     $ 350.1     $ 293.5  
Consolidated EBITDA before special items $ 146.3     $ 121.1     $ 361.7     $ 327.6  

(11)

  EBITDA is defined as net income, plus interest expense, net, plus
income tax 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

UNAUDITED

 
Three months ended July 31,   Nine months ended July 31,
(in millions)   2018   2017   2018   2017
Net cash provided by operating activities $ 51.3   $ 89.6 $ 55.8   $ 105.1
Cash paid for purchases of properties, plants and equipment (35.7 )   (25.4 )   (92.0 )   (65.1 )
Free cash flow $ 15.6 $ 64.2 $ (36.2 ) $ 40.0
 
   
GREIF, INC. AND SUBSIDIARY COMPANIES
GAAP TO NON-GAAP RECONCILIATION
FREE CASH FLOW EXCLUDING THE ADDITIONAL U.S. PENSION CONTRIBUTION

UNAUDITED

 
Three months ended July 31,   Nine months ended July 31,
(in millions)   2018   2017   2018   2017
Net cash provided by operating activities $ 51.3   $ 89.6 $ 55.8   $ 105.1
Additional U.S. pension contribution 65.0         65.0      
Adjusted net cash provided by operating activities(12) $ 116.3 $ 89.6 $ 120.8 $ 105.1
Cash paid for purchases of properties, plants and equipment (35.7 )   (25.4 )   (92.0 )   (65.1 )
Free cash flow excluding the additional U.S. pension contribution $ 80.6     $ 64.2     $ 28.8     $ 40.0  

(12)

  Adjusted net cash provided by operating activities is defined as net
cash provided by operating activities excluding the additional U.S.
pension contribution.
 
 
GREIF, INC. AND SUBSIDIARY COMPANIES
PROJECTED 2018 GUIDANCE RECONCILIATION
FREE CASH FLOW EXCLUDING THE ADDITIONAL U.S. PENSION CONTRIBUTION

UNAUDITED

 
Fiscal 2018 Guidance Range
(in millions) Scenario 1   Scenario 2
Net cash provided by operating activities $ 255.0   $ 295.0
Additional U.S. pension contribution 65.0     65.0  
Adjusted net cash provided by operating activities 320.0 360.0
Cash paid for purchases of properties, plants and equipment (120.0 )   (140.0 )
Free cash flow excluding the additional U.S. pension contribution $ 200.0     $ 220.0  
   
GREIF, INC. AND SUBSIDIARY COMPANIES
GAAP TO NON-GAAP RECONCILIATION

SEGMENT OPERATING PROFIT BEFORE SPECIAL ITEMS(13)

UNAUDITED

 
Three months ended July 31,   Nine months ended July 31,
(in millions)   2018   2017   2018   2017
Operating profit:    
Rigid Industrial Packaging & Services $ 62.0 $ 65.3 $ 140.4 $ 164.2
Paper Packaging & Services 44.1 19.4 105.0 59.7
Flexible Products & Services 5.8 3.1 14.0 5.5
Land Management 2.1   2.7   7.8   8.2  
Total operating profit $ 114.0   $ 90.5   $ 267.2   $ 237.6  
Restructuring charges:
Rigid Industrial Packaging & Services $ 3.3 $ 3.7 $ 13.1 $ 7.6
Paper Packaging & Services 0.3 0.3 0.3
Flexible Products & Services 0.1   0.2   0.4   0.8  
Total restructuring charges $ 3.7   $ 3.9   $ 13.8   $ 8.7  
Acquisition-related costs:
Rigid Industrial Packaging & Services $ 0.5   $   $ 0.7   $  
Total acquisition-related costs $ 0.5   $   $ 0.7   $  
Non-cash asset impairment charges:
Rigid Industrial Packaging & Services $ 0.8 $ 2.0 $ 4.1 $ 5.6
Flexible Products & Services       0.3  
Total non-cash asset impairment charges $ 0.8   $ 2.0   $ 4.1   $ 5.9  
(Gain) loss on disposal of properties, plants, equipment and
businesses, net:
Rigid Industrial Packaging & Services $ (0.5 ) $ (0.8 ) $ (5.0 ) $ (3.5 )
Paper Packaging & Services 0.2 0.1
Flexible Products & Services (0.1 ) (0.7 ) (0.1 ) (0.3 )
Land Management (0.7 ) (0.6 ) (2.3 ) (2.4 )
Total gain on disposal of properties, plants, equipment and
businesses, net
$ (1.3 ) $ (1.9 ) $ (7.4 ) $ (6.1 )
Operating profit before special items:
Rigid Industrial Packaging & Services $ 66.1 $ 70.2 $ 153.3 $ 173.9
Paper Packaging & Services 44.4 19.6 105.3 60.1
Flexible Products & Services 5.8 2.6 14.3 6.3
Land Management 1.4   2.1   5.5   5.8  
Total operating profit before special items $ 117.7   $ 94.5   $ 278.4   $ 246.1  

(13)

  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, CLASS A EARNINGS PER SHARE AND TAX RATE BEFORE
SPECIAL ITEMS

UNAUDITED

 

 

Income before

Income Tax

(Benefit)

Expense and

Equity

Equity Diluted

Earnings of

Income Tax Earnings of Non- Net Income Class A
(in millions, except

Unconsolidated

(Benefit) Unconsolidated Controlling Attributable Earnings
for per share amounts)  

Affiliates, net

  Expense   Affiliates   Interest   to Greif, Inc.   Per Share   Tax Rate
Three months ended July 31, 2018 $ 96.7 $ 25.7 $ (1.0 ) $ 4.3 $ 67.7 $ 1.15 26.6 %
Gain on disposal of properties, plants, equipment and businesses, net (1.3 ) (0.2 ) (1.1 ) (0.02 )
Restructuring charges 3.7 0.9 2.8 0.04
Acquisition-related costs 0.5 0.1 0.4 0.01
Non-cash asset impairment charges 0.8 0.8 0.02
Non-cash pension settlement 0.4     0.1             0.3          
Excluding Special Items $ 100.8     $ 26.6     $ (1.0 )   $ 4.3     $ 70.9     $ 1.20     26.4 %
 
Three months ended July 31, 2017 $ 74.4 $ 27.2 $ (0.3 ) $ 3.6 $ 43.9 $ 0.74 36.6 %
Gain on disposal of properties, plants, equipment and businesses, net (1.9 ) (1.3 ) (0.3 ) (0.3 )
Restructuring charges 3.9 0.5 0.1 3.3 0.06
Non-cash asset impairment charges 2.0 2.0 0.04
Non-cash pension settlement charge 1.0     0.2             0.8     0.01      
Excluding Special Items $ 79.4     $ 26.6     $ (0.3 )   $ 3.4     $ 49.7     $ 0.85     33.5 %
 
Nine months ended July 31, 2018 $ 213.4 $ 31.2 $ (1.8 ) $ 14.7 $ 169.3 $ 2.88 14.6 %
Gain on disposal of properties, plants, equipment and businesses, net (7.4 ) (0.9 ) (6.5 ) (0.11 )
Restructuring charges 13.8 2.8 0.2 10.8 0.18
Acquisition-related costs 0.7 0.2 0.5 0.01
Non-cash asset impairment charges 4.1 0.7 3.4 0.06
Non-cash pension settlement charge 0.4 0.1 0.3
Provisional tax net benefit resulting from the Tax Reform Act     33.4             (33.4 )   (0.57 )    
Excluding Special Items $ 225.0     $ 67.5     $ (1.8 )   $ 14.9     $ 144.4     $ 2.45     30.0 %
 
Nine months ended July 31, 2017 $ 157.1 $ 62.0 $ (0.3 ) $ 10.1 $ 85.3 $ 1.45 39.5 %
Gain on disposal of properties, plants, equipment and businesses, net (6.1 ) (2.3 ) (3.8 ) (0.06 )
Restructuring charges 8.7 (2.3 ) 0.4 10.6 0.18
Non-cash asset impairment charges 5.9 0.1 5.8 0.10
Non-cash pension settlement charge 25.6     8.1             17.5     0.30      
Excluding Special Items $ 191.2     $ 65.5     $ (0.3 )   $ 10.6     $ 115.4     $ 1.97     34.3 %

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 nine months ended
July 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.

     

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 July 31,
  Increase in Increase in
(in millions)   2018   2017   Net Sales ($)   Net Sales (%)
Consolidated
Net Sales $ 1,012.1 $ 961.8 $ 50.3 5.2 %
Currency Translation 2.8   N/A
Net Sales Excluding the Impact of Currency Translation $ 1,014.9 $ 961.8 $ 53.1 5.5 %
Rigid Industrial Packaging & Services
Net Sales $ 687.6 $ 674.4 $ 13.2 2.0 %
Currency Translation 4.4   N/A
Net Sales Excluding the Impact of Currency Translation $ 692.0 $ 674.4 $ 17.6 2.6 %
Flexible Products & Services
Net Sales $ 82.6 $ 73.9 $ 8.7 11.8 %
Currency Translation (1.6 ) N/A
Net Sales Excluding the Impact of Currency Translation $ 81.0 $ 73.9 $ 7.1 9.6 %
Nine months ended July 31,
Increase in Increase in
(in millions)   2018   2017   Net Sales ($)   Net Sales (%)
Consolidated
Net Sales $ 2,886.1 $ 2,670.1 $ 216.0 8.1 %
Currency Translation (68.8 ) N/A
Net Sales Excluding the Impact of Currency Translation $ 2,817.3 $ 2,670.1 $ 147.2 5.5 %
Rigid Industrial Packaging & Services
Net Sales $ 1,965.7 $ 1,860.2 $ 105.5 5.7 %
Currency Translation (53.0 ) N/A
Net Sales Excluding the Impact of Currency Translation $ 1,912.7 $ 1,860.2 $ 52.5 2.8 %
Flexible Products & Services
Net Sales $ 246.7 $ 210.2 $ 36.5 17.4 %
Currency Translation (15.8 ) N/A
Net Sales Excluding the Impact of Currency Translation $ 230.9 $ 210.2 $ 20.7 9.8 %

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