DELAWARE, Ohio (June 3, 2020) – Greif, Inc. (NYSE: GEF, GEF.B), a world leader in industrial packaging products and services, today announced second quarter 2020 results.
Second Quarter Highlights include (all results compared to the second quarter of 2019 unless otherwise noted):
- Net income of $11.4 million or $0.19 per diluted Class A share decreased compared to net income of $13.6 million or $0.23 per diluted Class A share. Net income, excluding the impact of adjustments(1), of $56.5 million or $0.95 per diluted Class A share increased compared to net income, excluding the impact of adjustments, of $47.6 million or $0.81 per diluted Class A share. Adjusted EBITDA(2) increased by $19.3 million to $181.3 million.
- Net cash provided by operating activities increased by $37.6 million to $99.8 million. Adjusted free cash flow(3) increased by $32.9 million to $79.0 million.
- Total debt decreased by $260.2 million to $2,682.3 million. Net debt(4) decreased $242.8 million to $2,609.9 million and decreased $107.4 million sequentially from the first quarter of 2020.
Strategic Actions and Announcements
- Completed the divestiture of the Consumer Packaging Business to Graphic Packaging Holding Company for $85.0 million in cash, subject to closing adjustments.
- Announced the permanent closure of the Mobile, Alabama Uncoated Recycled Board Mill (URB) as part of the Company’s commitment to optimize the URB mill network. The closure of the #1 machine in October 2019 (approximately 65,000 tons) combined with the closure of the #2 machine (approximately 75,000 tons) removes approximately 140,000 tons of URB capacity from Greif’s network. The Company will transfer existing customer business to other mills in its system.
- Achieved record intermediate bulk container (IBC) volume during the quarter. Also acquired a minority stake in Centurion Container LLC to further expand the Company’s IBC reconditioning network in North America.
- Withdrawing fiscal 2020 adjusted Class A earnings per share and adjusted free cash flow guidance. Due to end market uncertainty, the Company is unable to reasonably quantify the impacts to its business for the remainder of its fiscal year. The Company plans to reinstate guidance in the future when there is better clarity into the duration and impact of the COVID-19 pandemic.
Pete Watson, Greif’s President and Chief Executive Officer, commented:
“At Greif, we safely package and protect essential goods and materials that serve the greater needs of communities around the world. That is our purpose as a Company and a serious responsibility in which we take pride. While we are operating in a highly unprecedented time, we continue to draw strength from our 16,000 global colleagues, and I commend them for their efforts this past quarter. I would like to especially thank our front-line production colleagues for their dedication during this pandemic and for their outstanding service to our customers.
We are responding to COVID-19 from a position of strength, taking proactive steps to prioritize the safety and well-being of our colleagues, customers and suppliers while adapting to new methods to further serve customer needs. We are also advancing our strategic priorities, and during the quarter took steps to enhance our U.S. IBC reconditioning capability and published our 11th annual sustainability report.
From a financial perspective, the business generated solid second quarter results. Adjusted EBITDA rose by 12 percent to $181.3 million, while Adjusted Free Cash Flow increased by more than 71 percent to $79.0 million. Although pleased with this performance, the current operating environment is dynamic and remains difficult to read. While economies have begun to reopen for business, the pace at which they do so varies and uncertainty persists.”
(1) Adjustments that are excluded from net income before adjustments and from earnings per diluted Class A share before adjustments are gain or loss on disposal of properties, plants, equipment and business, net, restructuring charges, acquisition and integration related costs, non-cash asset impairment charges, incremental COVID-19 costs, net, debt extinguishment charges, and tax net expense (benefit) resulting from the Tax Cuts and Jobs Act (“Tax Reform Act”).
(2) 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 incremental COVID-19 costs, net, plus non-cash pension settlement (income) charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net.
(3) Adjusted free cash flow is defined as net cash provided by (used in) 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 debt issuance costs, plus cash paid for incremental COVID-19 costs, net, plus cash paid for acquisition and integration related Enterprise Resource Planning (ERP) systems.
(4) Net debt is defined as total debt less cash and cash equivalents.
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.
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