Financial Performance & Profitable Growth
Focusing on the future while creating value today.
Highlights
- Guided by The Greif Way, integrating sustainability into our operations enables more robust sales, improves efficiency, reduces costs and creates greater value for shareholders.
- In 2022, we implemented ESG data, measurement and tracking into the new Greif Business System 2.0 Enterprise Scorecard and incorporated ESG performance into our capital approval process.
- Our collaborative approach to product innovation and life cycle solutions enables us to support our customers in solving their business challenges while lowering input costs and contributing to sustainability performance.
- We delivered record financial performance driven by strong volume growth and ongoing pricing activities, resulting in an adjusted EBITDA of $917.5 million and an adjusted free cash flow of $506.3 million, reducing our net debt by approximately $332 million.
Why Financial Performance & Profitable Growth Matters
Greif believes financial performance and sustainability are not mutually exclusive but mutually beneficial. Investment in a robust sustainability strategy is vital to long-term financial success. Guided by The Greif Way, integrating sustainability into our operations enables stronger sales, improves efficiency, reduces costs and creates greater value for shareholders. Also represented in Greif’s Build to Last Strategy, ensuring financial strength is one of our four strategy pillars. Better financial performance significantly impacts colleagues by increasing engagement, morale and compensation.
Governance
Greif’s Board of Directors oversees, counsels and directs management in the long-term interest of our stockholders. One of its primary responsibilities, the Board regularly monitors our operational execution and financial performance and discusses improvements and changes when appropriate. The Board holds management accountable for the execution of our strategic plans, including financial performance and profitable growth.
Greif will continue strengthening our business operations and improving performance by further integrating ESG into everything we do. In 2021, our Leadership Council focused on accelerating our ESG performance on key ESG initiatives—Diversity, Equity & Inclusion, Waste, Energy Reduction, Environmental Compliance and Circularity & Innovation—through quarterly meetings and developing and implementing strategic action plans. We also implemented ESG data, measurement and tracking into the new Greif Business System 2.0 Enterprise Scorecard and incorporated ESG performance into our capital approval process. The capital approval process considers a project’s ESG benefits, such as reduced energy use or increased use of recycled materials, allowing better measurement, tracking and decision-making related to our sustainability impacts. In 2022, we expanded our program to include ESG metrics in quarterly performance reviews.
Our commitments to delivering the highest level of customer satisfaction through product quality and legendary customer service enabled us to improve our Customer Satisfaction Index, Corrective Action Rate and Net Promoter Score, contributing to our efforts to attract and retain customers. Embedding sustainability into our products and conversations with customers will demonstrate our value as partners as they embark and build on their sustainability journey. We continue to leverage increased customer interactions into enhanced service offerings for our customers and better strategic insight into their business needs.
Greif Acquires Lee Container
As opportunities within plastics continue to develop, with many customers expanding into agrochemical sectors, we have further invested in our small plastic jerrycans business. In December 2022, Greif’s acquisition of Lee Containers was finalized for $300 million. Lee serves a similar customer base across the agrochemical, specialty chemical, lubricant and pet care industries. This acquisition solidifies our commitment to growing our small plastics operations, balances Greif’s end market and product mix and incorporates Lee Container’s processes that allow for the nearly immediate reuse of scrap material. Their easily collectable, 100 percent recyclable products also advance our circularity strategy. This investment to build our plastics growth strategy will allow us to meet increasing customer demand in this high-growth market over the short to medium term and improve output while reducing costs.
Our colleagues make our efforts and success possible. We are creating a workplace that our colleagues want to participate in by creating a safe, productive, inclusive environment. Like our approach to ensuring customer satisfaction, we took steps in 2022 to drive employee satisfaction, including enhancing benefits and conducting our gender pay equity study. We focus on colleague engagement through our Colleague Resource Groups (CRGs), retention and development to ensure our colleagues are fulfilled and prepared to do business The Greif Way. Read more about how we value our colleagues on the Talent Attraction, Development & Retention page.
The United States Securities and Exchange Commission (SEC) has proposed rule changes that would require registrants to include certain climate-related disclosures, including greenhouse gas emission data with third-party attestation and climate-related financial statement metrics in a note to their audited financial statements. These SEC proposals related to the enhancement and standardization of climate-related disclosures may require us to change our accounting policies, alter our operational policies and implement new or enhance existing systems to reflect new or amended financial reporting standards or to restate our published financial statements.
Goals, Progress & Performance
Fiscal 2022 marked our 145th year of operation. Throughout the year, we expanded our focus on colleague engagement, key financial priorities and legendary customer service. Through our approach, we delivered record financial performance driven by strong volume growth and ongoing pricing activities, resulting in an adjusted EBITDA of $917.5 million and an adjusted free cash flow of $506.3 million, reducing our net debt by approximately $332 million. We returned more than $111.3 million to our shareholders via dividends paid, an increase of 6 percent from last year. As part of the implementation of our $150 million accelerated share repurchase program, we spent $75 million in 2022. We will continue this program by spending the remaining funds through open market purchases, demonstrating our conviction in Greif’s Build to Last Strategy and our commitment to returning value to our shareholders.
In 2022, Greif signed its first sustainable financing agreement. $1.8 of the $2.4 billion sustainability-linked loan is derived from our sustainability performance, based on our EcoVadis ESG score. As Greif pushes for greater sustainability performance, we will be able to customize internally set Key Performance Indicators (KPIs), allowing the loan structure to evolve and align with our ambitious targets.
We work closely with our customers to create new and innovative products. Our collaborative approach to product innovation and life cycle solutions enables us to support our customers in solving their business challenges while lowering input costs and contributing to sustainability performance. In 2023, we will dedicate nearly $3 million to the Innovation Team to create new products. Investments in these innovations are direct responses to customer requests and market shortages. Please visit our Innovation page for additional examples of innovation supporting our financial performance.
In April 2022, Greif finalized its 50 percent divestment of the Flexible Packaging joint venture to Gulf Refined Packaging for a total cash consideration of $123 million. This completed divestment concludes the consolidation and standardization of our GIP businesses with a single leadership team. In 2023, we plan to improve alignment between our GIP and PPS business segments to create consistency throughout our operations. We have begun to accomplish this by investing more in our supply chain organization and the Global Operations Group (GOG).
In 2023, we plan to roll out Environmental Key Performance Indicators (EKPIs) as part of the Build to Last Strategy. We have developed two KPIs for each of the four missions making up this strategy. We also plan to implement our three long-term capital deployment objectives: maintain target leverage ratio, diversify and enhance shareholder return and invest back into business for growth.
