Special to 1808Delaware
Delaware-based Greif, Inc., a global leader in industrial packaging products and services, today announced first quarter 2023 results.
First Quarter Financial Highlights include (all results compared to the first quarter of 2022 unless otherwise noted):
• Net income of $89.9 million or $1.54 per diluted Class A share increased compared to net income of $10.3 million or $0.18 per diluted Class A share. Net income, excluding the impact of adjustments(1), of $61.9 million or $1.06 per diluted Class A share decreased compared to net income, excluding the impact of adjustments, of $75.6 million or $1.28 per diluted Class A share.
• Adjusted EBITDA(2) of $164.5 million decreased by $32.3 million compared to Adjusted EBITDA of $196.8 million.
• Net cash provided by operating activities increased by $10.5 million to $32.9 million. Adjusted free cash flow(3) increased by $11.2 million to a use of $7.6 million.
• Total debt decreased by $67.5 million to $2,229.3 million. Net debt(4) decreased by $108.8 million to $2,068.3 million. Our leverage ratio(5) increased to 2.11x from 1.73x sequentially, which is within our targeted leverage ratio range of 2.0x – 2.5x, but decreased from 2.39x in the prior year quarter.
Strategic Actions and Announcements
• Completed previously announced acquisition of Lee Container Corporation. Our Greif team, including our newly welcomed colleagues, is progressing ahead of schedule on planned integration, and we reaffirm our expectation to fully realize expected synergies of at least $6.0 million.
• Announced a definitive agreement to increase Greif’s current 9% ownership interest in Centurion Container LLC, a leader in the North American IBC reconditioning industry, to an 80% stake in an all-cash transaction for $145.0 million, subject to customary purchase price adjustments for cash and debt, as well as customary closing conditions, including regulatory clearances. Greif has been a joint venture partner of Centurion since 2020 and is expanding our ownership as part of our ongoing commitment to grow in high margin, highly sustainable resin-based products.
CEO Commentary
“I am very proud of our team’s execution in first quarter 2023 despite multiple headwinds: destocking, lower customer demand and continued inflationary pressures”, said Ole Rosgaard, Chief Executive Officer of Greif. “The pace and severity of these
headwinds progressed rapidly during the quarter and pressured results in both business segments. Despite these challenges, our teams around the world demonstrated resiliency in rapidly adapting to these changing conditions while continuing to deliver on our Build to Last strategy and making meaningful progress towards our long-term strategic missions.”
Build to Last Mission Progress
Customer satisfaction surveys are a key component of our mission to deliver Legendary Customer Service. Our consolidated CSI(6) score was 95.0 at the end of the first quarter 2023, which is Greif’s aspirational target. We look forward to building upon this achievement and continuing our focus on delivering exceptional service to our customers.
During the quarter, Greif recognized 122 of our global facilities for an accident-free year in 2022, with over 10 million safe hours worked. The safety of our people is our number one priority and the foundation of Creating Thriving Communities. We are very proud of our global Greif team for a record year of safety excellence. Additionally, during the quarter we published our 2030 Sustainability Targets, highlighting our commitment to advancing a circular economy, reducing greenhouse gas emissions, and championing diversity, equity & inclusion initiatives.
Protecting Our Future is critical to the future success of Greif. More information on our 2030 targets is available at our sustainability homepage at https://www.greif.com/sustainability/ and will be a part of our 14th annual sustainability report, publicly available in April 2023.
(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,
(gain) loss on disposal of properties, plants, equipment and businesses, net.
(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 noncash asset impairment charges, plus (gain) loss on disposal of properties, plants, equipment and businesses, 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 integration related Enterprise Resource Planning (ERP) systems and equipment.
(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.
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.
