Slide 1: First Quarter 2020 Earnings Conference Call
FIRST QUARTER 2020 EARNINGS CONFERENCE CALL FEBRUARY 27, 2020
Slide 2: Safe harbor
Safe harbor FORWARD-LOOKING STATEMENTS • This presentation contains certain 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,” “
Slide 3: First Quarter Fiscal Year (FY) 2020 summary
First Quarter Fiscal Year (FY) 2020 summary Financial performance Markets and operations Strategic priority highlights • Net Sales: $1,112.4M, +24% YoY • RIPS: • Differentiated customer service: ‒ Improved demand Western/Central ‒ Q1’20 customer satisfaction index • Gross Profit: $222.6M, +29% (CSI)
Slide 4: Rigid Industrial Packaging & Services (RIPS) review
Rigid Industrial Packaging & Services (RIPS) review $M Q1 2020 Q1 2019 Quarter Highlights: • Net sales down 4.1%, excluding F/X1, from prior year quarter Net sales $568.7 $597.9 ‒ Solid demand in West/Central/Eastern Europe and the Middle East and North Africa, offset by softness in North America an
Slide 5: Flexible Products & Services (FPS) review
Flexible Products & Services (FPS) review $M Q1 2020 Q1 2019 Quarter Highlights: Net sales $63.0 $75.1 • Net sales down 14.6%, excluding F/X1, from prior year quarter ‒ Soft demand conditions in Western Europe and poor start to fertilizer Gross profit $12.3 $17.4 season Adj. EBITDA $4.1 $7.9 • Adj.
Slide 6: Paper Packaging & Services (PPS) review
Paper Packaging & Services (PPS) review $M Q1 2020 Q1 2019 Quarter Highlights: • Net sales up 118% from prior year quarter Net sales $473.7 $217.3 ‒ Caraustar addition: $288.2M Gross profit $100.1 $53.9 ‒ Softer containerboard conditions and lower YoY published prices ‒ 21K tons of containerboard ec
Slide 7: Caraustar integration progressing to plan
Caraustar integration progressing to plan Anticipated synergy over 36 months ($M) Caraustar recap and integration highlights $75 At least • February 11, 2020 was one year anniversary of Caraustar $70M acquisition closing $70 • Caraustar’s strategic rationale continues to be confirmed: $65 ‒ Enhanced
Slide 8: Q1'20 vs. Q1'19: financial comparison
Q1’20 vs. Q1’19: financial comparison Key financial metrics ($M and $/sh) Q1 2020 Q1 2019 Net Sales, Excluding the Impact of Currency Translation1 $1,117.9 $897.0 Gross Profit $222.6 $172.8 SG&A $135.4 $98.1 Adjusted EBITDA2 $147.4 $106.3 Interest expense $30.7 $11.7 Other expense (income) $1.3 $(0.
Slide 9: FY20 guidance and key modeling assumptions
FY20 guidance and key modeling assumptions Fiscal 2020 guidance1 ($/sh and $M) FY 2020 Guidance issued at Q1 ‘20 FY 2020 Guidance issued at Q4 ‘19 Adj. Class A Earnings Per Share1 $3.55 – $3.91 $3.63 – $4.13 Adjusted Free Cash Flow2 $265 – $305 $245 – $285 Fiscal 2020 key modelling assumptions ($M a
Slide 10: Capital allocation priorities
Capital allocation priorities 1 Reinvest in • Fund maintenance to sustain cash generation and advance organic growth opportunities that the business exceed required returns 2 De-lever the balance • Current compliance leverage ratio = ~3.7x sheet • Aim to achieve targeted leverage ratio of 2.0 – 2.5x
Slide 11: Why invest in Greif?
Why invest in Greif? Compelling customer value Robust and diverse product Numerous avenues for Compelling dividend and proposition due to portfolio with exposure to a incremental low-risk growth opportunity for free cash demonstrated commitment variety of end markets and margin enhancement flow expa
Slide 12: Appendix
GREIF PACKAGING SUCCESS TOGETHER™ APPENDIX
Slide 13: Q1 Price, Volume and Foreign Currency Impact to Net Sales
Q1 Price, Volume and Foreign Currency Impact to Net Sales for Primary Products: TOTAL SALES VOLUME PRICE FX VARIANCE RIPS NA -6.2% -5.0% 0.2% -11.0% ($12.7) ($10.2) $0.3 ($22.5) RIPS LATAM -1.4% 11.6% -15.4% -5.2% ($0.5) $4.3 ($5.7) ($1.9) RIPS EMEA 5.3% -0.9% -0.9% 3.5% $12.3 ($2.1) ($2.2) $8.1 RIP
Slide 14: Key assumptions and sensitivity
Key assumptions and sensitivity FY 2020 Foreign Exchange Exposure Paper Packaging & Services Assumptions & Sensitivity 10% strengthening of the USD; Cumulative impact Key PPS stats Currency impact to EBITDA before hedging Containerboard production ~1M tons per year Euro $(9M) – $(11M) $(9M) – $(11M)
Slide 15: Becoming a world class customer service organization
Becoming a world class customer service organization Customer Satisfaction Index (CSI)1 NPS Score Evolution Expectation RIPS Wave 9 6 26 67 = 61 PPS Wave 1 11 38 51 = 40 FPS 0 20 40 60 80 100 50 60 70 80 90 100 Q1'20 Q1'19 Detractors Passives Promoters 1PPS CSI for Q4’19 includes Caraustar Note: CSI
Slide 16: Non-GAAP financial measures
Non – GAAP financial measures Non-GAAP 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 fina
Slide 17: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Segment and Consolidated Financials: Q1 2020, Q1 2019 (11) EBITDA is defined as net income, plus interest expense, net, including debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization. However, because the Company does no
Slide 18: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Reconciliation of Net Sales to Net Sales Excluding the Impact of Currency Translation $Millions February 27, 2020 – P.18
Slide 19: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Reconciliation of Net Income to Adjusted EBITDA(13) $Millions (13) Adjusted EBITDA is defined as net income, plus interest expense, net, including debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization expense, plus restru
Slide 20: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Reconciliation of Segment Operating Profit to Adjusted EBITDA(14) ($Millions) (14) Adjusted EBITDA is defined as net income, plus interest expense, net, including debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization expe
Slide 21: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Net Income and Class A Earnings Per Share Excluding Adjustments $Millions and $/sh February 27, 2020 – P.21
Slide 22: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Adjusted Free Cash Flow(15) and Projected 2020 Adjusted Free Cash Flow guidance February 27, 2020 – P.22