Greif Inc. · NYSE:GEF
Greif — Investor Day (June 2010)
26 slides from Greif's investor day presentation, Jun 17, 2010
Slide 1: Flexible Products & Services Investor Meeting New York June 15, 2010
Flexible Products & Services Investor Meeting New York June 15, 2010
Slide 2: Forward-Looking Statements
1 Forward-Looking Statements This presentation and management's remarks may contain certain forward- looking information within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "estimate," "target," and similar expressions, among other
Slide 3: Welcome and Introductions
2 Welcome and Introductions Safety reminder Speakers Chairman & CEO Mike Gasser President & COO David Fischer Executive Vice President & CFO Don Huml Greif senior executives SVP, People Services & Talent Development Karen Lane SVP, General Counsel and Secretary Gary Martz SVP and Divisional Presiden
Slide 4: Greif Profile
3 Greif Profile Founded in 1877 as a packaging company Initial public offering in 1926 Diversified business platform Leading industrial packaging company with more than 30% global product share More than 200 operations in over 50 countries
Slide 5: Strategy Statement
4 Strategy Statement Continue to strengthen the core Industry consolidation Emerging markets Product line extensions Optimize and embed the Greif Business System throughout the enterprise to achieve top quartile profitability and lowest cost producer status while enhancing safety and quality Pursue
Slide 6: Greif Advantages
5 Greif Advantages Global sourcing and distribution platform Raw materials Energy Logistics Industry leader with identified acquisition opportunities and a record of successful business integration Proven benefits of Greif Business System to unlock value Substantial percentage of customers who use b
Slide 7: Flexible Packaging
6 Flexible Packaging The flexible products industry includes FIBCs and shipping sacks which are distributed regionally Storsack, acquired in February 2010, is the leader in the flexible packaging industry with approximately a 10% share Principal end markets for flexible packaging products include ch
Slide 8: Flexible Products Reinforce Greif's Core Packaging Business
7 Overlaps with Greif's customers and geographic footprint Enhances Greif's end market profile (e.g., agriculture, food) Customers and sectors Greif has developed operational and commercial capabilities through successful consolidation of rigid industrial packaging segment Direct expertise Complemen
Slide 9: FPS Greif End Market Diversification Benefits
8 Source: Industry and company data: FPS 41 Greif End Market Diversification Benefits Chemicals Ag & minerals Pharma/personal care Food Oil & lubes Other Pie 2 35 18 4 21 0 22 Chemicals Ag & minerals Pharma/personal care Food Oil & lubes Other Pie 1 46 15 16 23 Percent FPS diversifies Greif's busine
Slide 10: Flexible Products & Services Strategy
Flexible Products & Services Strategy President & COO David Fischer
Slide 11: Polywoven an $11 Billion Industry
10 Polywoven an $11 Billion Industry FIBCs SSs Other 2 5 4 Greif initially focused on FIBCs and SSs Industry includes other product groups that can be targeted later by leveraging resin, fabric, channel and hub strategy
Slide 12: FIBCs and Shipping Sacks Industry Breakdown
11 Chemical Construction & other Food Feed Seed Pharma Fertilizer 38 27 17 9 5 4 0 Pie 2 9 26 42 15 9 0 6 5.00 FIBCs largely used in EU and NA, SSs in developing countries By industry - % share FIBC SSs NA EU LA ME APAC 23% 45% 9% 6% 17% 2.4 4.7 Revenue $ FIBC SS FIBCs SSs 4.5 4.0 CAGR % Focus globa
Slide 13: Flexible Packaging Strategy
12 Flexible Packaging Strategy Consolidate a fragmented industry Acquired Storsack, market leader Leverage the GBS to create the first world-class, integrated enterprise in the industry Realize cost and logistical advantages by locating "hub" in the Kingdom of Saudi Arabia (KSA) Conversion
Slide 14: KSA Advantages
13 KSA Advantages Gateway to the world market Growing population New and large port Ease of doing business Efficient tax system Access to capital financing Globally competitive energy costs Abundant and low-cost resins
Slide 15: Resin the Major Cost Component of FIBCs
14 Resin the Major Cost Component of FIBCs Polypropylene Other Electric 64 28 8 Existing competitors have focused strategic efforts primarily on lower cost labor sources 64% 28% 8%
Slide 16: 5 Guiding Principles
15 Achieve high ground through channel experience and expertise Provide unrivaled service via global footprint and integrated supply chain Drive consistency, value and sustainability via GBS Consolidate operations while maintaining agility and flexibility Leverage world-class economics with advantag
Slide 17: FPS Creates Flexible Products Global Leader
16 + + Strategy Growth GBS Aspirations Advantaged hub Strategic outsourcing Channel mastery Organic growth, industry shaping and conduct Acquisitions Execution excellence Other tuck-ins OpEx ComEx People and teams Performance management Revenues of $1 Billion 25-30% global product share, FIBCs 20-25
Slide 18: Flexible Products & Services Investment Rationale
Flexible Products & Services Investment Rationale Executive Vice President & CFO Don Huml
Slide 19: Investment Thesis
18 Investment Thesis Flexible Products & Services fit growth strategy as a product line extension Storsack acquisition provides platform for consolidating fragmented FIBC industry Flexible products complement rigid industrial packaging and its business model is similar Significant customer overlap a
Slide 20: Greif Transformation Illustrates Potential
19 Greif Business System delivered performance improvement Embedded disciplined business processes throughout the company Right-sized the company and implemented capability-building to realize commercial and operational excellence objectives Initiated global sourcing and supply chain strategy Achiev
Slide 21: Disciplined Due Diligence and Comprehensive Acquisition Integration
20 Disciplined Due Diligence and Comprehensive Acquisition Integration Recommendation on overall strategic and operational fit High level savings estimate from commercial, sourcing, SG&A, lean and logistics Investment needed to achieve savings Savings capture timeline and associated risks Talent and
Slide 22: Key Operating Parameter Comparisons
21 Key Operating Parameter Comparisons Note: COGS = Cost of Goods Sold Key Metrics Flexibles 1 Greif Operating profit margin (%) 4 - 6 12.5 2 Direct materials to COGS (%) 60 - 65 63 Labor to COGS (%) ~15 - 25 13 SG&A to net sales (%) ~12 - 18 7.5 2 Capital turnover 2.6x 2x Inventory days 60 - 90 30
Slide 23: Operating Profit Bridge for Flexible Products
22 Operating Profit Bridge for Flexible Products 2010 Sourcing SG&A 2015 OpEx ComEx Fabric hub Joint venture 3% lift through optimizing footprint and factory- level lean Savings on gap compared to Greif Revenue uplift from ComEx programs, including product manage- ment and value pricing Scale and ot
Slide 24: Flexible Products Metrics and Milestones
23 Flexible Products Metrics and Milestones Strategic Plan - Metrics Year 1 Year 5 Net sales $300 $1,000 FIBC global product share 12% 30% Organic growth -- 5% Operating profit $15 $150 Operating profit margin 5% 15% Investment 1 $60 $250 RONA <15% >30% (Dollars in millions) 1 Greif 50% share Key Mi
Slide 25: Wrap-up and Q&A
Wrap-up and Q&A Chairman and CEO Mike Gasser
Slide 26: Re-earning the Right to Premium Valuation
25 Diversity > Strength > Performance Re-earning the Right to Premium Valuation GBS - a catalyst enabling strong relative performance and value creation during cyclical trough Diversity - a compelling competitive advantage Strong balance sheet and access to alternate sources of liquidity Balanced fo