Slide 1: Investor Presentation
Investor Presentation December 12 – 14, 2016
Slide 2: Safe Harbor
SAFE HARBOR FORWARD-LOOKING STATEMENTS • All presentations contain certain forward-looking information 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: Greif strategy
GREIF Greif strategy
Slide 4: Greif's Investment Thesis
GREIF’S INVESTMENT THESIS Disciplined operational Best performing Comprehensive execution and customer service Mitigate risk packaging Committed to financial company in through a diverse, provider, with return of capital to discipline, leading industrial global portfolio leverage to the shareholders
Slide 5: Greif's Vision and Three Strategic Priorities
GREIF’S VISION AND THREE STRATEGIC PRIORITIES In industrial packaging, be the best performing Vision customer service company in the world People & Teams Customer Service Excellence Transformational Performance • Colleague engagement • Superior customer satisfaction • Strengthen the portfolio • Acco
Slide 6: Greif's Path to Transformation
GREIF’S PATH TO TRANSFORMATION 2015 2016 2017 • Embarked on RUN RATE Transformation New direction: ($M) COMMITMENTS process • New leadership Net Sales $3,500 • Completed • Customer service portfolio review Gross Profit $720 - $730 excellence • Held Greif’s first SG&A $345 - $355 • Execution discipli
Slide 7: Strategic Priority: People and Teams
STRATEGIC PRIORITY: PEOPLE AND TEAMS Gallup survey findings: Higher engagement leads to better performance1 • New leadership team Profitability • Colleague engagement Productivity • Culture of accountability with incentives aligned to value creation Customer ratings 0% 5% 10% 15% 20% 25% Engaged Del
Slide 8: Strategic Priority: Customer Service Excellence
STRATEGIC PRIORITY: CUSTOMER SERVICE EXCELLENCE Greif Customer Satisfaction Index (CSI) • Studies indicate direct correlation between an increase in customer loyalty and PPS profitable growth1 FPS • Customer Satisfaction Index (CSI) RIPS ‒ Year over year and sequential improvement in CSI scores at Q
Slide 9: Strategic Priority: Transformational Performance
STRATEGIC PRIORITY: TRANSFORMATIONAL PERFORMANCE Expand margins through Optimize and strengthen the fundamental operating Fiscal discipline portfolio improvements • 23 divestitures and 15 closed • 20.6% = Trailing four quarter • Focused on Free Cash Flow operations gross profit margin (best in 10+ (
Slide 10: Delivering Sustained Operational Improvement
DELIVERING SUSTAINED OPERATIONAL IMPROVEMENT End of 2017 FY 2014 FY 2015 FY 2016 run rate Actual Actual Actual target Gross Profit 19.1% 18.5% 20.6% 20% Margin SG&A 11.7% 11.4% 11.3% 10% Ratio OPBSI 7.5% 7.4% 9.3% 10% Margin1 Engaged Delighted Profitable Teams Customers Growth 1 Operating Profit Bef
Slide 11: Tracking to 2017 Transformation Commitments
TRACKING TO 2017 TRANSFORMATION COMMITMENTS Greif 2017 consolidated Transformation commitments 2017 run rate commitments: 2017 run rate commitments: ($M) June 10, 2015 June 24, 2016 Net Sales $3,831 $3,500 Gross Profit $760 – $770 $720 – $730 SG&A $375 – $385 $345 – $355 Operating Profit $375 – $395
Slide 12: Business overview
GREIF Business overview
Slide 13: A Global Leader in Industrial Packaging
A GLOBAL LEADER IN INDUSTRIAL PACKAGING Rigid Industrial Paper Packaging Flexible Products Land Packaging & & Services & Services Management Services 2016 Revenue: 2016 Revenue: 2016 Revenue: 2016 Revenue: $2,324M $687M $288M $24M Page 13
Slide 14: Comprehensive Packaging Provider with Diverse Offering
COMPREHENSIVE PACKAGING PROVIDER WITH DIVERSE OFFERING Land/timber Flexibles Corrugated sheets Steel drums Containerboard Other Reconditioning GPA Plastic (packaging drums accessories) IBC Fibre drums Filling operations Note: slide depicts 2016 actual revenue sources Page 14
Slide 15: Rigid Industrial Packaging and Services Key Markets
RIGID INDUSTRIAL PACKAGING AND SERVICES KEY MARKETS Bulk/commodity chemicals Oil/lubricants Specialty chemicals Solid food, pastes, etc. Other Paints, coatings, adhesives Packaging distributors Agro chemicals Juices and beverages Pharmaceuticals and personal care Flavors and fragrances Blenders/fill
Slide 16: Steady Gross Margin Improvement
STEADY GROSS MARGIN IMPROVEMENT 22,00% 2017 21.1% Transformation 20,00% run rate commitment 18,00% 16,00% 14,00% 12,00% 10,00% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 • Pursuing a variety of drivers to improve and sustain gross margins. Examples: Improving production efficien
Slide 17: SG&A Reduced by 24% Since 2014
SG&A REDUCED BY 24% SINCE 2014 Annual SG&A expense ($M) $600 • Sustainable SG&A reductions implemented $496.7 $500 • Additional, but smaller, opportunities exist $400 $376.8 • Improved culture of accountability $300 $200 $100 Engaged Delighted Profitable Teams Customers Growth $0 2013 2014 2015 2016
Slide 18: Fiscal Year 2017 Earnings Per Share Guidance
FISCAL YEAR 2017 EARNINGS PER SHARE GUIDANCE Class A earnings per share before special • Fiscal 2017: Expect to generate between $2.78 and items1 ($/sh) Actual and guidance $3.08 in Class A earnings per share before special items • Midpoint of Fiscal 2017 guidance: $3,50 ‒ Represents a 20% improveme
Slide 19: Free Cash Flow Tracking Towards Transformation
FREE CASH FLOW TRACKING TOWARDS TRANSFORMATION Free Cash Flow1 ($/sh) Actual, guidance and 2017 run rate commitment $250 $205 - $225 $200.9 $180 - $210 $200 Timing and one time tax benefit $150 $100 $70,5 $50 $0 2015 2016 2017 2017 actual actual guidance run rate commitment Engaged Delighted Profita
Slide 20: Near Term Capital Allocation Priorities
NEAR TERM CAPITAL ALLOCATION PRIORITIES Fund maintenance and capital projects • Enterprise wide focus; reward demonstrated performance • Appropriate maintenance capital spending • Return on capital must exceed cost of capital for organic growth projects Pay steady dividends Expanding Free • Class A:
Slide 21: Greif Offers Industry Leading Yields
GREIF OFFERS INDUSTRY LEADING YIELDS Dividend and Free Cash Flow yield comparison (data as of December 7, 2016) 10,00% 8,00% 6,00% 4,00% 2,00% 0,00% S&P 500 10 year treasury Dow Jones Greif Class A Greif Class B 2017 Greif Free 1 2 dividend yield yield Industrial dividend dividend Cash Flow Yield Av
Slide 22: Strengthened Balance Sheet
STRENGTHENED BALANCE SHEET Debt maturity profile ($M) at October 31, 2016 • Leverage ratio at 2.2 as of 10/31/2016 $600 • Announced new credit facility in early November $500 ‒ Extends to 2021 $400 ‒ Enhances financial flexibility and helps reduce interest expense $300 • Near term capital allocation
Slide 23: Q4 and Fiscal 2016 financial highlights
Q4 and Fiscal 2016 financial highlights
Slide 24: Greif Consolidated Results
GREIF CONSOLIDATED RESULTS Q4 2016 Q4 2015 FY 2016 FY 2015 Net Sales After Divestitures and Currency Translation1 $880.7 $836.6 $3,466.0 $3,448.6 Operating Profit $53.6 $32.1 $225.6 $192.8 Operating Profit Before Special Items2 $87.0 $72.0 $308.3 $266.2 Net Income Attributable to Greif, Inc. $8.5 $1
Slide 25: Transformation segment run rate commitments
Transformation segment run rate commitments
Slide 26: Rigid Industrial Packaging & Services: 2017 Transformation Commitments
RIGID INDUSTRIAL PACKAGING & SERVICES: 2017 TRANSFORMATION COMMITMENTS 2017 run rate 2017 run rate ($M) commitments: commitments: Trends June 10, 2015 June 24, 2016 Net Sales $2,605 $2,544 Accelerating gross profit Gross Profit $495 – $505 $506 – $516 improvement SG&A $280 – $285 $256 – $261 Focused
Slide 27: Paper Packaging & Services: 2017 Transformation Commitments
PAPER PACKAGING & SERVICES: 2017 TRANSFORMATION COMMITMENTS 2017 run rate 2017 run rate ($M) commitments: commitments: Trends June 10, 2015 June 24, 2016 Net Sales $887 $640 Weaker containerboard pricing and higher fiber Gross Profit $195 – $205 $152 – $162 costs year to date SG&A $50 – $55 $46 – $5
Slide 28: Flexible Products & Services: 2017 Transformation Commitments
FLEXIBLE PRODUCTS & SERVICES: 2017 TRANSFORMATION COMMITMENTS 2017 run rate 2017 run rate ($M) commitments: commitments: Trends June 10, 2015 June 24, 2016 Net Sales $315 $290 Instilling a sense of Gross Profit $55 – $65 $43 – $53 urgency to fix underperforming SG&A $45 – $50 $38 – $43 operations Op
Slide 29: Land Management: 2017 Transformation Commitments
LAND MANAGEMENT: 2017 TRANSFORMATION COMMITMENTS 2017 run rate 2017 run rate ($M) commitments: commitments: Trends June 10, 2015 June 24, 2016 Net Sales $24 $26 Steady performance Gross Profit $5 – $15 $4 – $14 SG&A $0 – $5 $0 – $5 Operating Profit $5 – $10 $4 – $9 before Special Items1 Engaged Deli
Slide 30: 2017 Commitment Assumptions
2017 COMMITMENT ASSUMPTIONS • Assumed market growth rate of 0-1% • Raw material costs assumed flat against current indices in the markets in which we participate • Major raw material price increases are passed to customers through price adjustment mechanisms in contracts or otherwise with customary
Slide 31: Appendix
GREIF Appendix
Slide 32: Note on Non-GAAP Financial Measures
NOTE ON 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 t
Slide 33: Price, Volume and Foreign Currency Impact to Net Sales for Primary Products
PRICE, VOLUME AND FOREIGN CURRENCY IMPACT TO NET SALES FOR PRIMARY PRODUCTS: EXCLUDING DIVESTITURES Selling Prices and Product Currency Total Net Sales Volume Mix Translation Variance RIPS AMERICAS 1.5% 11.0% -1.8% 10.7% $3.3 $24.8 ($4.0) $24.1 North America 0.9% 10.2% 0.0% 11.2% $1.6 $18.2 $0.0 $19
Slide 34: Foreign Exchange Exposure
FOREIGN EXCHANGE EXPOSURE 10% strengthening of the USD; Currency Cumulative impact impact to OPBSI Euro $(5M) – $(7M) $(5M) – $(7M) Next five largest exposures $(6M) – $(8M) $(11M) – $(15M) Turkish Lira $3M – $4M Singapore Dollar $(3M) – $(4M) Argentina Peso $(3M) – $(4M) Russia Ruble $(1M) – $(2M)
Slide 35: GAAP to Non-GAAP Reconciliation: Operating Profit Before Special Items
GAAP TO NON-GAAP RECONCILIATION: SEGMENT AND CONSOLIDATED OPERATING PROFIT (LOSS) BEFORE SPECIAL ITEMS $ Millions Three months ended October 31, Twelve months ended October 31, 2016 2015 2016 2015 Operating profit (loss): Rigid Industrial Packaging & Services $ 30.5 $ 10.9 $ 143.9 $ 86.4 Paper Packa
Slide 36: GAAP to Non-GAAP Reconciliation: Net Income and Class A EPS
GAAP TO NON-GAAP RECONCILIATION: NET INCOME AND CLASS A EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS $ Millions and $/sh Three months ended October 31, 2016 Class A Net Income Attributable to Greif, Inc. $ 8.5 $ 0.14 Plus: Loss on disposal of properties, plants, equipment and businesses, net 17.3 0.29
Slide 37: GAAP to Non-GAAP Reconciliation: Excluding Impact of Divestitures
GAAP TO NON-GAAP RECONCILIATION: RECONCONCILIATION OF SELECTED FINANCIAL INFORMATION EXCLUDING THE IMPACT OF DIVESTITURES $ Millions Three months ended October 31, Twelve months ended October 31, Excluding the Excluding the Impact of Impact of Impact of Impact of 2016 Divestitures Divestitures 2016
Slide 38: GAAP to Non-GAAP Reconciliation: Excluding Impact of Divestitures Continued
GAAP TO NON-GAAP RECONCILIATION: RECONCONCILIATION OF SELECTED FINANCIAL INFORMATION EXCLUDING THE IMPACT OF DIVESTITURES CONTINUED $ Millions Three months ended October 31, Twelve months ended October 31, Excluding Excluding The The Impact of Impact of Impact of Impact of 2015 Divestitures Divestit
Slide 39: GAAP to Non-GAAP Reconciliation: Net Sales Excluding Divestitures and Currency
GAAP TO NON-GAAP RECONCILIATION: RECONCONCILIATION OF NET SALES EXCLUDING THE IMPACT OF DIVESTITURES AND CURRENCY TRANSLATION $ Millions Three months ended October 31, (Decrease) in (Decrease) in 2016 2015 Net Sales ($) Net Sales (%) Net Sales $ 867.6 $ 868.5 $ (0.9) (0.1)% Impact of Divestitures 1.
Slide 40: GAAP to Non-GAAP Reconciliation: RIPS Net Sales
GAAP TO NON-GAAP RECONCILIATION RIGID INDUSTRIAL PACKAGING & SERVICES NET SALES TO NET SALES EXCLUDING THE IMPACT OF DIVESTITURES AND CURRENCY TRANSLATION $ Millions Page 40
Slide 41: GAAP to Non-GAAP Reconciliation: Free Cash Flow
GAAP TO NON-GAAP RECONCILIATION: FREE CASH FLOW $ Millions FREE CASH FLOW 1 Three months ended October 31, Twelve months ended October 31, 2016 2015 2016 2015 Net cash provided by operating activities $ 143.0 $ 132.9 $ 301.0 $ 206.3 Less: Cash paid for capital expenditures (28.7) (27.6) (100.1) (135
Slide 42: GAAP to Non-GAAP Reconciliation: Operating Profit Before Special Items FY2014-2016
GAAP TO NON-GAAP RECONCILIATION: CONSOLIDATED OPERATING PROFIT (LOSS) BEFORE SPECIAL ITEMS FOR FY 2014, FY 2015 AND TTM ENDED OCTOBER 31, 2016 $ Millions Fiscal Year Fiscal Year Fiscal Year 2014 2015 2016 Operating profit $ 249.3 $ 192.8 $ 225.6 Restructuring charges 16.1 40 26.9 Acquisition related
Slide 43: Trailing Twelve Months: Gross Profit Margin, SG&A Ratio and OPBSI Margin
TRAILING TWELVE MONTHS: GROSS PROFIT MARGIN, SG&A RATIO AND OPERATING PROFIT BEFORE SPECIAL ITEMS MARGIN $ Millions Q4 2016 Q3 2016 Q2 2016 Q1 2016 Trailing Twelve Months $ % $ % $ % $ % $ % Net Sales 867.6 845.0 839.6 771.4 3,323.6 Gross Profit 183.4 21.1% 176.5 20.9% 173.7 20.7% 151.3 19.6% 684.9
Slide 44: Free Cash Flow Guidance Reconciliation
FREE CASH FLOW GUIDANCE RECONCILIATION 2016 PROJECTED FREE CASH FLOW 1 Forecast Range Scenario 1 Scenario 2 Net cash provided by operating activities $275 $315 Less: Cash paid for capital expenditures $(95) $(105) Free Cash Flow $180 $210 2017 RUN RATE FREE CASH FLOW COMMITMENT 2 Forecast Range Scen
Slide 45: Key Definitions
KEY DEFINITIONS • Customer Satisfaction Index: Customer Satisfaction Index is an internal measure of a plants or businesses performance against selected parameters that customers experience, giving us an indication of our level of meeting our customers basic needs. Components include: customer compl