Slide 1: Third Quarter 2020 Earnings Conference Call
THIRD QUARTER 2020 EARNINGS CONFERENCE CALL AUGUST 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: Third Quarter Fiscal Year 2020 key highlights
Third Quarter Fiscal Year (FY) 2020 key highlights • Executing on enhanced protocols to safeguard the health, safety and well-being of our colleagues and continuity of our supply chain • Further enhanced our customer service performance – achieved record trailing four quarter CSI score • Strong cost
Slide 4: Rigid Industrial Packaging & Services (RIPS) review
Rigid Industrial Packaging & Services (RIPS) review $M Q3 2020 Q3 2019 Quarter Highlights: • Net sales down 12%, excluding F/X1, from prior year quarter Net sales $548.5 $642.1 ‒ Solid demand in China, Middle East / N. Africa, offset by softness in Europe and in the Americas Gross profit $114.4 $126
Slide 5: Improving steel drum demand in RIPS
Improving steel drum demand in RIPS YoY comparison Q3'20 May '20 June '20 July '20 0% -5% -10% -15% -20% • Positive demand for food, flavors and fragrances • Negative but improving demand for bulk chemicals and specialty chemicals • Weak demand from industrial paints and lubricants Slightly less tha
Slide 6: Flexible Products & Services (FPS) review
Flexible Products & Services (FPS) review $M Q3 2020 Q3 2019 Quarter Highlights: Net sales $69.3 $74.5 • Net sales down 5%, excluding F/X1, from prior year quarter ‒ Soft demand conditions and lower average sales price from raw Gross profit $14.3 $16.0 material price declines Adj. EBITDA2 $7.0 $7.2
Slide 7: Paper Packaging & Services (PPS) review
Paper Packaging & Services (PPS) review $M Q3 2020 Q3 2019 Quarter Highlights: Net sales $459.3 $530.0 • Net sales down 13%, excluding F/X1, from prior year quarter ‒ Lower YoY published containerboard and boxboard prices and Gross profit $88.9 $134.7 divestiture of CPG ‒ 10K tons of containerboard
Slide 8: Improving demand in PPS' converting assets
Improving demand in PPS’ converting assets CorrChoice YoY comparisons IPG (tube / core) YoY comparisons Q3'20 May '20 June '20 July '20 Q3'20 May '20 June '20 July '20 20% 0% 15% -5% 10% 5% -10% 0% -15% -5% -10% -20% • Positive demand from e-commerce and independent • Positive demand from constructi
Slide 9: Q3'20 vs. Q3'19: financial comparison
Q3’20 vs. Q3’19: financial comparison Key financial metrics ($M and $/sh) Q3 2020 Q3 2019 Net Sales, Excluding the Impact of Currency Translation1 1,099.1 1,252.6 Gross Profit 219.7 279.4 SG&A 120.4 138.9 Adjusted EBITDA2 159.4 203.8 Interest expense 29.8 34.5 Adjusted Net Income Attributable to Gre
Slide 10: FY20 guidance and key modeling assumptions
FY20 guidance and key modeling assumptions Fiscal 2020 guidance1 ($/sh and $M) Adj. Class A Earnings Per Share1 $3.00 – $3.20 Adjusted Free Cash Flow2 $260 – $290 Fiscal 2020 key modeling assumptions ($M and %) DD&A expense $240 – $250 Interest expense $115 – $120 Other expense $2.5 – $7.5 Net incom
Slide 11: 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 • Current compliance leverage ratio = 3.72x (covenant = 4.50x) De-lever the balance sheet • Net debt decreased by $71M sequen
Slide 12: 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 13: Appendix
GREIF PACKAGING SUCCESS TOGETHER™ APPENDIX
Slide 14: Q3 Price, Volume and Foreign Currency Impact to Net Sales for Primary Products
Q3 Price, Volume and Foreign Currency Impact to Net Sales for Primary Products: NOTES: (1) Primary products are manufactured steel, plastic and fibre drums; IBCs (new and reconditioned); containerboard, corrugated sheets and corrugated containers, boxboard and tube &core; FIBCs, 1&2 loop and 4 loop
Slide 15: 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) – $(11M)
Slide 16: Supporting stakeholders through COVID-19
Supporting stakeholders through COVID-19 Colleagues Customers The health and safety of our global colleagues is our #1 Responding to customer needs in a dynamic and rapidly priority evolving environment • COVID-19 task forces activated at local, regional and • Deemed essential throughout the world w
Slide 17: Balance sheet and liquidity profile
Balance sheet and liquidity profile Debt schedule as of 7/31/2020 ($M) $1,400 Key liquidity statistics • Covenant net debt to EBITDA requirement = $1,200 4.50x; GEF currently 3.72x (Q3’20) • ~80% of debt is fixed rate • $~523M in available liquidity, including ~$99M $1,000 cash • ~245K acres of timb
Slide 18: Becoming a world class customer service organization
Becoming a world class customer service organization Customer Satisfaction Index (CSI)1 Expectation RIPS PPS FPS 50 60 70 80 90 100 Q3'20 Q3'19 Note: CSI is an internal measure of a plant’s or business’ performance against selected parameters that customers experience, giving us an indication of our
Slide 19: 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 20: GAAP to Non-GAAP reconciliation: Segment and Consolidated Financials
GAAP to Non-GAAP reconciliation: Segment and Consolidated Financials: Q3 2020, Q3 2019 August 27, 2020 – P.20
Slide 21: GAAP to Non-GAAP reconciliation: Net Sales excluding currency translation
GAAP to Non-GAAP reconciliation: Reconciliation of Net Sales to Net Sales Excluding the Impact of Currency Translation August 27, 2020 – P.21
Slide 22: GAAP to Non-GAAP reconciliation: Net Income to Adjusted EBITDA
GAAP to Non-GAAP reconciliation: Reconciliation of Net Income to Adjusted EBITDA August 27, 2020 – P.22
Slide 23: GAAP to Non-GAAP reconciliation: Segment Operating Profit to Adjusted EBITDA
GAAP to Non-GAAP reconciliation: Reconciliation of Segment Operating Profit to Adjusted EBITDA August 27, 2020 – P.23
Slide 24: GAAP to Non-GAAP reconciliation: Net Income and EPS Excluding Adjustments
GAAP to Non-GAAP reconciliation: Net Income and Class A Earnings Per Share Excluding Adjustments August 27, 2020 – P.24
Slide 25: GAAP to Non-GAAP reconciliation: Adjusted Free Cash Flow
GAAP to Non-GAAP reconciliation: Adjusted Free Cash Flow August 27, 2020 – P.25
Slide 26: GAAP to Non-GAAP reconciliation: Net debt
GAAP to Non-GAAP reconciliation: Net debt August 27, 2020 – P.26
Slide 27: Credit Agreement Adj. EBITDA & Leverage Ratio
Credit Agreement Adj. EBITDA & Leverage Ratio August 27, 2020 – P.27