Greif Inc. · NYSE:GEF
Greif — Q4 2020 Earnings Presentation
29 slides from Greif's earnings presentation, Dec 10, 2020
Slide 1: Fourth Quarter and Fiscal 2020 Earnings Conference Call
FOURTH QUARTER AND FISCAL 2020 EARNINGS CONFERENCE CALL DECEMBER 10, 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: Key takeaways from today's call
Key takeaways from today’s call Adj. Free Cash Flow ($M) Global pandemic and economic environment is uncertain, but Greif is controlling the controllables $400 Enhanced protocols remain in place in response to COVID-19 $350 Sharp focus on safety, customer service, operating costs and cash genera
Slide 4: Rigid Industrial Packaging & Services (RIPS) review
Rigid Industrial Packaging & Services (RIPS) review $M Q4 2020 Q4 2019 FY 2020 FY 2019 Quarter Highlights: • Net sales down 6.3%, excluding F/X1, from prior year quarter Net sales 579.1 619.0 2,298.9 2,490.6 ‒ Solid demand in China, Central / Western Europe, Mediterranean and the Middle East and Nor
Slide 5: Steel drum demand in RIPS improved in the quarter
Steel drum demand in RIPS improved in the quarter YoY comparison (units per day) Q4 '20 Aug '20 Sep '20 Oct '20 5% 0% -5% • Positive demand for bulk /commodity chemicals • Negative but improving demand for lubricants, specialty chemicals and industrial paints • Weak demand for food (poor conical sea
Slide 6: Flexible Products & Services (FPS) review
Flexible Products & Services (FPS) review $M Q4 2020 Q4 2019 FY 2020 FY 2019 Quarter Highlights: Net sales 73.2 70.9 272.9 297.5 • Net sales up 0.6%, excluding F/X1, from prior year quarter ‒ Soft demand conditions in the Americas, partially offset by strategic Gross profit 17.0 14.2 57.5 64.2 prici
Slide 7: Paper Packaging & Services (PPS) review
Paper Packaging & Services (PPS) review $M Q4 2020 Q4 2019 FY 2020 FY 2019 Quarter Highlights: • Net sales down 6.1% from prior year quarter Net sales 502.3 535.1 1,916.9 1,780.0 ‒ Lower YoY published containerboard and boxboard prices and divestiture of CPG ($58M of prior year net sales), partially
Slide 8: Solid demand seen in PPS' converting operations
Solid demand seen in PPS’ converting operations CorrChoice YoY comparison (MSF per day) IPG (tube / core) YoY comparison (units per day) Q4 '20 Aug '20 Sep '20 Oct '20 Q4 '20 Aug '20 Sep '20 Oct '20 40% 5% 35% 30% 0% 25% 20% -5% • Positive demand from independent and integrated • Positive demand fro
Slide 9: Fiscal Q4'20 vs. fiscal Q4'19: financial comparison
Fiscal Q4’20 vs. fiscal Q4’19: financial comparison Key financial metrics ($M and $/sh) Q4 2020 Q4 2019 Net Sales, Excluding the Impact of Currency Translation1 1,160.4 1,232.1 Gross Profit 231.7 259.0 SG&A 139.1 130.4 Adjusted EBITDA2 154.5 186.8 Interest expense 26.0 32.4 Other (income) expense (0
Slide 10: Introducing quarterly financial outlook
Introducing quarterly financial outlook Fiscal Q1 2021 guidance1 ($/sh and $M) Adj. Class A Earnings Per Share1: $0.48 – $0.58 Other Q1 guidance assumptions Q1’21 OCC cost: $69/ton (approximately $38/ton higher vs PY) Higher transport and insurance costs vs PY (tighter market conditions) Higher SG&A
Slide 11: Fiscal 2022 financial commitment update
Fiscal 2022 financial commitment update FY ‘22 Adj. FY ‘22 Adj. $M EBITDA1 Free Cash Flow2 RIPS $314 – $341 PPS $437 – $477 FPS $28 – $38 Land $6 – $9 Total Company $785 – $865 $410 – $450 Current FY2022 commitment vs. June 2019 • RIPS Adj. EBITDA increase driven product mix; portfolio optimization
Slide 12: Disciplined capital allocation priorities in place
Disciplined capital allocation priorities in place Reinvesting in the business De-levering the balance sheet Returning cash to shareholders Fund maintenance to sustain the “cash Reduced net debt by ~$294M in FY20 Returned more than $104M to machine” and organic growth shareholders through divi
Slide 13: 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 14: Appendix
GREIF PACKAGING SUCCESS TOGETHER™ APPENDIX
Slide 15: Q4 Price, Volume and Foreign Currency Impact to Net Sales for Primary Products
Q4 Price, Volume and Foreign Currency Impact to Net Sales for Primary Products: TOTAL SALES VOLUME PRICE FX VARIANCE RIPS NA -8.2% -2.9% -0.4% -11.5% ($16.4) ($5.8) ($0.8) ($22.9) RIPS LATAM -2.9% 0.7% -16.6% -18.8% ($1.1) $0.3 ($6.6) ($7.5) RIPS EMEA -0.6% -4.2% 1.4% -3.4% ($1.5) ($11.1) $3.6 ($9.0
Slide 16: Key assumptions and sensitivity
Key assumptions and sensitivity FY 2021 Foreign Exchange Exposure Paper Packaging & Services Assumptions & Sensitivity 10% strengthening of the USD; Cumulative impact PPS Stats Currency impact to EBITDA before hedging Containerboard production ~1M tons per year Euro $(9M) – $(11M) $(9M) – $(11M) URB
Slide 17: Becoming a world class customer service organization
Becoming a world class customer service organization Customer Satisfaction Index (CSI)1 NPS Score Evolution Expectation RIPS Wave = 67 5 23 72 10 PPS Wave 1 11 38 51 = 40 FPS 0 20 40 60 80 100 50 60 70 80 90 100 Q4'20 Q4'19 Detractors Passives Promoters 1PPS CSI for Q4’19 includes Caraustar Note: CS
Slide 18: Debt Maturities
Debt Maturities Debt schedule as of 10/31/2020 ($M) $M $1,200 $1,000 $800 $600 $400 $200 $0 2021 2022 2023 2024 2025 2026 2027 7.375% Senior Notes - 2021¹ US Revolver - FY 2024 Asset Securitization Other 6.50% Senior Notes - 2027 Term Loan A-1 Term Loan A-2 1) Senior Notes 2021 will be replaced by T
Slide 19: Fiscal 2022 commitment assumptions
Fiscal 2022 commitment assumptions • Net sales will be approximately $5.0B in FY22 reflecting a 2018 like economy with the impacts of both the COVID-19 pandemic and the industrial recession in place pre-COVID fully behind us • Raw material costs increase slightly against current indices in the marke
Slide 20: 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 21: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Segment and Consolidated Financials: Q4 2020, Q4 2019, FY2020, FY2019 (9) EBITDA is defined as net income, plus interest expense, net, plus debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization. However, because the Compa
Slide 22: 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 $Millions December 11, 2020 – P.22
Slide 23: GAAP to Non-GAAP reconciliation: Net Income to Adjusted EBITDA
GAAP to Non-GAAP reconciliation: Reconciliation of Net Income to Adjusted EBITDA $Millions December 11, 2020 – P.23
Slide 24: GAAP to Non-GAAP reconciliation: Segment Operating Profit to Adjusted EBITDA
GAAP to Non-GAAP reconciliation: Reconciliation of Segment Operating Profit to Adjusted EBITDA(12) ($Millions) (12) 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 a
Slide 25: 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 $Millions and $/sh December 11, 2020 – P.25
Slide 26: GAAP to Non-GAAP reconciliation: Adjusted Free Cash Flow
GAAP to Non-GAAP reconciliation: Adjusted Free Cash Flow(13) December 11, 2020 – P.26
Slide 27: GAAP to Non-GAAP reconciliation: Adjusted Free Cash Flow comparison over time
GAAP to Non-GAAP reconciliation: Adjusted Free Cash Flow(1) comparison over time GREIF, INC. AND SUBSIDIARY COMPANIES GAAP TO NON-GAAP RECONCILIATION ADJUSTED FREE CASH FLOW(1) UNAUDITED Twelve Months Ended October 31, (in millions) 2015 2016 2017 2018 2019 2020 Net cash provided by operating activi
Slide 28: GAAP to Non-GAAP reconciliation: Net debt
GAAP to Non-GAAP reconciliation: Net debt December 11, 2020 – P.28
Slide 29: Credit Agreement Adj. EBITDA & Leverage Ratio
Credit Agreement Adj. EBITDA & Leverage Ratio December 11, 2020 – P.29