Greif Inc. · NYSE:GEF
Greif — Non-Deal Roadshow (March 2016)
33 slides from Greif's roadshow presentation, Mar 30, 2016
Slide 1: Boston and New York Investor Meetings
Boston and New York Investor Meetings 28 – 30 March, 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,” “co
Slide 3: Greif at a glance
Greif at a glance ▪ Founded in 1877; initial public offering in 1926 ▪ Leading global producer of rigid industrial packaging products and services conducting business in 50 countries ▪ Four business segments: ‒ Rigid Industrial Packaging & Services ‒ Paper Packaging & Services ‒ Flexible Products &
Slide 4: Focused on enhancing Greif's customer service excellence
Focused on enhancing Greif’s customer service excellence To engage our To create loyal To improve colleagues customers performance and profitability • Customer service • Improves customer • Elimination of activities that excellence is built on the experience customers do not value relationship betwe
Slide 5: Greif segment overview
Greif segment overview Rigid Industrial Paper Flexible Products Land Packaging & Services Packaging & Services & Services Management Steel, fibre and plastic Containerboard, Flexible intermediate bulk Timberland and special drums; rigid intermediate corrugated sheets, containers and related use land
Slide 6: A diverse and global customer base
A diverse and global customer base 2015 Greif net sales by geography Key end markets include: ▪ Agriculture ▪ Automotive 18% ▪ Building products ▪ Chemicals 47% ▪ Coatings ▪ Food and beverage 35% ▪ Lubricants ▪ Paints and pigments ▪ Pharmaceuticals United States ▪ Petroleum Europe, Middle East and A
Slide 7: Transforming to improve shareholder returns
Transforming to improve shareholder returns Divested 17 non-core assets since 2014 Strengthening Consolidating operational network – closed 12 underperforming operations the portfolio Pursuing select growth in attractive markets: integration of Paper Packaging system and Intermediate Bulk Containers
Slide 8: 2017 Greif Transformation commitments (consolidated)
2017 Greif Transformation commitments (consolidated) 2014 2017 IMPACT Value (%) Gross Profit 19.1% 20.0% $50M Operating Margin SG&A 11.7% 10.0% $50M Operating Margin 1 Operating Profit 7.5% 10.0% 30% Improvement 2 Operating Working Capital 9.7% <7.5% $100M Cash 8 1Operating Profit excluding special
Slide 9: Significant Free Cash Flow expansion on the horizon
Significant Free Cash Flow1 expansion on the horizon Fiscal 2015 Fiscal 2016 2017 forecasted Outlook Transformation run rate Improved fundamentals and targeted growth opportunities expand Free Cash Flow 9 1Free cash flow is defined as net cash provided by operating activities less cash paid for capi
Slide 10: Improving debt profile and reducing leverage
Improving debt profile and reducing leverage Average total debt ($M) Targeting a leverage ratio of 2.0 – 2.5x exiting 2017 10 Note: Debt definition = long term debt + short term borrowings + current portion of long term debt. Average for each year determined by summing quarters and dividing by four
Slide 11: Step change in performance: Q1 2016 versus Q1 2015
Step change in performance: Q1 2016 versus Q1 2015 280 33% $19M basis points Class A EPS SG&A expense Operating profit before special improvement before special items1 items1 margin expansion 250 $43M basis points Free Gross profit Cash Flow2 margin improvement expansion 11 1 A summary of all specia
Slide 12: FY 2016 Class A EPS guidance midpoint increased
FY 2016 Class A EPS guidance midpoint increased Guidance @ 12/10/2015 Guidance @ 3/7/2016 Class A EPS per share ($/sh)1 $2.05 – $2.35 $2.10 – $2.40 Capital expenditure ($M) $99 – $124 $99 – $124 Free Cash Flow ($M)2 $120 – $150 $125 – $150 Restructuring expense ($M) $15 – $25 $15 – $25 GAAP tax rate
Slide 13: Executive compensation tied to shareholder returns
Executive compensation tied to shareholder returns CEO compensation mix Named executive officer mix Incentive plans ▪ Short term incentive is based on Return on Net Assets ▪ Long term incentive considers three 19% year performance periods and is based on EBITDA 44% 33% 61% 20% Insider purchasing ▪ I
Slide 14: Appendix: Segment specific slides
Appendix: Segment specific slides
Slide 15: Rigid Industrial Packaging & Services (RIPS)
Rigid Industrial Packaging & Services (RIPS) Q1 2016 Sales: $535M RIPS Q1 2016 operating profit before special items1: $36M RIPS North America Overall volumes lower due to divestitures, network consolidation and weakness in the U.S. Gulf region Higher gross margins versus previous year Continu
Slide 16: Rigid Industrial Packaging & Services (RIPS cont.)
Rigid Industrial Packaging & Services (RIPS cont.) Q1 2016 Sales: $535M RIPS Q1 2016 operating profit before special items1: $36M RIPS Europe, Middle East and Africa Net sales increased 5.8% driven by strong steel drum and intermediate bulk container (IBC) volume Continued emphasis on fixing und
Slide 17: Paper Packaging & Services (PPS)
Paper Packaging & Services (PPS) Q1 2016 Sales: $158M Q1 2016 operating profit before special items1: $23M Higher volumes year over year, helping to partially offset the impact of lower containerboard pricing Growth projects at mills and CorrChoice being successfully implemented Specialty prod
Slide 18: Flexible Products & Services (FPS)
Flexible Products & Services (FPS) Q1 2016 Sales: $73M Q1 2016 operating profit before special items1: $(2M) Turnaround continuing; gross profit improvement year over year Operating Profit Before Special Items1 improved by $7M compared to Q1 2015 and breakeven coming out of Q1 2016 Continuous
Slide 19: Land Management
Land Management Q1 2016 Sales: $5M Q1 2016 operating profit before special items1: $2M Timber sales up year over year due to increased harvesting activities in wet weather timber stands in Alabama and Mississippi Continue to evaluate and pursue non-timber revenue growth opportunities Managing po
Slide 20: Q1 2016 Financial Performance
Q1 2016 Financial Performance (Dollars in Millions, except per share amounts) Q1 2016 Q1 2015 Net Sales After Divestitures and Currency Translation1 $851 $878 Operating Profit $18 $65 Operating Profit Before Special Items2 $58 $42 Net Income Attributable to Greif, Inc. $(11) $30 Net Income Attributa
Slide 21: Diverse portfolio helping to mitigate a volatile market
Diverse portfolio helping to mitigate a volatile market Growth in U.S. industrial production remains sluggish: ‒ The Federal Reserve’s February 2016 Beige Book reported that overall manufacturing activity was flat; eight Districts noted that weak demand from the energy sector was creating signific
Slide 22: Appendix: Reconciliation tables and supporting data
Appendix: Reconciliation tables and supporting data
Slide 23: Price, Volume and Foreign Currency Impact to Net Sales: Excluding Divestitures
Price, Volume and Foreign Currency Impact to Net Sales: Excluding Divestitures Sales Volume Price FX Variance RIPS Americas -6.4% 2.2% -11.9% -16.1% North America -9.6% -2.3% -0.7% -12.7% Latin America -2.2% 19.3% -49.6% -32.5% RIPS EMEA APAC 3.4% -6.5% -10.6% -13.8% EMEA 5.8% -6.2% -11.9% -12.3% AP
Slide 24: GAAP to Non-GAAP Reconciliation: Segment and Consolidated Operating Profit Before Special Items
GAAP to Non-GAAP Reconciliation: Segment and Consolidated Operating Profit (Loss) Before Special Items (Dollars in Millions) 24
Slide 25: GAAP to Non-GAAP Reconciliation: Net Income and Class A EPS Excluding Special Items
GAAP to Non-GAAP Reconciliation: Net Income and Class A Earnings Per Share Excluding Special Items (Dollars in Millions, except for per share amounts) 25 Note: All special items are net of tax and non-controlling interest.
Slide 26: GAAP to Non-GAAP Reconciliation: Operating Working Capital
GAAP to Non-GAAP Reconciliation: Operating Working Capital October 31, 2015 October 31, 2014 Current assets $ 1,008.5 $ 1,139.4 (Dollars in Millions) Less: current liabilities 639.0 851.7 Working capital 369.5 287.7 Less: cash and cash equivalents 106.2 85.1 Net working capital $ 263.3 $October 31,
Slide 27: Q1 GAAP to Non-GAAP: Excluding the Impact of Divestitures
Q1 GAAP to Non-GAAP: Reconciliation of Selected Financial Information Excluding the Impact of Divestitures (Dollars in Millions) 1 27 *Note: The 2015 Acquisitions were completed at the beginning of the fiscal year and are not adjusted because they are fully reflected in both periods. 1 See table con
Slide 28: GAAP to Non-GAAP: Net Sales Excluding Divestitures and Currency Translation
GAAP to Non-GAAP: Reconciliation of Net Sales Excluding the Impact of Divestitures and Currency Translation (Dollars in Millions) 28
Slide 29: GAAP to Non-GAAP: Free Cash Flow: Q1 2016 versus Q1 2015
GAAP to Non-GAAP: Free Cash Flow: Q1 2016 versus Q1 20151 (Dollars in Millions) 2 3 1 Free cash flow is defined as net cash provided by operating activities less cash paid for capital expenditures. 2 Free cash flow from Venezuela operations is defined as net cash provided by Venezuela operating acti
Slide 30: GAAP to Non-GAAP: Free Cash Flow: Fiscal 2015
GAAP to Non-GAAP: GREIF, INC. AND SUBSIDIARY COMPANIES Free Cash Flow1: Fiscal 2015 GAAP TO NON-GAAP RECONCILIATION FREE CASH FLOW 9 UNAUDITED (Dollars in Millions) (Dollars in millions) Twelve months ended October 31 2015 Net cash used in operating activities $ 206.3 Less: Cash paid for capital exp
Slide 31: Q1 2016 Foreign Currency Impact
Q1 2016 Foreign Currency Impact (Dollars in Millions) F/x change versus USD Q1 2016 to Q1 2015 Impact to net sales ($M) Argentina (Peso) (23%) Region Q1 16 Brazil (Real) (33%) Americas ($37.0) China (Yuan) (4%) Europe (Euro) ($20.7) Euro (11%) Europe (Various) ($10.6) Russia (Ruble) (23%) Middle Eas
Slide 32: 2017 Greif commitments and key assumptions (at Q2 2015)
2017 Greif commitments and key assumptions (at Q2 2015) ▪ Assumed market growth rate of 1.5%-2% 1 ▪ Raw material costs assumed flat against our baseline indices ▪ Major raw material price increases are passed to customers through Price Adjustment Mechanisms in contracts or otherwise with customary d
Slide 33: Fiscal year GAAP to Non-GAAP Reconciliation Excluding the Impact of Divestitures
Fiscal year GAAP to Non-GAAP Reconciliation of Selected Financial Information Excluding the Impact of Divestitures (Dollars in Millions) T we lv e m o nt hs e nde d T we lv e m o nt hs e nde d O c t o be r 3 1 O c t o be r 3 1 E xc luding t he E xc luding t he Im pa c t o f Im pa c t o f Im pa c t o