Greif Inc. · NYSE:GEF
Greif — Q3 2019 Earnings Presentation
22 slides from Greif's earnings presentation, Aug 29, 2019
Slide 1: Third Quarter 2019 Earnings Conference Call
THIRD QUARTER 2019 EARNINGS CONFERENCE CALL AUGUST 29, 2019
Slide 2: Safe harbor
Safe harbor FORWARD-LOOKING STATEMENTS • This presentation contains 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: Third Quarter Fiscal Year (FY) 2019 summary
Third Quarter Fiscal Year (FY) 2019 summary Key performance statistics Segment summary Financial summary Trailing 12 mos Customer Satisfaction Index • PPS: • Adjusted EBITDA and Adjusted ‒ Containerboard: softer market Class A EPS up ~39% and ~5%, conditions and lower YoY published respectively, ver
Slide 4: Rigid Industrial Packaging & Services (RIPS) review
Rigid Industrial Packaging & Services (RIPS) review • Net sales down 4.3%, excluding F/X1, from prior year $M Q3 2019 Q3 2018 ‒ Continued solid demand in the Middle East, North Africa and Southern Europe, offset by trade related softness in N. America, Net sales $642.1 $687.6 APAC and West/Central E
Slide 5: Paper Packaging & Services (PPS) review
Paper Packaging & Services (PPS) review • Net sales up 124.6% from prior year $M Q3 2019 Q3 2018 ‒ Caraustar addition: $320.4M Net sales $530.0 $236.0 ‒ Softer conditions in containerboard operations • Adj. EBITDA1 up 109.0% from prior year Gross profit $134.7 $59.5 ‒ Caraustar Adj. EBITDA contribut
Slide 6: Unlocking value through Caraustar synergies
Unlocking value through Caraustar synergies Synergy Detail Caraustar run-rate synergy detail • Cross-selling opportunities with existing containerboard customers Operational • Integrating URB volumes into legacy Greif converting network Enhancements • Integrating heavy weight linerboard into the Cor
Slide 7: Flexible Products & Services (FPS) review
Flexible Products & Services (FPS) review • Net sales down 5.9%, excluding F/X1, from prior year $M Q3 2019 Q3 2018 ‒ Softer market conditions in Western Europe Net sales $74.5 $82.6 • Gross profit roughly flat to prior year, but margin improved +130BP Gross profit $16.0 $16.7 ‒ Lower raw material c
Slide 8: Q3'19 vs. Q3'18: financial comparison
Q3’19 vs. Q3’18: financial comparison Key financial metrics ($M and $/sh) Q3 2019 Q3 2018 Net Sales, Excluding the Impact of Currency Translation1 $1,272.3 $1,012.1 Gross Profit $279.4 $217.1 SG&A $138.9 $99.4 Adjusted EBITDA2 $203.8 $146.3 Interest expense $34.5 $12.1 Other (income) expense $(1.1)
Slide 9: 2019 guidance and key modeling assumptions
2019 guidance and key modeling assumptions FY 2019 Guidance @ FY 2019 Guidance @ Fiscal 2019 guidance1 ($/sh and $M) Q3’19 Q2’19 call Adjusted Class A Earnings Per Share1 $3.70 - $4.00 $3.70 - $4.00 Adjusted Free Cash Flow2 $230 - $250 $230 - $250 FY 2019 Assumption @ FY 2019 Assumption @ Fiscal 201
Slide 10: Near term capital priorities: fund maintenance and de-lever
Near term capital priorities: fund maintenance and de-lever 2019 Capital Expenditure allocation1 Fiscal 2019 capital priorities Invest to create sustainable value • Fund maintenance and organic growth opportunities that exceed required returns Discretionary • Advance opportunistic capital options if
Slide 11: Why invest in Greif?
Why invest in Greif? 1 Attractive valuation, compelling dividend and opportunity for free cash flow expansion 2 Robust and diverse product portfolio with exposure to a variety of end markets 3 Numerous avenues for incremental low-risk growth and margin enhancement 4 Compelling customer value proposi
Slide 12: Appendix
GREIF PACKAGING SUCCESS TOGETHER™ APPENDIX
Slide 13: 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: Excluding Divestitures August 28, 2019 – P.13
Slide 14: Key Foreign Exchange assumptions
Key Foreign Exchange assumptions 10% strengthening of the USD; Currency Cumulative impact impact to EBITDA Euro $(9M) – $(11M) $(9M) – $(11M) Next five largest exposures $(7M) – $(10M) $(16M) – $(21M) Turkish Lira $3M – $4M Singapore Dollar $(3M) – $(4M) Russia Ruble $(3M) – $(4M) British Pound $(2M
Slide 15: Striving to become a world class customer service organization
Striving to become a world class customer service organization Customer Satisfaction Index (CSI)1 NPS Score Evolution Expectation RIPS = 57 Wave 8 7 29 64 PPS = 40 Wave 1 11 38 51 FPS 0 20 40 60 80 100 50 60 70 80 90 100 Q3'19 Q3'18 Detractors Passives Promoters 1PPS CSI for Q3’19 includes Caraustar
Slide 16: 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 17: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Segment and Consolidated Financials: Q3 2019, Q3 2018 Three months ended July 31, Nine months ended July 31, (in millions) 2019 2018 2019 2018 Net sales: Rigid Industrial Packaging & Services $ 642.1 $ 687.6 $ 1,871.6 $ 1,965.7 Paper Packaging & Services 530.0 236.0
Slide 18: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Reconciliation of Net Sales to Net Sales Excluding the Impact of Currency Translation $Millions Three months ended July 31, Increase in Increase in (in millions) 2019 2018 Net Sales ($) Net Sales (%) Consolidated Net Sales $ 1,252.6 $ 1,012.1 $ 240.5 23.8 % Currency
Slide 19: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Reconciliation of Net Income to Adjusted EBITDA $Millions Three months ended July 31, Nine months ended July 31, (in millions) 2019 2018 2019 2018 Net income $ 67.5 $ 72.0 $ 124.4 $ 184.0 Plus: Interest expense, net 34.5 12.1 80.1 38.4 Plus: Debt extinguishment charg
Slide 20: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Reconciliation of Segment Operating Profit to Adjusted EBITDA ($Millions) Three months ended July 31, Nine months ended July 31, (in millions) 2019 2018 2019 2018 Rigid Industrial Packaging & Services Operating profit 54.3 62.0 124.6 140.4 Less: Other expense, net 0.
Slide 21: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Net Income and Class A Earnings Per Share Excluding Adjustments $Millions and $/sh Income before Income Tax (Benefit) Expense and Equity Income Tax Net Income Diluted Class A Earnings of Unconsolidated (Benefit) Equity Non-Controlling Attributable to Earnings Per (in
Slide 22: GAAP to Non-GAAP reconciliation
GAAP to Non-GAAP reconciliation: Adjusted Free Cash Flow and projected 2019 Adjusted Free Cash Flow guidance August 28, 2019 – P.22