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EX-99.2 - EXHIBIT 99.2 - GREIF, INC | c97060exv99w2.htm |
8-K - FORM 8-K - GREIF, INC | c97060e8vk.htm |
EXHIBIT 99.1
Greif, Inc. Reports First Quarter 2010 Results
| Net sales were $709.7 million in the first quarter of 2010 compared to $666.3 million in the first quarter of 2009. The 7 percent increase was due to higher sales volumes (16 percent or 11 percent excluding acquisitions) and foreign currency translation (5 percent), partially offset by lower selling prices (14 percent) due to the pass-through of lower input costs. | |
| Net income before special items, as defined below, was $37.6 million ($0.65 per diluted Class A share) in the first quarter of 2010 compared to $21.7 million ($0.38 per diluted Class A share) in the first quarter of 2009. GAAP net income was $24.8 million ($0.43 per diluted Class A share) in the first quarter of 2010 and GAAP net loss was $2.3 million ($0.03 loss per diluted Class A share) in the first quarter of 2009. |
DELAWARE, Ohio (Feb. 24, 2010) Greif, Inc. (NYSE: GEF, GEF.B), a global leader in industrial
packaging products and services, today announced results for its first fiscal quarter, which ended
Jan. 31, 2010.
Michael J. Gasser, chairman and chief executive officer, said, Our sales volumes have
significantly improved across all businesses and geographic regions from the same quarter last year
with particular strength in emerging markets. The improved gross profit margins were led by
Industrial Packaging margin expansion. We continue to focus on the disciplined execution of the
Greif Business System and maintaining the permanent cost savings that were achieved during fiscal
2009.
Gasser continued, During the first quarter, we completed an industrial packaging acquisition that
expanded our footprint in Scandinavia. We continue to pursue our pipeline of consolidation and
product line extension opportunities.
Special Items and GAAP to Non-GAAP Reconciliation
Special items are as follows: (i) for the first quarter of 2010, restructuring charges of $5.9
million ($4.8 million net of tax) and acquisition-related costs of $10.1 million ($8.0 million net
of tax) pursuant to the adoption of SFAS No. 141(R), as described below; and (ii) for the first
quarter of 2009, restructuring charges of $27.2 million ($22.6 million net of tax) and
restructuring-related inventory charges of $1.8 million ($1.5 million net of tax). A
reconciliation of the differences between all non-GAAP financial measures used in this release with
the most directly comparable GAAP financial measures is included in the financial schedules that
are a part of this release.
Recent Accounting Changes
In the first quarter of 2010, the Company changed from using a combination of first-in, first-out
(FIFO) (approximately 80 percent of total inventory) and last-in, first-out (LIFO) (approximately
20 percent of total inventory) inventory accounting methods to the FIFO method for all of its
businesses. The Company believes this change is preferable because the FIFO method:
| Provides better matching of sales and expenses | ||
| Better reflects the current value of inventories on hand | ||
| Presents a uniform inventory method across all operations | ||
| Allows for easier comparisons with peer companies | ||
| Reduces complexity in financial reporting |
Financial information in this press release for the first quarter of 2009 has been adjusted for
presentation under the FIFO accounting method.
In the first quarter of 2010, the Company adopted SFAS No. 141(R) (codified under ASC 805,
Business Combinations), which requires it to expense acquisition costs in the period incurred.
Previously, these costs were capitalized as part of the purchase price of the acquisition. Under
this new guidance, there were $10.1 million of acquisition-related costs recognized in the first
quarter of 2010 included in selling, general and administrative expenses. This amount included
$6.1 million for acquisition costs incurred prior to November 1, 2009 that were previously
accumulated to the balance sheet for acquisitions not consummated by October 31, 2009, and $4.0
million for acquisition costs incurred during the first quarter of 2010.
Consolidated Results
Net sales were $709.7 million in the first quarter of 2010 compared to $666.3 million in the first
quarter of 2009. The 7 percent increase was due to higher sales volumes (16 percent or 11 percent
excluding acquisitions) and foreign currency translation (5 percent), substantially offset by lower
selling prices (14 percent) due to the pass-through of lower input costs. The $43.4 million
increase was due to Industrial Packaging ($35.3 million increase) and Paper Packaging ($9.1 million
increase), slightly offset by Land Management ($1.0 million decrease).
Operating profit before special items was $66.7 million for the first quarter of 2010 compared to
$40.5 million for the first quarter of 2009. The $26.2 million increase was due to Industrial
Packaging ($38.8 million increase), principally offset by a decrease in Paper Packaging ($12.4
million decrease). GAAP operating profit was $50.7 million and $11.5 million in the first quarter
of 2010 and 2009, respectively. The improvement in GAAP operating profit was partially offset by
the impact resulting from the adoption of SFAS No. 141(R), as described above.
Net income before special items was $37.6 million for the first quarter of 2010 compared to $21.7
million for the first quarter of 2009. Diluted earnings per share before special items were $0.65
compared to $0.38 per Class A share and $0.96 compared to $0.56 per Class B share for the first
quarter of 2010 and 2009, respectively. The Company had GAAP net income of $24.8 million, or $0.43
per diluted Class A share and $0.63 per diluted Class B share, in the first quarter of 2010
compared to GAAP net loss of $2.3 million, or $0.03 loss per diluted Class A share and $0.06 loss
per diluted Class B share, in the first quarter of 2009.
Business Group Results
Industrial Packaging net sales were $564.8 million in the first quarter of 2010 compared to $529.5
million in the first quarter of 2009. The 7 percent increase in net sales was due to higher sales
volumes (14 percent or 11 percent excluding acquisitions) and foreign currency translation (6
percent), substantially offset by lower selling prices (13 percent) due to the pass-through of
lower input costs. Operating profit before special items increased to $57.4 million in the first
quarter of 2010 from $18.6 million in the first quarter of 2009. The $38.8 million increase was
primarily due to higher sales volumes, margin expansion principally due to lower input costs and
the disciplined execution of the Greif Business System, and benefits from permanent cost savings
achieved during fiscal 2009. GAAP operating profit was $41.4 million in the first quarter of 2010
compared to GAAP operating loss of $8.3 million in the first quarter of 2009.
Paper Packaging net sales were $139.5 million in the first quarter of 2010 compared to $130.4
million in the first quarter of 2009. The 7 percent increase in net sales was due to higher sales
volumes, partially offset by lower containerboard selling prices. The Company initiated a $50 per
ton containerboard price increase at the end of the first quarter of 2010 that should be fully
implemented during the second quarter of 2010. Operating profit before special items decreased to
$6.3 million in the first quarter of 2010 from $18.7 million in the first quarter of 2009. This
decline was primarily due to higher raw material costs (especially old corrugated containers) and
lower selling prices, which were partially offset by higher sales volumes. GAAP operating profit
was $6.3 million and $16.8 million in the first quarter of 2010 and 2009, respectively.
Land Management net sales were $5.4 million and $6.4 million in the first quarter of 2010 and 2009,
respectively. Operating profit before special items was $3.0 million in the first quarter of 2010
compared to $3.2 million in the first quarter of 2009. Included in these amounts were profits from
the sale of special use properties (surplus, higher and better use, and development properties) of
$0.3 million in the first quarters of 2010 and 2009. GAAP operating profit was $3.0 million in the
first quarters of 2010 and 2009.
Other Cash Flow Information
In the first quarter of 2010, the Companys debt increased primarily due to seasonal factors and
cash payments related to the acquisition of an industrial packaging company, capital expenditures,
quarterly dividends and performance-based incentives.
Capital expenditures were $33.7 million, excluding timberland purchases of $0.1 million, for the
first quarter of 2010 compared with capital expenditures of $26.8 million, excluding timberland
purchases of $0.4 million, for the first quarter of 2009. Capital expenditures are expected to be
approximately $125 million, excluding timberland purchases, for fiscal 2010.
On Feb. 22, 2010, the Board of Directors declared quarterly cash dividends of $0.38 per share of
Class A Common Stock and $0.57 per share of Class B Common Stock. These dividends are payable on
April 1, 2010 to stockholders of record at close of business on March 17, 2010.
Greif Business System (GBS) and Accelerated Initiatives
During fiscal 2009, the Company implemented specific plans to address the adverse impact to its
businesses resulting from the sharp decline of the global economy, which began at the end of fiscal
2008. These plans included accelerated GBS initiatives, contingency actions and active portfolio
management. An additional $30 million, net, of savings from these plans are anticipated during
fiscal 2010.
Company Outlook
The Companys management continues to anticipate a gradual improvement in sales volumes and the
full realization of the fiscal 2009 permanent cost reductions. In addition, it expects to mitigate
the impact of the temporary margin contraction for Paper Packaging with other actions including
full implementation of the
January containerboard price increase. As such, the Company reaffirms its earnings guidance before
special items of $4.00 to $4.25 per Class A share for fiscal 2010.
Conference Call
The Company will host a conference call to discuss the first quarter of 2010 results on Feb. 25,
2010, at 10 a.m. Eastern Time (ET). To participate, domestic callers should call 877-485-3107 and
ask for the Greif conference call. The number for international callers is +1 201-689-8427. Phone
lines will open at 9:50 a.m. ET. The conference call will also be available through a live webcast,
including slides, which can be accessed at www.greif.com in the Investor Center. A replay of the
conference call will be available on the Companys website approximately one hour following the
call.
About Greif
Greif is a world leader in industrial packaging products and services. The Company produces steel,
plastic, fibre, corrugated and multiwall containers, packaging accessories and containerboard, and
provides blending and packaging services for a wide range of industries. Greif also manages timber
properties in North America. The Company is strategically positioned in more than 45 countries to
serve global as well as regional customers. Additional information is on the Companys website at
www.greif.com.
Forward-Looking Statements
All statements other than statements of historical facts included in this news release, including,
without limitation, statements regarding the Companys future financial position, business
strategy, budgets, projected costs, goals and plans and objectives of management for future
operations, are forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements generally can be identified by the use of
forward-looking terminology such as may, will, expect, intend, estimate, anticipate,
project, believe, continue, on track or target or the negative thereof or variations
thereon or similar terminology. All forward-looking statements made in this news release are based
on information currently available to management. Although the Company believes that the
expectations reflected in forward-looking statements have a reasonable basis, the Company can give
no assurance that these expectations will prove to be correct. Forward-looking statements are
subject to risks and uncertainties that could cause actual events or results to differ materially
from those expressed in or implied by the statements. Such risks and uncertainties that might cause
a difference include, but are not limited to: general economic and business conditions, including a
prolonged or substantial economic downturn; the availability of the credit markets to our customers
and suppliers, as well as the Company; changing trends and demands in the industries in which the
Company competes, including industry over-capacity; industry competition; the continuing
consolidation of the Companys customer base for its industrial packaging, containerboard and
corrugated products; political instability in those foreign countries where the Company
manufactures and sells its products; foreign currency fluctuations and devaluations; availability
and costs of raw materials for the manufacture of the Companys products, particularly steel,
resin and old corrugated containers; price fluctuations in energy costs; costs associated with
litigation or claims against the Company pertaining to environmental, safety and health, product
liability and other matters; work stoppages and other labor relations matters; property loss
resulting from wars, acts of terrorism or natural disasters; the Companys ability to integrate its
newly acquired operations effectively with its existing business; the Companys ability to achieve
improved operating efficiencies and capabilities; the Companys ability to effectively embed and
realize improvements from the Greif Business System; the frequency and volume of sales of the
Companys timber, timberland and special use timberland; and the deviation of actual results from
the estimates and/or assumptions used by the Company in the application of its significant
accounting policies. These and other risks and uncertainties that could materially affect the
Companys consolidated financial results are further discussed in its filings with the Securities
and Exchange Commission, including its Form 10-K for the year ended Oct. 31, 2009. The Company
assumes no obligation to update any forward-looking statements.
GREIF, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(Dollars and shares in millions, except per share amounts)
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(Dollars and shares in millions, except per share amounts)
Quarter ended | ||||||||
January 31, | ||||||||
2010 | 2009 | |||||||
(As Adjusted)(1) | ||||||||
Net sales |
$ | 709.7 | $ | 666.3 | ||||
Cost of products sold |
572.0 | 571.5 | ||||||
Gross profit |
137.7 | 94.8 | ||||||
Selling, general and administrative expenses(2) |
82.4 | 58.4 | ||||||
Restructuring charges |
5.9 | 27.2 | ||||||
Asset gains, net |
1.3 | 2.3 | ||||||
Operating profit |
50.7 | 11.5 | ||||||
Interest expense, net |
14.9 | 12.2 | ||||||
Other income (expense), net |
(2.8 | ) | (1.8 | ) | ||||
Income (loss) before income tax expense (benefit) and
equity earnings and minority interests, net |
33.0 | (2.5 | ) | |||||
Income tax expense (benefit) |
6.7 | (1.2 | ) | |||||
Net income (loss) attributable to controlling interest |
26.3 | (1.3 | ) | |||||
Net income (loss) attributable to equity earnings and
minority interests, net |
(1.5 | ) | (1.0 | ) | ||||
Net income (loss) |
$ | 24.8 | $ | (2.3 | ) | |||
Basic earnings (loss) per share: |
||||||||
Class A Common Stock |
$ | 0.43 | $ | (0.03 | ) | |||
Class B Common Stock |
$ | 0.63 | $ | (0.06 | ) | |||
Diluted earnings (loss) per share: |
||||||||
Class A Common Stock |
$ | 0.43 | $ | (0.03 | ) | |||
Class B Common Stock |
$ | 0.63 | $ | (0.06 | ) | |||
Shares used to calculate basic earnings (loss) per share: |
||||||||
Class A Common Stock |
24.5 | 24.1 | ||||||
Class B Common Stock |
22.5 | 22.5 | ||||||
Shares used to calculate diluted earnings (loss) per share: |
||||||||
Class A Common Stock |
24.9 | 24.3 | ||||||
Class B Common Stock |
22.5 | 22.5 |
(1) | In the first quarter of 2010, the Company changed from using a combination of first-in, first-out (FIFO) and last-in, first-out (LIFO) inventory accounting methods to the FIFO method for all of its businesses. Financial information in any tables included herein has been adjusted for presentation under the FIFO accounting method. | |
(2) | In the first quarter of 2010, the Company adopted SFAS No. 141(R) (codified under ASC 805, Business Combinations), which requires it to expense acquisition costs in the period incurred. Previously, these costs were capitalized as part of the purchase price of the acquisition. Under this new guidance, there were $10.1 million of acquisition-related costs recognized in the first quarter of 2010 included in selling, general and administrative expenses. This amount included $6.1 mln for acquisition costs incurred prior to November 1, 2009 which were previously accumulated to the balance sheet for acquisitions not consummated by October 31, 2009, and $4.0 million for acquisition costs incurred during the first quarter of 2010. |
GREIF, INC. AND SUBSIDIARY COMPANIES
GAAP TO NON-GAAP RECONCILIATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(Dollars in millions, except per share amounts)
GAAP TO NON-GAAP RECONCILIATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(Dollars in millions, except per share amounts)
Quarter ended January 31, 2010 | Quarter ended January 31, 2009 | |||||||||||||||||||||||
Diluted per share amounts | Diluted per share amounts | |||||||||||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||||||||||
(As Adjusted) | (As Adjusted) | (As Adjusted) | ||||||||||||||||||||||
GAAP operating profit |
$ | 50.7 | $ | 11.5 | ||||||||||||||||||||
Restructuring charges |
5.9 | 27.2 | ||||||||||||||||||||||
Restructuring-related
inventory charges |
| 1.8 | ||||||||||||||||||||||
Acquisition-related costs |
10.1 | | ||||||||||||||||||||||
Non-GAAP operating
profit before restructuring
charges,
restructuring-related
inventory charges and
acquisition-related costs |
$ | 66.7 | $ | 40.5 | ||||||||||||||||||||
GAAP net income (loss) |
$ | 24.8 | $ | 0.43 | $ | 0.63 | $ | (2.3 | ) | $ | (0.03 | ) | $ | (0.06 | ) | |||||||||
Restructuring charges, net
of tax |
4.8 | 0.08 | 0.12 | 22.5 | 0.38 | 0.58 | ||||||||||||||||||
Restructuring-related
inventory charges, net of
tax |
| | | 1.5 | 0.03 | 0.04 | ||||||||||||||||||
Acquisition-related costs,
net of tax |
8.0 | 0.14 | 0.21 | | | | ||||||||||||||||||
Non-GAAP net income
(loss) before restructuring
charges, restructuring-
related inventory charges
and acquisition-related
costs |
$ | 37.6 | $ | 0.65 | $ | 0.96 | $ | 21.7 | $ | 0.38 | $ | 0.56 | ||||||||||||
GREIF, INC. AND SUBSIDIARY COMPANIES
SEGMENT DATA
UNAUDITED
(Dollars in millions)
SEGMENT DATA
UNAUDITED
(Dollars in millions)
Quarter ended | ||||||||
January 31, | ||||||||
2010 | 2009 | |||||||
(As Adjusted) | ||||||||
Net sales |
||||||||
Industrial Packaging |
$ | 564.8 | $ | 529.5 | ||||
Paper Packaging |
139.5 | 130.4 | ||||||
Land Management |
5.4 | 6.4 | ||||||
Total |
$ | 709.7 | $ | 666.3 | ||||
Operating profit |
||||||||
Operating profit before restructuring charges,
restructuring-related inventory charges and
acquisition-related costs: |
||||||||
Industrial Packaging |
$ | 57.4 | $ | 18.6 | ||||
Paper Packaging |
6.3 | 18.7 | ||||||
Land Management |
3.0 | 3.2 | ||||||
Operating profit before restructuring charges,
restructuring-related inventory charges and
acquisition-related costs |
66.7 | 40.5 | ||||||
Restructuring charges: |
||||||||
Industrial Packaging |
5.9 | 25.1 | ||||||
Paper Packaging |
| 1.9 | ||||||
Land Management |
| 0.2 | ||||||
Restructuring charges |
5.9 | 27.2 | ||||||
Restructuring-related inventory charges: |
||||||||
Industrial Packaging |
| 1.8 | ||||||
Acquisition-related costs: |
||||||||
Industrial Packaging |
10.1 | | ||||||
Total |
$ | 50.7 | $ | 11.5 | ||||
Depreciation, depletion and amortization expense |
||||||||
Industrial Packaging |
$ | 21.3 | $ | 17.5 | ||||
Paper Packaging |
7.3 | 6.7 | ||||||
Land Management |
0.9 | 1.1 | ||||||
Total |
$ | 29.5 | $ | 25.3 | ||||
GREIF, INC. AND SUBSIDIARY COMPANIES
GEOGRAPHIC DATA
UNAUDITED
(Dollars in millions)
GEOGRAPHIC DATA
UNAUDITED
(Dollars in millions)
Quarter ended | ||||||||
January 31, | ||||||||
2010 | 2009 | |||||||
(As Adjusted) | ||||||||
Net sales |
||||||||
North America |
$ | 360.9 | $ | 394.0 | ||||
Europe, Middle East and Africa |
224.3 | 182.3 | ||||||
Other |
124.5 | 90.0 | ||||||
Total |
$ | 709.7 | $ | 666.3 | ||||
Operating profit |
||||||||
Operating profit before restructuring charges,
restructuring-related inventory charged and acquisition-
related costs: |
||||||||
North America |
$ | 32.2 | $ | 48.0 | ||||
Europe, Middle East and Africa |
26.6 | 0.5 | ||||||
Other |
7.9 | (8.0 | ) | |||||
Operating profit before restructuring charges and
timberland disposals, net |
66.7 | 40.5 | ||||||
Restructuring charges |
5.9 | 27.2 | ||||||
Restructuring-related inventory charges |
| 1.8 | ||||||
Acquisition-related costs |
10.1 | | ||||||
Total |
$ | 50.7 | $ | 11.5 | ||||
GREIF, INC. AND SUBSIDIARY COMPANIES
GAAP TO NON-GAAP RECONCILIATION
SEGMENT DATA
UNAUDITED
(Dollars in millions)
GAAP TO NON-GAAP RECONCILIATION
SEGMENT DATA
UNAUDITED
(Dollars in millions)
Quarter ended | ||||||||
January 31, | ||||||||
2010 | 2009 | |||||||
(As Adjusted) | ||||||||
Industrial Packaging |
||||||||
GAAP operating profit (loss) |
$ | 41.4 | $ | (8.3 | ) | |||
Restructuring charges |
5.9 | 25.1 | ||||||
Restructuring-related inventory charges |
| 1.8 | ||||||
Acquisition-related costs |
10.1 | | ||||||
Non-GAAP operating profit before restructuring
charges, restructuring-related inventory charges and
acquisition-related costs |
$ | 57.4 | $ | 18.6 | ||||
Paper Packaging |
||||||||
GAAP operating profit |
$ | 6.3 | $ | 16.8 | ||||
Restructuring charges |
| 1.9 | ||||||
Non-GAAP operating profit before restructuring
charges |
$ | 6.3 | $ | 18.7 | ||||
Land Management |
||||||||
GAAP operating profit |
$ | 3.0 | $ | 3.0 | ||||
Restructuring charges |
| 0.2 | ||||||
Non-GAAP operating profit before restructuring
charges |
$ | 3.0 | $ | 3.2 | ||||
GREIF, INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(Dollars in millions)
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(Dollars in millions)
January 31, 2010 | October 31, 2009 | |||||||
(As Adjusted) | ||||||||
ASSETS |
||||||||
CURRENT ASSETS
|
$ | 89.4 | $ | 111.9 | ||||
Cash and cash equivalents |
$ | 89.4 | $ | 111.9 | ||||
Trade accounts receivable |
337.2 | 337.1 | ||||||
Inventories |
253.8 | 238.8 | ||||||
Other current assets |
150.7 | 157.3 | ||||||
831.1 | 845.1 | |||||||
LONG-TERM ASSETS |
||||||||
Goodwill |
606.8 | 592.1 | ||||||
Intangible assets |
133.0 | 131.4 | ||||||
Assets held by special purpose entities |
50.9 | 50.9 | ||||||
Other long-term assets |
88.2 | 112.1 | ||||||
878.9 | 886.5 | |||||||
PROPERTIES, PLANTS AND EQUIPMENT |
1,122.0 | 1,092.3 | ||||||
$ | 2,832.0 | $ | 2,823.9 | |||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Accounts payable |
$ | 228.6 | $ | 335.8 | ||||
Short-term borrowings |
62.2 | 37.1 | ||||||
Other current liabilities |
161.7 | 189.2 | ||||||
452.5 | 562.1 | |||||||
LONG-TERM LIABILITIES |
||||||||
Long-term debt |
879.4 | 721.1 | ||||||
Liabilities held by special purpose entities |
43.3 | 43.3 | ||||||
Other long-term liabilities |
381.1 | 390.8 | ||||||
1,303.8 | 1,155.2 | |||||||
SHAREHOLDERS EQUITY |
1,075.7 | 1,106.6 | ||||||
$ | 2,832.0 | $ | 2,823.9 | |||||