Greif(GEF) - 2025 Q2 - Quarterly Results

Greif Reports Fiscal Second Quarter 2025 Results Fiscal Second Quarter 2025 Financial Highlights Greif reported strong Q2 2025 results with adjusted net income up 42.8% to $68.7 million and Adjusted EBITDA up 26.0% to $213.9 million, improving liquidity and reducing leverage to 3.3x Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $47.3M | $44.4M | +6.5% | | Net Income (Adjusted) | $68.7M | $48.1M | +42.8% | | Diluted Class A EPS | $0.82 | $0.77 | +6.5% | | Diluted Class A EPS (Adjusted) | $1.19 | $0.83 | +43.4% | | Adjusted EBITDA | $213.9M | $169.7M | +26.0% | | Net Cash from Operating Activities | $136.4M | $87.5M | +$48.9M | | Adjusted Free Cash Flow | $109.6M | $59.0M | +$50.6M | | Total Debt | $2,775.2M | $2,916.1M | -$140.9M | | Leverage Ratio | 3.3x | 3.4x | -0.1x | Strategic Actions and Announcements Greif is executing its 'Build to Last' strategy, achieving $10.0 million in cost savings and progressing with timberland sale for debt reduction - The company is making progress on the sale of its timberland business and plans to use the proceeds for further debt reduction[6] - The cost optimization program is ahead of schedule, with $10.0 million in run-rate savings achieved, targeting $15.0 million to $25.0 million by end of fiscal 2025[6] - CEO Ole Rosgaard highlighted Greif's strong quarter, balancing financial execution with strategic progress, demonstrating resilience and positioning for future value creation[5] Segment Performance Customized Polymer Solutions Customized Polymer Solutions saw significant growth, with net sales up $43.7 million to $329.3 million and Adjusted EBITDA up $18.5 million to $53.4 million, driven by acquisitions Customized Polymer Solutions Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $329.3M | $285.6M | +15.3% | | Gross Profit | $76.7M | $55.5M | +38.2% | | Operating Profit | $25.8M | $6.3M | +309.5% | | Adjusted EBITDA | $53.4M | $34.9M | +53.0% | - Net sales growth was primarily due to $38.8 million in contributions from recent acquisitions[10] Durable Metal Solutions Durable Metal Solutions experienced a decline, with net sales down $34.8 million to $378.9 million, due to lower volumes and selling prices, impacting profitability Durable Metal Solutions Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $378.9M | $413.7M | -8.4% | | Gross Profit | $82.9M | $89.3M | -7.2% | | Operating Profit | $54.1M | $56.5M | -4.2% | | Adjusted EBITDA | $63.7M | $64.5M | -1.2% | - The decrease in net sales was primarily driven by lower volumes ($18.6 million) and lower average selling prices ($12.3 million)[12] Sustainable Fiber Solutions Sustainable Fiber Solutions achieved strong profit growth, with Adjusted EBITDA up $30.0 million to $79.5 million, driven by higher prices despite lower volumes Sustainable Fiber Solutions Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $599.1M | $580.1M | +3.3% | | Gross Profit | $132.7M | $93.7M | +41.6% | | Operating Profit | $25.9M | $18.9M | +37.0% | | Adjusted EBITDA | $79.5M | $49.5M | +60.6% | - Net sales increased primarily due to $29.0 million from higher published prices, partially offset by a $9.1 million impact from lower volumes[14] Integrated Solutions Integrated Solutions' performance declined, with net sales down $13.2 million to $78.4 million, primarily due to the Delta Petroleum Company divestiture Integrated Solutions Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $78.4M | $91.6M | -14.4% | | Gross Profit | $27.2M | $31.6M | -13.9% | | Operating Profit | $12.8M | $16.4M | -22.0% | | Adjusted EBITDA | $17.3M | $20.8M | -16.8% | - The decrease in net sales was primarily due to a $15.2 million impact from the Delta Divestiture[17] Financial Summaries & Outlook Tax Summary Greif's Q2 2025 income tax rate was 35.5% (adjusted 32.8%), with full-year fiscal 2025 projected between 27.0% and 32.0% - The income tax rate for Q2 2025 was 35.5%, and the tax rate excluding adjustments was 32.8%[20] - For fiscal year 2025, the expected tax rate (including and excluding adjustments) is projected to be between 27.0% and 32.0%[20] Dividend Summary Greif's Board declared quarterly cash dividends for Class A and Class B Common Stock, payable July 1, 2025, to shareholders of record June 17, 2025 Quarterly Dividend Declaration | Stock Class | Dividend per Share | | :--- | :--- | | Class A Common Stock | $0.54 | | Class B Common Stock | $0.81 | Company Outlook Despite industrial contraction, Greif raised its fiscal year 2025 low-end guidance for Adjusted EBITDA to $725 million and Adjusted Free Cash Flow to $280 million due to strong Q2 performance - The company has not identified any compelling demand inflection on the horizon after a multi-year period of industrial contraction[22] Raised Fiscal 2025 Low-End Guidance | Metric (in millions) | Guidance Estimate | | :--- | :--- | | Adjusted EBITDA | $725 | | Adjusted free cash flow | $280 | Financial Statements Condensed Consolidated Statements of Income Greif's Q2 2025 net sales increased to $1,385.7 million, with gross profit at $319.5 million and net income at $47.3 million ($0.82 per diluted Class A share) Income Statement Summary (Three Months Ended April 30) | (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $1,385.7 | $1,371.0 | | Gross profit | $319.5 | $270.1 | | Operating profit | $118.6 | $98.1 | | Net income attributable to Greif, Inc. | $47.3 | $44.4 | Condensed Consolidated Balance Sheets As of April 30, 2025, Greif's total assets were $6,754.4 million, with total liabilities of $4,448.2 million and long-term debt at $2,290.9 million Balance Sheet Summary | (in millions) | April 30, 2025 | October 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,754.4 | $1,549.4 | | Total assets | $6,754.4 | $6,647.6 | | Long-term debt | $2,290.9 | $2,626.2 | | Total liabilities | $4,448.2 | $4,400.2 | | Total equity | $2,175.0 | $2,117.5 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly increased to $136.4 million in Q2 2025, with cash and cash equivalents rising by $51.6 million during the quarter Cash Flow Summary (Three Months Ended April 30) | (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $136.4 | $87.5 | | Net cash used in investing activities | $(12.7) | $(609.0) | | Net cash (used in) provided by financing activities | $(116.2) | $548.8 | | Net increase in cash and cash equivalents | $51.6 | $16.7 | | Cash and cash equivalents, end of period | $252.7 | $196.0 | GAAP to Non-GAAP Reconciliations Consolidated Adjusted EBITDA Reconciliation Greif reconciled GAAP Net Income to Adjusted EBITDA, which reached $213.9 million in Q2 2025, up from $169.7 million in the prior year Adjusted EBITDA Reconciliation (Three Months Ended April 30) | (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $54.5 | $52.0 | | Plus: Interest, Taxes, D&A, etc. | $130.9 | $105.9 | | Plus: Restructuring, Impairment, and other charges | $28.5 | $5.8 | | Adjusted EBITDA | $213.9 | $169.7 | Net Income and EPS Before Adjustments Reconciliation Greif's Q2 2025 GAAP net income of $47.3 million ($0.82 per share) adjusted to $68.7 million ($1.19 per share) after excluding specific costs Adjusted Net Income & EPS Reconciliation (Three Months Ended April 30) | (in millions, except per share) | 2025 | 2024 | | :--- | :--- | :--- | | Net Income Attributable to Greif, Inc. (GAAP) | $47.3 | $44.4 | | Diluted Class A EPS (GAAP) | $0.82 | $0.77 | | Total Adjustments | $21.4 | $3.7 | | Net Income Attributable to Greif, Inc. (Adjusted) | $68.7 | $48.1 | | Diluted Class A EPS (Adjusted) | $1.19 | $0.83 | Adjusted Free Cash Flow Reconciliation Adjusted Free Cash Flow for Q2 2025 significantly increased to $109.6 million from $59.0 million in the prior year, driven by strong operating cash flow Adjusted Free Cash Flow Reconciliation (Three Months Ended April 30) | (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $136.4 | $87.5 | | Less: Purchases of properties, plants and equipment | $(30.0) | $(41.0) | | Free cash flow | $106.4 | $46.5 | | Plus: Specific cash costs (acquisition, ERP, etc.) | $3.2 | $12.5 | | Adjusted free cash flow | $109.6 | $59.0 | Net Debt and Leverage Ratio Reconciliation Greif's net debt decreased by $197.6 million to $2,522.5 million, improving the leverage ratio to 3.3x as of April 30, 2025 Net Debt Calculation | (in millions) | April 30, 2025 | April 30, 2024 | | :--- | :--- | :--- | | Total debt | $2,775.2 | $2,916.1 | | Less: Cash and cash equivalents | $(252.7) | $(196.0) | | Net debt | $2,522.5 | $2,720.1 | - The leverage ratio improved to 3.3x as of April 30, 2025, down from 3.4x as of April 30, 2024[49] Projected 2025 Guidance Reconciliation Greif projects fiscal 2025 low-end Adjusted Free Cash Flow guidance at $280.0 million, based on $431.0 million in operating cash flow Fiscal 2025 Low-End Adjusted Free Cash Flow Guidance Reconciliation | (in millions) | Estimate | | :--- | :--- | | Net cash provided by operating activities | $431.0 | | Less: Cash paid for purchases of properties, plants and equipment | $(171.0) | | Free cash flow | $260.0 | | Plus: Cash paid for acquisition, ERP, and other costs | $20.0 | | Adjusted free cash flow | $280.0 |