Greif(US:GEF)2021-09-01 16:00Part I. Financial Information Item 1. Financial Statements This section presents Greif, Inc.'s unaudited condensed consolidated financial statements for the three and nine months ended July 31, 2021, and 2020, including income, comprehensive income, balance sheets, cash flows, and changes in shareholders' equity, with accompanying notes Condensed Consolidated Statements of Income The company reported significant year-over-year growth in net sales and profitability for both the third quarter and the first nine months of fiscal 2021, with net income attributable to Greif, Inc. increasing to $113.0 million and $286.2 million respectively Consolidated Income Statement Highlights (in millions, except per share data) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,490.8 | $1,083.0 | $3,977.9 | $3,353.7 | | Gross Profit | $318.8 | $219.7 | $796.9 | $683.0 | | Operating Profit | $173.1 | $61.9 | $443.7 | $213.1 | | Net Income to Greif, Inc. | $113.0 | $20.7 | $286.2 | $64.4 | | Diluted EPS (Class A) | $1.89 | $0.35 | $4.80 | $1.09 | Condensed Consolidated Balance Sheets The balance sheet as of July 31, 2021, shows an increase in total assets to $5.72 billion from $5.51 billion at October 31, 2020, driven by higher trade accounts receivable and inventories, while total long-term debt decreased, contributing to a stronger equity position Key Balance Sheet Items (in millions) | Account | July 31, 2021 | October 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $1,566.9 | $1,302.8 | | Total Assets | $5,723.6 | $5,510.9 | | Total Current Liabilities | $1,241.7 | $1,000.1 | | Long-term Debt | $2,089.7 | $2,335.5 | | Total Shareholders' Equity | $1,507.5 | $1,200.7 | Condensed Consolidated Statements of Cash Flows For the nine months ended July 31, 2021, net cash provided by operating activities was $258.7 million, comparable to the prior year, with investing activities providing $86.2 million primarily from timberland sales, and financing activities using $354.1 million mainly for debt repayment and dividends Cash Flow Summary for Nine Months Ended July 31 (in millions) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $258.7 | $254.3 | | Net Cash from Investing Activities | $86.2 | $(14.8) | | Net Cash from Financing Activities | $(354.1) | $(225.6) | | Net (Decrease) in Cash | $(6.1) | $21.2 | Notes to Condensed Consolidated Financial Statements This section details accounting policies and specific financial items, including changes in reportable segments, restructuring charges, long-term debt composition, financial instruments, segment performance, and the significant gain from timberland disposal - Effective in the first quarter of 2021, the company combined its Rigid Industrial Packaging & Services and Flexible Products & Services segments into a single reportable segment named Global Industrial Packaging2287 - Restructuring charges of $18.8 million were recorded in the first nine months of 2021, down from $26.8 million in the prior-year period, focusing on optimizing the Paper Packaging segment and rationalizing the Global Industrial Packaging segment2527 - On July 14, 2021, the company paid in full its €200.0 million 7.375% Senior Notes due 2021 using proceeds from a new $225.0 million Incremental Term A-3 Loan3235 - In the second quarter of 2021, the company sold approximately 69,200 acres of Alabama timberland for $145.1 million in cash, resulting in a pre-tax gain of $95.7 million, with proceeds used for debt repayment90 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for the third quarter and first nine months of 2021, highlighting strong performance driven by higher volumes and prices across key segments, offsetting increased raw material and transportation costs, and detailing the new segment structure, financial results by segment, balance sheet changes, and liquidity and capital resources Third Quarter Results of Operations Third quarter 2021 results showed substantial improvement over the prior year, with net sales growing 37.7% to $1.49 billion and operating profit nearly tripling to $173.1 million, driven by strong performance in both the Global Industrial Packaging and Paper Packaging & Services segments Q3 2021 vs Q3 2020 Performance (in millions) | Metric | Q3 2021 | Q3 2020 | Change | | :--- | :--- | :--- | :--- | | Total Net Sales | $1,490.8 | $1,083.0 | +37.7% | | Total Operating Profit | $173.1 | $61.9 | +179.6% | | Total Adjusted EBITDA | $237.8 | $159.4 | +49.2% | - Management anticipates customer demand trends from Q3 to continue into Q4, with supply markets for steel, resin, and old corrugated containers (OCC) expected to remain tight, and OCC prices likely to continue increasing118 Year-to-Date Results of Operations For the first nine months of 2021, net sales increased by 18.6% to $3.98 billion, operating profit more than doubled to $443.7 million significantly boosted by a $95.7 million gain on timberland sale, and Adjusted EBITDA grew 13.3% to $552.9 million Nine Months 2021 vs 2020 Performance (in millions) | Metric | 9 Months 2021 | 9 Months 2020 | Change | | :--- | :--- | :--- | :--- | | Total Net Sales | $3,977.9 | $3,353.7 | +18.6% | | Total Operating Profit | $443.7 | $213.1 | +108.2% | | Total Adjusted EBITDA | $552.9 | $488.1 | +13.3% | - The Global Industrial Packaging segment's Adjusted EBITDA increased by $81.7 million year-to-date, driven by higher volumes and prices, while the Paper Packaging & Services segment's Adjusted EBITDA decreased by $14.7 million due to higher input and transportation costs offsetting price and volume gains157160 Liquidity and Capital Resources The company maintains liquidity through operating cash flows and various credit facilities, with total long-term debt, net of current portion and financing costs, at $2.09 billion as of July 31, 2021, a reduction from $2.34 billion at October 31, 2020, and $738.5 million of available borrowing capacity under its revolving credit facility - Primary sources of liquidity are operating cash flow, senior secured credit facilities, senior notes, and trade accounts receivable credit facilities175 Long-Term Debt Summary (in millions) | Category | July 31, 2021 | October 31, 2020 | | :--- | :--- | :--- | | 2019 Credit Agreement - Term Loans | $1,277.3 | $1,429.8 | | Senior Notes due 2027 | $495.7 | $495.1 | | Accounts receivable credit facilities | $386.4 | $310.0 | | Total Long-term debt, net | $2,089.7 | $2,335.5 | - As of July 31, 2021, the company had $738.5 million of available borrowing capacity under its $800.0 million secured revolving credit facility182 Quantitative and Qualitative Disclosures About Market Risk The company reports no significant changes in its quantitative and qualitative disclosures about market risk from those presented in its Annual Report on Form 10-K for the fiscal year ended October 31, 2020 - There have been no significant changes in market risk disclosures since the 2020 Form 10-K200 Controls and Procedures Management confirms no material changes in internal control over financial reporting during the most recent fiscal quarter and that disclosure controls and procedures were effective as of the end of the period - No material changes to internal control over financial reporting occurred during the quarter201 - The CEO and CFO concluded that disclosure controls and procedures were effective as of July 31, 2021202203 Part II. Other Information Item 1A. Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended October 31, 2020 - There have been no material changes in risk factors from those disclosed in the 2020 Form 10-K204 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported for the period205 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and an amendment agreement related to a receivables financing facility Signatures The report is duly signed on September 2, 2021, by Lawrence A. Hilsheimer, the Executive Vice President and Chief Financial Officer of Greif, Inc