Greif(US:GEF)2021-12-09 17:16Financial Data and Key Metrics Changes - Fiscal 2021 was an exceptional year with record financial results, including a 35% increase in net sales excluding foreign exchange impact compared to the prior year [24][25] - Adjusted Class A earnings per share more than doubled to $1.93 for Q4 and reached $5.60 for fiscal 2021, a 74% improvement year-over-year [25][26] - Fourth quarter adjusted EBITDA rose by $57 million, overcoming significant inflationary pressures and raw material costs [24][25] Business Line Data and Key Metrics Changes - Global industrial packaging business saw a nearly 3% sales increase year-over-year, with large plastic drums and intermediate bulk container volumes growing by over 18% and 10% respectively [15][18] - Paper Packaging's fourth quarter sales rose by approximately $120 million due to stronger volumes and higher containerboard prices, with adjusted EBITDA increasing by roughly $10 million [20][22] - Tube and core volumes increased by 7% per day compared to the prior year, indicating strong demand across key end markets [22] Market Data and Key Metrics Changes - The Americas region recorded strong mid-single-digit growth, with customers reporting solid order backlogs despite supply chain disruptions [17] - APAC region faced challenges due to strategic pricing actions and supply chain disruptions, leading to a 1.5% decline in global steel drum volume [16][19] - Demand for durables and e-commerce growth remained solid, with no slowdown anticipated in the near term [22] Company Strategy and Development Direction - The company aims to continue enhancing its sustainability performance and embedding ESG deeper into its business strategies [10][12] - Strategic planning is underway to determine the focus and extent of growth activities, leveraging a strong balance sheet for shareholder benefit [29][30] - The company anticipates spending between $150 million and $170 million in capital expenditures for fiscal 2022, targeting a growing dividend [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to benefit from ongoing strength in key end markets and operational execution [39][40] - The guidance for fiscal 2022 reflects anticipated lower profits in the GIP segment, offset by higher profitability in other areas, highlighting the benefits of a diversified portfolio [31][32] - Management acknowledged the challenges posed by inflation and supply chain disruptions but remains optimistic about the company's resilience [30][32] Other Important Information - The company successfully de-levered its balance sheet, repaying $261 million in total debts in Q4 2020 [28] - The transition of leadership from Peter Watson to Ole Rosgaard was highlighted, with confidence in the new CEO's ability to lead the company forward [40][41] Q&A Session Summary Question: Inventory Building and Market Conditions - Management noted that customers are not building inventory but adjusting stock levels due to supply chain issues, with solid order books reported [44][46] Question: Volume Growth Assumptions - For GIP, global steel drum volume is expected to grow low single digits, while the IBC business is projected to grow in the high to mid-teens [52] Question: Paper Volumes and Demand - The paper business is experiencing strong demand, with tube and core business growing mid- to high single digits, despite some supply chain disruptions [60][62] Question: Steel Pricing and Guidance - The company does not expect a significant drag from steel-related issues in 2022, with a stable steel cost environment anticipated [72][73] Question: Capital Allocation and Expenditure - The company will maintain a disciplined approach to capital allocation, focusing on deleveraging and strategic growth initiatives [91]