On June 7, 2024, Greif Inc (GEF, Financial) released its 8-K filing detailing the fiscal second quarter 2024 results. Greif Inc, a global leader in industrial packaging products and services, operates in three reportable business segments: Global Industrial Packaging, Paper Packaging and Services, and Land Management. The company serves customers across North and Latin America, Europe, the Middle East, Africa, and the Asia Pacific regions.
Financial Highlights
For the fiscal second quarter of 2024, Greif Inc reported a significant decline in net income, which decreased by 60.1% to $44.4 million, or $0.77 per diluted Class A share, compared to $111.2 million, or $1.90 per diluted Class A share, in the same period last year. Excluding adjustments, net income decreased by 53.9% to $47.9 million, or $0.82 per diluted Class A share.
Adjusted EBITDA also saw a decline, falling 25.7% to $169.9 million from $228.6 million in the prior year quarter. Net cash provided by operating activities decreased by $123.3 million to $87.5 million, and adjusted free cash flow decreased by $126.5 million to $59.0 million.
Segment Performance
| Segment | Net Sales (Q2 2024) | Net Sales (Q2 2023) | Gross Profit (Q2 2024) | Gross Profit (Q2 2023) |
|---|---|---|---|---|
| Global Industrial Packaging | $804.8 million | $748.2 million | $181.5 million | $177.9 million |
| Paper Packaging & Services | $560.8 million | $554.8 million | $86.0 million | $131.4 million |
| Land Management | $5.4 million | $5.9 million | $2.6 million | $2.5 million |
Strategic Actions and Announcements
Greif Inc completed the acquisition of Ipackchem on March 26, 2024, marking a significant milestone in its strategic objective to expand its global platform in high-performance small plastic containers. The company also announced an upcoming Investor Day in New York City on December 11, 2024.
“We are excited to present another quarter of solid progress on our Build to Last Strategy, including completing our Ipackchem acquisition and achieving multiple other milestones on our Build to Last missions,” stated Ole Rosgaard, Chief Executive Officer of Greif.
Challenges and Outlook
The company faced challenges in its Paper Packaging & Services segment, where gross profit decreased by $45.4 million to $86.0 million due to higher raw material, transportation, and manufacturing costs. Operating profit in this segment also decreased by $55.0 million to $12.6 million.
Greif Inc's leverage ratio increased to 3.44x from 2.53x sequentially, primarily due to the acquisition of Ipackchem. Total debt rose by $626.9 million to $2,916.1 million, and net debt increased by $589.4 million to $2,720.1 million.
Dividend and Tax Summary
On June 3, 2024, the Board of Directors declared quarterly cash dividends of $0.52 per share of Class A Common Stock and $0.78 per share of Class B Common Stock, payable on July 1, 2024. The company recorded an income tax rate of 24.9% for the quarter.
Conclusion
Despite the challenges, Greif Inc continues to focus on strategic growth and operational efficiency. The company's efforts to manage costs and improve demand alongside its customers are crucial for future value creation. Investors are encouraged to review the company's 8-K filing for a comprehensive understanding of its financial performance and strategic initiatives.
Explore the complete 8-K earnings release (here) from Greif Inc for further details.
