investor presentation july 2014 (9 8 14) (keybanc capital ... · leading product position strong...

September 2014

Investor Presentation

September 2014| 2

Safe HarborForward-Looking Statements

This presentation contains certain forward-looking information within the meaning of the PrivateSecurities Litigation Reform Act of 1995. The words “may,” “will,” “expect,” “intend,” “estimate,”“anticipate,” “aspiration,” “objective,” “project,” “believe,” “continue,” “on track” or “target” or the negativethereof and similar expressions, among others, identify forward-looking statements. All forward-lookingstatements are based on information currently available to management. Such forward-lookingstatements are subject to certain risks and uncertainties that could cause events and the Company’sactual results to differ materially from those expressed or implied. Please see the disclosure regardingforward-looking statements immediately preceding Part I of the Company’s Annual Report on Form 10-Kfor the fiscal year ended October 31, 2013. The company assumes no obligation to update any forward-looking statements.

Regulation G

This presentation includes certain non-GAAP financial measures like EBITDA and other measures thatexclude special items such as restructuring and other unusual charges and gains that are volatile fromperiod to period. Management of the company uses the non-GAAP measures to evaluate ongoingoperations and believes that these non-GAAP measures are useful to enable investors to performmeaningful comparisons of current and historical performance of the company. All non-GAAP data in thepresentation are indicated by footnotes. Tables showing the reconciliation between GAAP and non-GAAP measures are available at the end of this presentation and on the Greif website at www.greif.com.

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Overview

• Founded in 1877 as a packaging company

• Initial public offering in 1926

• Global leader in rigid industrial andflexible products packaging

• Over 240 facilities in more than 50 countries

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Diversified Business PlatformRolling twelve months ended July 31, 2014(Dollars in millions)

Rigid Industrial Packaging & Services

Sales $ 3,106Operating Profit $ 169

Flexible Products & Services

Sales $ 440Operating Profit $ (37)

Land Management

Sales $ 28Operating Profit $ 46

Paper Packaging

Serve diverse end markets such as chemicals, paints and pigments, food and beverage, petroleum, industrial coatings, agricultural, pharmaceutical, minerals and building products

Sales $ 4,422Operating Profit $ 302

Sales $ 848Operating Profit $ 124

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1. Continuing to emphasize safety in all facilities and work-related activities;

2. Making further progress on reducing operating working capital and increasing cash flow;

3. Addressing capacity utilization issues in Flexible Products & Services;

4. Increasing integration levels, capacity and product differentiation efforts in Paper Packaging;

5. Implementing more Greif Business System initiatives to improve performance; and

6. Restructuring selected geographies and assets that persist with unacceptable results

Divest Fix Protect Grow

2014 Priorities

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Most Comprehensive Industrial Packaging Products and Services Portfolio

Schutz

Mauser

#1 #1#2 #3 #1#1 #1

Global Presence Steel Plastic Fibre

Rigid Intermediate

Bulk Containers

Filling & Blending Closures

Reconditioned Rigid Industrial

Packaging Flexibles

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Greif, Inc. – Profile

Global industry leader

Diversification: markets, substrates, geography

Significant timberland holdings

Reasonable leverage profile and substantial liquidity

Net sales by Geographic Market (1)

Competitive AdvantagesOperating Profit

Net sales

(1) Twelve months ended July 31, 2014

$4,422

(Dollars in millions)

(1)

(1)

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Rigid Industrial Packaging & Services

Leading product position

Strong global footprint

Compelling value proposition

Strong customer relationships

Largest global drum reconditioner

Markets served

Competitive advantagesOperating Profit

Net sales



(1)

(1)

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Paper Packaging

Integrated containerboard network

Highly efficient sheet feeder footprint

Efficient Frontier strategy

Product differentiation and innovation

Automotive Building Products Food Packaging

Markets served


Net sales



(1)

(1)

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Flexible Products & Services

Leading global position in FIBC market

50/50 Polywoven joint venture

Greif Business System cost-savings opportunities

Markets served

Competitive advantagesOperating Profit(1)

Net sales(1)

(1) 2009 and 2010 reflects only information for the multiwall bag business in North America(2) Twelve months ended July 31, 2014


(2)

(2)

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Land Management


Net sales

(1) Twelve months ended July 31, 2014(2) Includes 10,295 acres in Canada

Book value $251 million at July 31, 2014

Total acres owned 261,645 Core timberland 225,205 Special use land 36,645(2)

Active harvesting and regeneration in U.S. to achieve sustainable long-term yields

Revenue growth opportunities

251,350 acres in U.S.

Alabama Louisiana Mississippi


(1)

(1)

10,345 acres in Canada

Ontario Quebec

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Financial Profile

(1) Working capital represents current assets less current liabilities. (2) Free cash flow is defined as cash provided by (used in) operating activities less capital expenditures and timberland purchases plus proceeds from sales of properties, plants , equipment, timberland and other assets.(3) Net debt represents long-term debt plus the current portion of long-term debt plus short-term borrowings less cash and cash equivalents.

Note: A reconciliation of the differences between all non-GAAP financial measures used in this presentation with the most directly comparable GAAP financial measures is included in the Appendix to this presentation.


2009 2010 2011 2012 2013 2014 2013Net sales 2,790$ 3,462$ 4,248$ 4,270$ 4,353$ 4,422$ 3,296$ 3,227$ Net income attributable to Greif, Inc. 105$ 202$ 175$ 122$ 147$ 114$ 78$ 111$ Working capital(1) 246$ 347$ 348$ 188$ 292$ 384$ 365$ 315$ Net cash provided by (used in) operating activities 267$ 178$ 172$ 473$ 250$ 248$ 117$ 119$ Free cash flow(2) 191$ 30$ 37$ 318$ 146$ 136$ 37$ 48$ Net debt(3) 646$ 920$ 1,391$ 1,185$ 1,203$ 1,259$ 1,259$ 1,221$

Twelve Months Ended 7/31/14

Nine MonthsEnded July 31,

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Analysis of Net IncomeUnaudited(Dollars in millions)

Three Months Ended July 31, Nine Months Ended July 31, 2014 2013 2014 2013

Net Income Attributable to Greif, Inc. $ 12.2 $ 46.7 $ 77.5 $ 110.5 Total Special Items, net of tax (11.8) (2.8) (5.6) (6.1)Non‐controlling interest attributable to Special Items 0.1 ‐ 0.9 ‐Total Special Items, net of tax and non‐controlling interest (11.7) (2.8) (4.7) (6.1)Net Income Attributable to Greif, Inc. before Special Items 23.9 49.5 82.2 116.6

Add: Weather, net of tax ‐ ‐ 7.3 ‐Add: Turkey Impact, net of tax and non‐controlling interest 0.8 ‐ 3.9 ‐Total $ 24.7 $ 49.5 $ 93.4 $ 116.6

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Fiscal 2014 Class A Earnings Guidance BridgeDollars per share

Prior Guidance New Guidance

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Free Cash Flow(1)

(1) Free Cash Flow is defined as net cash provided by operating activities less capital expenditures and timberland purchases plus proceeds from sales of properties,plants, equipment, businesses, timberland and other assets.


Dollars in millions

$191

$30 $37

$318

$146 $136

2009 2010 2011 2012 2013 2014(2)

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Total DebtDollars in millions

Total debt has declined by $128 million since January 31, 2014

Fiscal Year-end Quarter-end

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• Slow motion global economic recovery is anticipated to continue duringthe remainder of fiscal 2014

• Moderate sales volume improvement

• Slightly higher raw material costs in certain regions

• Specific actions will be implemented in the Flexible Products segmentduring the remainder of 2014

• Based on these factors, including anticipated gains from the sale ofselect non-core assets, fiscal 2014 Class A earnings per shareguidance is $1.98 to $2.08.

• This guidance excludes timberland gains of approximately $16.9million or $0.20 per Class A share and potential future impairmentcharges.

Company Outlook

APPENDIX

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Condensed Consolidated Statements of Income(Dollars in millions)

2009 2010 2011 2012 2013 2014 2013

Net sales 2,789.5$ 3,461.8$ 4,248.2$ 4,269.5$ 4,353.4$ 4,422.4$ 3,296.2$ 3,227.2$ Cost of products sold 2,293.6 2,760.5 3,449.9 3,489.9 3,520.8 3,589.3 2,689.1 2,620.6 Gross profit 495.9 701.3 798.3 779.6 832.6 833.1 607.1 606.6

Selling, general and administrative expenses 271.3 365.3 449.2 468.4 477.3 502.7 386.3 360.9 Restructuring charges 48.4 23.8 26.0 23.1 4.8 12.6 10.5 2.7 Timberland gains ‐ ‐ ‐ ‐ (17.5) (34.4) (16.9) ‐ Non‐cash asset impairment charges 18.2 2.9 9.0 12.9 34.0 45.1 15.6 4.5 (Gain) loss on disposal of properties, plants, equipment and bussinesses, net (34.4) (11.4) (16.1) (7.6) (5.6) 4.7 4.2 (6.1) Operating profit 192.4 320.7 330.2 282.8 339.6 302.4 207.4 244.6

Interest expense, net 53.6 65.5 76.0 89.9 83.8 83.1 61.5 62.2 Debt extinguishment charges 0.8 ‐ ‐ ‐ 1.3 ‐ ‐ 1.3 Other expense, net 7.1 7.1 14.1 7.5 10.8 10.4 7.5 7.9 Income before income tax expense and equity earnings of unconsolidated affil iates, net 130.9 248.1 240.1 185.4 243.7 208.9 138.4 173.2

Income tax expense 22.7 44.5 67.3 58.8 97.6 103.1 64.2 58.7 Equity earnings of unconsolidated affil iates, net of tax (0.4) 3.6 4.8 1.3 2.9 2.3 0.9 1.5 Net income 107.8 207.2 177.6 127.9 149.0 108.1 75.1 116.0 Net income attributable to noncontroll ing interests (3.2) (5.7) (2.9) (5.5) (1.7) 6.2 2.4 (5.5) Net income attributable to Greif, Inc. 104.6$ 201.5$ 174.7$ 122.4$ 147.3$ 114.3$ 77.5$ 110.5$



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Condensed Consolidated Balance Sheets(Dollars in millions)

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Condensed Consolidated Statements of Cash Flows(Dollars in millions)

2009 2010 2011 2012 2013 2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES:Net income 113.8$ 207.2$ 177.6$ 127.9$ 149.0$ 108.1$ 75.1$ 116.0$ Depreciation, depletion and amortization 102.7 116.0 144.3 154.8 156.9 158.8 119.8 117.9 Asset impairment 19.5 2.9 9.0 12.9 34.0 45.1 15.6 4.5 Other non‐cash adjustments to net income (46.4) (5.9) (17.6) 8.4 (16.2) (33.6) (19.5) (2.1) Working capital changes 109.6 (84.6) (10.7) 140.5 (76.0) (47.8) (81.4) (109.6) Increase (decrease) in cash from changes in certain

assets and l iabil ities and other (32.7) (57.5) (130.4) 28.8 2.6 17.8 7.2 (8.0) Net cash provided by operating activities 266.5 178.1 172.2 473.3 250.3 248.4 116.8 118.7

CASH FLOWS FROM INVESTING ACTIVITIES:Acquisitions of companies, net of cash acquired (90.8) (277.6) (344.9) ‐ ‐ (53.5) (53.5) ‐ Purchases of properties, plants, equipment and timber properties (125.7) (165.1) (165.8) (169.7) (145.4) (212.0) (149.7) (83.1) Proceeds from sale of properties, plants, equipment, businesses, timberland and other assets 50.3 17.3 31.0 13.9 41.5 99.7 70.2 12.0 Payments (proceeds) on notes receivable with related party, net ‐ ‐ (20.0) 2.0 3.2 1.9 1.3 2.6 Other (5.0) ‐ (0.7) ‐ ‐ ‐ ‐ ‐

Net cash used in investing activities (171.2) (425.4) (500.4) (153.8) (100.7) (163.9) (131.7) (68.5)

CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from (payments on) debt 40.9 330.8 462.9 (241.9) (12.9) 22.9 69.4 33.6 Dividends paid (88.0) (93.1) (97.8) (97.7) (98.3) (98.5) (73.8) (73.6) Cash paid for deferred purchase price related to acquisitio ‐ ‐ ‐ (14.3) (46.6) (46.6) ‐ ‐ Other (18.2) 6.4 (17.0) 1.7 (2.1) 7.7 7.6 (2.2)

Net cash provided by (used in) financing activities (65.3) 244.1 348.1 (352.2) (159.9) (114.5) 3.2 (42.2)

EFFECTS OF EXCHANGE RATES ON CASH 4.3 (1.7) 0.4 (3.1) (3.1) 0.1 (1.4) (4.6)

Net increase (decrease) in cash and cash equivalents 34.3$ (4.9)$ 20.3$ (35.8)$ (13.4)$ (29.9)$ (13.1)$ 3.4$



Note: 2009 amounts as originally reported

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GAAP to Non-GAAP ReconciliationFree Cash Flow(1)


(1) Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures and timberland purchases plus proceeds from sales of properties, plants, equipment, timberland and other assetsNote: 2009 amounts as originally reported

2009 2010 2011 2012 2013 2014 2013

Net cash provided by operating activities 266.5$ 178.1$ 172.2$ 473.3$ 250.3$ 248.4$ 116.8$ 118.7$ Less: Purchases of properties, plants, equipment and timber properties (125.7)$ (165.1)$ (165.8)$ (169.7)$ (145.4)$ (212.0)$ (149.7)$ (83.1)$ Plus: Proceeds from sales of properties, plants, equipment, businesses timberland and other assets 50.3 17.3 31.0 13.9 41.5 99.7 70.2 12.0

Free Cash Flow 191.1$ 30.3$ 37.4$ 317.5$ 146.4$ 136.1$ 37.3$ 47.6$



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GAAP to Non-GAAP ReconciliationNet Debt(1)


2009 2010 2011 2012 2013 July 31, 2014 July 31, 2013

Long Term Debt 721.1$ 953.1$ 1,371.4$ 1,175.3$ 1,207.2$ 1,228.9$ 1,240.8$ Plus: current portion of long‐term debt 17.5 12.5 12.5 25.0 10.0 17.5 10.0 Plus: short‐term borrowings 19.6 60.9 134.8 76.1 64.1 77.8 65.5 Less: cash and cash equivalents 111.9 107.0 127.3 91.5 78.1 65.0 94.9 Net Debt 646.3$ 919.5$ 1,391.4$ 1,184.9$ 1,203.2$ 1,259.2$ 1,221.4$

(1) Net debt represents long-term debt plus the current portion of long-term debt plus short-term borrowings less cash and cash equivalents

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GAAP to Non-GAAP ReconciliationWorking Capital(1)


(1) Working capital represents current assets less current liabilities

2009 2010 2011 2012 2013 July 31, 2014 July 31, 2013

Current Assets 833.5$ 1,134.5$ 1,283.2$ 1,055.3$ 1,094.0$ 1,234.6$ 1,134.3$ Less: current l iabil ities 587.4 787.9 935.6 867.3 801.7 869.8 818.9 Working Capital 246.1$ 346.6$ 347.6$ 188.0$ 292.3$ 364.8$ 315.4$

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Reconciliation of GAAP to Non-GAAP Net IncomeUnaudited(Dollars in millions)

investor presentation july 2014 (9 8 14) (keybanc capital ... · leading product position strong...

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