GREIF, INC. (Exact name of registrant as specified in its charter) FORM 10-Q
Greif, Inc. (GEF) reported its quarterly financial results for the three and nine months ended July 31, 2024. The company’s net sales increased by 10.3% to $1.34 billion, driven by growth in its Packaging and Paperboard segments. Net income rose to $43.4 million, or $0.63 per diluted share, compared to $34.1 million, or $0.49 per diluted share, in the same period last year. The company’s gross profit margin expanded by 130 basis points to 23.1%, while its operating margin increased by 140 basis points to 7.4%. As of July 31, 2024, Greif had cash and cash equivalents of $143.4 million and total debt of $1.23 billion. The company’s financial performance was driven by its strategic initiatives, including the expansion of its packaging and paperboard products, as well as its efforts to improve operational efficiency and reduce costs.
Greif, Inc. Q3 2024 Financial Report Summary and Analysis
Overview of the Company’s Financial Performance
Greif, Inc. is a leading global producer of industrial packaging products and services, with three reportable business segments: Global Industrial Packaging, Paper Packaging & Services, and Land Management. The company reported strong financial results for the third quarter and first nine months of fiscal year 2024, with increases in net sales, operating profit, and Adjusted EBITDA compared to the prior year period.
Revenue and Profit Trends
Net sales for the third quarter of 2024 were $1,454.2 million, up 9.3% from $1,330.3 million in the prior year quarter. This increase was primarily due to higher average selling prices and higher volumes across the Global Industrial Packaging and Paper Packaging & Services segments, as well as contributions from recent acquisitions.
Gross profit for the third quarter of 2024 was $290.4 million, down 5.4% from $307.0 million in the prior year quarter. The decrease was primarily due to higher raw material, transportation, and manufacturing costs, partially offset by the factors that drove the increase in net sales.
Operating profit for the third quarter of 2024 was $171.0 million, up 9.9% from $155.6 million in the prior year quarter. The increase was primarily due to the $46.1 million gain from the divestiture of Delta Petroleum Company, Inc., partially offset by higher SG&A expenses.
Adjusted EBITDA for the third quarter of 2024 was $193.7 million, down 14.5% from $226.5 million in the prior year quarter. The decrease was primarily due to higher SG&A expenses, partially offset by the factors that drove the increase in gross profit.
Strengths and Weaknesses
Strengths:
- Diversified product portfolio and global footprint in the industrial packaging market
- Successful execution of the Greif Business System to drive operational efficiency
- Ability to pass through raw material cost increases through higher selling prices
- Successful acquisitions and divestitures to enhance the business portfolio
Weaknesses:
- Exposure to volatility in raw material, energy, and transportation costs
- Competitive pressures in certain product markets
- Integration challenges with recent acquisitions
Outlook and Future Prospects
Greif expects the mixed demand trends experienced during the third quarter to continue through the end of the fiscal year. While volumes have improved on a year-over-year basis, the company believes that customer sentiment remains mixed and end market demand choppy depending on the region and product group.
The company anticipates costs for key raw materials, as well as labor, transportation, and utilities, to be relatively stable through the rest of the year. Greif remains focused on executing its strategic initiatives, including further integration of recent acquisitions, to drive long-term growth and profitability.
