Greif reports fourth quarter and fiscal 2016 results, provides fiscal
2017 guidance
Delaware, ohio--(business wire)--greif, inc. (nyse: gef, gef.b), a world leader in industrial packaging products and services, announced fourth quarter and fiscal 2016 results. pete watson, president and chief executive officer, stated “i am pleased with greif’s solid fourth quarter results, which conclude an improved fiscal 2016 for our company. we increased class a earnings before special items per share1 by 11.9 percent, more than doubled free cash flow2 to $200.9 million and returned $98.7 million in dividends to our shareholders, despite the effects of a tepid global industrial economy. our performance benefited from improved customer service, stronger operating fundamentals and systematic fiscal discipline. our plans for 2017 include furthering our commitment to customer service, continuing to improve our underlying business and achieving our 2017 run rate commitments. this will generate greater value for our customers and shareholders." fourth quarter highlights include: net income of $8.5 million or $0.14 per diluted class a share compared to net income of $12.4 million or $0.21 per diluted class a share for the fourth quarter of 2015. net income, excluding the impact of special items, of $38.5 million or $0.65 per diluted class a share compared to net income, excluding the impact of special items, of $44.7 million or $0.76 per diluted class a share for the fourth quarter of 2015. the net income for the fourth quarter of 2016 was significantly impacted by the changes in income tax expense as described below. net sales decreased $0.9 million to $867.6 million compared to $868.5 million for the fourth quarter of 2015. net sales, after adjusting for the effect of divestitures for both quarters and currency translation for the fourth quarter of 20163, increased 5.3 percent compared to the fourth quarter 2015. gross profit improved to $183.4 million compared to $168.0 million for the fourth quarter of 2015. gross profit margin improved to 21.1 percent from 19.3 percent for the fourth quarter of 2015. operating profit improved $21.5 million and operating profit before special items improved $15.0 million from the fourth quarter of 2015. operating profit margin before special items improved to 10.0 percent compared to 8.3 percent for the fourth quarter of 2015. cash provided by operating activities increased $10.1 million compared to the fourth quarter of 2015. free cash flow improved $9.0 million compared to the fourth quarter of 2015. income tax expense for the fourth quarter of 2016 increased to $28.3 million, or 81.3 percent, from $2.6 million, or 23.0 percent, for the fourth quarter 2015, due primarily to the impact of discrete losses in jurisdictions for which there is minimal tax benefit, adjustments to uncertain tax position estimates, withholding tax expense on fourth quarter transactions and corrections identified through enhanced control procedures executed during the quarter. in addition, the fourth quarter of 2015 tax expense was positively impacted by discrete transactions which resulted in one-time tax benefits. fiscal year highlights include: net income of $74.9 million or $1.28 per diluted class a share compared to net income of $71.9 million or $1.23 per diluted class a share for fiscal year 2015. net income, excluding the impact of special items, of $143.5 million or $2.44 per diluted class a share compared to net income, excluding the impact of special items, of $127.7 million or $2.18 per diluted class a share for fiscal year 2015. net sales decreased $293.1 million to $3,323.6 million compared to $3,616.7 million for fiscal year 2015. net sales, after adjusting for the effect of divestitures for both years and currency translation for fiscal year 2016, were flat compared to fiscal year 2015. gross profit improved to $684.9 million compared to $669.8 million for fiscal year 2015. gross profit margin improved to 20.6 percent compared to 18.5 percent for fiscal year 2015. operating profit improved $32.8 million and operating profit before special items improved $42.1 million from fiscal year 2015. operating profit margin before special items improved to 9.3 percent compared to 7.4 percent for fiscal year 2015. cash provided by operating activities increased $94.7 million compared to fiscal year 2015. free cash flow improved $130.4 million compared to fiscal year 2015. long-term debt has decreased $172.3 million since the previous year-end. income tax expense for the year was $66.5 million or 47.1 percent. the increase in the tax rate from the forecasted range of 35 - 38 percent was due primarily to the same factors impacting the quarterly rate. __________ note: a reconciliation of the differences between all non-gaap financial measures used in this release with the most directly comparable gaap financial measures is included in the financial schedules that are a part of this release. these non-gaap financial measures are intended to supplement and should be read together with our financial results. they should not be considered an alternative or substitute for, and should not be considered superior to, our reported financial results. accordingly, users of this financial information should not place undue reliance on these non-gaap financial measures. company outlook our 2017 fiscal year guidance is set forth below. note: 2017 gaap class a earnings per share guidance is not provided in this release due to the potential for one or more of the following, the timing and magnitude of which we are unable to reliably forecast: gains or losses on the disposal of businesses, timberland or properties, plants and equipment, net, non-cash asset impairment charges due to unanticipated changes in the business, restructuring-related activities or acquisition costs, and the income tax effects of these items and other income tax-related events. no reconciliation of the fiscal year 2017 class a earnings per share guidance, a non-gaap financial measure which excludes gains and losses on the disposal of businesses, timberland and property, plant and equipment, acquisition costs and restructuring and impairment charges is included in this release because, due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible, we are unable to quantify certain amounts that would be required to be included in the most directly comparable gaap financial measure without unreasonable efforts. segment results net sales are impacted primarily by the volume of primary products sold, selling prices, product mix and the impact of changes in foreign currencies against the u.s. dollar. the table below shows the percentage impact of each of these items on net sales for our primary products for the fourth quarter of 2016 as compared to the fourth quarter of 2015 for the business segments with manufacturing operations: net sales impact - primary products: rigid industrialpackaging &services * paper packaging &services* flexible products& services * rigid industrial packaging & services net sales increased $1.8 million to $602.9 million for the fourth quarter of 2016 compared to $601.1 million for the fourth quarter of 2015. net sales, after adjusting for the effect of divestitures for both quarters and currency translation for the fourth quarter of 2016 increased $42.0 million to $613.6 million for the fourth quarter 2016 from $571.6 million for the fourth quarter 2015 due primarily to the impact of strategic volume and pricing decisions. gross profit increased to $130.9 million (21.7 percent) for the fourth quarter of 2016 compared to $112.3 million (18.7 percent) for the fourth quarter of 2015 due to the same factors impacting net sales and the divestiture of select non-core and underperforming assets. operating profit was $30.5 million for the fourth quarter of 2016 compared to operating profit of $10.9 million for the fourth quarter of 2015. operating profit before special items and excluding the impact of divestitures increased to $60.3 million for the fourth quarter of 2016 from $41.8 million for the fourth quarter of 2015, due primarily to the same factors impacting gross profit. paper packaging & services net sales increased $9.2 million to $189.0 million for the fourth quarter of 2016 compared with $179.8 million for the fourth quarter of 2015. the increase was primarily due to increases in volumes offset by reductions in the published containerboard index prices that occurred during 2016. gross profit was $39.0 million (20.6 percent) for the fourth quarter of 2016 compared to $46.5 million (25.9 percent) for the fourth quarter of 2015. the reduction in gross profit margin was due primarily to increased input costs, primarily old corrugated container costs, as well as reductions in published containerboard index prices. operating profit was $24.7 million for the fourth quarter of 2016 compared with $32.6 million for the fourth quarter of 2015. the reduction was due to the same factors impacting gross profit. flexible products & services net sales decreased $4.2 million to $69.1 million for the fourth quarter of 2016 compared with $73.3 million for the fourth quarter of 2015. excluding the impact of divestitures,4 sales decreased $1.8 million to $69.1 million for the fourth quarter of 2016 from $70.9 million for the fourth quarter of 2015, due primarily to the negative impact of currency translation. gross profit was $11.7 million (16.9 percent) for the fourth quarter 2016 compared to $6.9 million (9.4 percent) for the fourth quarter 2015. the margin improvement was due primarily to reduced fixed costs and the impact of strategic volume and pricing decisions throughout 2016. operating loss was $3.6 million for the fourth quarter of 2016 compared to an operating loss of $12.8 million for the fourth quarter of 2015. operating profit before special items was $0.1 million for the fourth quarter of 2016 compared to an operating loss of $5.3 million for the fourth quarter of 2015. the improvement in the operating profit before special items was primarily due to the same factors impacting gross profit. land management net sales decreased $7.7 million to $6.6 million for the fourth quarter of 2016 compared to $14.3 million for the fourth quarter of 2015. the decrease in net sales was due to the sale of 5,200 acres of development properties in canada during the fourth quarter of 2015. operating profit was $2.0 million for the fourth quarter of 2016 compared to $1.4 million for the fourth quarter of 2015. __________ dividend summary on december 6, 2016, the board of directors declared quarterly cash dividends of $0.42 per share of class a common stock and $0.62 per share of class b common stock. dividends are payable on january 1, 2017, to stockholders of record at the close of business on december 19, 2016. unaudited (dollars in millions, except per share amounts) selected financial highlights diluted class a earnings per share attributable to greif, inc. before special items $ 0.65 $ 0.76 $ 2.44 $ 2.18 special items note: other income is not included in operating profit, therefore, the impact of venezuela devaluation on other income is not applicable to operating profit before special items, but is applicable to ebitda before special items. __________ conference call the company will host a conference call to discuss the fourth quarter of 2016 results on december 8, 2016, at 10:00 a.m. eastern time (et). to participate, domestic callers should call 877-201-0168. the greif id is 18972823. the number for international callers is 1-647-788-4901. phone lines will open at 9:30 a.m. et. the conference call will also be available through a live webcast, including slides, which can be accessed at http://investor.greif.com by clicking on the events and presentations tab and searching under the events calendar. a replay of the conference call will be available on the company’s website approximately two hours following the call. about greif greif is a global leader in industrial packaging products and services and is pursuing its vision to become the world’s best performing customer service company in industrial packaging. the company produces steel, plastic, fibre, flexible, corrugated, and reconditioned containers, intermediate bulk containers, containerboard and packaging accessories, and provides filling, packaging and industrial packaging reconditioning services for a wide range of industries. greif also manages timber properties in the southeastern united states. the company is strategically positioned in over 45 countries to serve global as well as regional customers. additional information is on the company’s website at www.greif.com. forward-looking statements this release contains forward-looking statements within the meaning of the private securities litigation reform act of 1995. the words “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “aspiration,” “objective,” “project,” “believe,” “continue,” “on track” or “target” or the negative thereof and similar expressions, among others, identify forward-looking statements. all forward-looking statements are based on assumptions, expectations and other information currently available to management. such forward-looking statements are subject to certain risks and uncertainties that could cause the company’s actual results to differ materially from those forecasted, projected or anticipated, whether expressed or implied. the most significant of these risks and uncertainties are described in part i of the company’s annual report on form 10-k for the fiscal year ended october 31, 2016. the company undertakes no obligation to update or revise any forward-looking statements. although the company believes that the expectations reflected in forward-looking statements have a reasonable basis, the company can give no assurance that these expectations will prove to be correct. forward-looking statements are subject to risks and uncertainties that could cause the company’s actual results to differ materially from those forecasted, projected or anticipated, whether expressed in or implied by the statements. such risks and uncertainties that might cause a difference include, but are not limited to, the following: (i) historically, our business has been sensitive to changes in general economic or business conditions, (ii) our operations subject us to currency exchange and political risks that could adversely affect our results of operations, (iii) the current and future challenging global economy and disruption and volatility of the financial and credit markets may adversely affect our business, (iv) the continuing consolidation of our customer base and suppliers may intensify pricing pressure, (v) we operate in highly competitive industries, (vi) our business is sensitive to changes in industry demands, (vii) raw material and energy price fluctuations and shortages may adversely impact our manufacturing operations and costs, (viii) we may encounter difficulties arising from acquisitions, (ix) we may incur additional restructuring costs and there is no guarantee that our efforts to reduce costs will be successful, (x) tax legislation initiatives or challenges to our tax positions may adversely impact our results or condition, (xi) full realization of our deferred tax assets may be affected by a number of factors, (xii) several operations are conducted by joint ventures that we cannot operate solely for our benefit, (xiii) our ability to attract, develop and retain talented and qualified employees, managers and executives is critical to our success, (xiv) our business may be adversely impacted by work stoppages and other labor relations matters, (xv) our pension plans are underfunded and will require future cash contributions, and our required future cash contributions could be higher than we expect, each of which could have a material adverse effect on our financial condition and liquidity, (xvi) we may be subject to losses that might not be covered in whole or in part by existing insurance reserves or insurance coverage, (xvii) our business depends on the uninterrupted operations of our facilities, systems and business functions, including our information technology and other business systems, (xviii) a security breach of customer, employee, supplier or company information may have a material adverse effect on our business, financial condition and results of operations, (xix) legislation/regulation related to environmental and health and safety matters and corporate social responsibility could negatively impact our operations and financial performance, (xx) product liability claims and other legal proceedings could adversely affect our operations and financial performance, (xxi) we may incur fines or penalties, damage to our reputation or other adverse consequences if our employees, agents or business partners violate, or are alleged to have violated, anti-bribery, competition or other laws, (xxii) changing climate, climate change regulations and greenhouse gas effects may adversely affect our operations and financial performance, (xxiii) the frequency and volume of our timber and timberland sales will impact our financial performance, (xxiv) changes in u.s. generally accepted accounting principles and sec rules and regulations could materially impact our reported results, (xxv) if the company fails to maintain an effective system of internal control, the company may not be able to accurately report financial results or prevent fraud, and (xxvi) the company has a significant amount of goodwill and long-lived assets which, if impaired in the future, would adversely impact our results of operations. changes in business results may impact our book tax rates. the risks described above are not all-inclusive, and given these and other possible risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. for a detailed discussion of the most significant risks and uncertainties that could cause our actual results to differ materially from those forecasted, projected or anticipated, see “risk factors” in part i, item 1a of our most recently filed form 10-k and our other filings with the securities and exchange commission. all forward-looking statements made in this news release are expressly qualified in their entirety by reference to such risk factors. except to the limited extent required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. unaudited (dollars and shares in millions, except per share amounts) unaudited (dollars in millions) (unaudited) (dollars in millions) unaudited (dollars in millions) __________ unaudited (dollars in millions) europe, middle east and africa 302.5 307.7 1,208.4 1,287.2 asia pacific and other americas 133.3 142.2 504.4 641.2 total net sales $ 867.6 $ 868.5 $ 3,323.6 $ 3,616.7 unaudited (dollars in millions) consolidated ebitda7 unaudited (dollars in millions) $ 53.6 $ 32.1 $ 225.6 $ 192.8 __________ segment ebitda8 unaudited (dollars in millions) __________ free cash flow9 unaudited (dollars in millions) free cash flow from venezuela operations10 free cash flow from venezuela operations __________ free cash flow from venezuela operations is defined as net cash provided by (used in) venezuela operating activities less cash paid for venezuela capital expenditures. segment operating profit (loss) before special items12 unaudited (dollars in millions) paper packaging & services __________ operating profit (loss) before special items is defined as operating profit (loss), plus restructuring charges plus acquisition-related costs, plus non-cash impairment charges, less timberland gains, less (gain) loss on disposal of properties, plants, equipment and businesses, net, plus the impact of venezuela devaluation of inventory on cost of products sold. unaudited (dollars in millions, except for per share amounts) all special items are net of tax and noncontrolling interests unaudited (dollars in millions) impact ofdivestitures excluding theimpact ofdivestitures impact ofdivestitures excluding theimpact of divestitures flexible products & services flexible products & services flexible products & services flexible products & services __________ unaudited (dollars in millions) impact ofdivestitures excluding theimpact of divestitures 2015 impact ofdivestitures excluding theimpact of divestitures flexible products & services flexible products & services flexible products & services flexible products & services note: the 2015 acquisitions were completed at the beginning of the fiscal year and are not adjusted because they are fully reflected in both periods. __________ unaudited (dollars in millions) increase(decrease) innet sales ($) increase(decrease) innet sales (%) increase(decrease) innet sales ($) increase(decrease) innet sales (%) unaudited (dollars in millions) increase innet sales ($) increase(decrease) innet sales ($) increase(decrease) innet sales (%)
