Greif reports first quarter 2015 results
Delaware, ohio--(business wire)--greif, inc. (nyse: gef, gef.b), a global leader in industrial packaging products and services, today reported first quarter 2015 net income attributable to the corporation totaling $30.1 million or $0.52 per diluted class a share on sales of $902.3 million compared with net income of $30.7 million or $0.53 per diluted class a share on sales of $1,001.5 million in the first quarter of 2014. after adjusting for the effect of dispositions, facility closures and currency fluctuations, sales for the quarter were flat compared to the first quarter of 2014. excluding the impact of special items1, earnings were $0.30 per diluted class a share compared to $0.46 per diluted class a share for the first quarter of 2014. david b. fischer, president and chief executive officer, stated, “net sales for the first quarter of 2015 excluding divestitures and foreign currency translation were similar to the same period last year. our results were also adversely impacted by product and geographic mix issues resulting in lower gross profit, a higher effective tax rate and lower results in the flexible packaging business compared to a year ago. we are aggressively executing transformation initiatives through portfolio optimization and specific opportunities in individual work streams. during the past few quarters we have taken actions to sell non-core businesses and continue to address operations that no longer fit our business portfolio. since the beginning of the first quarter 2015, we have announced the closing of four plants located primarily in north america, apac and europe and divested three businesses. we expect the benefits of these actions to make positive contributions to our results beginning in the second half of this year.” rigid industrial packaging & services net sales decreased 8.8 percent to $649.7 million for the first quarter of 2015 compared with $712.3 million for the first quarter of 2014. excluding the impact of divestitures and facility closures2, net sales decreased 6.4 percent to $648.9 million for the first quarter of 2015 compared with $692.9 million for the first quarter of 2014. the decrease in net sales was attributable to the negative impact of foreign currency translation. volumes were flat overall compared to the first quarter of 2014, with increases in north america and europe offset by a decrease in latin america. operating profit was $20.2 million for the first quarter of 2015 compared to $29.2 million for the first quarter of 2014. operating profit excluding special items and the impact of divestitures and facility closures was $21.8 million for the first quarter of 2015 versus $34.3 million for the first quarter of 2014. the decrease was primarily due to the negative impact of foreign currency translation, higher health care and pension costs and lower gross margins in europe and north america due to product mix. paper packaging net sales decreased 6.2 percent to $159.2 million for the first quarter of 2015 compared with $169.8 million for the first quarter of 2014. excluding the impact of divestitures and facility closures, net sales decreased 3.5 percent to $159.2 million for the first quarter of 2015 compared with $165.0 million for the first quarter of 2014. the decrease was attributable to lower volumes, primarily due to one less shipping day and softness in demand for containerboard toward the end of the quarter. operating profit was $28.1 million for the first quarter of 2015 compared with $30.0 million for the first quarter of 2014. operating profit before special items and excluding the impact of divestitures and facility closures was $28.2 million for the first quarter of 2015 compared with $29.0 million for the first quarter of 2014. the decrease was due to lower volumes for containerboard. flexible products & services net sales decreased 22.2 percent to $88.1 million for the first quarter of 2015 compared with $113.2 million for the first quarter of 2014. excluding the impact of divestitures and facility closures, net sales decreased 8.9 percent to $84.9 million compared with $93.2 million for the first quarter of 2014. the decrease was primarily attributable to the negative impact of foreign currency translation. operating loss was $8.8 million for the first quarter of 2015 versus operating profit of $0.8 million for the first quarter of 2014. operating loss before special items and excluding the impact of divestitures and facility closures was $8.8 million for the first quarter of 2015 versus $1.2 million for the first quarter of 2014. this increase in operating loss was due to several factors. we incurred higher freight costs to meet lead time demands of customers. we incurred an inventory write down adjustment in part due to the combination of rapidly decreasing resin prices and higher inventory levels from the carryover impact of the occupation of our hadimkoy facility as we transitioned back to full capacity. in addition, the higher costs of the move to an in-house labor force, prompted primarily by changes in the local regulatory environment, and the inefficiencies incurred as a result of this move, also contributed to the increase in the operating loss for this segment. land management net sales decreased 14.5 percent to $5.3 million for the first quarter of 2015 compared with $6.2 million for the first quarter of 2014. the decrease was due to lower timber sales as planned for the first quarter of 2015. timberland gains were $24.3 million and $8.4 million for the first quarter of 2015 and 2014, respectively, and are recorded as gains on disposal of properties, plants and equipment, net. operating profit was $25.9 million for the first quarter of 2015 compared with $11.4 million for the first quarter of 2014. this increase was due to $24.3 million of timberland gains in the first quarter of 2015 compared to $8.4 million of timberland gains in the first quarter of 2014. operating profit before special items was $1.2 million for the first quarter of 2015 compared with $1.6 million for the first quarter of 2014. the decrease was due to the same item impacting net sales for this segment. dividends on march 3, 2015, the board of directors declared quarterly cash dividends of $0.42 per share of class a common stock and $0.63 per share of class b common stock. dividends are payable on april 1, 2015, to stockholders of record at close of business on march 19, 2015. company outlook the company continues to anticipate the overall global economy to reflect a modest recovery in fiscal 2015, with positive aspects of the improving economy in the united states being offset by the negative trends in other regions, particularly in europe and latin america. we anticipate that foreign currency matters will continue to present challenges for the company, as the strengthening of the united states dollar against other currencies will continue to impact the company’s revenues and net income. in addition, an expected approximately two-week shutdown of the company’s riverville mill during the third quarter for the installation of upgrades will negatively impact our 2015 net income. we are continuing to execute restructuring plans and facility closures and pursuing the sale of select non-core assets as part of our overall strategic transformation, which are expected to result in significant impairment and restructuring charges in the remainder of 2015. sg&a cost savings actions are being implemented throughout 2015 and beyond. based on these factors, fiscal 2015 adjusted class a earnings per share remains in the range of $2.25 to $2.35, excluding gains and losses on the sales of businesses, timberland and property, plant and equipment, and acquisition related costs, as well as restructuring and impairment charges. selected financial highlights special items impact ofdivestituresand facilityclosures excluding theimpact ofdivestituresand facilityclosures 2015 impact ofdivestituresand facilityclosures excluding theimpact ofdivestituresand facilityclosures 2014 conference call the company will host a conference call to discuss the first quarter of 2015 results on march 5, 2015, at 10 a.m. eastern time (et). to participate, domestic callers should call 877-485-3107 and ask for the greif conference call. the number for international callers is +1 201-689-8427. phone lines will open at 9:50 a.m. et. the conference call will also be available through a live webcast, including slides, which can be accessed at www.greif.com in the investor center/conference calls. a replay of the conference call will be available on the company’s website approximately one hour following the call. about greif greif is a world leader in industrial packaging products and services. the company produces steel, plastic, fibre, flexible and corrugated containers and containerboard, and provides reconditioning, blending, filling and packaging services for a wide range of industries. greif also manages timber properties in north america. the company is strategically positioned in more than 50 countries to serve global as well as regional customers. additional information is on the company's website at www.greif.com. forward-looking statements all statements, other than statements of historical facts, included in this news release, including without limitation statements regarding our future financial position, business strategy, budgets, projected costs, goals and plans and objectives of management for future operations, are forward-looking statements within the meaning of section 27a of the securities act of 1933, as amended, and section 21e of the securities exchange act of 1934, as amended. forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “believe,” “continue,” “on track” or “target” or the negative thereof or variations thereon or similar terminology. all forward-looking statements made in this news release are based on information currently available to management. although we believe that the expectations reflected in forward-looking statements have a reasonable basis, we can give no assurance that these expectations will prove to be correct. forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those 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) we may be subject to losses that might not be covered in whole or in part by existing insurance reserves or insurance coverage, (xvi) our business depends on the uninterrupted operations of our facilities, systems and business functions, including our information technology and other business systems, (xvii) 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, (xviii) legislation/regulation related to environmental and health and safety matters and corporate social responsibility could negatively impact our operations and financial performance, (xix) product liability claims and other legal proceedings could adversely affect our operations and financial performance, (xx) 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, (xxi) changing climate, climate change regulations and greenhouse gas effects may adversely affect our operations and financial performance, (xxii) the frequency and volume of our timber and timberland sales will impact our financial performance, (xxiii) changes in u.s. generally accepted accounting principles and sec rules and regulations could materially impact our reported results, (xxiv) 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 (xxv) the company has a significant amount of goodwill, and 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 projected, 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. increase (decrease) in cash from changes in certain assets and liabilities and other january 31, ebitda 10: net income attributable to greif less: (gain) loss on disposal of properties, plants, equipment and businesses, net net income attributable to greif excluding special items less: (gain) loss on disposal of properties, plants, equipment and businesses, net 2015 (12) 2014 (12) see table contained herein entitled gaap to non-gaap reconciliation segment operating profit (loss) before special items for a reconciliation of each segment’s operation profit (loss) before special items.
