Greif, a packaging products company based in Delaware, Ohio, has released its fourth-quarter financial results for 2020.
The company says it has achieved a net income of $44.4 million, or 74 cents per diluted Class A share, which decreased compared with a net income of $65 million, or $1.09 per diluted Class A share, in the same time frame in 2019. Net income, excluding the impact of adjustments, were $46.4 million, or 78 cents per diluted Class A share, down from $73.4 million, or $1.24 per diluted Class A share. Greif reports that its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was at $154.5 million in the fourth-quarter period.
Net cash provided by operating activities increased by $5 million to $200.4 million in the fourth quarter of 2020. Adjusted free cash flow increased to $173.9 million, the company reports in a news release on its latest earnings results.
Within Greif’s Paper Packaging & Services division, net sales decreased by $32.8 million to $502.3 million in the fourth quarter of the year. The company says this is due to $58 million of prior-year net sales, attributable to the divested Consumer Packaging Group business as well as lower published containerboard and boxboard prices, partially offset by higher volumes.
That segment also experienced decreased gross profit in the fourth quarter, down $29.7 million to $98.8 million compared with 2019. The company says its change in gross profit was primarily due to the same factors that impacted net sales as well as higher old corrugated container (OCC) input costs, partially offset by lower manufacturing costs.
Paper Packaging & Services operating profit also decreased by $25 million to $30.7 million in the fourth quarter compared with the same time frame in 2019. Adjusted EBITDA decreased by $31.3 million to $77.4 million primarily due to the same factors that impacted gross profit and the segment receiving a greater portion of allocated corporate costs, partially offset by a reduction in the segment’s selling, general and administrative expense that was, in part, attributable to synergy realizations.
“Looking ahead the business sees continued strong demand and all of our special product portfolio has record backlogs,” said Pete Watson, president and CEO of Greif, during the company’s earnings presentation Dec. 10. “We assume OCC will average $69 a ton in fiscal quarter one. In our tubing core business fourth-quarter volumes are roughly flat to the prior year quarter on a per day basis. But we did show sequential improvement over the last three months. We continue to see strong demand in film and construction in markets and weaknesses in textiles.”
Fiscal 2020 overview
“Fiscal 2020 was unlike any year we’ve ever experienced, and throughout our colleagues’ dedication to our business and our customers was extraordinary,” Watson said in the earnings presentation regarding its fiscal year. “We made notable progress across all of our strategic priorities in fiscal 2020, starting with customer service, both our Customer Satisfaction Index scores and our most recent Net Promoter Score survey, improved versus the prior year we achieved all-time best scores. We remain laser focused on controlling those areas within our control, and that safety, customer service excellence and disciplined operational execution. And this focus builds additional momentum for our team.”
Watson said Caraustar’s integration into Greif “remains well on track,” as well. He said, “Through fiscal year end 2020, we have captured roughly $63 million in identified synergies since announcing the acquisition, and we still expect to achieve synergies of at least $70 million over 36 months from deal close. The business continues to demonstrate strong strategic fit and robust cash generation in line with the acquisition strategic rationale.”
For its complete 2020 fiscal year, Greif says it achieved a net income of $108.8 million, or $1.83 per diluted Class A share, which is down compared with a net income of $171 million, or $2.89 per diluted Class A share, in fiscal 2019. Net income, excluding the impact of adjustments, was at $190.9 million, or $3.22 per diluted Class A share, in the 2020 fiscal year, which is down compared with $234 million, or $3.96 per diluted Class A share, in 2019. Adjusted EBITDA decreased by $16.3 million to $642.6 million this year compared with 2019.
Additionally, Greif says it reduced its net debt by $293.5 million since Oct. 31, 2019, and paid $104.3 million in dividends to stockholders.
“I am very proud of the commitment displayed by the Greif team to adapt and manage the challenges presented by the COVID-19 pandemic this past year,” Watson adds. “Through our focus on customer service excellence and disciplined operational execution, the team delivered solid financial results, strong cash flow and significant debt reduction in a challenging operating environment. I am particularly pleased with our team's results in reducing working capital, which created a strong source of cash in the fiscal fourth quarter that helped drive our fiscal 2020 adjusted free cash flow well higher than our previously announced forecast.
“Looking ahead, while downstream industries are gradually ramping back up, there remains lingering uncertainty in the global economy. We are committed to managing those areas within our control to navigate successfully through these uncertainties. Greif is well positioned to benefit as the economy further recovers.”