Greif sales declined in Q3 of 2020

Net sales were down in all of the packaging company’s business segments.

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During the third quarter of 2020, net sales were down in all business segments of Greif Inc., Delaware, Ohio, according to the packaging producer’s latest earnings report.

Overall, the company achieved net income of $20.7 million, or 35 cents per diluted Class A share, which is down compared with the $62.7 million, or $1.06 per diluted share, it achieved in the third quarter of 2019. Net income for the third quarter was at $50.1 million, or 85 cents per diluted Class A share, which is down from $74.7 million, or $1.26 per diluted Class A share, achieved in the third quarter of 2019. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) declined by $44.4 million in the third quarter compared with the same quarter last year to $159.4 million.

Compared with the third quarter of 2019, net cash provided by operating activities decreased by $6.5 million to $135 million in the third quarter. When comparing the same time periods, adjusted free cash flow decreased by $500,000 to $106.6 million.

However, Greif reports that total debt decreased by $240.9 million to about $2.64 billion in the third quarter when compared with the same quarter in 2019. Net debt decreased by $263.6 million to about $2.54 billion and decreased $70.8 million sequentially from the second quarter of 2020.

Net sales were down 13 percent in Greif’s Paper Packaging & Services business segment in the third quarter compared with the same time period in 2019. In the company’s third-quarter earnings presentation Aug. 27, it said lower year-over-year published containerboard and boxboard prices adversely affected net sales for this division. In addition, the division took about 10,000 tons of containerboard economic downtime in the start of the third quarter.

Adjusted EBITDA for Greif’s Paper Packaging & Services business segment was down about 35 percent in the third quarter compared with the same time frame in 2019. On the earnings call, the company said it attributes this decline to lower sales as well as higher old corrugated containers (OCC) costs and product mix. The lower EBITDA was partially offset by manufacturing and selling, general and administrative expense reduction.

“Our global Greif team executed well during the fiscal third quarter in the face of a challenging operating environment,” says Pete Watson, president and CEO of Greif. “Financial results were weaker as expected, dragged down by soft industrial conditions around much of our global portfolio and by a significant price/cost squeeze in our paper business.

“Despite these external challenges to profit, we generated free cash flow essentially flat to the prior year and paid down debt through stronger operating discipline and better working capital performance. Given our strong execution driving cost reduction and operating efficiencies, combined with increased near-term visibility of the COVID-19 pandemic volume impacts to the remainder of the fiscal year, we are reintroducing financial guidance ranges.”

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