Greif reports sales down, profit up slightly for Q1 2019

Greif Inc., an industrial packaging products and services business, announced its first quarter 2019 results. According to a Greif news release, the company’s net sales decreased by $8.7 million to $897 million and gross profit increased by $1.1 million to $172.8 million. Net income of $29.7 million decreased compared with net income of $56.5 million. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased by $14.2 million to $106.3 million.

Pete Watson, president and chief executive officer of Greif, reports that Greif “delivered solid financial performance” in the fiscal first quarter of 2019, “despite being negatively impacted by the continuation of market softness in discrete regions” of its portfolio.

“First quarter adjusted EBITDA rose by roughly 15 percent versus the prior year quarter, while Class A earnings per share, excluding the impact of adjustments, increased by 33 percent,” he says. “Performance was particularly strong in our paper packaging and services segment due to a favorable price/cost environment and solid unit demand, and in our flexible products and services segment due to customer service improvements and solid operating performance.”

In the most recent quarter, Greif announced an agreement to acquire Caraustar Industries Inc. Dec. 20, 2018. The transaction was completed Feb. 11 for cash consideration of $1.8 billion. 

“Caraustar is a vertically integrated paper packaging company and operates a business with close operational adjacency to Greif’s existing mill operations,” Watson says. “The company is a leader in the production of uncoated recycled paperboard and coated recycled paperboard, operates one of the largest recovered fiber businesses in the U.S. and is a leading manufacturer of tube and core products for industrial uses. Caraustar shares our vision of providing industry-leading customer service and has a long-tenured domestic blue-chip customer base. 

“The acquisition of Caraustar will drive significant value creation for Greif shareholders by enhancing Greif’s margins and EBITDA and by strengthening and balancing our portfolio. Caraustar’s strong free cash flow, combined with Greif’s existing free cash generation, will permit rapid deleveraging and enhance our longerterm financial flexibility. The business is an excellent cultural fit and we welcome our new 4,000 colleagues to the global Greif team.”