january 2021 investor presentation · 2021. 1. 28. · ecovadis. awarded gold rating in...
TRANSCRIPT
January 2021Investor Presentation
January 2021 – P.2
Safe harborFORWARD-LOOKING STATEMENTS
• This presentation contains certain forward-looking information 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 information currently available to management. Such forward-looking statements are subject to certain risks and uncertainties that could cause events and the Company’s actual results to differ materially from those expressed or implied. Please see the disclosure regarding forward-looking statements immediately preceding Part I of the Company’s Annual Report on the most recently filed Form 10-K. The company assumes no obligation to update any forward-looking statements.
REGULATION G
• This presentation includes certain non-GAAP financial measures like Adjusted EBITDA and other measures that exclude special items such as restructuring and other unusual charges and gains that are volatile from period to period. Management of the company uses the non-GAAP measures to evaluate ongoing operations and believes that these non-GAAP measures are useful to enable investors to perform meaningful comparisons of current and historical performance of the company. All non-GAAP data in the presentation are indicated by footnotes. Tables showing the reconciliation between GAAP and non-GAAP measures are available at the end of this presentation and on the Greif website at www.greif.com.
January 2021 – P.3
Who we are
January 2021 – P.4
Leading industrial packaging solutions provider
(1) A summary of all adjustments that are included in the Adj. EBITDA is set forth in the appendix of this presentationNote: A reconciliation of the differences between all non-GAAP financial measures used in this presentation with the most directly comparable GAAP financial measures is included in the appendix of this presentation.
Highlights and capabilities
• Leading product positions in multiple packaging substrates
• Diverse geographic portfolio (presence in 40+ countries) with wide market reach
Differentiations• Demonstrated commitment to
customer service and industry partnership
• Broadest industrial packaging product portfolio capability of fulfilling customer needs
FY 2020 net sales by segment (%)
Rigid IndustrialPackaging & Services
Paper Packaging &Services
Flexible Products &Services
Land Management
FY 2020 Adj. EBITDA1 by segment (%)
Rigid IndustrialPackaging & Services
Paper Packaging &Services
Flexible Products &Services
Land Management
FY 2020 Performance ($M)
Revenue $4,515.0
Adj. EBITDA1 $642.6
Adjusted EBITDA margin 14.2%
Who we are How we operate Why invest in Greif? Business segment overview Appendix
January 2021 – P.5
Leading positions in multiple packaging substrates
Fibre
IBC
#3
Industrial Closures
Plastic
#2
#1
Steel
#1
Flexible IBCs
Note: Ranking denotes standing in global market. Based on company estimates.
Industrial Packaging
Tube & Core
Upstream Operations
Uncoated Recycled Paperboard (URB)
Coated Recycled Paperboard (CRB)
#2
#3
#2Recovered Fiber Group
Top 10
#1#1
Who we are How we operate Why invest in Greif? Business segment overview Appendix
January 2021 – P.6
Engaged Teams Customer Service Excellence Enhanced PerformanceHealth and Safety
• Recorded 24% fewer medical cases with 1M+ more man hours worked vs. 2019
‒ High focus on LIFE risk identification / mitigation
• Implemented enhanced protocols in response to COVID-19
Colleague Engagement
• Achieved 3rd consecutive Gallup colleagueengagement score improvement
• Expanded Colleague Resource Groups tofurther advance inclusivity
Customer Satisfaction Index
• Achieved record trailing four quarter CSI performance (93.0)
Net Promoter Score
• Achieved record Net Promoter Survey score (67)
Adjusted Free Cash Flow
• FY20 Adj. FCF = $347.6M, + ~$78M vs. 2019
Sustainability
• Awarded 3rd consecutive gold rating by EcoVadis
• Awarded 3rd consecutive “A-” leadership ranking by CDP
• Launched FY21 ESG materiality assessment
Fiscal Year (FY20) highlightsWho we are How we operate Why invest in Greif? Business segment overview Appendix
Strong performance across all strategic priorities in FY20
January 2021 – P.7
How we operate
January 2021 – P.8
Greif’s culture is the foundation for our businessThe Principles That Guide Our Business Behaviors
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Communicate with respect,
candor, and trust
Act with the mindset of a
champion
Model the behaviors of a servant leader
Think Greif first
EthicalWe can be trusted to do what is right. Greif’s
Code of Conduct and Ethics guides our decisions and actions.
Strong Through Diversity
We encourage and embrace our diversity of culture, language, location and thought. Our differences define but do not divide us; our common interests unite us. From the many,
we are one: Greif.
Serious About Sustainability
We honor our history as we focus on our future. We use financial, natural and human resources wisely without compromising the
ability of future generations to meet their needs.
Committed to Continuous
Improvement
We always look for ways to make our work, our products, our services and our Company
better.
January 2021 – P.9
Who we are How we operate Why invest in Greif? Business segment overview Appendix
To safely package and protect our customers goods and materials to serve the essential needs of communities around the world
In industrial packaging, be the best performing customer service company in the world
Engaged Teams Differentiated Customer Service Enhanced Performance• Best in class health and safety
• Top decile colleague engagement
• Accountability aligned to value creation
• Deliver Superior customer experience
• Create value for our customers through a solutions based approach
• Earn our customers trust and loyalty
• Value driven growth
• Margin and Free Cash Flow expansion via the Greif Business System
• Sustainability commitment
The Greif Business System
THE GREIF WAY
Vision
StrategicPriorities
Values
Key Enabler
Purpose
Greif’s purpose, vision and three strategic priorities
1 2 3
January 2021 – P.10
21% Higher profitability
17% Higher productivity
10% Higher customer metrics
70% Fewer safety incidents
59% Less turnover
41% Lower absenteeism
28% Less shrinkage
Strategic priority: engaged teamsGallup Overall Engagement Score
1
3.81
3.97
4.17
3.7
3.8
3.9
4.0
4.1
4.2
2018 2019 2020
74th
55th
Manufacturing sector percentile ranking 89th
Teams in the top quartile of those Gallup1 has studied have…
(1) According to “The Relationship Between Engagement at Work and Organizational Outcomes: 2016 Q12 Meta- Analysis
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Safe and engaged colleagues drive improved operating and financial performance
January 2021 – P.11
30
40
50
60
70
80
90
100
FY15 FY16 FY17 FY18 FY19 FY20 Goal
Note: CSI is an internal measure of a plant’s or business’ performance against selected parameters that customers experience, giving us an indication of our level of meeting our customers basic needs. Components include: customer complaints received; customer complaints open greater than 30 days; credits raised; number of late deliveries; and the number of deliveries.
Strategic priority: differentiated customer service Customer Satisfaction Index (CSI)
5
11
23
38
72
51
Wave 10
Wave 1
Net Promoter Score (NPS)
Detractors Passive Promoters
Net Promoter Score
= 67
= 40
2
Who we are How we operate Why invest in Greif? Business segment overview Appendix
68% improvement in Net Promoter Score since inception
January 2021 – P.12
Sharp focus on generating reliable and sustainable cash flow through cycles
Adj. Free Cash Flow over time ($M)
Strategic priority: generate sustainable Free Cash Flow3
Who we are How we operate Why invest in Greif? Business segment overview Appendix
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
FY15 FY16 FY17 FY18 FY19 FY20 Column1 FY22Commitment
‘22 Commitment: $410 - $450M
January 2021 – P.13
There is a solid link between sustainability / ESG, customer service excellence and value creation
ESG factorsEnvironment Social Governance
Enhancing/promoting circular options Reducing scrap Minimizing energy Reducing GHG emissions Reducing water usage Reducing raw materials Improving logistics, transportation
Improving safety Promoting diversity / inclusion Protecting human rights in the workplace Improving working conditions Enhancing colleague training and development
Maintaining compliance with environmental, safety, antitrust, antibribery and other laws Enhancing ethics Implementing fair business practices
• Improves EBITDA through higher sales and reduced costs
• Improves EBITDA through lower costs and higher colleague retention
• Improves EBITDA by reducing fines and compliance costs
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Strategic priority: pursuing sustainability through ESG 3
January 2021 – P.14
Targets Recognition
Diversity & Inclusion Waste Responsibility Sustainability
90%Percent of waste diverted
from landfills from all legacy Greif production facilities by
the end of FY25
Energy & Emissions1 Water
10%Reduction in BOD
discharged in kilograms per metric ton of production by
the end of FY25
Corporate ESG Leadership
ISS ESGRated Greif “Prime” status
for corporate ESG performance with above sector-specific averages
CDPAwarded Greif “A-
Leadership” ranking for third consecutive year as part of their annual climate change
assessment
Newsweek recognized Greif on its list of America’s Most Responsible
Companies
EcoVadisAwarded Gold Rating in
sustainability performance for the third consecutive year
25%Increase in proportion of
women in management by the end of FY25
10%Reduction in energy and greenhouse gas (GHG)
emissions per unit of production
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Strategic priority: key sustainability goals and recognition3
1Note: new 2030 target in development as current target recently expired
January 2021 – P.15
Why invest in Greif?
January 2021 – P.16
Global trends support Greif’s future growth
Trend Details Greif Actions
Growth of emerging economies• Emerging economies driving
greater consumption of goods and infrastructure
• Optimize capacity to serve increased demand from emerging economies
Expanding influence of sustainability and multi-use packaging
• Paper products and plastic-based packaging (especially IBCs) are easily reused or recycled
• Expand IBC collection and reconditioning network and expand paper solutions
Expansion of e-commerce adoption
• Increasing demand for delivery in consumer segments
• Focus on meeting demand with corrugated and other paper products
Increasing importance of food safety
• Heightened attention toward food safety and transportation
• Further penetrating food and beverage segments in RIPS and PPS
Who we are How we operate Why invest in Greif? Business segment overview Appendix
January 2021 – P.17
Who we are How we operate Why invest in Greif? Business segment overview Appendix
• Positive demand for bulk /commodity chemicals
• Negative but improving demand for lubricants, specialty chemicals and industrial paints
• Weak demand for food (poor conical season)
End markets continue to rebound from COVID-19 impact
RIPS steel drum demand has improved
-5%
0%
5%Q4 '20 Aug '20 Sep '20 Oct '20
YoY comparison (units per day)
January 2021 – P.18
Who we are How we operate Why invest in Greif? Business segment overview Appendix
-5%
0%
5%Q4 '20 Aug '20 Sep '20 Oct '20
20%
25%
30%
35%
40%Q4 '20 Aug '20 Sep '20 Oct '20
• Positive demand from independent and integrated customers across range of end markets (i.e. durables, food, ag, e-commerce)
Robust demand for corrugated sheets and improving demand for tubes and cores
Solid demand seen in PPS’ converting operationsCorrChoice YoY comparison (MSF per day) IPG (tube / core) YoY comparison (units per day)
• Positive demand from construction and film
• Soft but improving demand from paper mills and metal strapping
• Weak demand from textile (carpet, yarn, cloth)
January 2021 – P.19
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Disciplined capital allocation priorities are in placeReinvesting in the business De-levering the balance sheet Returning cash to shareholders
Fund maintenance to sustain the “cash machine” and organic growth opportunities that exceed required returns
Reduced net debt by ~$294M in FY20
Current compliance leverage ratio = 3.66x; on track to achieve targeted leverage ratio of 2.0 – 2.5x by 2023
Returned more than $104M to shareholders through dividends in FY20
Remain committed to potentially growing dividend once target leverage ratio is achieved
Financial strength supported by focus on strong Free Cash Flow generation
January 2021 – P.20
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Attractive valuation relative to peer companiesForward EV to EBITDA 2021E FCF Yield
0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x
O-I Glass
International Paper
Westrock
Greif
Berry Global Group
Graphic Packaging
Silgan Holdings
Sonoco Products
Sealed Air
Packaging Corps of America
Crown Holdings
Avery-Dennison
Aptargroup
Ball
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
Ball
Aptargroup
Crown Holdings
Avery-Dennison
Packaging Corps of America
Silgan Holdings
O-I Glass
Graphic Packaging
Sealed Air
Sonoco Products
International Paper
Greif
Westrock
Berry Global Group
Note: Data as of 1/22/2021 and sourced from IR Insight.
January 2021 – P.21
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Fiscal 2022 financial commitments updated at FQ4 2020$M FY ‘22 Adj.
EBITDA1FY ‘22 Adj.
Free Cash Flow2
RIPS $314 – $341
PPS $437 – $477
FPS $28 – $38
Land $6 – $9
Total Company $785 – $865 $410 – $450
XXXXSubstantial increase in Free Cash Flow on the horizon(1) No reconciliation of the fiscal year 2022 Adjusted EBITDA, a non-GAAP financial measure which excludes gains and losses on the disposal of businesses, timberland and property, plant and equipment,
acquisition costs, non-cash pension settlement charges, restructuring and impairment charges is included in this presentation 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.
(2) No reconciliation of the fiscal year 2022 Adjusted free cash flow, defined as net cash provided by (used in) operating activities, less cash paid for purchases of properties, plants and equipment, plus cash paid for acquisition-related costs, plus cash paid for debt issuance costs, plus cash paid for incremental COVID-19 costs, net, plus cash paid for acquisition-related Enterprise Resource Planning (ERP) systems, is included in this presentation 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.
Current FY2022 commitment vs. June 2019
• RIPS Adj. EBITDA increase driven product mix; portfolio optimization and greater efficiencies
• PPS Adj. EBITDA decrease driven by COVID-19 delay to operational enhancements; delayed network optimization benefit; freight / insurance cost inflation; and CPG divestiture
• Adj. Free Cash Flow flat to prior commitment aided by lower cash taxes, interest and capital expenditures
January 2021 – P.22
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Why invest in Greif?Robust and diverse productportfolio with exposure to a
variety of end markets
Compelling customer value proposition due to
demonstrated commitment to customer service
Numerous avenues for incremental low-risk growth
and margin enhancement
Compelling dividend and opportunity for free cash
flow expansion
We have leading market positions (e.g. steel drum, fiber
drum, large plastic drum, uncoated recycled board) that
serve a variety of markets globally.
We are pursuing our vision: in industrial packaging, be the best performing customer
service company in the world. We partner with customers to help solve their problems and
grow their businesses.
We use the Greif Business System to drive a sharp focus on cost control and operating discipline. We employ a risk-adjusted return process that
drives capital investment. We are growing close to the core in plastics and increasing our containerboard integration.
We have a clear and consistent capital allocation philosophy, offer an industry
leading dividend and are laser focused on generating growing
and sustainable Free Cash Flow.
Business segment overview
January 2021 – P.24
RIPS: broad product and services capabilityFibre
#1
IBC
#3
Closures
#1
Plastic
#2#1
Steel
Note: Ranking denotes standing in global market. Based on company estimates.
FillingEarth Minded
Who we are How we operate Why invest in Greif? Business segment overview Appendix
RIPS is the most comprehensive customer solutions provider in the industry
January 2021 – P.25
Highlights and Capabilities Differentiation
2020 Net Sales By Geography 2020 Revenue Mix 2020 Top End Markets By Revenue
• Extensive global expertise and operational footprint
• Large product shares in steel and fibre and fast growing IBC business
• FPS cross selling opportunities
(1)A summary of all adjustments that are included in the Adj. EBITDA is set forth in the appendix of this presentation(2)Includes packaging accessories, reconditioning, water bottles, pails and other miscellaneousNote: A reconciliation of the differences between all non-GAAP financial measures used in this presentation with the most directly comparable GAAP financial measures is included in the appendix of this presentation
RIPS: highlights and differentiation• Industry’s most comprehensive
product line offering
• Ability to serve customers globally
• Differentiated customer service focus; long tenured relationships
2020 Financials ($M)Revenue $2,298.9
Adj. EBITDA1 $297.5
Adj. EBITDA margin 12.9%
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Petrol Prod, Lube Oils & Adds
Specialty Chemicals
Bulk/Commodity Chemicals
Solid Food Prod, Pastes & EdOilsPaints, Coatings, Inks,AdhesivesPackaging Distributors
Juices & Beverage Products
Agro Chemicals
Blenders, Fillers & ChemDistr.Pharmaceutical & PersonalCareFlavours & Fragrances
Other
Steel
Plastic
Fibre
IBC
Filling
All Other
United States
Europe, Middle Eastand Africa
Asia Pacific andOther Americas
January 2021 – P.26
RIPS: expanding reconditioning for sustainable solutionsWho we are How we operate Why invest in Greif? Business segment overview Appendix
CollectionPickup conditions vary from plant to plant and country to country
Recycle ComponentsRaw materials that cannot be used are recycled for alternative purposes
Clean, Reshape, ReconditionGreif facilities clean, wash, rebottle, recondition, test and inspect as required
ReuseCompanies that reuse through reconditioning can make a more sustainable impact than recycling
ReportingCapability to track and evaluate your carbon footprint with
January 2021 – P.27
PPS: broad portfolio offering a variety of paper products
Note: Ranking denotes standing in the U.S. Based on company estimates.
Uncoated Recycled Paperboard
#2
Coated Recycled Paperboard
#3
Tube & Core
#2
Containerboard
C
Corrugated Products
Recovered Fiber
Mills
Converting
Who we are How we operate Why invest in Greif? Business segment overview Appendix
January 2021 – P.28
Highlights and Capabilities Differentiation
North America
2020 Net Sales By Geography End Markets
North America
PPS: highlights and differentiation
• Niche position in containerboard
• Leadership position in URB and tubes/cores
• Unique converting capabilities
• Speed – response and lead times• Breadth of product offerings• Long-standing customer
relationships • Best in class customer service
• Containerboard serves a variety of industrial and consumer needs
• URB serves predominantly industrial end markets
• CRB serves predominantly consumer end markets
2020 Financials ($M)Revenue $1,916.9
Adjusted EBITDA1 $306.4
Adjusted EBITDA margin 16.0%
(1)A summary of all adjustments that are included in the Adj. EBITDA is set forth in the appendix of this presentation.Note: A reconciliation of the differences between all non-GAAP financial measures used in this presentation with the most directly comparable GAAP financial measures is included in the appendix of this presentation
Who we are How we operate Why invest in Greif? Business segment overview Appendix
January 2021 – P.29
Transport / Logistics
Procurement / Materials
SG&A
Other Fixed Costs
Operational Enhancements
Realized synergies and FY22 estimate
Who we are How we operate Why invest in Greif? Business segment overview Appendix
PPS: Caraustar integration proceeding on planCaraustar run-rate synergy detail
$0
$10
$20
$30
$40
$50
$60
$70
$80
DealAssumption
FY19Realized
FY20Realized
FY22Expected
Anticipate a minimum of $70M in synergies within 36 months of acquisition
January 2021 – P.30
RecoveredFiber Group
Packaging Industry
Variousindustries
Folding carton
and other customers
Containerboard~1M tons
Uncoated Boxboard~700K tons
Coated Boxboard~200K tons
CorrugatedNetwork of sheet feeders
Tubes & Coresconverting plants across the US
PPS: expanded, integrated and national paper networkWho we are How we operate Why invest in Greif? Business segment overview Appendix
January 2021 – P.31
PPS: IPG benefits from diverse end markets
Top 10 Tube/core revenue by end market1
(1)Based on FY 2020 sales
• IPG’s diversified end market revenue provides broad exposure to US economic activity
• Tube/core market offers limited risk as paper remains best substrate due to performance characteristics
‒ URB preferred to containerboard due to performance, board cost and adhesive cost
‒ URB preferred to plastic due to cost, performance, and recyclability
Who we are How we operate Why invest in Greif? Business segment overview Appendix
IPG services a diverse set of end markets with low substitution risk
Film
Paper Mill
Protect A Board
Construction
Cloth
All Other Core
Yarn
Carpet & Floor
Metal, Foil Strapping
Roofing
January 2021 – P.32
North America
FPS: global market leader with superior capabilities
Note: Ranking denotes standing in global market. Based on company estimates.
4 loop bag1&2 loop bag Container linersReconditioning
1-Loop 2-Loop#1 #1 #1
Who we are How we operate Why invest in Greif? Business segment overview Appendix
FPS is the largest FIBC producer in the world and offers the most comprehensive line of product and services
January 2021 – P.33
Highlights and Capabilities Differentiation
North America
2020 Net Sales By Geographies 2020 Revenue Mix
FPS: highlights and differentiation
• Leading position in highly fragmented market
• Largest FIBC re-conditioner in the industry
• 50/50 joint venture
• Exceptional technical capabilities and differentiated customer service
• Unmatched global network of production and commercial facilities
• Going to market with RIPS
(1)A summary of all adjustments that are included in Adj. EBITDA is set forth in the appendix of this presentationNote: A reconciliation of the differences between all non-GAAP financial measures used in this presentation with the most directly comparable GAAP financial measures is included in the appendix of this presentation
2020 Financials ($M)Revenue $272.9
Adj. EBITDA1 $26.8
Adj. EBITDA margin 9.8%
Who we are How we operate Why invest in Greif? Business segment overview Appendix
1 & 2 Loop
4 Loop
All Other
United States
Europe, Middle Eastand Africa
Asia Pacific andOther Americas
Appendix and required reconciliation tables
January 2021 – P.35
$0
$200
$400
$600
$800
$1,000
$1,200
2021 2022 2023 2024 2025 2026 2027
7.375% Senior Notes - 2021¹ US Revolver - FY 2024 Asset Securitization Other 6.50% Senior Notes - 2027 Term Loan A-1 Term Loan A-2
Debt schedule as of 10/31/2020 ($M)
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Solid balance sheet with anticipated interest savings
Anticipate significant interest expense savings in H2 2021 from locked in refinancing of below 3%
January 2021 – P.36
Operationalizing sustainabilityWho we are How we operate Why invest in Greif? Business segment overview Appendix
Advancing and embedding circular economy principles in our business
GREIFRecovered Fiber Collection Center
DISTRIBUTIONInternal and External
Collected Fiber
GREIFRecycled Paperboard
ManufacturingCONSUMER
INTERNAL AND EXTERNAL
CUSTOMERS
GREIFConverted Products;
Cores, and Other Paperboard Products
CONVERTINGInternal and External Recycled Paperboard
RECYLABLE WASTE
EXTERNAL CONVERTERS
Net positive recycler in Paper Packaging Rigid and Flexible Packaging highlights
35+ Reconditioning facilities in North America and Europe
4.5 mil. Containers reconditioned and recycled in 2019
63% Reduction in emissions from rebottling with a reconditioned vs. new 15kg IBC
100% Scrap from internal production reused to make new plastic products
75% Scrap from internal production reused to make new flexible products
100% of RIPS products are recyclable
January 2021 – P.37
GAAP to Non-GAAP Reconciliation:Reconciliation of Operating Profit to Adjusted EBITDA$Millions
Who we are How we operate Why invest in Greif? Business segment overview Appendix
(12) Adjusted EBITDA is defined as net income, plus interest expense, net, plus income tax expense, plus depreciation, depletion and amortization expense, plusrestructuring charges, plus acquisition-related costs, plus non-cash impairment charges, plus incremental COVID-19 costs, net, plus non-cash pensionsettlement (income) charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net. However, because the Company does notcalculate net income by segment, this table calculates adjusted EBITDA by segment with reference to operating profit by segment, which, as demonstrated inthe table of consolidated adjusted EBITDA, is another method to achieve the same result.
January 2021 – P.38
GAAP to Non-GAAP Reconciliation:Adjusted Free Cash Flow(1)
$Millions
Who we are How we operate Why invest in Greif? Business segment overview Appendix
(in millions) 2015 2016 2017 2018 2019 2020Net cash provided by operating activities 206.3$ 301.0$ 305.0$ 253.0$ 389.5$ 454.7$ Cash paid for purchases of properties, plants and equipment (135.8) (100.1) (96.8) (140.2) (156.8) (131.4) Free Cash Flow 70.5$ 200.9$ 208.2$ 112.8$ 232.7$ 323.3$ Cash paid for acquisition-related costs - - - 0.7 29.7 17.0 Cash paid for debt issuance costs - - - - 5.1 - Cash paid for incremental COVID-19 costs, net - - - - - 2.6 Cash paid for acquisition-related ERP systems - - - - 0.3 3.3 Additional U.S. pension contribution - - - 65.0 - - Free cash flow from Venezuela operations 9.9 - - - - - Adjusted Free Cash Flow 80.4$ 200.9$ 208.2$ 178.5$ 267.8$ 346.2$
Twelve Months EndedOctober 31,
(1)Adjusted free cash flow is defined as net cash provided by (used in) operating activities, less cash paid for purchases of properties, plants and equipment, plus cash paid for acquisition-related costs, plus cash paid for debt issuance costs, plus cash paid for incremental COVID-19 costs, net, plus cash paid for acquisition-related ERP systems, plus the additional one-time $65.0 million contribution made by the Company to its U.S. defined benefit plan (the “additional U.S. pension contribution”) during the third quarter of 2018, plus free cash flow from Venezuela Operations in 2015.
January 2021 – P.39
GAAP to Non-GAAP Reconciliation:Adjusted Free Cash Flow(1)
$Millions
Who we are How we operate Why invest in Greif? Business segment overview Appendix
(1)Adjusted free cash flow is defines as net cash provided by operating activities, plus cash paid for acquisition-related costs, plus cash paid for debt issuance costs, less cash paid for purchases of properties, plants and equipment.(2)Cash paid for debt issuance costs is defined as cash payments for debt issuance related expenses included within net cash used in operating activities.(3)Cash paid for acquisition-related ERP systems is defined as capital expenditures for the integration of Caraustar into Greif’s global Enterprise Resource Planning System.
January 2021 – P.40
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Q4 Price, Volume and Foreign Currency Impact to Net Sales for Primary Products:
RIPS NA -8.2% -2.9% -0.4% -11.5%
($16.4) ($5.8) ($0.8) ($22.9)
RIPS LATAM -2.9% 0.7% -16.6% -18.8%
($1.1) $0.3 ($6.6) ($7.5)
RIPS EMEA -0.6% -4.2% 1.4% -3.4%
($1.5) ($11.1) $3.6 ($9.0)
RIPS APAC 9.8% -4.6% 2.8% 8.0%
$4.9 ($2.3) $1.4 $4.0
RIPS Segment -2.6% -3.4% -0.4% -6.4%
($14.2) ($18.8) ($2.4) ($35.4)
PPS Segment 8.0% -2.4% 0.0% 5.6%
$35.7 ($10.6) $0.0 $25.0
FPS Segment -0.2% 1.7% 2.7% 4.2%
($0.2) $1.2 $1.8 $2.8
PRIMARY PRODUCTS 2.3% -2.5% 0.0% -0.3%
$24.5 ($26.8) ($0.5) ($2.8)
RECONCILIATION TO TOTAL COMPANY NET SALES
-38.2%
($63.3)
TOTAL COMPANY -5.7%
($70.8)
NON-PRIMARY PRODUCTS
VOLUME PRICE FX TOTAL SALES VARIANCE
January 2021 – P.41
Fiscal 2022 financial commitments assumptionsWho we are How we operate Why invest in Greif? Business segment overview Appendix
• Net sales will be approximately $5.0B in FY22 reflecting a 2018 like economy with the impacts of both the COVID-19 pandemic and the industrial recession in place pre-COVID fully behind us
• Raw material costs increase slightly against current indices in the markets in which we participate; assume OCC cost range of $35/ton -$75/ton (midpoint = $55/ton)
• Raw material price changes are passed to customers through price adjustment mechanisms in contracts or otherwise with customary delay in our RIPS and FPS businesses
• FX rates flat to FY21 rates
• DD&A to increase to $250M - $260M by FY22
• Annual other expense to be $5M in FY22
• Cash taxes paid to be $65M - $75M in FY22
• Interest expense is calculated to be $90M - $95M by FY22 based on debt pay down
• OWC is a use of cash in FY22 as a result of higher sales
• Annual CapEx to range between $150M – $170M
• Synergies of $70M to be realized by FY22 ($10M increase vs 2019 investor day assumption)
• Acquisitions or divestitures not contemplated in targets
January 2021 – P.42
Who we are How we operate Why invest in Greif? Business segment overview Appendix
Credit Agreement Adj. EBITDA & Leverage Ratio