Greif achieves strong Q3 sales and announces executive transitions

Third-quarter sales rose for Greif, Delaware, Ohio, compared with the third quarter of 2020. The packaging producer reports that it achieved record net sales of $1,490.8 million in the third quarter of the year compared with $1,083 million in the third quarter of 2020. The company also achieved record adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $237.8 million in the recently completed quarter compared with adjusted EBITDA of $159.4 million in the third quarter of 2020.

Greif decreased its total debt by $370 million to $2,267.6 million in the third quarter of the year as well, according to the company’s third-quarter earnings report. Net debt decreased by $371.3 million to $2,167.8 million and decreased by $35.2 million sequentially from the second quarter of the year.

“The Greif team delivered an exceptional third quarter,” says Pete Watson, president and CEO. “In addition to strong operating results, we achieved record financial performance, reduced our debt and made meaningful progress towards achieving our targeted leverage ratio. While we continue to face significant inflationary conditions, COVID-19-related constraints and labor availability challenges, our underlying end markets are strong, and we are executing with discipline to offset challenges and deliver on our commitments. Looking ahead, Greif is well-positioned for success as we continue to partner closely with our customers and drive enhanced value creation for our shareholders.”

During the company’s earnings call Sept. 2, Watson said Greif's Global Industrial Packaging segment faced tight supply chain conditions in the third quarter. “While we have not experienced any significant raw material shortage, some of our customers have, which has negatively impacted our demand in certain regions," he said. "Labor availability is becoming more challenging, which is not unique to Greif, and has impacted the productivity of some plants in both [Global Industrial Packaging] and paper packaging.”

Watson reported that the company’s Paper Packaging segment third-quarter sales rose by about $120 million compared with the same quarter in 2020. He attributed the increase to stronger volumes and higher selling prices due to increases in published containerboard prices and boxboard prices. Adjusted EBITDA in that segment rose by about $18 million compared with the same time in 2020 due to higher sales. He noted that the Paper Packaging segment’s EBITDA was offset by higher transportation and raw material costs, including an additional $24 million spent on old corrugated containers (OCC).

The company says it anticipates OCC could cost roughly $183 per ton in the fourth quarter of the year.

“Since early June, we’ve announced five price increases, including a total of $100 a ton on [coated recycled board or CRB], $120 a ton on [uncoated recycled board or URB] and $70 a ton on containerboard,” Watson said. “As of August, the published indexes recognized $50 a ton on the CRB increases, $50 a ton on the URB increases and a $50 and $60 a ton on linerboard and medium, respectively.”

Executive changes

Watson

Watson also plans to retire Feb. 1, 2022, and will be succeeded by Greif Chief Operating Officer Ole Rosgaard.

“Until that time, Ole will serve as chief operating officer and work closely with me and our executive leadership team on his transition,” Watson said during the company’s earnings call Sept. 2. “Ole is a servant leader and a proven team builder with demonstrated commitment to customer service excellence and disciplined operational execution. Those attributes, along with his extensive manufacturing and industrial packaging experience, makes him the ideal leader to take Greif forward.”

Rosegaard added, “As head of global industrial packaging, my focus was on driving and delivering the operating and business results that our customers and shareholders expect. As COO, that focus continues across the wider Greif portfolio. As Pete said, I’m working closely with the executive leadership team on our fiscal 2022 business plan and will share more about my priorities for the future after I assume my new role.”

Michael Gasser, chairman of the board of directors at Greif, will not stand for re-election at the company’s 2022 annual meeting of stockholders; Watson will step in as executive chairman of the board, and Bruce Edwards will become lead director of the board at that time.