Greif, Inc. — FY2021 Form 10-K Summary
Reporting period: Fiscal year ended October 31, 2021. Although the request references 2021 Q4, this filing is an annual report; it does not provide a clear standalone fourth-quarter financial summary. Unless noted otherwise, amounts are in U.S. dollars.
Business context
Greif is a global industrial-packaging and paper-packaging producer, with timberland operations. It operates in more than 40 countries and reports three segments: Global Industrial Packaging, Paper Packaging & Services, and Land Management. In 2021, it combined its rigid and flexible industrial-packaging reporting segments under Global Industrial Packaging.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net sales | $5,556.1 million | $4,515.0 million |
| Gross profit / margin | $1,093.0 million / 19.7% | $914.7 million / 20.3% |
| Operating profit | $585.2 million | $304.9 million |
| Net income | $413.2 million | $124.3 million |
| Net income attributable to Greif | $390.7 million | $108.8 million |
| Adjusted EBITDA | $764.2 million | $642.6 million |
| Net cash from operating activities | $396.0 million | $454.7 million |
| Capital expenditures | $140.7 million | $131.4 million |
| Cash and cash equivalents at year-end | $124.6 million | $105.9 million |
| Total debt before deferred financing costs | $2,185.4 million | $2,469.7 million |
Basic EPS was $6.57 for Class A and $9.84 for Class B, compared with $1.83 and $2.74, respectively, in FY2020. FY2021 dividends were $1.78 per Class A share and $2.66 per Class B share.
Material changes versus FY2020
- Sales rose $1,041.1 million, or about 23%, primarily on higher volumes and average selling prices across segments.
- Gross profit increased, but gross margin declined 0.6 percentage points, reflecting cost pressures, particularly in Paper Packaging & Services.
- Operating profit and net income increased substantially. The results included a $95.7 million timberland gain from the sale of approximately 69,200 Alabama acres; proceeds of approximately $145.1 million after closing costs were applied to debt repayment. Adjusted EBITDA, which excludes timberland gains, increased to $764.2 million.
- Operating cash flow decreased by $58.7 million. Higher accounts receivable and inventory tied to increased sales, prices, and volume contributed to working-capital demands.
- Debt declined by $284.3 million. Greif refinanced the €200 million notes due 2021 using a $225 million incremental term loan and repaid debt with timberland-sale proceeds.
- Global Industrial Packaging sales increased to $3,316.7 million and Adjusted EBITDA to $453.3 million. Paper Packaging & Services sales increased to $2,218.4 million, while Adjusted EBITDA decreased to $302.0 million from $306.4 million. Land Management operating profit included the timberland gain; its Adjusted EBITDA was $8.9 million.
Liquidity, outlook, risks, and unusual items
- Greif reported $749.5 million of available capacity under its $800 million revolving credit facility and stated that expected operating cash flow and borrowing capacity should meet anticipated liquidity needs for at least 12 months. It reported compliance with debt covenants at year-end. The leverage covenant limit was 4.50 times at October 31, 2021; the filing text does not provide a clear actual year-end leverage ratio.
- Receivables facilities had $391.1 million outstanding. The U.S. facility ($275 million) matured in May 2022 and the European facility ($116.1 million) in April 2022; Greif expected to refinance or renew both on a long-term basis.
- Management expected overall customer demand to remain consistent and solid through 2022, while warning that inflation, supply-chain disruption, and labor shortages could weigh on customers. It expected transportation, labor, and energy costs to continue rising; steel prices to decline slightly, less so in North America; and resin and recycled-fiber input prices to remain relatively stable to slightly decline.
- Raw-material inflation was a significant operating factor. Greif said it passed through most increases to customers, but contractual pricing mechanisms can lag cost changes and pressure margins. Freight capacity, driver shortages, and labor availability are additional risks.
- COVID-19 effects remained uncertain, including demand volatility, operational constraints, and supply-chain disruption. Other disclosed risks include economic cyclicality, foreign exchange, customer and supplier concentration, competition, acquisitions and restructuring execution, cybersecurity, and environmental and climate regulation.
- Greif recorded $23.1 million of restructuring charges and closed five plants, with 177 employees severed. It reported $8.9 million of non-cash asset impairment charges. Remaining expected costs on open or developing restructuring plans were $10.8 million.
- Environmental reserves were $19.5 million, including $11.0 million for the Lower Passaic River/Diamond Alkali matter. Greif reported an estimated share below 1% of the Lower Passaic River liability allocation, but stated future developments could require additional charges. In Milwaukee, an odor class-action settlement included $0.8 million cash and up to $0.5 million for facility improvements; the company also anticipated a civil penalty from environmental proceedings.
- The annual goodwill impairment test found reporting-unit fair values above carrying values, by at least 30% for units with goodwill. Goodwill was $1,515.4 million; valuation depends on assumptions including revenue growth and discount rates.
- FY2021 operating results also included $9.1 million in non-cash pension settlement charges. Pension funding requirements may vary; the company expected approximately $35.5 million of 2022 pension contributions and direct benefit payments.
Important facts for investors to verify
- How much of FY2021 earnings and cash generation is repeatable after excluding the timberland gain and other adjustment items; compare GAAP results with Adjusted EBITDA.
- Whether higher selling prices continue to offset raw-material, freight, energy, and labor inflation, and whether cost pass-through timing affects margins.
- How Greif refinanced or renewed the U.S. and European receivables facilities that matured in 2022, and its progress on debt reduction and covenant headroom.
- Whether working-capital growth—particularly receivables and inventory—moderates and operating cash flow improves.
- Developments in environmental matters, including the Lower Passaic River allocation and Milwaukee proceedings, and whether recorded reserves remain adequate.
- Progress on restructuring savings, integration, and goodwill-sensitive business performance, particularly in Paper Packaging & Services and Asia Pacific industrial packaging.