Greif Reports First Quarter 2018 Results

DELAWARE, Ohio–(BUSINESS WIRE)–Greif, Inc. (NYSE: GEF, GEF.B), a world leader in industrial packaging
products and services, today announced first quarter 2018 results.

First Quarter Highlights include (all results compared to the first
quarter of 2017 unless otherwise noted):

• Net sales increased by $84.8 million to $905.7 million.
• Gross profit increased by $8.4 million to $171.7 million.
• Operating profit decreased by $0.1 million to $65.5 million and
  operating profit before special items1 increased by $1.4
  million to $68.1 million.
• Income tax expense decreased from $11.8 million to a benefit of $15.6
  million. The results for the three months ended January 31, 2018
  included a provisional net tax benefit of $29.1 million related to the
  recently enacted Tax Cuts and Jobs Act of 2017 ("Tax Reform Act").
  Please see the Tax Summary section of this release for further
  discussion of tax changes.
• Net income of $56.5 million or $0.96 per diluted Class A share
  compared to net income of $5.4 million or $0.10 per diluted Class A
  share. Net income, excluding the impact of special items, of $28.8
  million or $0.49 per diluted Class A share compared to net income,
  excluding the impact of special items, of $26.4 million or $0.45 per
  diluted Class A share.
• Cash used in operating activities increased by $9.6 million to $53.7
  million. Free cash flow2 decreased by $16.3 million to a
  use of $81.7 million.

“Greif delivered improved year over year results during the fiscal first
quarter, but our performance fell below our expectations,” said Greif’s
President and Chief Executive Officer, Pete Watson. “Sales, operating
profit before special items and earnings each increased versus the prior
year quarter, but were negatively impacted by weaker than anticipated
Rigid Industrial Packaging & Services volumes in December caused by a
temporary winter slowdown. In addition, raw material costs continued to
accelerate, outpacing price adjustment mechanisms in that segment, and
we experienced increased transportation costs across our global network.
Despite these challenges, we achieved a positive January performance and
Rigid Industrial Packaging & Services volumes have rebounded. We remain
extremely confident in achieving our Fiscal 2018 guidance.”

Note: A reconciliation of the differences between all non-GAAP financial
measures used in this release with the most directly comparable GAAP
financial measures is included in the financial schedules that are a
part of this release. These non-GAAP financial measures are intended to
supplement and should be read together with our financial results. They
should not be considered an alternative or substitute for, and should
not be considered superior to, our reported financial results.
Accordingly, users of this financial information should not place undue
reliance on these non-GAAP financial measures.

Customer Service

During the quarter, each of our three business segments with
manufacturing operations – Rigid Industrial Packaging & Services (RIPS),
Paper Packaging & Services (PPS) and Flexible Products & Services (FPS)
– reported year over year CSI3 improvements, with the largest
in FPS, which generated a 27% improvement versus the prior year quarter.
Our expectation is the each business segment delivers CSI at a 95 score
or better.

We also finalized our fifth NPS4 survey during the quarter
and received a consolidated Greif score of 47, which is flat compared to
the previous surveys results. Our aspiration is to achieve a score of 55
over time. We continue to leverage the increased customer interactions
that accompany each survey as they lead to additional actions with our
customers and ultimately better strategic insight into their businesses.

Segment Results (all results compared to the first quarter of 2017
unless otherwise noted)

Net sales are impacted mainly by the volume of primary products5
sold, selling prices, product mix and the impact of changes in foreign
currencies against the U.S. Dollar. The table below shows the percentage
impact of each of these items on net sales for our primary products, for
the first quarter of 2018 as compared to the first quarter of 2017 for
the business segments with manufacturing operations:

Rigid Industrial Packaging & Services

Net sales increased by $53.9 million to $615.4 million. Net sales
excluding foreign currency translation increased by $29.1 million due
primarily to a 7.5 percent increase in selling prices on our primary
products as a result of strategic pricing decisions and increases in
index prices.

Gross profit decreased by $2.0 million to $110.4 million. The decrease
in gross profit was primarily due to the continuation of rapidly rising
raw material costs, the timing of contractual pass through arrangements,
a temporary winter slowdown and an increase in transportation costs of
$2.5 million.

Operating profit decreased by $11.6 million to $31.2 million. Operating
profit before special items decreased by $8.7 million to $34.7 million,
due primarily to the same factors that impacted gross profit and an
increase in this segment's selling, general & administrative ("SG&A")
expenses.

Paper Packaging & Services

Net sales increased by $20.9 million to $203.8 million. The increase was
due primarily to an increase in selling prices due to increases in
published containerboard pricing and increased sales of specialty
products.

Gross profit increased by $8.0 million to $43.3 million. The increase in
gross profit was primarily due to higher containerboard prices and lower
old corrugated container input costs, partially offset by an increase in
transportation costs of $2.3 million.

Operating profit increased by $7.9 million to $27.9 million. Operating
profit before special items increased by $8.0 million to $27.9 million
due to the same factors that impacted gross profit.

Flexible Products & Services

Net sales increased by $10.3 million to $80.0 million. Net sales
excluding foreign currency translation increased by $4.4 million due to
strategic pricing decisions, product mix and higher volumes.

Gross profit increased by $2.1 million to $15.2 million due primarily
due to the same factors that impacted net sales.

Operating profit increased by $2.6 million to $3.2 million. Operating
profit before special items increased by $1.9 million to $3.5 million.
The improvement in operating profit before special items was due
primarily to the same factors that impacted gross profit in addition to
effective SG&A expense control.

Land Management

Net sales decreased by $0.3 million to $6.5 million primarily due to
unusually severe winter weather in parts of the southeastern United
States.

Operating profit increased by $1.0 million to $3.2 million. Operating
profit before special items increased by $0.2 million to $2.0 million.

Dividend Summary

On February 27, 2018, the Board of Directors declared quarterly cash
dividends of $0.42 per share of Class A Common Stock and $0.63 per share
of Class B Common Stock. Dividends are payable on April 1, 2018, to
stockholders of record at the close of business on March 19, 2018.

Tax Summary

During the quarter, we recorded a provisional tax net benefit of $29.1
million related to the enactment of the Tax Reform Act. The provisional
tax net benefit, which is being treated as a special item, is the net
benefit resulting from the remeasurement of deferred tax balances for
the new corporate rate, offset by the tax liability incurred for the
one-time deemed repatriation transition tax. This provisional tax net
benefit is subject to change. We will not have any cash tax payment
during the fiscal year regarding the repatriation transition tax.

Company Outlook

Note: 2018 Class A Earnings per Share guidance is not provided in this
release due to the potential for one or more of the following, the
timing and magnitude of which we are unable to reliably forecast: gains
or losses on the disposal of businesses, timberland or properties,
plants and equipment, net, non-cash asset impairment charges due to
unanticipated changes in the business, restructuring-related activities,
non-cash pension settlement charges or acquisition costs, and the income
tax effects of these items and other income tax-related events. No
reconciliation of the fiscal year 2018 Class A earnings per share
guidance, a non-GAAP financial measure which excludes gains and losses
on the disposal of businesses, timberland and properties, plants and
equipment, non-cash pension settlement charges, acquisition costs,
restructuring and impairment charges and provisional tax net benefit
resulting from the Tax Reform Act is included in this release 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. A reconciliation of 2018 free cash flow guidance
to forecasted net cash provided by operating activities, the most
directly comparable GAAP financial measure, is included in this release.

Conference Call

The Company will host a conference call to discuss the first quarter of
2018 results on March 1, 2018, at 8:30 a.m. Eastern Time (ET). To
participate, domestic callers should call 833-231-8265. The Greif ID is
8160029. The number for international callers is +1-647-689-4110. Phone
lines will open at 8:00 a.m. ET. The conference call will also be
available through a live webcast, including slides, which can be
accessed at http://investor.greif.com
by clicking on the Events and Presentations tab and searching under the
events calendar. A replay of the conference call will be available on
the Company’s website approximately two hours following the call.

About Greif

Greif is a global leader in industrial packaging products and services
and is pursuing its vision to become the world’s best performing
customer service company in industrial packaging. The Company produces
steel, plastic, fibre, flexible, corrugated, and reconditioned
containers, intermediate bulk containers, containerboard and packaging
accessories, and provides filling, packaging and industrial packaging
reconditioning services for a wide range of industries. Greif also
manages timber properties in the southeastern United States. The Company
is strategically positioned with production facilities in over 40
countries to serve global as well as regional customers. Additional
information is on the Company’s website at www.greif.com.

Forward-Looking Statements

This release contains forward-looking statements 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
assumptions, expectations and other information currently available to
management. Such forward-looking statements are subject to certain risks
and uncertainties that could cause the Company’s actual results to
differ materially from those forecasted, projected or anticipated,
whether expressed or implied. The most significant of these risks and
uncertainties are described in Part I of the Company’s Annual Report on
Form 10-K for the fiscal year ended October 31, 2017. The Company
undertakes no obligation to update or revise any forward-looking
statements.

Although the Company believes that the expectations reflected in
forward-looking statements have a reasonable basis, the Company can give
no assurance that these expectations will prove to be correct.
Forward-looking statements are subject to risks and uncertainties that
could cause the Company’s actual results to differ materially from those
forecasted, projected or anticipated, whether expressed in or implied by
the statements. Such risks and uncertainties that might cause a
difference include, but are not limited to, the following:
(i) historically, our business has been sensitive to changes in general
economic or business conditions, (ii) we may not successfully implement
our business strategies, including achieving our growth objectives,
(iii) our operations subject us to currency exchange and political risks
that could adversely affect our results of operations, (iv) the current
and future challenging global economy and disruption and volatility of
the financial and credit markets may adversely affect our business,
(v) the continuing consolidation of our customer base and suppliers may
intensify pricing pressure, (vi) we operate in highly competitive
industries, (vii) our business is sensitive to changes in industry
demands, (viii) raw material and energy price fluctuations and shortages
may adversely impact our manufacturing operations and costs, (ix)
geopolitical conditions, including direct or indirect acts of war or
terrorism, could have a material adverse effect on our operations and
financial results, (x) we may encounter difficulties arising from
acquisitions, (xi) in connection with acquisitions or divestitures, we
may become subject to liabilities, (xii) we may incur additional
restructuring costs and there is no guarantee that our efforts to reduce
costs will be successful, (xiii) we could be subject to changes in our
tax rates, the adoption of new U.S. of foreign tax legislation or
exposure to additional tax liabilities, (xiv) full realization of our
deferred tax assets may be affected by a number of factors, (xv) several
operations are conducted by joint ventures that we cannot operate solely
for our benefit, (xvi) certain of the agreements that govern our joint
ventures provide our partners with put or call options, (xvii) our
ability to attract, develop and retain talented and qualified employees,
managers and executives is critical to our success, (xviii) our business
may be adversely impacted by work stoppages and other labor relations
matters, (xix) we may not successfully identify illegal immigrants in
our workforce, (xx) our pension and postretirement plans are underfunded
and will require future cash contributions and our required future cash
contributions could be higher than we expect, each of which could have a
material adverse effect on our financial condition and liquidity,
(xxi) we may be subject to losses that might not be covered in whole or
in part by existing insurance reserves or insurance coverage, (xxii) our
business depends on the uninterrupted operations of our facilities,
systems and business functions, including our information technology
(IT) and other business systems, (xxiii) a security breach of customer,
employee, supplier or Company information may have a material adverse
effect on our business, financial condition and results of operations,
(xxiv) legislation/regulation related to environmental and health and
safety matters and corporate social responsibility could negatively
impact our operations and financial performance, (xxv) product liability
claims and other legal proceedings could adversely affect our operations
and financial performance, (xxvi) we may incur fines or penalties,
damage to our reputation or other adverse consequences if our employees,
agents or business partners violate, or are alleged to have violated,
anti-bribery, competition or other laws, (xxvii) changing climate,
climate change regulations and greenhouse gas effects may adversely
affect our operations and financial performance, (xxviii) the frequency
and volume of our timber and timberland sales will impact our financial
performance, (xxix) changes in U.S. generally accepted accounting
principles (U.S. GAAP) and SEC rules and regulations could materially
impact our reported results, (xxx) if the Company fails to maintain an
effective system of internal control, the Company may not be able to
accurately report financial results or prevent fraud, and (xxxi) the
Company has a significant amount of goodwill and long-lived assets
which, if impaired in the future, would adversely impact our results of
operations. The risks described above are not all-inclusive, and given
these and other possible risks and uncertainties, investors should not
place undue reliance on forward-looking statements as a prediction of
actual results. For a detailed discussion of the most significant risks
and uncertainties that could cause our actual results to differ
materially from those forecasted, projected or anticipated, see “Risk
Factors” in Part I, Item 1A of our most recently filed Form 10-K and our
other filings with the Securities and Exchange Commission. All
forward-looking statements made in this news release are expressly
qualified in their entirety by reference to such risk factors. Except to
the limited extent required by applicable law, we undertake no
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.

Contacts

Greif, Inc.
Investor Relations Contact:
Matt Eichmann,
740-549-6067
[email protected]

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