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Greif Q3 Earnings Miss Estimates, Sales Beat on Higher Volumes
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Greif, Inc. (GEF - Free Report) reported adjusted earnings per share (EPS) of $1.03 in third-quarter fiscal 2024 (ended July 31, 2024), missing the Zacks Consensus Estimate of $1.17. The bottom line fell 41.1% year over year.
Including one-time items, EPS was $1.50 in the quarter compared with $1.55 in the prior-year quarter.
GEF’s sales moved up 9.3% year over year to $1.45 billion. The top line surpassed the Zacks Consensus Estimate of $1.42 billion. The upside was mainly due to higher volumes, higher average selling prices and gains from recent acquisitions.
The cost of sales rose 13.7% year over year to $1.16 billion. Gross profit amounted to $290 million, down 5.4% from the prior-year quarter due to higher costs. The gross margin came in at 20%, down from the prior-year quarter’s 23.1%.
Selling, general and administrative (SG&A) expenses were $164 million compared with the prior-year quarter’s $136 million. Adjusted EBITDA fell 14.5% year over year to $194 million in the fiscal third quarter.
GEF’s Segment Performance in Q3
Sales in the Global Industrial Packaging segment were $846 million, higher than the prior-year quarter’s $762 million due to increased volumes and selling prices. Our model projected revenues of $809 million for the quarter. The segment’s adjusted EBITDA amounted to $122 million compared with the year-ago quarter’s $127 million. The reported figure missed our estimate of $130 million.
The Paper Packaging segment sales improved 7% year over year to $604 million in the fiscal third quarter due to improvements in volumes and higher selling prices. The figure topped our sales estimate of $586 million. The segment’s adjusted EBITDA moved down to $69 million from the prior-year quarter’s $98 million. We projected the segment’s adjusted EBITDA to be $77 million.
The Land Management segment’s sales totaled $4.6 million in the reported quarter, flat year over year. We projected the segment's sales to be $4.4 million in the quarter. Adjusted EBITDA was $2 million compared with the year-earlier quarter’s $1.9 million. Our projection for the quarter’s adjusted EBITDA was $1.5 million.
Greif’s Cash Position & Balance Sheet at Q3 End
Greif reported cash and cash equivalents of $194 million at the end of third-quarter fiscal 2024 compared with $181 million at the end of fiscal 2023. Cash flow from operating activities totaled $77 million in the quarter under review, a substantial decline from $202 million in the prior-year quarter.
The long-term debt amounted to $2.79 billion as of July 31, 2024, compared with $2.12 billion as of Oct. 31, 2023.
On Aug. 27, Greif’s board announced a quarterly cash dividend of 54 cents per share of Class A Common Stock and 81 cents per share of Class B Common Stock. This marks an increase of 2 cents in its quarterly dividend per share for Class A shares and 3 cents for Class B shares. The hike in the quarterly dividend is in sync with the company’s broader capital allocation strategy. The dividends will be paid out on Oct. 1 to shareholders of record at the close of business as of Sep. 16, 2024.
Greif sold its subsidiary, Delta Petroleum Company, on July 31, 2024, to PSC Group LLC. The business no longer aligns with GEF’s core growth strategy of expansion into resin-based industrial products serving higher-growth and less cyclical end markets.
The cash proceeds from the sale were received on Aug. 1, 2024, (subsequent to the end of the fiscal third quarter) and were utilized to pay back debt. The cash and debt balance mentioned above does not include the Delta sale.
GEF’s FY24 Outlook
Greif expects fiscal 2024 adjusted EBITDA between $675 million and $725 million. The adjusted free cash flow is anticipated between $175 million and $225 million.
Greif’s Share Price Performance
The company’s shares have lost 10.8% in the past year against the industry’s growth of 19.3%.
Packaging Corporation of America (PKG - Free Report) reported adjusted earnings per share of $2.20 in the second quarter of 2024, beating the Zacks Consensus Estimate of $2.12. The reported figure was higher than the company’s guidance of $2.07 in the quarter under review. However, the bottom line decreased 5% year over year.
PKG’s revenues in the second quarter grew 6.3% year over year to $2.08 billion. The top line beat the Zacks Consensus Estimate of $2.03 billion.
AptarGroup, Inc. (ATR - Free Report) reported second-quarter 2024 adjusted earnings per share of $1.37, beating the Zacks Consensus Estimate of $1.36. The bottom line increased 12% year over year from $1.22 (including comparable exchange rates).
ATR’s total revenues increased 1.6% year over year to $910 million in the reported quarter. The reported figure missed the Zacks Consensus Estimate of $923 million.
Sonoco Products Company (SON - Free Report) reported adjusted earnings per share of $1.28 in second-quarter 2024, beating the Zacks Consensus Estimate of $1.26. The figure was within the company’s guidance of $1.25-$1.35. The bottom line fell 7% from the prior-year quarter.
Sonoco’s net revenues were $1.62 billion, which missed the Zacks Consensus Estimate of $1.68 million. The top line fell 4.8% year over year, hurt by the divestiture of Protective Solutions and the thermoformed food packaging plant closure.
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Greif Q3 Earnings Miss Estimates, Sales Beat on Higher Volumes
Greif, Inc. (GEF - Free Report) reported adjusted earnings per share (EPS) of $1.03 in third-quarter fiscal 2024 (ended July 31, 2024), missing the Zacks Consensus Estimate of $1.17. The bottom line fell 41.1% year over year.
Including one-time items, EPS was $1.50 in the quarter compared with $1.55 in the prior-year quarter.
Greif, Inc. Price, Consensus and EPS Surprise
Greif, Inc. price-consensus-eps-surprise-chart | Greif, Inc. Quote
Greif’s Sales Rise in Q3, Margins Dip
GEF’s sales moved up 9.3% year over year to $1.45 billion. The top line surpassed the Zacks Consensus Estimate of $1.42 billion. The upside was mainly due to higher volumes, higher average selling prices and gains from recent acquisitions.
The cost of sales rose 13.7% year over year to $1.16 billion. Gross profit amounted to $290 million, down 5.4% from the prior-year quarter due to higher costs. The gross margin came in at 20%, down from the prior-year quarter’s 23.1%.
Selling, general and administrative (SG&A) expenses were $164 million compared with the prior-year quarter’s $136 million. Adjusted EBITDA fell 14.5% year over year to $194 million in the fiscal third quarter.
GEF’s Segment Performance in Q3
Sales in the Global Industrial Packaging segment were $846 million, higher than the prior-year quarter’s $762 million due to increased volumes and selling prices. Our model projected revenues of $809 million for the quarter. The segment’s adjusted EBITDA amounted to $122 million compared with the year-ago quarter’s $127 million. The reported figure missed our estimate of $130 million.
The Paper Packaging segment sales improved 7% year over year to $604 million in the fiscal third quarter due to improvements in volumes and higher selling prices. The figure topped our sales estimate of $586 million. The segment’s adjusted EBITDA moved down to $69 million from the prior-year quarter’s $98 million. We projected the segment’s adjusted EBITDA to be $77 million.
The Land Management segment’s sales totaled $4.6 million in the reported quarter, flat year over year. We projected the segment's sales to be $4.4 million in the quarter. Adjusted EBITDA was $2 million compared with the year-earlier quarter’s $1.9 million. Our projection for the quarter’s adjusted EBITDA was $1.5 million.
Greif’s Cash Position & Balance Sheet at Q3 End
Greif reported cash and cash equivalents of $194 million at the end of third-quarter fiscal 2024 compared with $181 million at the end of fiscal 2023. Cash flow from operating activities totaled $77 million in the quarter under review, a substantial decline from $202 million in the prior-year quarter.
The long-term debt amounted to $2.79 billion as of July 31, 2024, compared with $2.12 billion as of Oct. 31, 2023.
On Aug. 27, Greif’s board announced a quarterly cash dividend of 54 cents per share of Class A Common Stock and 81 cents per share of Class B Common Stock. This marks an increase of 2 cents in its quarterly dividend per share for Class A shares and 3 cents for Class B shares. The hike in the quarterly dividend is in sync with the company’s broader capital allocation strategy. The dividends will be paid out on Oct. 1 to shareholders of record at the close of business as of Sep. 16, 2024.
Greif sold its subsidiary, Delta Petroleum Company, on July 31, 2024, to PSC Group LLC. The business no longer aligns with GEF’s core growth strategy of expansion into resin-based industrial products serving higher-growth and less cyclical end markets.
The cash proceeds from the sale were received on Aug. 1, 2024, (subsequent to the end of the fiscal third quarter) and were utilized to pay back debt. The cash and debt balance mentioned above does not include the Delta sale.
GEF’s FY24 Outlook
Greif expects fiscal 2024 adjusted EBITDA between $675 million and $725 million. The adjusted free cash flow is anticipated between $175 million and $225 million.
Greif’s Share Price Performance
The company’s shares have lost 10.8% in the past year against the industry’s growth of 19.3%.
Image Source: Zacks Investment Research
GEF’s Zacks Rank
Greif currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Packaging Stocks
Packaging Corporation of America (PKG - Free Report) reported adjusted earnings per share of $2.20 in the second quarter of 2024, beating the Zacks Consensus Estimate of $2.12. The reported figure was higher than the company’s guidance of $2.07 in the quarter under review. However, the bottom line decreased 5% year over year.
PKG’s revenues in the second quarter grew 6.3% year over year to $2.08 billion. The top line beat the Zacks Consensus Estimate of $2.03 billion.
AptarGroup, Inc. (ATR - Free Report) reported second-quarter 2024 adjusted earnings per share of $1.37, beating the Zacks Consensus Estimate of $1.36. The bottom line increased 12% year over year from $1.22 (including comparable exchange rates).
ATR’s total revenues increased 1.6% year over year to $910 million in the reported quarter. The reported figure missed the Zacks Consensus Estimate of $923 million.
Sonoco Products Company (SON - Free Report) reported adjusted earnings per share of $1.28 in second-quarter 2024, beating the Zacks Consensus Estimate of $1.26. The figure was within the company’s guidance of $1.25-$1.35. The bottom line fell 7% from the prior-year quarter.
Sonoco’s net revenues were $1.62 billion, which missed the Zacks Consensus Estimate of $1.68 million. The top line fell 4.8% year over year, hurt by the divestiture of Protective Solutions and the thermoformed food packaging plant closure.