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Greif, Inc. (GEF - Free Report) reported adjusted earnings of 47 cents per share in second-quarter fiscal 2016 results (ended Apr 30, 2016), declining roughly 11.3% year over year. Earnings also missed the Zacks Consensus Estimate of 57 cents.
Including one-time items, the company posted earnings of 53 cents per share, which increased from 35 cents per share in the year-ago quarter.
Operational Update
Revenues fell 8.3% year over year to $840 million from $916 million in the year-ago quarter which were hurt primarily by the volume of products sold, selling prices, product mix and the impact of changes in foreign currencies against the U.S. dollar. The top line however beat the Zacks Consensus Estimate of $832.9 million. Excluding the effect of divestitures and currency fluctuations, sales were flat compared to the prior-year quarter.
Cost of sales decreased 9.4% year over year to $666 million. Gross profit declined 4% year over year to $173.7 million. Selling, general and administrative expenses (SG&A) decreased 12.9% year over year to $94.5 million. Adjusted operating profit increased 9.2% year over year to $79.3 million.
Segmental Performance
Rigid Industrial Packaging & Services: This segment reported sales of $589.6 million, down 11.5% from $666.6 million in the year-ago quarter. Excluding the effect of divestitures, net sales declined $57.9 million due to unfavorable foreign currency. Adjusted operating income however increased 9.9% to $54.3 million from $49.4 million in the year-ago quarter.
Paper Packaging: Sales grew 4.2% year over year to $167.2 million. The growth was primarily due to volume increases related to increased containerboard output from the Riverville modernization project in the third quarter of 2015 and the addition of two lines in the corrugator business. This was offset by a reduction in prices as a result of a change in index prices, hurting the first and second quarters of 2016. The segment reported an operating profit of $24.2 million, down 10.7% from the year-ago quarter.
Flexible Products & Services: Sales from this segment went down 7.1% year over year to $76.2 million due primarily to reduced volumes and the negative influence of foreign currency. The segment reported an adjusted operating loss of $1.1 million, narrower than the prior-year operating loss of $5.7 million.
Land Management: This segment’s sales declined 4.3% year over year to $6.6 million. Adjusted operating income was $2 million compared with $2.6 million in the prior-year quarter.
Financial Position
At the end of second-quarter fiscal 2016, Greif had cash and cash equivalents of $89.6 million compared with $106.2 million as of Oct 31, 2015. The company reported cash from operations of $83.9 million in the three-month period ending Apr 30, 2016, compared with $32.8 million in the comparable year-ago period. Long-term debt was $777 million as of Apr 30, 2016, compared with $1,116 million as of Oct 31, 2015.
Guidance
Greif raised earnings per share guidance for full-year fiscal 2016 to the range of $2.20 to $2.46, from the prior band of $2.10 to $2.40 per share. This excludes gains and losses on the sale of businesses, timberland and property, plant and equipment, acquisition costs and restructuring and impairment charges.
The company expects fiscal 2016 results to continue to gain from further implementation of its transformation efforts. However, a sluggish global industrial economy, weaker containerboard prices and the consistent strengthening of the U.S. dollar, compared to other currencies will remain as headwinds.
Delaware, OH-based Greif makes and sells industrial packaging products, bulk containers, and containerboard and corrugated products worldwide. The company provides services such as blending, filling, packaging and recycling of industrial containers for a wide range of industries. Greif also manages timber properties in North America and offers land management consulting services.
Zacks Rank
Greif currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector include Crown Holdings Inc. (CCK - Free Report) , Sonoco Products Co. (SON - Free Report) and Berry Plastics Group, Inc. (BERY - Free Report) . All these stocks carry a Zacks Rank #2 (Buy).
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Greif's Q2 Earnings Miss, Revenues Bets, Raises FY16 View
Greif, Inc. (GEF - Free Report) reported adjusted earnings of 47 cents per share in second-quarter fiscal 2016 results (ended Apr 30, 2016), declining roughly 11.3% year over year. Earnings also missed the Zacks Consensus Estimate of 57 cents.
Including one-time items, the company posted earnings of 53 cents per share, which increased from 35 cents per share in the year-ago quarter.
Operational Update
Revenues fell 8.3% year over year to $840 million from $916 million in the year-ago quarter which were hurt primarily by the volume of products sold, selling prices, product mix and the impact of changes in foreign currencies against the U.S. dollar. The top line however beat the Zacks Consensus Estimate of $832.9 million. Excluding the effect of divestitures and currency fluctuations, sales were flat compared to the prior-year quarter.
Cost of sales decreased 9.4% year over year to $666 million. Gross profit declined 4% year over year to $173.7 million. Selling, general and administrative expenses (SG&A) decreased 12.9% year over year to $94.5 million. Adjusted operating profit increased 9.2% year over year to $79.3 million.
Segmental Performance
Rigid Industrial Packaging & Services: This segment reported sales of $589.6 million, down 11.5% from $666.6 million in the year-ago quarter. Excluding the effect of divestitures, net sales declined $57.9 million due to unfavorable foreign currency. Adjusted operating income however increased 9.9% to $54.3 million from $49.4 million in the year-ago quarter.
Paper Packaging: Sales grew 4.2% year over year to $167.2 million. The growth was primarily due to volume increases related to increased containerboard output from the Riverville modernization project in the third quarter of 2015 and the addition of two lines in the corrugator business. This was offset by a reduction in prices as a result of a change in index prices, hurting the first and second quarters of 2016. The segment reported an operating profit of $24.2 million, down 10.7% from the year-ago quarter.
Flexible Products & Services: Sales from this segment went down 7.1% year over year to $76.2 million due primarily to reduced volumes and the negative influence of foreign currency. The segment reported an adjusted operating loss of $1.1 million, narrower than the prior-year operating loss of $5.7 million.
Land Management: This segment’s sales declined 4.3% year over year to $6.6 million. Adjusted operating income was $2 million compared with $2.6 million in the prior-year quarter.
Financial Position
At the end of second-quarter fiscal 2016, Greif had cash and cash equivalents of $89.6 million compared with $106.2 million as of Oct 31, 2015. The company reported cash from operations of $83.9 million in the three-month period ending Apr 30, 2016, compared with $32.8 million in the comparable year-ago period. Long-term debt was $777 million as of Apr 30, 2016, compared with $1,116 million as of Oct 31, 2015.
Guidance
Greif raised earnings per share guidance for full-year fiscal 2016 to the range of $2.20 to $2.46, from the prior band of $2.10 to $2.40 per share. This excludes gains and losses on the sale of businesses, timberland and property, plant and equipment, acquisition costs and restructuring and impairment charges.
The company expects fiscal 2016 results to continue to gain from further implementation of its transformation efforts. However, a sluggish global industrial economy, weaker containerboard prices and the consistent strengthening of the U.S. dollar, compared to other currencies will remain as headwinds.
Delaware, OH-based Greif makes and sells industrial packaging products, bulk containers, and containerboard and corrugated products worldwide. The company provides services such as blending, filling, packaging and recycling of industrial containers for a wide range of industries. Greif also manages timber properties in North America and offers land management consulting services.
Zacks Rank
Greif currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector include Crown Holdings Inc. (CCK - Free Report) , Sonoco Products Co. (SON - Free Report) and Berry Plastics Group, Inc. (BERY - Free Report) . All these stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>