The provider of industrial packaging products and services, Greif, Inc. (GEF - Free Report) reported adjusted earnings of 65 cents per share in fourth-quarter fiscal 2016 (ended Oct 31, 2016), which declined 14% year over year due to changes in income tax expense. Also, earnings fell short of the Zacks Consensus Estimate of 68 cents.
Including one-time items, the company posted earnings of 14 cents per share, a 33% plunge from 21 cents per share recorded in the year-ago quarter.
Operational Update
Revenues edged down 0.9% year over year to $868 million from $869 million in the prior-year quarter, however beat the Zacks Consensus Estimate of $846 million. Adjusting for the effect of and currency translation, sales increased 5.3% on a year-over-year basis.
Cost of sales decreased 2% year over year to $684 million. Gross profit grew 9% year over year to $183 million. Gross margin expanded 180 basis points to 21.1% in the quarter. Selling, general and administrative (SG&A) expenses inched up 1% year over year to $96.5 million. Adjusted operating profit increased 21% year over year to $87 million. Adjusted operating margin improved 170 basis points to 10% in the quarter.
Segmental Performance
Rigid Industrial Packaging & Services: This segment reported sales of $603 million, up 0.3% from $601 million in the year-ago quarter. Excluding the effect of divestitures and currency translation, net sales was up 7% due to the impact of strategic volume and pricing decisions. Adjusted operating income surged 44% to $60.3 million from $41.8 million in the year-ago quarter.
Paper Packaging: Sales were up 5% year over year to $189 million, on the back of increases in volumes, offset by reductions in the published containerboard index prices which occurred during 2016. The segment reported an operating profit of $24.7 million, down 24% from the year-ago quarter, hit by higher input costs, primarily old corrugated container costs, as well as reductions in published containerboard index prices.
Flexible Products & Services: Sales from this segment went down 6% year over year to $69 million. Excluding the impact of divestitures, sales decreased 3% mainly due to the negative impact of currency translation. The segment reported adjusted operating profit of $0.1 million versus operating loss of $5.3 million in the prior-year quarter. The improvement was driven by lower fixed costs and the impact of strategic volume and pricing decisions throughout 2016.
Land Management: The segment’s sales plummeted 54% year over year to $6.6 million due to the sale of 5,200 acres of development properties in Canada during the prior-year quarter. Adjusted operating income improved 43% year over year to $2 million.
Financial Position
At the end of fiscal 2016, Greif had cash and cash equivalents of $103.7 million compared with $106.2 million as of fiscal 2015 end. The company reported cash from operations of $301 million in fiscal 2016, compared with $206 million in the prior fiscal. Long-term debt was $974.6 million as of fiscal 2016 end, compared with $1,116 million as of fiscal 2015 end.
On Dec 6, 2016, Greif declared a quarterly dividend of 42 cents per share of Class A Common Stock and 62 cents per share of Class B Common Stock. Dividends are payable on Jan 1, 2017, to stockholders of record at the close of business as of Dec 19, 2016.
Fiscal 2016 Performance
For fiscal 2016, Greif reported adjusted earnings of $2.44 per share, up 12% from the prior fiscal. Earnings, however, fell short of the Zacks Consensus Estimate of $2.46. Including one-time items, the company reported earnings of $1.28 per share, up 4% year over year. Revenues dipped 8% year over year to $3.32 billion from $3.62 billion in the year-ago quarter, but came ahead of the Zacks Consensus Estimate of $3.30 billion.
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The provider of industrial packaging products and services, Greif, Inc. (GEF - Free Report) reported adjusted earnings of 65 cents per share in fourth-quarter fiscal 2016 (ended Oct 31, 2016), which declined 14% year over year due to changes in income tax expense. Also, earnings fell short of the Zacks Consensus Estimate of 68 cents.
Including one-time items, the company posted earnings of 14 cents per share, a 33% plunge from 21 cents per share recorded in the year-ago quarter.
Operational Update
Revenues edged down 0.9% year over year to $868 million from $869 million in the prior-year quarter, however beat the Zacks Consensus Estimate of $846 million. Adjusting for the effect of and currency translation, sales increased 5.3% on a year-over-year basis.
Cost of sales decreased 2% year over year to $684 million. Gross profit grew 9% year over year to $183 million. Gross margin expanded 180 basis points to 21.1% in the quarter. Selling, general and administrative (SG&A) expenses inched up 1% year over year to $96.5 million. Adjusted operating profit increased 21% year over year to $87 million. Adjusted operating margin improved 170 basis points to 10% in the quarter.
Segmental Performance
Rigid Industrial Packaging & Services: This segment reported sales of $603 million, up 0.3% from $601 million in the year-ago quarter. Excluding the effect of divestitures and currency translation, net sales was up 7% due to the impact of strategic volume and pricing decisions. Adjusted operating income surged 44% to $60.3 million from $41.8 million in the year-ago quarter.
Paper Packaging: Sales were up 5% year over year to $189 million, on the back of increases in volumes, offset by reductions in the published containerboard index prices which occurred during 2016. The segment reported an operating profit of $24.7 million, down 24% from the year-ago quarter, hit by higher input costs, primarily old corrugated container costs, as well as reductions in published containerboard index prices.
Flexible Products & Services: Sales from this segment went down 6% year over year to $69 million. Excluding the impact of divestitures, sales decreased 3% mainly due to the negative impact of currency translation. The segment reported adjusted operating profit of $0.1 million versus operating loss of $5.3 million in the prior-year quarter. The improvement was driven by lower fixed costs and the impact of strategic volume and pricing decisions throughout 2016.
Land Management: The segment’s sales plummeted 54% year over year to $6.6 million due to the sale of 5,200 acres of development properties in Canada during the prior-year quarter. Adjusted operating income improved 43% year over year to $2 million.
Financial Position
At the end of fiscal 2016, Greif had cash and cash equivalents of $103.7 million compared with $106.2 million as of fiscal 2015 end. The company reported cash from operations of $301 million in fiscal 2016, compared with $206 million in the prior fiscal. Long-term debt was $974.6 million as of fiscal 2016 end, compared with $1,116 million as of fiscal 2015 end.
On Dec 6, 2016, Greif declared a quarterly dividend of 42 cents per share of Class A Common Stock and 62 cents per share of Class B Common Stock. Dividends are payable on Jan 1, 2017, to stockholders of record at the close of business as of Dec 19, 2016.
Fiscal 2016 Performance
For fiscal 2016, Greif reported adjusted earnings of $2.44 per share, up 12% from the prior fiscal. Earnings, however, fell short of the Zacks Consensus Estimate of $2.46. Including one-time items, the company reported earnings of $1.28 per share, up 4% year over year. Revenues dipped 8% year over year to $3.32 billion from $3.62 billion in the year-ago quarter, but came ahead of the Zacks Consensus Estimate of $3.30 billion.
GREIF INC Price, Consensus and EPS Surprise
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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