The provider of industrial packaging products and services, Greif, Inc. (GEF - Free Report) reported adjusted earnings of 67 cents per share in second-quarter fiscal 2017 (ended Apr 30, 2017), that surged around 42.6% year over year. However, earnings fell short of the Zacks Consensus Estimate of 71 cents.
Including one-time items, the company posted earnings of 61 cents per share compared to 53 cents per share recorded in the year-ago quarter.
Operational Update
Revenues increased 5.7% year over year to $887.4 million from $839.6 million in the prior-year quarter. Revenues, however, missed the Zacks Consensus Estimate of $899 million.
Cost of sales increased 6% year over year to $705.5 million. Gross profit grew 4.7% year over year to $181.9 million. Gross margin contracted 20 basis points to 20.5% in the quarter. Selling, general and administrative (SG&A) expenses went up 2.6% year over year to $97 million. Adjusted operating profit climbed 7.2% year over year to $84.9 million. Adjusted operating margin expanded 20 basis points to 9.6% in the quarter.
Segmental Performance
Rigid Industrial Packaging & Services: This segment reported sales of $624.3 million, up 5.9% from $589.6 million in the year-ago quarter. Adjusted operating profit climbed 11% year over year to $60.3 million from $54.3 million.
Paper Packaging: Sales were up 12.9% year over year to $188.7 million, on the back of growth in volumes and increased sales of specialty products. The segment reported an adjusted operating profit of $20.6 million, down 14.5% year over year, due primarily to increased input costs.
Flexible Products & Services: Sales from this segment declined 12.6% year over year to $66.6 million. A divestiture and foreign currency translation, both adversely affected net sales by $2.7 million and $4.0 million, respectively. The segment reported adjusted operating profit of $2.1 million compared to an operating loss of $1.1 million in the year-earlier quarter.
Land Management: The segment’s sales increased 18% year over year to $7.8 million. Operating income rose 4.35% year over year to $3.3 million.
Financial Position
Greif ended the quarter with cash and cash equivalents of $87 million compared with $103.7 million as of Oct 31, 2016. Cash provided by operating activities decreased to $59.6 million for the fiscal second quarter compared with $83.9 million in the year-ago quarter, due to raw material price increases and accelerated inventory purchases made in advance of those increases. Long-term debt was $1033.6 million as of Apr 30, 2017, compared with $974.6 million as of Oct 31, 2016.
On Jun 6, Greif declared a quarterly dividend of $0.42 per share of Class A Common Stock and $0.63 per share of Class B Common Stock. The dividends are payable on Jul 1 to stockholders of record at the close of business as of Jun 19, 2017.
Guidance
Greif slashed its fiscal 2017 adjusted earnings per share guidance to the range of $2.84–$3.02 from the prior band of $2.78–$3.08. Compared to the adjusted earnings per share of $2.44 in fiscal 2016, the guidance depicts year-over-year growth in the range of 16–24%.
The company also trimmed its fiscal 2017 free cash flow guidance range to $180–$200 million due to the recently approved organic growth expansions in the Rigid Industrial Packaging & Services and Paper Packaging & Services segments.
Share price Performance
In the last one year, Greif has outperformed the Zacks classified Containers-Metal/Glass sub-industry with respect to price performance. The stock gained around 61.4%, while the industry recorded growth of 11.7% over the same time frame.
Greif currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector are AGCO Corporation (AGCO - Free Report) , Altra Industrial Motion Corp. and Parker-Hannifin Corporation (PH - Free Report) . All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AGCO has an average positive earnings surprise of 40.39% for the trailing four quarters. Altra Industrial Motion generated an average positive earnings surprise of 15.93% over the past four quarters, while Parker-Hannifin has an average positive earnings surprise of 14.94% for the last four quarters.
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The provider of industrial packaging products and services, Greif, Inc. (GEF - Free Report) reported adjusted earnings of 67 cents per share in second-quarter fiscal 2017 (ended Apr 30, 2017), that surged around 42.6% year over year. However, earnings fell short of the Zacks Consensus Estimate of 71 cents.
Including one-time items, the company posted earnings of 61 cents per share compared to 53 cents per share recorded in the year-ago quarter.
Operational Update
Revenues increased 5.7% year over year to $887.4 million from $839.6 million in the prior-year quarter. Revenues, however, missed the Zacks Consensus Estimate of $899 million.
Cost of sales increased 6% year over year to $705.5 million. Gross profit grew 4.7% year over year to $181.9 million. Gross margin contracted 20 basis points to 20.5% in the quarter. Selling, general and administrative (SG&A) expenses went up 2.6% year over year to $97 million. Adjusted operating profit climbed 7.2% year over year to $84.9 million. Adjusted operating margin expanded 20 basis points to 9.6% in the quarter.
Segmental Performance
Rigid Industrial Packaging & Services: This segment reported sales of $624.3 million, up 5.9% from $589.6 million in the year-ago quarter. Adjusted operating profit climbed 11% year over year to $60.3 million from $54.3 million.
Paper Packaging: Sales were up 12.9% year over year to $188.7 million, on the back of growth in volumes and increased sales of specialty products. The segment reported an adjusted operating profit of $20.6 million, down 14.5% year over year, due primarily to increased input costs.
Flexible Products & Services: Sales from this segment declined 12.6% year over year to $66.6 million. A divestiture and foreign currency translation, both adversely affected net sales by $2.7 million and $4.0 million, respectively. The segment reported adjusted operating profit of $2.1 million compared to an operating loss of $1.1 million in the year-earlier quarter.
Land Management: The segment’s sales increased 18% year over year to $7.8 million. Operating income rose 4.35% year over year to $3.3 million.
Financial Position
Greif ended the quarter with cash and cash equivalents of $87 million compared with $103.7 million as of Oct 31, 2016. Cash provided by operating activities decreased to $59.6 million for the fiscal second quarter compared with $83.9 million in the year-ago quarter, due to raw material price increases and accelerated inventory purchases made in advance of those increases. Long-term debt was $1033.6 million as of Apr 30, 2017, compared with $974.6 million as of Oct 31, 2016.
On Jun 6, Greif declared a quarterly dividend of $0.42 per share of Class A Common Stock and $0.63 per share of Class B Common Stock. The dividends are payable on Jul 1 to stockholders of record at the close of business as of Jun 19, 2017.
Guidance
Greif slashed its fiscal 2017 adjusted earnings per share guidance to the range of $2.84–$3.02 from the prior band of $2.78–$3.08. Compared to the adjusted earnings per share of $2.44 in fiscal 2016, the guidance depicts year-over-year growth in the range of 16–24%.
The company also trimmed its fiscal 2017 free cash flow guidance range to $180–$200 million due to the recently approved organic growth expansions in the Rigid Industrial Packaging & Services and Paper Packaging & Services segments.
Share price Performance
In the last one year, Greif has outperformed the Zacks classified Containers-Metal/Glass sub-industry with respect to price performance. The stock gained around 61.4%, while the industry recorded growth of 11.7% over the same time frame.
Greif currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector are AGCO Corporation (AGCO - Free Report) , Altra Industrial Motion Corp. and Parker-Hannifin Corporation (PH - Free Report) . All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AGCO has an average positive earnings surprise of 40.39% for the trailing four quarters. Altra Industrial Motion generated an average positive earnings surprise of 15.93% over the past four quarters, while Parker-Hannifin has an average positive earnings surprise of 14.94% for the last four quarters.
3 Top Picks to Ride the Hottest Tech Trend
Zacks just released a Special Report to guide you through a space that has already begun to transform our entire economy...
Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>
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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