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Greif (GEF) Earnings & Sales Surpass Estimates in Q2, Up Y/Y

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Greif, Inc. (GEF - Free Report) reported adjusted earnings per share (EPS) of $2.41 in second-quarter fiscal 2022 (ended Apr 30, 2022), which surpassed the Zacks Consensus Estimate of $1.79. The bottom line surged 113% year on year.

Including one-time items, EPS was $2.09 in the quarter compared with $2.51 in the prior-year quarter.

Operational Update

Sales surged 24% year over year to $1,667 million. The top line beat the Zacks Consensus Estimate of $1,591 million.

Cost of sales was up 24% year over year to $1,329 million. Gross profit amounted to $339 million, up 27% from the prior-year quarter’s levels. The gross margin came in at 20.3% compared with the prior-year quarter’s 19.8%.

Selling, general and administrative (SG&A) expenses came in at $147 million, flat year over year. Adjusted EBITDA increased 42% year over year to $251 million in the fiscal second quarter.

Segmental Performance

Sales in the Global Industrial Packaging segment increased 22% year over year to $972 million. The segment’s adjusted EBITDA amounted to $131 million compared with the year-ago quarter’s $106 million.

The Paper Packaging segment sales rose 28% year over year to $689 million in the fiscal second quarter. The segment’s adjusted EBITDA moved up to $117 million from the prior-year quarter’s $68 million.

The Land Management segment’s sales totaled $6.3 million in the reported quarter compared with $5.6 million in the year-ago quarter. Adjusted EBITDA was $3 million compared with the year-earlier quarter’s $2 million.

Financial Position

Greif reported cash and cash equivalents of $108.7 million at the end of second-quarter fiscal 2022 compared with $124.6 at the end of fiscal 2021. Cash flow from operating activities totaled $139 million in the quarter under review compared with $152 million in the prior-year quarter.

Long-term debt amounted to $1,991 million as of Apr 30, 2022, compared with $2,055 million as of Oct 31, 2021.

On Jun 7, Greif’s board announced a quarterly cash dividend of 46 cents per share of Class A Common Stock and 69 cents per share of Class B Common Stock. The dividend will be paid out on Jul 1 to shareholders of record at the close of business as of Jun 17, 2022.

Outlook

Given strong end-market demand, Greif expects fiscal 2022 adjusted EPS between $7.45 and $7.75. Adjusted free cash flow is anticipated to be between $380 million and $440 million.

Business Update

Greif completed the divestment of its 50% ownership in the Flexible Products & Services joint venture to Gulf Refined Packaging for cash proceeds of $131.6 million. The company utilized the fund for the repayment of debt.

Price Performance

Greif’s shares have gained 0.9% so far this year compared with the industry’s growth of 4%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Key Picks

Greif currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Graphic Packaging Holding Co. (GPK - Free Report) , Myers Industries (MYE - Free Report) and Packaging Corporation of America (PKG - Free Report) . While GPK & MYE flaunt a Zacks Rank #1 (Strong Buy), PKG carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.

Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 14.8% in a year.

Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.

MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have gained 13% in the past year.

Packaging Corp. has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings rose 4.2% in the past 60 days.

PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have gained 4% in the past year.

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