Earnings Highlights and Review: Greif’s Quarterly Sales Increased 6%, Adjusted EPS Surged 43%

LONDON, UK / ACCESSWIRE / June 27, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Greif, Inc. (NYSE: GEF), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=GEF, following the Company’s announcement of its second quarter fiscal 2017 financial results on June 06, 2017. The industrial packaging Company’s revenue and earnings fell short of market expectations. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Earnings Reviewed

For Q2 FY17, Greif’s net sales increased 5.7% to $887.4 million compared to net sales of $839.6 million in Q2 FY16. The Company’s revenue number fell short of analysts’ expectations of $899 million.

For Q2 FY17, Greif’s gross profit increased by $8.2 million to $181.9 million from $173.7 million in Q2 FY16. The Company’s operating profit decreased by $2.4 million to $80.4 million in the reported quarter and operating profit before special items increased by $5.6 million on a y-o-y basis to $84.9 million, or 9.6% of sales.

Greif’s net income totaled $36.0 million, or $0.61 per diluted Class A share, for Q2 FY17 compared to net income of $31.4 million, or $0.53 per diluted Class A share, in Q2 FY16. The Company’s net income, excluding the impact of special items, was $39.3 million, or $0.67 per diluted Class A share, versus net income, excluding the impact of special items, of $27.8 million, or $0.47 per diluted Class A share, in the prior year’s comparable quarter. The Company’s earnings numbers lagged behind Wall Street’s expectations of $0.71 per share.

Segment Results

During Q2 FY17, Grief’s Rigid Industrial Packaging & Services’ net sales increased by $34.7 million to $624.3 million compared to $589.6 million in Q2 FY16. The Company stated that divestitures and foreign currency translation both negatively impacted net sales by $27.1 million and $9.9 million, respectively.

The segment’s gross profit had increased by $10.0 million to $133.9 million. The Company’s operating profit declined by $3.7 million to $55.5 million compared to $59.2 million in the prior year’s corresponding quarter. Greif’s operating profit before special items had increased by $6.0 million to $60.3 million.

For Q2 FY17, Greif’s Paper Packaging & Services’ net sales increased by $21.5 million to $188.7 million compared to $167.2 million in Q2 FY16, driven by an increase in volumes in the Company’s mills and corrugators’ facilities and increased sales of specialty products. The segment’s gross profit declined by $4.5 million to $32.9 million; the decline was attributed to increased input costs, partially offset by volume increases. Paper Packaging & Services’ operating profit declined by $4.4 million to $19.8 million in the reported quarter compared to $24.2 million in the prior year’s same quarter. The segment’s operating profit, before special items, decreased by $3.5 million to $20.6 million.

For Q2 FY17, Grief’s net sales decreased by $9.6 million to $66.6 million compared to $76.2 million in Q2 FY16. The segment’s sales were negatively impacted by a divestiture and foreign currency translation of $2.7 million and $4.0 million, respectively.

In the reported quarter, the segment’s gross profit increased by $2.7 million to $12.3 million, margin improvement was attributed to reduced labor and fixed production costs. Paper Packaging & Services’ operating profit increased by $4.7 million to $1.8 million compared to negative operating profit of $2.9 million.

Grief’s Land Management’s net sales increased by $1.2 million to $7.8 million in Q2 FY17 primarily due to an increase in timber sales and consulting revenues. The segment’s operating profit increased by $1.0 million to $3.3 million due to the same factors that impacted net sales.

Dividend Summary

For Q2 FY17, Greif cash provided by operating activities decreased by $24.3 million to $59.6 million from $83.9 million partially due to raw material price increases and accelerated inventory purchases made in advance of those increases.

The Company’s free cash flow decreased by $27.7 million due to the same factors impacting cash provided by operating activities and a $3.4 million increase in cash paid for properties, plants, and equipment.

On June 06, 2017, Grief’s Board of Directors declared quarterly cash dividends of $0.42 per share of Class a Common Stock and $0.63 per share of Class B Common Stock. Dividends are payable on July 01, 2017, to stockholders of record at the close of business on June 19, 2017.

Outlook

For FY17, Grief narrowed the range for Class A earnings per share before special items guidance to $2.84 – $3.02. The Company narrowed FY17 free cash flow guidance to a range of $180.0 million to $200.0 million.

Stock Performance

Greif’s share price finished yesterday’s trading session at $55.51, slightly down 0.18%. A total volume of 161.44 thousand shares have exchanged hands. The Company’s stock price soared 2.44% in the last three months, 6.85% in the past six months, and 48.07% in the previous twelve months. Additionally, the stock gained 8.19% since the start of the year. Shares of the Company have a PE ratio of 27.66 and have a dividend yield of 3.03%. The stock currently has a market cap of $2.78 billion.

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