) reported first-quarter fiscal 2014 (ended Jan 31, 2014) results
with adjusted earnings of 49 cents per share, up 11.4% from 44
cents in the year-ago quarter. However, results came short of the
Zacks Consensus Estimate of 53 cents.
Including special items, earnings per share in the quarter were
51 cents compared with 41 cents in the year-ago quarter.
Revenues improved 2.6% year over year to $1,034 million from
$1,008.6 million. The top line missed the Zacks Consensus
Estimate of $1,035 million. The year-over-year growth in net
sales was primarily attributable to increase in selling prices,
along with solid performance of the Paper Packaging segment.
Cost of sales increased 3% year over year to $847.8 million.
Gross profit remained flat at $186 million compared with the
Selling, general and administrative expenses (SG&A) fell 1%
year over year to $121.5 million. Adjusted operating profit
increased 1% year over year to $66.4 million. Adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA)
declined 1.3% to $100.9 million from $102 million in the year-ago
Rigid Industrial Packaging & Services: This segment reported
sales of $712 million, up 1.1% from $704 million in the year-ago
quarter. The growth was driven by 3.7% increase in selling prices
primarily as a result of pass-through of higher resin costs,
changes in product mix and volume improvement in Europe. These
were adversely affected by unfavorable foreign currency
translation. Adjusted operating income went down to $29.5 million
from $31.5 million in the year-ago quarter.
Flexible Products & Services: Sales from this segment rose
1.6% year over year to $113 million. Higher selling prices and
volume increases in polywoven products were partially offset by
lower multiwall volumes. The segment reported an operating profit
of $0.8 million, up from $0.6 million a year ago.
Paper Packaging: Sales increased 10% year over year to $202.7
million, aided by a 3.1% rise in volumes and a benefit of 6.9%
from higher selling prices. The segment reported a record
adjusted operating profit of $30 million, up 8.3% from $27.7
million in the year-ago period. The increase was driven by higher
selling prices and improved volumes partially offset by higher
energy and input costs.
Land Management: This segment's sales decreased 27.9% year over
year to $6.2 million driven by lower planned sales of timber.
Operating income improved nearly three fold to $11.7 million on
gain on the disposal of timberland.
Greif ended the quarter with cash and cash equivalents of $82
million, as against $78 million at the end of the year-ago
comparable period. Cash from operations during the quarter was
$62.8 million versus $68.8 million in the prior-year quarter.
Long-term debt was $1.3 billion as of Jan 31, 2014, up from $1.2
billion as of Oct 31, 2013. The debt-to-capitalization ratio
expanded 320 bps to 49.5% as of Jan 31, 2014, from 46.3% as of
Oct 31, 2013. Capital expenditures were $34.5 million in the
reported quarter versus $28.5 million the prior-year comparable
For fiscal 2014, Greif reiterated EBITDA in the range of $490
million to $540 million. Excluding timberland gains of around $20
million or 20 cents per share, earnings was reaffirmed in the
band of approximately $2.60 to $3.15 per share. Capital
expenditure is expected to be less than $150 million for 2014.
Greif anticipates a gradual global economic recovery during
fiscal 2014, which should result in moderate sales and volume
improvement, along with slightly higher raw material costs. In
addition, Greif is planning to implement additional restructuring
activities for select geographies and assets.
The company will continue to benefit from the integration of
acquisitions and geographic expansion. In the first quarter,
Greif acquired a leading drum manufacturer and reconditioner and
consolidated its North American network. In addition to
strengthening its Midwest footprint with acquisitions, the
company continues to expand certain product lines across North
America to deal with anticipated demand from the North American
energy and manufacturing renaissance.
The company is expected to reduce SG&A expenses during the
remainder of fiscal 2014 to align its cost structure with
identified market opportunities. However, foreign exchange
volatility as well as social and political unrest remain
Delaware, OH-based Greif manufactures 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
Greif currently carries a Zacks Rank #4 (Sell). Some
better-ranked stocks in the same sector include
Packaging Corporation of America
). Both of these have a Zacks Rank #2 (Buy).
Another company in the sector,
Sealed Air Corp.
), reported fourth-quarter 2013 adjusted net earnings from
continuing operations at 34 cents per share, up 6% from 32 cents
earned in the prior-year quarter. The results, however, fell
short of the Zacks Consensus Estimate of 37 cents per share.
BALL CORP (BLL): Free Stock Analysis Report
GREIF INC (GEF): Free Stock Analysis Report
PACKAGING CORP (PKG): Free Stock Analysis
SEALED AIR CORP (SEE): Free Stock Analysis
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