) reported fourth quarter 2012 (ended Oct 31, 2012) results, with
adjusted earnings of 63 cents per share, down 3% from 65 cents
earned in the year-ago quarter. However, earnings per share
comfortably surpassed the Zacks Consensus Estimate of 52
Weaker-than-expected volumes in Europe, particularly in the
Rigid Industrial Packaging & Services and Flexible Products
& Services segments, were somewhat offset by solid results
for Land Management and relatively stable conditions in North
America. Including special items, earnings per share in the
quarter stood at 45 cents compared with 36 cents in the year-ago
Sales dipped 5% year over year to $1,075.6 million, falling
short of the Zacks Consensus Estimate of $1,092 million. Sales
volumes increased 1% but were more than offset by a negative 4%
impact from foreign currency translation and a 2% setback from
lower selling prices.
Cost of sales improved 5% year over year to $881 million in
the reported quarter. Selling, general and administrative
expenses remained flat year over year at $120.8 million. Adjusted
operating profit decreased 16% year over year to $78.2 million in
the quarter, as weak results in Rigid Industrial Packaging &
Services and Flexible Products & Services offset solid
performance of Paper Packaging and Land Management.
Adjusted EBITDA (earnings before interest, taxes, depreciation
and amortization) was $110.3 million compared with $130.2 million
in the year-ago quarter.
Rigid Industrial Packaging & Services:
Sales declined 6% year over year to $764 million in the reported
quarter, dragged down by negative impact of 4% from foreign
currency translation, 1% lower sales volume, and 1% due to lower
selling prices. Adjusted operating income decreased 22% to $47.6
Flexible Products & Services:
The segment reported sales of $114.9 million, down 14% year over
year. A 1% increase in volumes was not enough to mitigate the
negative impact of 11% from lower selling prices, 4% negative
impact from foreign currency translation. Adjusted operating
income plunged 83% to $1.8 million; hurt by lower volumes, higher
production costs and startup costs mainly related to the fabric
hub in Saudi Arabia.
Sales increased 6% year over year to $189.6 million in the
quarter, helped by a 7% increase in volumes, which offset a
negative impact of 1% from lower selling prices. The segment
reported an operating profit of $25.2 million, up 37% from $18.4
million in the prior-year quarter. The increase was driven by
higher volumes and gross profit margin improvement mainly on the
back of lower raw material costs.
Sales increased 13% year over year to $7.1 million in the
quarter, driven by favorable weather conditions and customer
demand. Operating income increased 24% to $3.6 million.
Fiscal 2012 Performance
Adjusted earnings stood at $2.66 in fiscal 2012, a penny ahead
of the Zacks Consensus Estimate, but down 29% from $3.77 earned
in the previous year. Including one-time items, fiscal 2012
earnings were $2.17 per share compared with $3.04 in fiscal 2011.
Total revenue increased 1% to $4.27 billion from $4.25 billion in
the prior fiscal.
Greif ended fiscal 2012 with cash and cash equivalents of
$91.7 million, down from $127.4 million at the end of the
previous fiscal. Cash flow from operating activities during the
year improved substantially to $473.5 million from $172.3 million
in the prior year. During the year, free cash flow was an
impressive $303.8 million compared with $6.5 million in fiscal
Long-term debt declined to $1,175 million as of fiscal 2012
end from $1,371.4 million at the end of the fiscal 2011.
Debt-to-capitalization ratio improved to 49% as of fiscal 2012
end from 53% as of the end of fiscal 2011.
The company estimates EBITDA to be in the range of $450
million - $500 million in fiscal 2013. Interest expense is
expected to be lower compared with fiscal 2012, due to lower debt
levels. Capital expenditures are expected to range between $140
million and $150 million.
Contributions from contingency actions implemented during
2012, acquisition integration, and full realization of the $50
per ton containerboard price increase during the fourth quarter
will benefit results in the next fiscal. For fiscal 2013, volumes
are expected to show improvement and margins will expand on the
back of stable raw material costs, along with improved operating
performance and full realization of the containerboard price
Delaware, Ohio-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
provides land management consulting services. Greif competes with
International Paper Company
). The stock retains a quantitative Zacks #4 Rank (short-term
Sell rating) over the near term.
GREIF INC (GEF): Free Stock Analysis Report
INTL PAPER (IP): Free Stock Analysis Report
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