) reported first quarter 2013 (ended Jan 31, 2013) results, with
adjusted earnings of 46 cents per share decreasing 10% from 51
cents earned in the year-ago quarter and falling short of the
Zacks Consensus Estimate of 53 cents. Including special items,
earnings per share in the quarter stood at 43 cents compared with
38 cents in the year-ago quarter.
Sales inched up 2% year over year to $1.009 million, beating
the Zacks Consensus Estimate of $1.007 billion. Sales volumes
increased 3% but were offset by a 1% setback from lower selling
prices. Benefit from higher containerboard prices in paper
packaging were mitigated by selling price decreases due to the
pass-through of lower raw material costs in rigid industrial
packaging and flexible products.
Cost of sales increased 1% year over year to $821 million in
the reported quarter. Gross profit increased 6% to $187.3
million, helped by lower raw material costs and improved
operating leverage and efficiencies.
Selling, general and administrative expenses increased 8% to
$123 million. Adjusted operating profit edged up 1% year over
year to $64.7 million in the quarter, due to improved results in
the Paper Packaging, Rigid Industrial Packaging & Services
and Land Management segments, partially offset by the decline in
Flexible Products & Services segment. Adjusted EBITDA
(earnings before interest, taxes, depreciation and amortization)
was $104.1 million compared with $106.5 million in the year-ago
Rigid Industrial Packaging & Services: Sales remained flat
at $704 million as 4% higher volumes was offset by negative
impact of 1% from foreign currency translation and 3% decline in
selling prices. Volumes were particularly weak in Europe.
Adjusted operating income decreased 16% to $33.8
Flexible Products & Services: The segment reported sales
of $111.4 million, down 3% year over year, hurt by a negative
impact of 2% from lower selling prices and unfavorable foreign
currency translation of 1%. Adjusted operating income plunged 84%
to $0.7 million; hurt by lower volumes, higher production costs
and startup costs mainly related to the fabric hub in Saudi
Paper Packaging: Sales increased 10% year over year to $184.2
million in the quarter, helped by a 3% increase in volumes and a
benefit of 75 from higher selling prices and change in product
mix. The segment reported an adjusted operating profit of $27.7
million, up 37% from $20.2 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.
Land Management: Sales increased 32% year over year to $8.6
million in the quarter, driven by increased timber sales and
weather conditions favoring the ability to access the company's
timberlands. Operating income increased 40% to $4.2 million due
to increase in timber sales.
As of Jan 31, 2013, Greif had cash and cash equivalents of
$91.6 million, flat compared with Oct 31, 2012. Cash flow from
operating activities during the quarter was usage of $68.6
million compared with an inflow of $14 million in the prior
Long-term debt increased to $1.3 billion as of Jan 31, 2013
from $1,175.3 million as of Oct 31, 2012. Debt-to-capitalization
ratio increased to 51% as of Jan 31, 2013 from 49% as of Oct 31,
The company affirmed its previous expectation of EBITDA 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. For fiscal 2013, volumes
are expected to show improvement and margins will expand on the
back of stable raw material costs.
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 currently retains a short-term Zacks
Rank #3 (Hold).
Greif's peers in the containers-metal/glass industry are
Crown Holdings Inc.
Mobile Mini, Inc.
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