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Greif's Q3 Earnings & Revs Lag Estimates - Analyst Blog

By: Zacks.com
Posted: 9/5/2013 1:13:00 PM
Referenced Stocks: BLL;CCK;GEF;SLGN

Greif, Inc. ( GEF ) reported third quarter fiscal 2013 (ended Jul 31, 2013) results with adjusted earnings of 84 cents per share, up 21.7% from 69 cents earned in the year-ago quarter. The results, however, missed the Zacks Consensus Estimate of 89 cents.

Including special items, earnings per share in the quarter were 80 cents compared with 64 cents in the year-ago quarter.

Operational Updates

Revenues in the reported quarter increased to $1,129.7 million from $1,102.9 million in the year-ago quarter. The top line lagged the Zacks Consensus Estimate of $1,156 million. The 2.4% year-over-year increase in net sales was primarily attributable to the impact of a 1.2% increase in selling prices along with a 1% increase in volumes.

Cost of sales increased to $912.4 million in the reported quarter from $900.7 million in the prior-year quarter. Gross profit improved 7.5% year over year to $217.3 million.

Selling, general and administrative expenses increased 1.2% year over year to $118.2 million. Adjusted operating profit went up 11.8% year over year to $101 million. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 5.4% to $136.5 million from $129.5 million in the year-ago quarter.

Segmental Performance

Rigid Industrial Packaging & Services: The segment reported sales of $802.2 million, down from $805.2 in the year-ago quarter. The decline was due to a negative impact of 1% from lower selling prices, partly offset by 0.5% increase in volume. Sales were also affected by a delayed start to the agriculture seasons in North America and Europe. Adjusted operating income increased 1.5% year over year to $61.7 million.

Flexible Products & Services: Sales increased 0.7% year over year to $110.5 million driven by 5.5% increase in volume and 1.4% positive impact of foreign currency translation, partly offset by 6.1% decline in selling prices. However, operating profit in the quarter was nominal compared to the prior year quarter's operating income of $1.4 million.

Paper Packaging: Sales increased 14% year over year to $208.4 million, helped by a 0.8% increase in volumes and a benefit of 13.3% from higher selling prices. The segment reported an adjusted operating profit of $30.7 million, up 46% from $21 million in the prior-year quarter. The increase was driven by higher selling prices, higher volumes and moderately stable input costs.

Land Management: Sales increased 62% year over year to $8.6 million, driven by increased timber sales volumes along with higher prices for timber products. Operating income improved about three fold to $4.3 million on higher timber sales.

Financial Position

As of Jul 31, 2013, Greif had cash and cash equivalents of $94.9 million, up from $91.5 million as of Oct 31, 2012. Cash flow from operating activities during the quarter was $79.8 million compared with $155 million in the prior quarter.

Long-term debt increased to $1.2 billion as of Jul 31, 2013 from $1.1 billion as of Oct 31, 2012. Debt-to-capitalization ratio increased to 48% as of Jul 31, 2013 from 47.6% as of Oct 31, 2012.

Outlook

The company reiterated its previous expectation of EBITDA for fiscal 2013 in the range of $475 million to $500 million. For the fourth quarter of 2013, Greif expects modest sales growth from the agricultural sector and stable raw material costs across the business portfolio.

However, the company anticipates that the rigid industrial packaging business will hurt by continued challenging market conditions due to delayed agricultural season in Europe and North America. Its flexible products business will also be negatively impacted by challenges related to the new facilities.

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).

Peer Performance

Ball Corp. ( BLL ) reported second-quarter 2013 adjusted earnings of 85 cents per share, down 4.5% from the year-ago adjusted earnings of 89 cents per share. The results, however, beat the Zacks Consensus Estimate by a penny.

Silgan Holdings Inc. ( SLGN ) posted adjusted earnings of 63 cents per share in the second-quarter of 2013, up 15% from 55 cents earned in the year-ago quarter. The improvement was driven by solid operating performance by the metal and plastic container businesses. Earnings were consistent with the company's guided range of 60 cents to 70 cents per share but missed the Zacks Consensus Estimate of 65 cents.

Crown Holdings Inc. ( CCK ) reported second-quarter 2013 adjusted earnings of 96 cents per share, up 14% from 84 cents earned in the year-ago quarter. The results beat the Zacks Consensus Estimate of 93 cents.  Including restructuring charges, earnings per share in the reported quarter came in at 93 cents, up 4% from 89 cents in the year-ago quarter.



BALL CORP (BLL): Free Stock Analysis Report

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SILGAN HOLDINGS (SLGN): Free Stock Analysis Report

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