Greif, Inc 10-Q for FY2020 Q1

Greif, Inc (GEF)

10-Q 2020-02-28 For: 2020-01-31

Added on April 06, 2026

About this 10-Q

Greif, Inc filed this 10-Q on February 28, 2020, covering the quarter ended January 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended January 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.11B; up 24.0% from $897M a year earlier
Net income: $32.3M; up 8.8% from net income of $29.7M a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →



Delaware		31-4388903
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



425 Winter Road	Delaware	Ohio	43015
(Address of principal executive offices)			(Zip Code)



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐



Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock	GEF	New York Stock Exchange
Class B Common Stock	GEF-B	New York Stock Exchange



Class A Common Stock	26,260,943 shares
Class B Common Stock	22,007,725 shares



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Item		Page
	Part I. Financial Information
1	Financial Statements	4
	Condensed Consolidated Statements of Income for the Three Months Ended January 31, 2020 and 2019 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended January 31, 2020 and 2019 (Unaudited)	5
	Condensed Consolidated Balance Sheets at January 31, 2020 (Unaudited) and October 31, 2019	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended January 31, 2020 and 2019 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
3	Quantitative and Qualitative Disclosures About Market Risk	47
4	Controls and Procedures	47

	Part II. Other Information
1A	Risk Factors	48
2	Unregistered Sales of Equity Securities and Use of Proceeds	48
6	Exhibits	48
	Signatures	49



	Three Months Ended January 31,
(in millions, except per share amounts)	2020			2019
Net sales	$	1,112.4		$	897.0
Cost of products sold	889.8			724.2
Gross profit	222.6			172.8
Selling, general and administrative expenses	135.4			98.1
Restructuring charges	3.3			3.7
Acquisition and integration related costs	5.1			2.6
Non-cash asset impairment charges	0.1			2.1
Gain on disposal of properties, plants and equipment, net	(0.5		)	(0.9		)
Operating profit	79.2			67.2
Interest expense, net	30.7			11.7
Non-cash pension settlement income	(0.1		)	—
Other (income) expense, net	1.3			(0.2		)
Income before income tax expense and equity earnings of unconsolidated affiliates, net	47.3			55.7
Income tax expense	11.4			20.0
Equity earnings of unconsolidated affiliates, net of tax	(0.2		)	(0.1		)
Net income	36.1			35.8
Net income attributable to noncontrolling interests	(3.8		)	(6.1		)
Net income attributable to Greif, Inc.	$	32.3		$	29.7
Basic earnings per share attributable to Greif, Inc. common shareholders:
Class A common stock	$	0.55		$	0.51
Class B common stock	$	0.81		$	0.75
Diluted earnings per share attributable to Greif, Inc. common shareholders:
Class A common stock	$	0.55		$	0.51
Class B common stock	$	0.81		$	0.75
Weighted-average number of Class A common shares outstanding:
Basic	26.3			26.0
Diluted	26.4			26.0
Weighted-average number of Class B common shares outstanding:
Basic	22.0			22.0
Diluted	22.0			22.0
Cash dividends declared per common share:
Class A common stock	$	0.44		$	0.44
Class B common stock	$	0.65		$	0.65



	Three Months Ended January 31,
(in millions)	2020			2019
Net income	$	36.1		$	35.8
Other comprehensive income (loss), net of tax:
Foreign currency translation	(3.1		)	5.2
Derivative financial instruments	0.2			(5.7		)
Minimum pension liabilities	21.7			(0.8		)
Other comprehensive income (loss), net of tax	18.8			(1.3		)
Comprehensive income	54.9			34.5
Comprehensive income attributable to noncontrolling interests	1.8			7.1
Comprehensive income attributable to Greif, Inc.	$	53.1		$	27.4



(in millions)	January 31, 2020			October 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	90.8		$	77.3
Trade accounts receivable, less allowance of $7.3 in 2020 and $6.8 in 2019	641.7			664.2
Inventories:
Raw materials	248.7			238.4
Work-in-process	10.5			11.3
Finished goods	111.7			108.5
Assets held for sale	4.6			4.1
Assets held by special purpose entities	50.9			—
Prepaid expenses	54.8			44.0
Other current assets	93.9			101.2
	1,307.6			1,249.0
Long-term assets
Goodwill	1,522.1			1,517.8
Other intangible assets, net of amortization	758.9			776.5
Deferred tax assets	14.9			15.9
Assets held by special purpose entities	—			50.9
Pension asset	36.4			35.4
Operating lease assets	327.2			—
Other long-term assets	89.6			90.9
	2,749.1			2,487.4
Properties, plants and equipment
Timber properties, net of depletion	272.7			272.4
Land	177.0			178.0
Buildings	528.2			531.0
Machinery and equipment	1,877.3			1,866.2
Capital projects in progress	174.4			170.4
	3,029.6			3,018.0
Accumulated depreciation	(1,364.8		)	(1,327.7		)
	1,664.8			1,690.3
Total assets	$	5,721.5		$	5,426.7



	Three Months Ended January 31,
(in millions)	2020			2019
Cash flows from operating activities:
Net income	$	36.1		$	35.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	61.3			31.3
Non-cash asset impairment charges	0.1			2.1
Non-cash pension settlement income	(0.1		)	—
Gain on disposals of properties, plants and equipment, net	(0.5		)	(0.9		)
Unrealized foreign exchange (gain) loss	0.5			0.5
Deferred income tax benefit (expense)	(7.0		)	(4.3		)
Transition tax (benefit) expense	—			2.3
Amortization of operating lease assets	14.9			—
Other, net	(0.3		)	—
Increase (decrease) in cash from changes in certain assets and liabilities:
Trade accounts receivable	21.5			12.6
Inventories	(17.0		)	(35.2		)
Deferred purchase price on sold receivables	—			(6.9		)
Accounts payable	(32.2		)	(22.9		)
Restructuring reserves	(1.5		)	(0.9		)
Pension and post-retirement benefit liabilities	(6.1		)	(0.7		)
Other, net	(50.2		)	(22.4		)
Net cash provided by (used in) operating activities	19.5			(9.6		)
Cash flows from investing activities:
Purchases of properties, plants and equipment	(37.5		)	(26.0		)
Purchases of and investments in timber properties	(1.6		)	(0.9		)
Proceeds from the sale of properties, plants, equipment and other assets	1.5			1.5
Proceeds from the sale of businesses	—			0.8
Proceeds from insurance recoveries	—			0.2
Net cash used in investing activities	(37.6		)	(24.4		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	429.0			349.6
Payments on long-term debt	(311.4		)	(267.6		)
Payments on current portion of long-term debt	(0.1		)	—
Proceeds (payments) on short-term borrowings, net	(3.6		)	0.9
Proceeds from trade accounts receivable credit facility	2.5			11.5
Payments on trade accounts receivable credit facility	(57.9		)	(33.4		)
Dividends paid to Greif, Inc. shareholders	(25.9		)	(25.7		)
Dividends paid to noncontrolling interests	(0.8		)	(0.4		)
Purchases of redeemable noncontrolling interest	—			(11.9		)
Net cash provided by (used in) financing activities	31.8			23.0
Reclassification of cash to assets held for sale	—			(0.4		)
Effects of exchange rates on cash	(0.2		)	1.7
Net increase (decrease) in cash and cash equivalents	13.5			(9.7		)
Cash and cash equivalents at beginning of period	77.3			94.2
Cash and cash equivalents at end of period	$	90.8		$	84.5



(in millions)	Amounts Recognized as of the Acquisition Date			Measurement Period Adjustments (1)			Amount Recognized as of Acquisition Date (as Adjusted)
Fair value of consideration transferred
Cash consideration	$	1,834.9		$	—		$	1,834.9

Recognized amounts of identifiable assets acquired and liabilities assumed
Accounts receivable	$	147.0		$	—		$	147.0
Inventories	103.9			(4.4		)	99.5
Prepaid and other current assets	21.5			(9.3		)	12.2
Intangibles	717.1			8.4			725.5
Other long-term assets	1.3			5.1			6.4
Properties, plants and equipment	521.3			(18.4		)	502.9
Total assets acquired	1,512.1			(18.6		)	1,493.5

Accounts payable	(99.5		)	—			(99.5		)
Accrued payroll and employee benefits	(42.9		)	(6.4		)	(49.3		)
Other current liabilities	(21.8		)	4.5			(17.3		)
Long-term deferred tax liability	(185.7		)	46.9			(138.8		)
Pension and postretirement obligations	(67.1		)	—			(67.1		)
Other long-term liabilities	(12.7		)	(7.3		)	(20.0		)
Total liabilities assumed	(429.7		)	37.7			(392.0		)
Total identifiable net assets	$	1,082.4		$	19.1		$	1,101.5
Goodwill	$	752.5		$	(19.1	)	$	733.4



(in millions)	Current Preliminary Purchase Price Allocation		Weighted Average Estimated Useful Life
Customer relationships	$	708.0	15.0
Trademarks	15.0		3.0
Other	2.5		4.6
Total intangible assets	$	725.5



(in millions)	Amounts Recognized as of the Acquisition Date			Measurement Period Adjustments (2)			Amount Recognized as of Acquisition Date (as Adjusted)
Fair value of consideration transferred
Cash consideration	$	25.1		$	—		$	25.1
Deferred payments	29.2			—			29.2
Cash received	(2.1		)	$	—		(2.1		)
Total consideration	$	52.2		$	—		$	52.2

Recognized amounts of identifiable assets acquired and liabilities assumed
Accounts receivable	$	7.3		$	—		$	7.3
Inventories	3.0			0.4			3.4
Intangibles	24.1			—			24.1
Properties, plants and equipment	6.4			—			6.4
Other assets	1.2			—			1.2
Total assets acquired	42.0			0.4			42.4

Accounts payable	(4.0		)	—			(4.0		)
Capital lease obligations	(1.7		)	—			(1.7		)
Long-term deferred tax liability	(5.4		)	(0.4		)	(5.8		)
Other liabilities	(1.0		)	—			(1.0		)
Total liabilities assumed	(12.1		)	(0.4		)	(12.5		)
Total identifiable net assets	$	29.9		$	—		$	29.9
Goodwill	$	22.3		$	—		$	22.3



(in millions)	Rigid Industrial Packaging & Services			Paper Packaging & Services		Total
Balance at October 31, 2019	$	731.7		$	786.1	$	1,517.8
Goodwill adjustments	—			6.8		6.8
Currency translation	(2.5		)	—		(2.5		)
Balance at January 31, 2020	$	729.2		$	792.9	$	1,522.1



(in millions)	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
January 31, 2020:
Indefinite lived:
Trademarks and patents	$	13.1	$	—	$	13.1
Definite lived:
Customer relationships	887.4		162.1		725.3
Trademarks, patents and trade names	26.9		10.6		16.3
Non-compete agreements	2.2		1.2		1.0
Other	21.8		18.6		3.2
Total	$	951.4	$	192.5	$	758.9



(in millions)	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
October 31, 2019:
Indefinite lived:
Trademarks and patents	$	13.1	$	—	$	13.1
Definite lived:
Customer relationships	890.6		150.3		740.3
Trademarks and patents	27.0		9.3		17.7
Non-compete agreements	2.3		0.7		1.6
Other	21.9		18.1		3.8
Total	$	954.9	$	178.4	$	776.5



(in millions)	Total Amounts Expected to be Incurred		Amounts Incurred During the three months ended January 31, 2020		Amounts Remaining to be Incurred
Rigid Industrial Packaging & Services
Employee separation costs	$	15.3	$	1.3	$	14.0
Other restructuring costs	5.7		0.5		5.2
	21.0		1.8		19.2
Flexible Products & Services
Employee separation costs	1.4		0.5		0.9
Other restructuring costs	1.0		—		1.0
	2.4		0.5		1.9
Paper Packaging & Services
Employee separation costs	2.0		0.9		1.1
Other restructuring costs	1.9		0.1		1.8
	3.9		1.0		2.9
	$	27.3	$	3.3	$	24.0



(in millions)	Preliminary Fair Value		Weighted Average Estimated Useful Life
Customer relationships	$	21.9	15.0
Trademarks	1.2		9.0
Other	1.0		2.0
Total intangible assets	$	24.1



(in millions)	Employee Separation Costs			Other Costs			Total
Balance at October 31, 2019	$	9.5		$	1.8		$	11.3
Costs incurred and charged to expense	2.7			0.6			3.3
Costs paid or otherwise settled	(4.2		)	(0.6		)	(4.8		)
Balance at January 31, 2020	$	8.0		$	1.8		$	9.8



(in millions)	January 31, 2020		October 31, 2019
2019 Credit Agreement - Term Loans	$	1,591.3	$	1,612.2
Senior Notes due 2027	494.5		494.3
Senior Notes due 2021	219.7		221.7
Accounts receivable credit facilities	295.4		351.6
2019 Credit Agreement - Revolving Credit Facility	214.6		76.1
Other debt	0.4		0.4
	2,815.9		2,756.3
Less: current portion	83.8		83.7
Less: deferred financing costs	13.1		13.6
Long-term debt, net	$	2,719.0	$	2,659.0



	January 31, 2020
	Fair Value Measurement
(in millions)	Level 1		Level 2			Level 3		Total			Balance Sheet Location
Interest rate derivatives	$	—	$	0.7		$	—	$	0.7		Other current assets
Interest rate derivatives	—		(25.1		)	—		(25.1		)	Other current liabilities and other long-term liabilities
Foreign exchange hedges	—		1.4			—		1.4			Other current assets
Foreign exchange hedges	—		(0.7		)	—		(0.7		)	Other current liabilities
Insurance annuity	—		—			19.9		19.9			Other long-term assets
Cross currency swap	—		11.5			—		11.5			Other current assets and other long-term assets
Total	$	—	$	(12.2	)	$	19.9	$	7.7



	Quantitative Information about Level 3 Fair Value Measurements
(in millions)	Fair Value of Impairment		Valuation Technique	Unobservable Input	Range of Input Values
January 31, 2020
Impairment of Long Lived Assets	$	0.1	Sales Value	Sales Value	N/A
Total	$	0.1

January 31, 2019
Impairment of Net Assets Held for Sale	$	2.1	Indicative Bids	Indicative Bids	N/A
Total	$	2.1



Basic Class A EPS	=	40% * Average Class A Shares Outstanding	*	Undistributed Net Income	+	Class A Dividends Per Share
		40% * Average Class A Shares Outstanding + 60% * Average Class B Shares Outstanding		Average Class A Shares Outstanding

Diluted Class A EPS	=	40% * Average Class A Shares Outstanding	*	Undistributed Net Income	+	Class A Dividends Per Share
		40% * Average Class A Shares Outstanding + 60% * Average Class B Shares Outstanding		Average Diluted Class A Shares Outstanding

Basic Class B EPS	=	60% * Average Class B Shares Outstanding	*	Undistributed Net Income	+	Class B Dividends Per Share
		40% * Average Class A Shares Outstanding + 60% * Average Class B Shares Outstanding		Average Class B Shares Outstanding


	*Diluted Class B EPS calculation is identical to Basic Class B calculation



	Authorized Shares	Issued Shares	Outstanding Shares	Treasury Shares
January 31, 2020
Class A Common Stock	128,000,000	42,281,920	26,260,943	16,020,977
Class B Common Stock	69,120,000	34,560,000	22,007,725	12,552,275

October 31, 2019
Class A Common Stock	128,000,000	42,281,920	26,257,943	16,023,977
Class B Common Stock	69,120,000	34,560,000	22,007,725	12,552,275



(in millions)	Balance Sheet Classification	January 31, 2020
Lease Assets
Operating lease assets	Operating lease assets	$	327.2
Finance lease assets	Other long-term assets	5.2
Total lease assets		$	332.4

Lease Liabilities
Current operating lease liabilities	Current portion of operating lease liabilities	$	60.3
Current finance lease liabilities	Other current liabilities	1.8
Total current lease liabilities		62.1

Non-current operating lease liabilities	Operating lease liabilities	271.4
Non-current finance lease liabilities	Other long-term liabilities	3.4
Total non-current lease liabilities		274.8
Total lease liabilities		$	336.9



(in millions)	Three Months Ended January 31, 2020
Operating lease cost	$	17.2
Finance lease cost	0.2
Variable lease cost^*	6.2
Total lease cost	$	23.6



(in millions)	Operating Leases			Finance Leases			Total expected payments
2020	$	66.9		$	1.4		$	68.3
2021	60.2			1.4			61.6
2022	51.7			1.1			52.8
2023	43.0			0.8			43.8
2024	33.9			0.5			34.4
Thereafter	133.7			0.3			134.0
Total lease payments	$	389.4		$	5.5		$	394.9
Less: Interest	(57.7		)	(0.3		)	(58.0		)
Lease liabilities	$	331.7		$	5.2		$	336.9



Weighted-average remaining lease term (years):
Operating leases	10.4
Finance leases	4.2
Weighted-average discount rate:
Operating leases	3.39	%
Finance leases	3.45	%



(in millions)	January 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	17.1
Financing cash flows used for finance leases	0.4
Leased assets obtained in exchange for new operating lease liabilities	28.7
Leased assets obtained in exchange for new finance lease liabilities	—



	Year Ended October 31,
(in millions)	2019		2018		2017
Rent Expense	$	86.2	$	47.1	$	41.0



(in millions)	Operating Leases		Capital Leases
Year(s):
2020	$	64.8	$	1.8
2021	57.0		1.6
2022	48.7		1.3
2023	40.1		1.0
2024	31.6		0.6
Thereafter	117.5		0.3
Total	$	359.7	$	6.6



	Three-Months Ended January 31, 2020
	Capital Stock			Treasury Stock					Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Greif, Inc. Equity			Non controlling interests			Total Equity
	Common Shares	Amount		Treasury Shares		Amount
As of October 31, 2019	48,266	$	162.6	28,576		$	(134.8	)	$	1,539.0		$	(433.7	)	$	1,133.1		$	58.0		$	1,191.1
Net income									32.3						32.3			3.8			36.1
Other comprehensive income (loss):
Foreign currency translation												(1.1		)	(1.1		)	(2.0		)	(3.1		)
Derivative financial instruments, net of immaterial income tax expense												0.2			0.2						0.2
Minimum pension liability adjustment, net of $7.5 million of income tax expense												21.7			21.7						21.7
Comprehensive income				.											53.1						54.9
Current period mark to redemption value of redeemable noncontrolling interest									3.3						3.3						3.3
Net income allocated to redeemable noncontrolling interests															—			(0.1		)	(0.1		)
Dividends paid to Greif, Inc. shareholders ($0.44 and $0.65 per Class A share and Class B share, respectively)									(25.9		)				(25.9		)				(25.9		)
Dividends paid to noncontrolling interests and other															—			(0.8		)	(0.8		)
Restricted stock, executive	3	0.1		(3	)	0.1									0.2						0.2
As of January 31, 2020	48,269	$	162.7	28,573		$	(134.7	)	$	1,548.7		$	(412.9	)	$	1,163.8		$	58.9		$	1,222.7



	Three-Month Period Ended January 31, 2019
	Capital Stock			Treasury Stock					Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Greif, Inc. Equity			Non controlling interests			Total Equity
	Common Shares	Amount		Treasury Shares		Amount
As of October 31, 2018	47,949	$	150.5	28,893		$	(135.4	)	$	1,469.8		$	(377.1	)	$	1,107.8		$	46.4		$	1,154.2
Net income									29.7						29.7			6.1			35.8
Other comprehensive income (loss):
Foreign currency translation												4.2			4.2			1.0			5.2
Derivative financial instruments, net of income tax benefit of $1.9 million												(5.7		)	(5.7		)				(5.7		)
Minimum pension liability adjustment, net of immaterial income tax												(0.8		)	(0.8		)				(0.8		)
Comprehensive income															27.4						34.5
Adoption of ASU 2016-16									(2.1		)				(2.1		)				(2.1		)
Current period mark to redemption value of redeemable noncontrolling interest									0.2						0.2						0.2
Net income allocated to redeemable noncontrolling interests															—			(0.8		)	(0.8		)
Dividends paid to Greif, Inc. shareholders ($0.44 and $0.65 per Class A share and Class B share, respectively)									(25.7		)				(25.7		)				(25.7		)
Dividends paid to noncontrolling interests															—			(0.4		)	(0.4		)
Long-term incentive shares issued	292	11.0		(292	)	0.6									11.6						11.6
As of January 31, 2019	48,241	$	161.5	28,601		$	(134.8	)	$	1,471.9		$	(379.4	)	$	1,119.2		$	52.3		$	1,171.5



(in millions)	Foreign Currency Translation			Derivative Financial Instruments			Minimum Pension Liability Adjustment			Accumulated Other Comprehensive Income (Loss)
Balance as of October 31, 2019	$	(298.0	)	$	(12.7	)	$	(123.0	)	$	(433.7	)
Other Comprehensive Income (Loss)	(1.1		)	0.2			21.7			20.8
Balance as of January 31, 2020	$	(299.1	)	$	(12.5	)	$	(101.3	)	$	(412.9	)



(in millions)	Foreign Currency Translation			Interest Rate Derivative			Minimum Pension Liability Adjustment			Accumulated Other Comprehensive Income (Loss)
Balance as of October 31, 2018	$	(292.8	)	$	13.4		$	(97.7	)	$	(377.1	)
Other Comprehensive Income (Loss)	4.2			(5.7		)	(0.8		)	(2.3		)
Balance as of January 31, 2019	$	(288.6	)	$	7.7		$	(98.5	)	$	(379.4	)



	Three Months Ended January 31, 2020
(in millions)	United States		Europe, Middle East and Africa		Asia Pacific and Other Americas		Total
Rigid Industrial Packaging & Services	$	201.8	$	258.8	$	108.1	$	568.7
Paper Packaging & Services	467.8		—		5.9		473.7
Flexible Products & Services	7.3		48.5		7.2		63.0
Land Management	7.0		—		—		7.0
Total net sales	$	683.9	$	307.3	$	121.2	$	1,112.4