Greif (GEF) Q2 2024 earnings summary

Executive summary

• Achieved solid execution in Q2 2024 amid mixed global demand, with continued transformation through the Build to Last strategy and GBS 2.0, focusing on customer service, operational excellence, and sustainability.

• Net sales for Q2 2024 were $1,371.0 million, up 4.7% year-over-year, driven by higher prices, volumes, and acquisitions, but net income fell to $52.0 million from $116.0 million in Q2 2023 due to higher costs and lower margins.

• Adjusted EBITDA for Q2 2024 was $169.9 million, down from $228.6 million in Q2 2023, with adjusted EPS at $0.82 per share.

• Completed the acquisition of Ipackchem in March 2024, strengthening the global position in high-performance small plastic containers and expanding the Global Industrial Packaging segment.

• Released the 15th annual sustainability report and received the 2024 Gallup Exceptional Workplace Award.

Financial highlights

• Q2 2024 adjusted EBITDA was $169.9 million, adjusted free cash flow $59.0 million, and adjusted EPS $0.82 per share.

• Net income for Q2 2024 was $52.0 million, down from $116.0 million in Q2 2023.

• Gross profit for Q2 2024 was $270.1 million, down from $311.8 million year-over-year; gross margin declined to 19.7% from 23.8%.

• SG&A expenses increased to $167.2 million (12.2% of sales) from $137.2 million (10.5%) year-over-year, mainly due to compensation and acquisition-related costs.

• Leverage ratio rose to 3.44x from 2.25x year-over-year, with net debt at $2,720.1 million as of April 30, 2024.

Outlook and guidance

• Fiscal 2024 adjusted EBITDA guidance raised to $675–$725 million, up from $610 million previously.

• Adjusted free cash flow guidance for FY 2024 set at $175–$225 million.

• Management expects modest sequential improvement in customer demand through year-end, with stable input costs and sufficient liquidity to fund operations and investments.

• Expected tax rate for fiscal 2024: 8.0–12.0%; tax rate excluding adjustments: 10.0–14.0%.

• Anticipates continued sequential demand improvements in North America, LatAm, and EMEA, with cautious optimism due to customer uncertainty.