Greif (GEF) Q2 2024 earnings summary

Executive summary

• Achieved solid execution and value creation through the Build to Last strategy, with customer service and operational excellence recognized by a Net Promoter Score of 68 and the 2024 Gallup Exceptional Workplace Award.

• Net sales for Q2 2024 were $1,371.0 million, up 4.7% year-over-year, driven by higher prices, volumes, and acquisitions.

• Net income for Q2 2024 was $52.0 million, down from $116.0 million in Q2 2023, reflecting higher costs and lower margins.

• Adjusted EBITDA for Q2 2024 was $169.9 million, a decrease from $228.6 million in Q2 2023.

• Completed the Ipackchem acquisition in March 2024, strengthening the global platform in high-performance small plastic containers and jerrycans.

Financial highlights

• Q2 2024 adjusted EBITDA was $169.9 million, adjusted EPS $0.82, and free cash flow $59 million.

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

• Operating profit for Q2 2024 was $98.1 million, compared to $181.1 million in Q2 2023.

• Net income for the six months ended April 30, 2024, was $126.3 million, down from $209.1 million in the prior year period.

• 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, with adjusted free cash flow guidance at $175–$225 million.

• Free cash flow guidance maintained at $200 million midpoint for the full year.

• Management expects modest sequential improvement in demand, with stable input costs and sufficient liquidity for operations and investments.

• Guidance reflects lower Ipackchem contribution due to ag market softness and purchase accounting, and includes $19–$39 million in volume and inflationary headwinds.

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