DELAWARE, Ohio, Aug. 28, 2019 -- Greif, Inc. (NYSE: GEF, GEF.B), a world leader in industrial packaging products and services, today announced third quarter 2019 results.
Third Quarter Highlights include (all results compared to the third quarter of 2018 unless otherwise noted):
- Net sales increased by $240.5 million to $1,252.6 million.
- Gross profit increased by $62.3 million to $279.4 million.
- Net income of $62.7 million or $1.06 per diluted Class A share decreased compared to net income of $67.7 million or $1.15 per diluted Class A share. Net income, excluding the impact of adjustments(1), of $74.7 million or $1.26 per diluted Class A share increased compared to net income, excluding the impact of adjustments, of $70.9 million or $1.20 per diluted Class A share. Adjusted EBITDA(2) increased by $57.5 million to $203.8 million.
- Net cash provided by operating activities increased by $90.2 million to $141.5 million. Adjusted free cash flow(3) increased by $26.0 million to $107.1 million.
"Greif produced solid third quarter 2019 results despite ongoing market softness and a weakening industrial economy," said Pete Watson, Greif's President and Chief Executive Officer. "Third quarter adjusted EBITDA rose by roughly 39.0 percent versus the prior year quarter, while Class A earnings per share, excluding the impact of adjustments, increased by 5.0 percent."
"Our newly acquired Caraustar operations performed better than our original assumptions. However, we faced weaker market demand in our containerboard operations and in certain segments of our Rigid Industrial Packaging business. In light of external headwinds, we are implementing additional optimization measures in parts of our portfolio to lower costs and better navigate challenging market conditions. We remain laser focused on those areas within our control to more profitability serve our customers. I remain highly confident in our long term plan to drive more sustainable free cash flow, delever our balance sheet, and grow our profits."
(1) A summary of all adjustments that are excluded from net income before adjustments and from earnings per diluted Class A share before adjustments are set forth in the Selected Financial Highlights table following the Company Outlook in this release.
(2) Adjusted EBITDA is defined as net income, plus interest expense, net, including debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization expense, plus restructuring charges, plus acquisition-related costs, plus non-cash impairment charges, plus non-cash pension settlement charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net.
(3) Adjusted free cash flow is defined as net cash provided by operating activities, plus cash paid for acquisition-related costs, plus cash paid for debt issuance costs, plus an additional one-time $65.0 million contribution made by the Company to its U.S. defined benefit plan during the third quarter of 2018, less cash paid for purchases of properties, plants and equipment.
Note: A reconciliation of the differences between all non-GAAP financial measures used in this release with the most directly comparable GAAP financial measures is included in the financial schedules that are a part of this release. These non-GAAP financial measures are intended to supplement and should be read together with our financial results. They should not be considered an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of this financial information should not place undue reliance on these non-GAAP financial measures.
The Company's consolidated CSI(4) score improved by roughly two percent versus the prior year quarter and was flat sequentially to second quarter fiscal 2019. Greif's objective is that each business segment delivers a consistent CSI score of 95.0 or better. CSI for the Rigid Industrial Packaging & Services segment and Flexible Products & Services segment were roughly flat to the prior year quarter at 90.2 and 93.5, respectively. CSI for the Paper Packaging & Services segment was 89.0, or roughly seven percent lower than the prior year quarter. The Paper Packaging & Services segment's CSI results included the newly acquired Caraustar operations for the first time. Excluding the Caraustar operations, the Paper Packaging & Services segment's CSI for the fiscal third quarter 2019 would have been 95.5.