Investor Presentation. May 2010

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Transcription:

Investor Presentation May 2010

Safe Harbor Forward-Looking Statements This presentation contains certain forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. The words believe, expect, anticipate, estimate, target, and similar expressions, among others, identify forward-looking statements. All forward-looking statements are based on information currently available to management. Such forward-looking statements are subject to certain risks and uncertainties that could cause events and the Company s actual results to differ materially from those expressed or implied. Please see the disclosure regarding forward-looking statements immediately preceding Part I of the Company s Annual Report on Form 10-K for the fiscal year ended October 31, 2009. The Company assumes no obligation to update any forward-looking statements. Regulation G This presentation includes certain non-gaap financial measures that exclude restructuring and other unusual charges and gains that are volatile from period to period. Management believes the non-gaap measures provide a better indication of operational performance and a more stable platform on which to compare the historical performance of the Company than the most nearly equivalent GAAP data. All non-gaap data in the presentation are indicated by footnotes. Tables showing the reconciliation between GAAP and non-gaap measures are available at the end of this presentation and on the Greif Web site at www.greif.com. 2

Greif Profile Founded in 1877 as a packaging company Initial public offering in 1926 Diversified business platform Leading industrial packaging company with over 30% global market share Approximately 200 operations in more than 45 countries 3

Diversified Business Platform Twelve months ended January 31, 2010 (Dollars in millions) Sales $2,836 Operating Profit (1) $304 Industrial Packaging Paper Packaging Land Management Sales $2,302 Sales $514 Sales $20 Operating Profit (1) $250 Operating Profit (1) $32 Operating Profit (1) $22 (1) Before restructuring charges, restructuring-related inventory charges, acquisition-related costs and timberland disposals, net. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation. 4

Our Aspirations Preferred productivity partner Compelling value proposition based on what customers are willing to pay for Low-cost provider of high-quality products with consistent and reliable delivery Growth Top-quartile performance metrics Top-quartile performance Organic growth: 5.0% Organic growth: 5.0% Operating profit margin: 12.5% Operating profit margin: 12.5% SG&A to net sales: 7.5% SG&A to net sales: 7.5% OWC to net sales: 7.5% OWC to net sales: 7.5% RONA: 25.0% RONA: 25.0% Value People Productivity Strong performance ethic Strong performance ethic Transparent governance Transparent governance structure structure Performance management Performance management Talent and succession Talent and succession management management Productivity imperative Real-cost productivity: ty 4% %per year Capital productivity Asset turns: 2x World-class strategic sourcing capabilities Note: Performance metrics over a complete business cycle. 5

Our Catalyst Greif Business System Greif Production System The Greif Way Operational Excellence Working Capital Commercial Excellence Global Supply Chain Greif Operating System Strategy People Performance Management Core Processes 6

Greif Business System Illustrated Holistic Approach Operational Commercial Global Sourcing Working Capital Excellence Excellence and Supply Chain Key Overall Equipment Pocket Margin Identify key suppliers & Fully integrated Elements Effectiveness (OEE) source raw material global cash Account requirements effectively management Management system 5S (Sort/Set in Order/Shine/Standardize/ Sustain) Line Balancing Visual Management Value Stream Mapping Value Selling Channel Management Performance Management Reduce raw material price volatility Od Orderly deliveries i Aggressively pursue direct and indirect cost savings Strong credit approval process Automated tools to manage and monitor cash requirements GBS diagnostics have identified approximately $100 million of additional cost savings. 7

Strategy Statement Continue to strengthen the core > Industry consolidation > Emerging markets > Product line extensions Optimize and embed the Greif Business System throughout the enterprise to achieve top quartile profitability and lowest cost producer status while enhancing safety and quality. Pursue adjacencies. Emphasize sustainability in all of the company s activities to meet or exceed our stewardship responsibilities as a global citizen, and create long-term competitive and shareholder advantages. Fix, sell or close underperforming assets. 8

2010 Goals Deliver operating profit comparable to record levels of 2008 and top-quartile returns Permanent cost reduction / margin improvement of at least $120 million Optimize and leverage GBS catalyst for performance improvement and acquisition integration Disciplined execution of growth strategy and portfolio optimization Protect financial and operational flexibility Focus Discipline Passion 9

Rigid Industrial Packaging (Dollars in billions) 2005 2010 (2) CAGR Net sales Served markets $1.8 $2.3 6% Lubricants, Oils and Additives Agriculture (2) Pharmaceutical Chemicals Operating profit margin (1) Competitive advantages Leading market position Growing global footprint Compelling value proposition Comprehensive product portfolio (2) Strong customer relationships (1) Calculated as operating profit before restructuring charges, restructuring-related inventory charges and acquisition-related costs divided by net sales. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation. (2) Represents the twelve months ended January 31, 2010. 10

Most Comprehensive Rigid Industrial Products and Services Portfolio Global Presence Steel Plastic Fibre Intermediate Bulk Containers Filling & Blending Closures #1 #2 #1 #4 #1 Mauser Schutz Greif s global market share exceeds 30% 11

Flexible Industrial Products Flexible industrial products include the polywoveno industry, which is a $2 billion global market whose products are distributed regionally. Storsack, acquired in February 2010, is the leader in the polywoven industry with approximately a 10% share. Principal end markets for polywoven products include chemical, construction, food, feed, seed and pharmaceutical. 1 loop bag 2 loop bag 4 loop bags 12

Greif s Advantaged Position in Flexible Industrial Products World-class global sourcing platform. Industry leader with identified acquisition opportunities and a record of successful business integration. Proven benefits of Greif Business System to unlock value. Substantial percentage of customers who use both flexible and rigid industrial products. 13

Paper Packaging (Dollars in millions) Net sales Served markets 2005 2010 (2) CAGR $608 $514 (4)% Automotive Building Products Food Packaging (2) Operating profit margin (1) Competitive advantages Customer focus Integrated containerboard network Highly efficient sheet feeder footprint (2) (1) Calculated as operating profit before restructuring charges divided by net sales. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation. (2) Represents the twelve months ended January 31, 2010. 14

Land Management United States Canada Total Core Timberlands 229,350 0 229,350 Special Use Land 34,900 25,050 59,950 Total Acres 264,250 25,050 289,300 Land Management involves active harvesting, sale and regeneration of U.S. timber properties, Special Use (Higher and Better Use, surplus and development land) sales, timberland management, wildlife stewardship, recreation and development. Undervalued timber portfolio with book value of $208 million at January 31, 2010. Over $225 million of timber properties have been monetized since 2001. Timber properties are located in Alabama, Louisiana and Mississippi in the United States and the Provinces of Quebec and Ontario in Canada. 15

Financial Review

Financial Profile (Dollars in millions) 2005 2006 2007 2008 2009 2010 (3) CAGR Net Sales $2,424 $2,628 $3,322 $3,777 $2,792 $2,836 4% (1) Operating Profit (1) $ 165 $ 242 $ 312 $ 425 $ 277 $ 304 15% RONA (1) (2) 15.4% 21.9% 21.3% 25.5% 15.7% 16.8% (1) Before restructuring t charges, restructuring-related t t charges, acquisition-related iti t costs and timberland disposals net. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation. (2) An explanation of the calculation of RONA is included in the Appendix of this presentation. (3) Represents the twelve-months ended January 31, 2010. 17

Financial Objectives (1) (Dollars in millions) Annual Organic Sales Growth 5% Total Debt to Total Capitalization 30% - 40% Annual Dividend Payout 30% - 35% Annual Capital Expenditures $85 - $145 Spread Over Cost of Capital 7.5% - 10% (1) Over a complete market cycle. 18

Strong Cash Generation (Dollars in millions) Other $7 Purchases of PP&E, net $81 Operating Cash Flow $267 Acquisitions $91 Free Cash Flow (1) $186 Cash Dividends $88 33% of Operating Cash Flow Returned to Shareholders in Fiscal 2009 (1) Free cash flow = operating cash flow purchases of PP&E, net 19

Cash Dividends (Dollars per Class A Common Share) 2000-2009: 22%CAGR More than 75 consecutive years of cash dividends paid 30%-35% payout target over complete business cycle 3.1% current yield (1) (1) Based on cash dividends paid during last 12 months (February 1, 2010). 20

Re-earning the Right to Premium Valuation GBS a catalyst enabling strong relative performance and value creation during cyclical trough Diversity a compelling competitive advantage Strong balance sheet and access to alternate sources of liquidity Balanced focus on defense (contingency planning/ enterprise risk management) and offense Solid, experienced and performance-driven management team with record of accomplishment Diversity > Strength > Performance 21

Appendix

GAAP to Non-GAAP Reconciliation Return on Net tassets UNAUDITED (Dollars in millions) 2005 2006 2007 2008 2009 2010 GAAP operating profit $ 185.8 $ 250.2 $ 289.8 $ 382.3 $ 199.9 $ 239.1 Restructuring charges 35.8 33.2 21.2 43.2 66.6 45.4 Restructuring-related inventory charges - - - - 10.8 9.0 Acquisition-related costs - - - - - 10.1 Timberland disposals, net (56.3) (41.3) 0.7 (0.4) - - Non-GAAP - operating profit before restructuring charges, restructuring-related inventory charges, acquisition-related costs and timberland disposals, net $ 165.3 $ 242.1 $ 311.7 $ 425.1 $ 277.3 $ 303.6 (2) Average cash (1) $ (67.9) $ (148.9) $ (120.4) $ (101.0) $ (79.5) $ (81.9) Average short-term borrowings (1) 17.9 24.6 34.9 48.4 56.8 56.3 Average current portion of long-term debt (1) - - - - 3.5 7.5 Average long-term debt (1) 446.8 449.7 645.1 687.0 748.5 789.7 Average shareholders' equity (1) 677.9 779.6 904.0 1,030.4 1,034.9 1,036.8 Average net assets $ 1,074.7 $ 1,105.0 $ 1,463.6 $ 1,664.8 $ 1,764.2 $ 1,808.4 GAAP return on net assets (GAAP operating profit divided by average net assets) 17.3% 22.6% 19.8% 23.0% 11.3% 13.2% Non-GAAP return on net assets (non- GAAP operating profit before restructuring charges, restructuring-related inventory charges, acquisition-related costs and timberland disposals, net divided by average net assets) 15.4% 21.9% 21.3% 25.5% 15.7% 16.8% (1) Amounts used in the calculation for this graph are based upon the average balances as of the beginning g of the fiscal year and end of each fiscal quarter for the years presented. (2) Represents the twelve months ended January 31, 2010. 23

GAAP to Non-GAAP Reconciliation Operating Profit Margin by Segment UNAUDITED (Dollars in millions) 2005 2006 2007 2008 2009 2010 Industrial Packaging Net Sales $ 1,804.2 $ 1,993.1 1 $ 26629 2,662.9 $ 3,074.8 $ 2,266.9266 $ 23022 2,302.2 GAAP - operating profit $ 89.0 $ 143.4 $ 213.0 $ 292.0 $ 134.4 $ 184.1 Restructuring charges 31.4 24.0 16.0 34.0 65.7 46.5 Restructuring - related inventory charges - - - - 10.8 9.0 Acquisition-related costs - - - - - 10.1 Non-GAAP - operating profit before restructuring charges, restructuring-relatedrelated inventory charges and acquisition-related costs $ 120.4 $ 167.4 $ 229.0 $ 326.0 $ 210.9 $ 249.7 GAAP- operating profit margin 4.9% 7.2% 8.0% 9.5% 5.9% 8.0% Non-GAAP operating profit margin 6.7% 8.4% 8.6% 10.6% 9.3% 10.8% Paper Packaging g Net Sales $ 607.8 $ 620.3 $ 653.7 $ 696.9 $ 504.7 $ 513.8 GAAP - operating profit $ 32.6 $ 55.0 $ 63.1 $ 69.6 $ 43.4 $ 32.8 Restructuring charges 4.3 9.2 5.2 9.1 0.7 (1.2) Non-GAAP - operating profit before restructuring charges $ 36.9 $ 64.2 $ 68.3 $ 78.7 $ 44.1 $ 31.6 GAAP- operating profit margin 5.4% 8.9% 9.7% 10.0% 8.6% 6.4% Non-GAAP-operating profit margin 6.1% 10.3% 10.4% 11.3% 8.7% 6.2% Land Management GAAP - Operating profit $ 64.2 $ 51.9 $ 13.7 $ 20.9 $ 22.1 $ 22.1 Restructuring charges 0.1 - - 0.1 0.2 - Timberland disposals, net (56.3) (41.3) 0.7 (0.4) - - Non-GAAP - operating profit before restructuring charges and timberland disposals, net $ 8.0 $ 10.6 $ 14.4 $ 20.6 $ 22.3 $ 22.1 (1) Represents the twelve months ended January 31, 2010. 24 (1)