Item 2.02. Results of Operations and Financial Condition.
On June 3, 2020, Greif, Inc. (the “Company”) issued a press release (the “Earnings Release”) announcing the financial results for its second quarter ended April 30, 2020. The full text of the Earnings Release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The Earnings Release included the following non-GAAP financial measures (the “non-GAAP Measures”):
(i)the Company's net income, excluding the impact of adjustments, for the second quarter of 2020 and the second quarter of 2019, which is equal to the Company's consolidated net income for the applicable period plus restructuring charges, plus acquisition and integration related costs, plus debt extinguishment charges, plus non-cash asset impairment charges, plus non-cash asset impairment charges, plus incremental COVID-19 costs, net, plus the net tax benefit resulting from the Tax Cut and Jobs Act of 2017 (the "Tax Reform Act"), less (gain) loss on disposal of properties, plants, equipment and businesses, net, each net of tax, noncontrolling interest and equity earnings of unconsolidated affiliates and on a consolidated basis for the applicable period;
(ii)the Company's earnings per diluted Class A share, excluding the impact of adjustments, for the second quarter of 2020 and the second quarter of 2019, which is equal to earnings per diluted Class A share of the Company for the applicable period plus restructuring charges, plus acquisition and integration related costs, plus debt extinguishment charges, plus non-cash asset impairment charges, plus incremental COVID-19 costs, net, plus the net tax benefit resulting from the Tax Reform Act, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each net of tax, noncontrolling interest and equity earnings of unconsolidated affiliates and on a consolidated basis for the applicable period;
(iii)the Company's consolidated adjusted EBITDA for the second quarter of 2020 and the second quarter of 2019, which is equal to the Company's consolidated net income for the applicable period plus interest expense, net, plus debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization expense, plus restructuring charges, plus acquisition and integration related costs, plus non-cash asset impairment charges, plus incremental COVID-19 costs, net, plus non-cash pension settlement (income) charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each on a consolidated basis for the applicable period;
(iv)the Company's consolidated adjusted free cash flow for the second quarter of 2020 and the second quarter of 2019, which is equal to the Company's consolidated net cash provided by (used in) operating activities for the applicable period less cash paid for purchases of properties plants and equipment, plus cash paid for acquisition and integration related costs, plus cash paid for debt issuance costs, plus cash paid for incremental COVID-19 costs, net, plus cash paid for acquisition and integration related enterprise resource planning ("ERP") systems each on a consolidated basis for the applicable period;
(v)the Company's net debt for the second and first quarters of 2020 and the second quarter of 2019, which is equal to the Company's consolidated total debt at the end of the applicable period ended less cash and cash equivalents at the end of the applicable period ended.
(vi)net sales excluding foreign currency translation for the Company's Rigid Industrial Packaging & Services business segment for the second quarter of 2020 and the second quarter of 2019, which is equal to that business segment's net sales for the applicable quarter, after adjusting such sales for the second quarter of 2020 for foreign currency translation;
(vii)adjusted EBITDA for the Company’s Rigid Industrial Packaging & Services business segment for the second quarter of 2020 and the second quarter of 2019, which is equal to that business segment’s operating profit less other (income) expense, net, less equity earnings of unconsolidated affiliates, net of tax, plus depreciation and amortization expense, plus restructuring charges, plus acquisition and integration related costs, plus non-cash asset impairment charges, plus incremental COVID-19 costs, net, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each for the applicable period;
(viii)net sales excluding foreign currency translation for the Company's Paper Packaging & Services business segment for the second quarter of 2020 and the second quarter of 2019, which is equal to that business segment's net sales for the applicable quarter, after adjusting such sales for the second quarter of 2020 for foreign currency translation;
(ix)adjusted EBITDA for the Company’s Paper Packaging & Services business segment for the second quarter of 2020 and the second quarter of 2019, which is equal to that business segment’s operating profit less other (income) expense, net, less non-cash pension settlement (income) charges, plus depreciation and amortization expense, plus restructuring charges, plus acquisition and integration related costs, plus non-cash pension settlement (income) charges, plus incremental COVID-19 costs, net, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each for the applicable period;
(x)net sales excluding foreign currency translation for the Company's Flexible Products & Services business segment for the second quarter of 2020 and the second quarter of 2019, which is equal to that business segment's net sales for the applicable quarter, after adjusting such sales for the second quarter of 2020 for foreign currency translation;
(xi)adjusted EBITDA for the Company’s Flexible Products & Services business segment for the second quarter of 2020 and the second quarter of 2019, which is equal to that business segment’s operating profit less other (income) expense, net, plus depreciation and amortization expense, plus restructuring charges, plus incremental COVID-19 costs, net, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each for the applicable period; and
(xii)adjusted EBITDA for the Company’s Land Management business segment for the second quarter of 2020 and the second quarter of 2019, which is equal to that business segment’s operating profit plus depreciation, depletion and amortization expense, plus restructuring charges, less (gain) loss on disposal of properties, plants, equipment and businesses, net, each for the applicable period.
Management of the Company uses the non-GAAP Measures to evaluate ongoing operations and believes that these non-GAAP Measures are useful to investors. The exclusion of the impact of the identified adjustments (restructuring charges, acquisition and integration related costs, non-cash asset impairment charges, incremental COVID-19 costs, net, non-cash pension settlement (income) charges, disposals of properties, plants, equipment and businesses, net, and the net tax benefit resulting from the Tax Reform Act) enable management and investors to perform meaningful comparisons of current and historical performance of the Company. Management of the Company also believes that the exclusion of the impact of the identified adjustments provides a stable platform on which to compare the historical performance of the Company and that investors desire this information. Management believes that the use of consolidated adjusted free cash flow, which excludes cash paid for capital expenditures, acquisition and integration related costs, incremental COVID-19 costs, net, cash paid for debt issuance costs, and cash paid for acquisition and integration related ERP systems from the Company's consolidated net cash provided by (used in) operating activities, provides additional information on which to evaluate the cash flow generated by the Company and believes that this is information that investors find valuable. The non-GAAP Measures are intended to supplement and should be read together with our financial results. The non-GAAP Measures 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 the non-GAAP Measures.