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 presently 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, 2004. 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. September 15, 2005 KeyBanc Capital Markets Basic Materials & Packaging Conference
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KeyBanc Capital Markets Basic Materials & Packaging Conference · 2015. 12. 23. · equivalent GAAP data. All non-GAAP data in the presentation are indicated by footnotes. Tables
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Forward-Looking StatementsThis 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 presently 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, 2004. The Company assumes no obligation to update any forward-looking statements.
Regulation GThis 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. Tablesshowing 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.
Note: Annual operating profit includes corporate allocations for all years shown, but excludes operating profit from CorrChoice prior to fiscal 2003.
$32
$23
$54 $53
$20
$30 $29
$44
($2)
($5)
$15
$35
$55
Oct
-97
Oct
-98
Oct
-99
Oct
-00
Oct
-01
Oct
-02
Oct
-03
Oct
-04
Jul-0
5**
Linerboard Prices$/Ton
PPS’ Annual Operating Profit (1)
$ millions
Source: Pulp & Paper, Company Data
330
355
380
405
430
455
1997 1998 1999 2000 2001 2002 2003 2004 2005*
*As of August 2005
Linerboard Prices versus PPS' Operating Profit(1)
(1) Before special items
17
5%
1%
Net sales $15 million• Undervalued timberland assets
End markets
Advantages
Operating profit (1) $10 million
Containerboard Building products Housing Pilings and poles
283,000 acres in North America(1) Before special items
12 Months Ended 7/31/05
Timber
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Significant Timberland Transaction
Transaction• Sale of 56,000 acres of timberland, timber and associated assets.• Approximately $90 million total in two phases.
First phase completed May 2005• Sale of 35,000 acres of timberland and associated assets in Florida, Georgia, and Alabama.• Proceeds of approximately $51 million used for debt reduction and general corporate
purposes.
Second phase to be completed during fiscal 2006• Sale of an additional 21,000 acres of timberland and associated assets in Florida.• Expected to occur in several installments.• Proceeds of approximately $39 million.
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$1,500
Global Sourcing & Supply Chain Strategy
SteelPaper (2)
Transportation/LogisticsResinOCC
Global Spend (1)
Top Categories($ Millions)
$25 $50 – $75
(1) Fiscal 2004(2) Non-trade only
• Leverage global spend to optimize procurement costs.
• Focus on transportation/logistics and inventory to drive savings and to improve customer service levels.
• Standardize and automate business processes to realize indirect spend savings.
• Improve supply chain processes and systems to maximize value creation.
FY 2006 Savings Guidance($ Millions)
Permanent SavingsIdentified($ Millions)
Greif Business System
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Strong Foundation
Leadingmarketposition
• Global leader – industrial packaging• Leading specialty provider – paper and packaging• Advantaged timberland assets
Strongheritage
• Integrity • Customer focus• People first
History ofbold moves
• In the industry – acquisition of Van Leer and Sonoco’s industrial container businesses and CorrChoice investment
• In the market – value-added packaging provider• In the company – Greif Business System
Sources of competitive advantage
• Scale economies• Uniquely positioned to serve global customers• Distinctive customer service and respected “industrial brand”• Differentiated and comprehensive product offerings• A special culture
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Growth
ProductivityPeople
Value
“Strong performance ethic”
Preferred productivity partner
• Compelling value proposition based on what targetedcustomers are willing to pay for
• Low-cost provider of high-qualityproducts with consistent andreliable delivery
• Integrated problem solving• People management/development• Performance management
• Global fact-based management• Supplier relationships and integration• TCO (productivity) analysis
Greif’s Operating System – Capability Engines
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Strategy
People
PerformanceManagement
• Current focus on optimizing existing business portfolio.
• Putting the right people in the pivotal roles.• Identify high potential employees and talent gaps.• Rigorous approach to talent development and capability building.
• Key Performance Indicators aligned across the enterprise.• Building automated dashboards to track progress.• Developing a rigorous performance management system.
Guiding/Driving Processes
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Incremental improvement A transformation
Cost-effective Low cost
Market pricing Value pricing
Nice place to work Demanding, but great place to work
(1) Before special items.(2) Return on net assets equals operating profit, before special items, divided by total debt plus shareholders' equity.(3) Operating working capital equals accounts receivable plus inventories less accounts payable.(4) Represents the twelve-month period ended July 31, 2005.
Operating Profit Margin(1)
5.6% 6.3% 7.0%
10.0%
7.4%
0.0%
3.0%
6.0%
9.0%
12.0%
2002 2003 2004 2005 2006Target
(4)
SG&A / Net Sales15.4%
9.9% 9.2% 10.0%11.9%
0.0%
5.0%
10.0%
15.0%
20.0%
2002 2003 2004 2005 2006Target
(4)
Return on Net Assets(2)
9.8%
20.0%15.5%
7.3%
12.9%
0.0%5.0%
10.0%15.0%20.0%25.0%
2002 2003 2004 2005 2006Target
(4)
Operating Working Capital(3) / Net Sales16.0% 14.9%
12.0%10.6%13.2%
0.0%
5.0%
10.0%
15.0%
20.0%
2002 2003 2004 2005 2006Target
(4)
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$628 $612
$431$360
$0
$175
$350
$525
$700
$875
2002 2003 2004 2005*
33.7%2005*
40.7%2004
51.7%2003
52.4%2002
Net Debt/Net Capitalization
* At July 31, 2005
Commitment to Net Debt Reduction($ millions)
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Established History of Cash Dividends
• Over 70 consecutive years of cash dividends paid.
• 50% increase in quarterly cash dividends per share announced on June 1, 2005.
• 30% targeted payout ratio over an entire business cycle.
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Fiscal 2005 Guidance (1)
• PPS’ results are anticipated to be impacted in the fourth quarter of 2005 by containerboard price reductions earlier this year.
• This, coupled with higher energy and other input costs during 2005 resulted in management’s earnings guidance, before special items, to be revised to $3.25 to $3.35 per diluted Class A share for 2005 on August 31, 2005, which represents a 13% to 16% increase over results before special items for fiscal 2004.
• Management remains optimistic about fiscal 2006, based on the expectation of improving market fundamentals from current levels, recent announcements related to the paper and packaging industry's rationalization of certain capacity, and stabilization of commodity prices, particularly steel.
• The Greif Business System will be further embedded throughout the company, and approximately $25 million of incremental savings are anticipated to be realized from strategic sourcing initiatives in fiscal 2006.
(1)Guidance was made as of August 31, 2005, and is not being updated or reaffirmed with these materials or the presentation
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Greif Business System:Catalyst for Unlocking Value
• Leading global market position in industrial packaging
• Comprehensive product portfolio and geographic diversification
• Fully-integrated network and value-added niche positions in paper and packaging