FinanceLooker

Excrept from filing document 2024-10-31

The aggregate market value of voting and non voting common equity held by non affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the Registrant s most recently completed second fiscal quarter was as follows
1 The Registrant s Definitive Proxy Statement for use in connection with the Annual Meeting of Stockholders to be held on February 24 2025 the 2025 Proxy Statement portions of which are incorporated by reference into Parts II and III of this Form 10 K The 2025 Proxy Statement will be filed within 120 days of October 31 2024
All statements other than statements of historical facts included in this Annual Report on Form 10 K of Greif Inc and its subsidiaries for the fiscal year ended October 31 2024 this Form 10 K or incorporated herein including without limitation statements regarding our future financial position business strategy budgets projected costs goals plans and objectives of management for future operations and initiatives are forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended the Exchange Act Forward looking statements generally can be identified by the use of forward looking terminology such as may will expect intend estimate anticipate aspiration objective project believe continue on track or target or the negative thereof or variations thereon or similar terminology All forward looking statements made in this Form 10 K are based on information currently available to our management Forward looking statements speak only as of the date the statements were made Although we believe that the expectations reflected in forward looking statements have a reasonable basis we can give no assurance that these expectations will prove to be correct Forward looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by the statements For a discussion of the most significant risks and uncertainties that could cause our actual results to differ materially from those projected see Risk Factors in Item 1A of this Form 10 K The risks described in this Form 10 K are not all inclusive and given these and other possible risks and uncertainties investors should not place undue reliance on forward looking statements as a prediction of actual results All forward looking statements made in this Form 10 K are expressly qualified in their entirety by reference to such risk factors Except to the limited extent required by applicable law we undertake no obligation to update or revise any forward looking statements whether as a result of new information future events or otherwise
We are a leading global producer of industrial packaging products and services with operations in over 35 countries We offer a comprehensive line of rigid industrial packaging products such as steel fibre and plastic drums rigid intermediate bulk containers jerrycans and other small plastics closure systems for industrial packaging products transit protection products water bottles and remanufactured and reconditioned industrial containers and services such as container life cycle management logistics warehousing and other packaging services We produce and sell containerboard corrugated sheets corrugated containers and other corrugated products to customers in North America in industries such as packaging automotive food and building products We also produce and sell coated recycled paperboard and uncoated recycled paperboard some of which are used to produce and sell industrial products tubes and cores construction products and protective packaging We also produce and sell bulk and specialty partitions made from both containerboard and uncoated recycled paperboard In addition we purchase and sell recycled fiber and produce and sell adhesives used in our paperboard products We sell timber to third parties from our timberland in the southeastern United States that we manage to maximize long term value In addition we sell from time to time timberland and special use land which consists of surplus land higher and better use HBU land and development land Our customers range from Fortune 500 companies to medium and small sized companies in a cross section of industries
Through the end of our 2024 fiscal year our fiscal year began on November 1 and ended on October 31 of the following year Any references in this Form 10 K to the years or to any quarter of those years relates to the fiscal year or quarter as the case may be ended in that year unless otherwise stated However we are changing our fiscal year end effective for the 2025 fiscal year Our 2025 fiscal year will begin on November 1 2024 and end on September 30 2025 and accordingly will consist of eleven months Our fourth fiscal quarter of 2025 will be the two month period ending September 30 2025 Thereafter our fiscal year will begin on October 1 and end on September 30 of the following year
For fiscal year 2024 we operated in seven operating segments which are aggregated into three reportable segments Global Industrial Packaging Paper Packaging Services and Land Management Information related to our reportable segments is included in Note 13 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10 K
Beginning with our first quarter of 2025 we will operate in four operating segments and four reportable segments Customized Polymer Solutions Durable Metal Solutions Sustainable Fiber Solutions and Integrated Solutions
In the Global Industrial Packaging reportable segment we are a leading global producer of industrial packaging products such as steel fibre and plastic drums rigid intermediate bulk containers jerrycans and other small plastics closure systems for industrial packaging products transit protection products water bottles and remanufactured and reconditioned industrial containers and services such as container life cycle management logistics warehousing and other packaging services We sell our industrial packaging products on a global basis to customers in industries such as chemicals paints and pigments food and beverage petroleum industrial coatings agriculture pharmaceutical and minerals among others
In the Paper Packaging Services reportable segment we produce and sell containerboard corrugated sheets corrugated containers and other corrugated products to customers in North America in industries such as packaging automotive food and building products Our corrugated container products are used to ship such diverse products as home appliances small machinery grocery products automotive components books and furniture as well as numerous other applications We also produce and sell coated recycled paperboard and uncoated recycled paperboard some of which are used to produce and sell industrial products tubes and cores construction products and protective packaging which ultimately serve both industrial and consumer markets We produce and sell bulk and specialty partitions made from both containerboard and uncoated recycled board In addition we purchase and sell recycled fiber and produce and sell adhesives used in our paperboard products
In the Land Management reportable segment we are focused on the active harvesting and regeneration of our United States timber properties to achieve sustainable long term yields While timber sales are subject to fluctuations we seek to maintain a
consistent cutting schedule within the limits of market and weather conditions We also sell from time to time timberland and special use land which consists of surplus land HBU land and development land As of October 31 2024 we owned approximately 175 000 acres of timber properties in the southeastern United States
The markets in which we sell our products are highly competitive with many participants Although no single company dominates we face significant competitors in each of our businesses Our competitors include large vertically integrated companies as well as numerous smaller companies The industries in which we compete are particularly sensitive to price fluctuations caused by shifts in industry capacity and other cyclical industry conditions Other competitive factors include design quality and service with varying emphasis depending on product line
In the global industrial packaging industry we compete by offering a comprehensive line of products on a global basis In the containerboard industry we compete by concentrating on providing value added higher margin corrugated products to niche markets In our other paper packaging businesses we compete by offering a comprehensive range of uncoated and coated paperboard products and diverse tube core partitions and other specialty products
Steel resin and containerboard as well as used industrial packaging for reconditioning are the principal raw materials for the Global Industrial Packaging reportable segment and pulpwood old corrugated containers and recycled coated and uncoated paperboard are the principal raw materials for the Paper Packaging Services reportable segment We satisfy most of our needs for these raw materials through purchases on the open market or under short term and long term supply agreements All of these raw materials are purchased in highly competitive price sensitive markets which have historically exhibited price demand and supply cyclicality From time to time some of these raw materials have been in short supply at certain of our manufacturing facilities In those situations we ship the raw materials in short supply from one or more of our other facilities with sufficient supply to the facility or facilities experiencing the shortage To date raw material shortages have not had a material adverse effect on our financial condition or results of operations
We must comply with extensive laws rules and regulations in the United States and in each of the countries where we conduct business with respect to a variety of matters including the compliance with government laws and regulations concerning the environment and health and safety matters We do not believe that future compliance with government laws and regulations will have a material adverse effect on our capital expenditures competitive position results of operations or financial condition
As to environmental matters our operations are subject to extensive federal state local and international laws regulations rules and ordinances relating to pollution the protection of the environment the generation storage handling transportation treatment disposal and remediation of hazardous substances and waste materials and numerous other environmental laws and regulations In the ordinary course of business we are subject to periodic environmental inspections and monitoring by various governmental agencies In addition certain of our production facilities require environmental permits that are subject to revocation modification and renewal As of the date of filing this Form 10 K and based on current information we believe that the probable costs of the remediation of company owned property will not have a material adverse effect on our financial condition or results of operations We believe that we have adequately reserved for our liability for these matters as of October 31 2024
As to health and safety matters our manufacturing operations involve the use of heavy equipment machinery and chemicals and require the performance of activities that create safety exposures We are subject to extensive federal state local and international laws regulations rules and ordinances relating to occupational health and safety We have established safety policies programs procedures and training for our manufacturing operations and our safety programs include measures required for compliance with these government laws and regulations In addition our safety programs include the ongoing identification and elimination of workplace exposures that can lead to injuries and sharing of health and safety best practices We do not believe that future compliance with health and safety laws and regulations will have a material adverse effect on our capital expenditures results of operations or financial condition
We do not believe that compliance with federal state local and international laws and regulations that have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment has had or will have a material adverse effect upon our capital expenditures competitive position results of operations or financial condition
See also Note 10 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10 K for additional information concerning environmental expenses and cash expenditures for the years ended October 31 2024 2023 and 2022 and our reserves for environmental liabilities as of October 31 2024 and 2023
Our Company s values and culture are critical to our ability to attract hire and retain talented employees for our global businesses We seek to engage develop and incentivize our employees to pursue our vision Be the best customer service company in the world We depend on our employees to provide differentiated customer service and create value for our customers through a solutions based approach with the goal of earning our customers trust and loyalty We work to accomplish this goal by looking to our purpose We create packaging solutions for life s essentials vision and values set forth in The Greif Way
Our Build to Last strategy provides a platform to support our strategic growth and development under four key missions creating thriving communities delivering legendary customer service protecting our future and ensuring financial strength Each employee has a part in driving these key missions wherever they are located in the world and ultimately our success is dependent on all of our employees working together to keep these priorities at the forefront of their activities Within our creating thriving communities mission we are focused on establishing a foundation for action that supports health and safety equity and inclusion and talent development and engagement
Safeguarding the health and safety of our employees is our first and foremost priority We are committed to providing a safe working environment for all our employees with a philosophy of Zero Harm We have implemented an incident tracking system that we call the LIFE program to assist with identifying global and regional leading indicators that facilitate the creation of programs and safety action plans that may help to reduce conditions and behaviors that lead to at risk situations and the use of technology and automation to eliminate such conditions We utilize a global safety scorecard with standardized safety metrics globally to understand improve and correct safety risk and culture To promote a continuous focus on safety we have safety committees that consist of employees and management at all our facilities We have implemented safety meetings at all levels in the organization from CEO to shop floor both in the facilities and in office or remote locations creating a safety mindset that everyone is a safety leader regardless of their position so that our safety culture is understood and practiced every day while developing a behavior commitment culture for each and every employee We are steadfast in our commitment to employee safety For example we hold an annual global safety week focused on Zero Harm by sharing best practices and learnings to mitigate safety risks through interactive activities related to machine safety devices good housekeeping and safe equipment operations In addition we have regular safety communications that target all employees and we have an annual award that recognizes facilities that have achieved certain criteria for proactive actions and behaviors
We are also committed to the total well being of all our employees and their families with a variety of physical mental and social wellness programs These programs differ by region and include Company sponsored or subsidized health care insurances voluntary health fairs and employee assistance programs to improve mental health and wellness
In accordance with our values we encourage our employees to embrace an inclusive culture of language location and thought Our success depends on maintaining a culture where every employee communicates with respect candor and trust We rely on the unique qualities and talents of our employees to help us achieve our Build to Last strategy We strive to create an inclusive and equitable working environment as well as promoting equitable treatment within our workforce including the support of multiple colleague led resource groups fostering an environment where our employees feel valued and appreciated for the distinct voice they bring to our Company In addition we strive to compensate our employees fairly and equitably and continue to monitor pay equity data and educate our managers to make objective compensation decisions in line with our Company s compensation policies
Attracting developing and retaining talented employees is an integral aspect of our human capital strategy and critical to our success We continuously strive to create learning and development opportunities for all our employees Our development and training programs are designed to enhance leadership develop a customer service mindset and improve engagement at all levels within our organization We utilize Greif University a centralized training platform offering a variety of learning and development offerings including recorded internal trainings on demand courses assessments and a learning library Greif University allows employees to access LinkedIn Learning an online learning and skill building platform that empowers employees to develop skills to grow their career We have a performance development review and talent development process in which managers provide regular feedback and coaching to assist with the development of our employees including the use of individual development plans to assist with career development To foster employee engagement we encourage and value feedback from our employees and conduct annual engagement surveys of all our global employees to better understand our employee s level of engagement and identify areas of improvement to build high performing teams to meet our strategic goals
As of October 31 2024 our approximately 14 000 full time employees were located in the following geographic regions 57 in North America 26 in Europe Middle East and Africa 9 in Asia Pacific and 8 in Latin America Our global workforce is 18 female and 82 male with approximately 38 represented by labor unions
Our operations are located in North and Latin America Europe the Middle East Africa and the Asia Pacific regions Information related to our geographic areas of operation is included in Note 13 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10 K
We maintain a website at www greif com We file reports with the United States Securities and Exchange Commission SEC We make these reports available free of charge on or through our website which include but are not limited to our annual reports on Form 10 K quarterly reports on Form 10 Q current reports on Form 8 K proxy and information statements and amendments to these reports filed or furnished pursuant to Section 13 a or 15 d of the Exchange Act as soon as reasonably practicable after we have electronically filed such material with or furnished it to the SEC
Any of the materials we file with the SEC may also be read and or copied at the SEC s Public Reference Room at 100 F Street NE Washington DC 20549 Information on the operation of the SEC s Public Reference Room may be obtained by calling the SEC at 1 800 SEC 0330 The SEC maintains a website that contains reports proxy and information statements and other information regarding issuers that file electronically with the SEC at www sec gov
Statements contained in this Form 10 K may be forward looking within the meaning of Section 21E of the Exchange Act Such forward looking statements are subject to certain risks and uncertainties that could cause our operating results to differ materially from those projected The following factors among others in some cases have affected and in the future could affect our actual financial or operational performance or both
Our customers generally consist of other manufacturers and suppliers who purchase industrial packaging products and containerboard and uncoated and coated recycled boxboard and related products for their own containment and shipping purposes Because we supply a cross section of industries including chemicals lubricants films paints and pigments food and beverage personal care fragrances petroleum industrial coatings carpeting agriculture agrochemical pharmaceuticals mineral products packaging automotive construction and building products industries and have operations in many countries demand for our products and services has historically corresponded to changes in general economic and business conditions of the industries and countries in which we operate The overall demand and prices for our products and services could decline as a result of numerous factors outside of our control including an economic recession increased labor costs availability of and increased cost of energy and disruptions in supply chains to our business our customers their end markets and our suppliers changes in industrial production processes or consumer preference changes in laws and regulations inflation tariffs changes in published pricing indices fluctuations in interest rates and currency exchange rates and changes in the fiscal or monetary
policies of governments in the regions in which we operate Accordingly our financial performance is substantially dependent upon the general economic and business conditions existing in these industries and countries where we do business and any prolonged or substantial economic downturn or geopolitical uncertainty in the markets in which we operate could have a material adverse effect on our business financial condition results of operations and cash flows
We are a global company with operations in over 35 countries with approximately 37 of our fiscal 2024 sales derived from non U S operations Management of global operations is complex and our operations outside the United States are subject to additional risks that may not exist or may not be as significant with respect to our operations within the United States
Within our global footprint we have operations in Europe Middle East and Asia Pacific As regards the Eastern Europe region the length impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable The Russian invasion of Ukraine and the ongoing conflict between those two countries have amplified and may continue to amplify certain risks to our operations including increased foreign exchange volatility disruptions to financial and credit markets energy supply specifically in Europe supply chain disruptions customer demand increased risks of cybersecurity incidents increased costs to ensure compliance with global and local laws and regulations economic recessions in certain neighboring European countries or globally due to inflationary and other pressures and delays in the ability or even the inability to access cash or earnings from Russia In addition the imposition of new or increased sanctions tariffs quotas exchange or price controls trade barriers or similar restrictions resulting from the conflict between Russia and Ukraine could negatively impact our business and operations
In the event that our operations in Russia cease for any reason that event would result in an impairment charge as we would not likely generate a fair market return on those assets In addition the Russian government has implemented strict currency controls that restrict the movement of capital This includes limits on the amount of money that can be taken out of the country directly impacting dividend payments Although we have been able to pay the de minimus dividends permitted by the Russian government we have been generally unable to transfer money out of Russia and do not expect that this will change in 2025 We will continue to monitor the effects of this conflict including risks that may affect our business and we will adjust our plans accordingly as the situation progresses As of October 31 2024 and the fiscal year then ended our operations in Russia accounted for approximately 3 of our net sales approximately 9 of our operating profit and approximately 2 of our total assets
As a result of our general global operations we are subject to certain risks that could disrupt our operations or force us to incur unanticipated costs or exit a specific country These risks which can vary substantially by country may include economic or political instability geopolitical events such as the Russian invasion of Ukraine Middle East conflicts in Gaza Lebanon Iran Syria Israel and Yemen governmental unrest in South Korea and tensions between China and Taiwan and North Korea and Japan corruption social and ethnic unrest the regulatory environment including the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation and enforceability of legal requirements hyperinflation and fluctuations in the value of local currency versus the U S dollar repatriating cash from foreign countries to the U S downturns or changes in economic conditions including in relation to commodity inflation adverse tax consequences or rulings nationalization or any change in social political or labor conditions in any of these countries or regions impacting matters such as sustainability environmental regulations and trade policies and agreements
We also have indebtedness agreements to purchase raw materials and agreements to sell finished products that are denominated in Russian Ruble Euro Brazilian Real Hungarian Forint Turkish Lira British Pound and other currencies Our operating performance is affected by fluctuations in currency exchange rates by
Current global economic conditions are challenging to our global business operations Such conditions have had and may continue to have a negative impact on our financial results Future economic downturns either in the United States Europe or in other regions in which we do business could negatively affect our business and results of operations With the volatility in the current global economic climate inflation and geopolitical events around the world including the conflict between Russia and Ukraine various conflicts in the Middle East governmental unrest in South Korea and tensions between China and Taiwan and
North Korea and Japan it is difficult for us to predict the complete impact of the forgoing matters on our business and results of operations Due to these current and future economic conditions our customers may face financial difficulties disruption in their supply chains and the unavailability of or reduction in commercial credit or increased debt levels that may result in decreased sales by and revenues to our Company Certain of our customers may cease operations or seek bankruptcy protection which would reduce our cash flows and adversely impact our results of operations Our customers that are financially viable and not experiencing economic distress may nevertheless elect to reduce the volume of orders for our products or close facilities in an effort to remain financially stable or as a result of the unavailability of commercial credit which would negatively affect our results of operations We may experience difficulties in servicing renewing or repaying our outstanding debt due to continued volatility in the global economy We may also have difficulty accessing the global credit markets if there is a tightening of commercial credit availability which would result in decreased ability to fund capital intensive strategic projects
Further we may experience challenges in forecasting revenues and operating results due to these global economic conditions The difficulty in forecasting revenues and operating results may result in volatility in the market price of our common stock
In addition the lenders under our senior secured credit agreement and other borrowing facilities described in Item 7 of this Form 10 K under Liquidity and Capital Resources Borrowing Arrangements and the counterparties with whom we maintain interest rate swap agreements currency forward contracts and derivatives and other hedge agreements may be unable to perform their lending or payment obligations in whole or in part or may cease operations or seek bankruptcy protection which would negatively affect our cash flows and our results of operations
The equipment that we use in our manufacturing operations is expensive and requires continued maintenance We may require significant capital investment to maintain our equipment If our existing sources of capital prove insufficient there can be no assurance that we will be able to obtain capital to finance these expenditures on favorable terms or at all Any inability by us to maintain our equipment as needed or any inability to obtain capital for expenditures on equipment maintenance on favorable terms could have an adverse effect on our business financial position and results of operations
Over the last few years many of our large industrial packaging containerboard and coated and uncoated recycled boxboard and related products customers have acquired or been acquired by companies with similar or complementary product lines In addition many of our suppliers of raw materials such as steel resin and paper have undergone a similar process of consolidation This consolidation has increased the concentration of our largest customers resulting in some cases in increased pricing pressures from our customers and in other cases a decreasing customer base due to customers becoming more vertically integrated The consolidation of our largest suppliers has resulted in limited sources of supply and increased cost pressures from our suppliers Any future consolidation of our customer base or our suppliers could negatively impact our business financial condition results of operations and cash flows Furthermore if one or more of our major customers reduces delays or cancels substantial orders if one or more of our major suppliers is unable to timely produce and deliver our orders or if we are unable to broaden our customer base and increase specialty product offerings to offset the effects of consolidation our business financial condition results of operations and cash flows may be materially and adversely affected particularly for the period in which the reduction delay or cancellation occurs and also possibly for subsequent periods
Each of our operating segments operates in highly competitive industries The most important competitive factors we face are price quality customer service and on time delivery To the extent any of our competitors become more successful with respect to any of these key competitive factors we could lose customers and our sales could decline Moreover we anticipate that the lower customer demand patterns that we experienced throughout fiscal years 2023 and 2024 will continue on an overall basis through 2025 which may cause our competitors to reduce prices to maintain or increase their sales volumes which could adversely impact our sales volumes and our margins In addition due to the tendency of certain customers to diversify their suppliers we could be unable to increase or maintain sales volumes with particular customers Certain of our competitors are substantially larger and have significantly greater financial resources
In addition some of our products are made from raw materials that are subject to pronounced and at times rapid price fluctuations such as metal which is used in the manufacture of steel drums and containers and intermediate bulk container IBC cages old corrugated containers OCC which impacts our paper products and oil which in turn affects the price of resin for plastic drums and containers including IBC bottles Particularly in well developed markets in Europe and in the United States any substantial increases in the supply of industrial packaging resulting from capacity increases the stockpiling of raw materials or other types of opportunistic behavior by our competitors in a period of high raw materials prices or price
wars could adversely affect our margins and the profitability of our business With many of our customers we have implemented raw material price adjustment mechanisms based on industrial index pricing however these price adjustment mechanisms lag market price changes and our ability to pass through costs to our customers could take months to realize which in turn could adversely impact our product margins Although price is a significant basis of competition in our industry we also compete on the basis of product reliability the ability to deliver products on a global scale and our reputation for quality and customer service If we fail to maintain our current standards for product quality the scope of our distribution capabilities or our customer relationships our reputation and business financial condition results of operations and cash flows could be adversely affected
Negative media reports about us or our businesses whether accurate or inaccurate could damage our reputation and relationships with our customers and suppliers cause customers and suppliers to terminate their relationship with us or impair our ability to effectively compete which could adversely affect our business financial condition results of operations and cash flows
Industry demand for certain of our industrial packaging and paper products in our United States operations and industrial packaging products in European and other international markets has varied in recent years and more recently related to reduced demand and inflationary pressures causing competitive pricing for those products In addition disruptions within our customers labor supply could reduce customer demand and negatively impact our business As demand decreases we see an increase in competition on price which could consequentially impact our sales and margins We seek to offset the impacts of these pressures by focusing on quality and customer service
We compete in industries that are capital intensive which generally leads to continued production as long as prices are sufficient to cover marginal costs We are making significant capital investments in line with our long term business strategy such as investments in new and improved equipment automation and technology to increase capacity productivity and safety As a result changes in industry demands including any resulting industry over capacity and increased new capacity for production of industrial packaging and paper products by competitors may cause substantial price competition and in turn we may not be able to derive the expected return on investment from our strategic investments which could negatively impact our business financial condition results of operations and cash flows Additionally customer preferences are constantly changing based on among other factors cost convenience health environmental and social concerns and customers may choose to use different packaging products than the products we manufacture as their business models change or may choose to use alternative more sustainable materials for their packaging products or simply forego the packaging of certain products entirely For example in the United States sales of fibre drums continue to decline on a year over year basis as some customers select other packaging solutions for their products Any shift away from packaging products we manufacture or changes in customer preferences to more sustainable supply chain solutions may adversely affect our business financial condition results of operations and cash flows
The principal raw materials used in the manufacture of our products are steel resin pulpwood recycled pulp from OCC recycled coated and uncoated boxboard and containerboard and used industrial packaging for reconditioning which we purchase or otherwise acquire in highly competitive price sensitive markets We have long term supply contracts in place for obtaining a portion of our principal raw materials These raw materials have historically exhibited price and demand cyclicality In addition the European Union EU s Packaging Packaging Waste Regulation that recently went into force will require post consumer resin PCR to be incorporated into plastic products sold in the EU As such prices for PCR may increase and we may also face a shortage of PCR supply necessary to meet regulatory requirements which could have a material adverse effect on our business financial condition and results of operations
In addition we manufacture certain component parts and other products for our rigid industrial packaging products and adhesives for our paper products and sell those parts and products to other companies including competitors Some of the raw materials products and component parts have been and in the future may be in short supply For example the availability of these raw materials component parts and products and or our ability to purchase and transport them may be unexpectedly disrupted by adverse weather conditions natural disasters man made disasters geopolitical conflicts a substantial economic downturn in the industries that provide any of those raw material requirements or competition for use of raw materials and component parts in other regions or countries As a result of inflation and continued economic slowdown we may continue to incur significant raw material prices increases in the future which would likely have an adverse effect on our operating margins While we have taken steps to minimize the impact of these increased costs by working closely with our suppliers and customers there can be no assurances that unforeseen future events in the global supply chain and our ability to pass on
The disruptions to the global economy starting in 2020 and continuing throughout 2024 which were intensified by the Russian invasion of Ukraine and the ongoing conflict between those two countries have impeded global supply chains in some regions in which we operate more than others resulting in longer lead times
The cost of producing our products is sensitive to the price of energy including its impact on transport costs Energy prices in particular oil and natural gas have fluctuated in recent years and specifically in Europe related to the Russian invasion of Ukraine and the ongoing conflict between those two countries which had a corresponding effect on our operation and production costs and may have the same effect on our customers causing volatility in demand for our products and services We are currently seeking alternative energy resources in Europe and elsewhere that may take years to fully implement and savings to be realized if any Potential legislation regulatory action and international treaties related to climate change especially those related to the regulation of greenhouse gases may result in significant increases in energy costs as well as taxes and other governmental charges There can be no assurance that we will be able to recoup any past or future increases in the cost of energy and transportation
We have invested a substantial amount of capital in acquisitions joint ventures and strategic investments and we expect that we will continue to do so in the foreseeable future We are continually evaluating acquisitions divestitures and strategic investments that are significant to our business both in the United States and internationally Acquisitions joint ventures and strategic investments involve numerous risks including the failure to identify suitable acquisition candidates complete acquisitions on acceptable terms and conditions retain key customers employees and contracts the inability to integrate businesses without material disruption unanticipated costs incurred in connection with integrating businesses the incurrence of liabilities greater than anticipated or operating results that are less than anticipated the inability to realize the projected value and the inability to realize projected synergies In addition acquisitions joint ventures and strategic investments and associated integration activities require time and attention of management and other key personnel There can be no assurance that any acquisitions joint ventures and strategic investments will be successfully integrated into our operations that competition for acquisitions will not intensify or that we will be able to complete such acquisitions joint ventures and strategic investments on acceptable terms and conditions The costs of unsuccessful acquisition joint venture and strategic investment efforts may adversely affect our business financial condition results of operations and cash flows
Additionally in connection with any acquisitions or divestitures we may become subject to contingent liabilities or legal claims including but not limited to third party liability and other tort claims claims for breach of contract employment related claims environmental health and safety regulatory actions and liabilities permitting regulatory or other legal compliance issues or tax liabilities If we become subject to any of these liabilities or claims and they are not adequately covered by insurance or an enforceable indemnity or similar agreement from a creditworthy counterparty we may be responsible for significant out of pocket expenditures These liabilities if they materialize could have an adverse effect on our business financial condition results of operations and cash flows
We have reorganized portions of our operations from time to time in recent years particularly following acquisitions or divestments of businesses and periods of economic downturn due to local regional or global economic conditions For 2025 we have created a new strategic business unit structure based on our products rather than geography We will continue to implement continuous improvement initiatives necessary or desirable to improve our business portfolio address underperforming assets and generate additional cash These initiatives may result in initial inefficiencies as employees and business operations adapt to the new structure These initiatives may also result in reductions in selling general and administrative costs throughout our Company and have and will likely continue to result in the rationalization of manufacturing facilities
The rationalization of our manufacturing facilities may result in temporary constraints upon our ability to manufacture the quantity of products necessary to fill orders and thereby complete sales in a timely manner In addition system upgrades at our
manufacturing facilities that impact ordering production scheduling and other related manufacturing processes are complex and could impact or delay production targets A prolonged delay in our ability to fill orders on a timely basis could affect customer demand for our products and increase the size of our product inventories causing future reductions in our manufacturing schedules and adversely affecting our results of operations Moreover our continuous development and production of new products will often involve the retooling of existing manufacturing facilities This retooling may limit our production capacity at certain times in the future which could adversely affect our business financial condition results of operations and cash flow In addition the expansion and reconfiguration of existing manufacturing facilities could increase the risk of production delays as well as require significant investments of capital
While we expect these initiatives to result in significant profit opportunities and savings throughout our organization our estimated profits and savings are based on assumptions that may prove to be inaccurate and as a result there can be no assurance that we will realize these profits and cost savings or that if realized these profits and cost savings will be sustained Failure to achieve or delays in achieving projected levels of efficiencies and cost savings from such measures or unanticipated inefficiencies resulting from manufacturing and administrative reorganization actions in progress or contemplated could adversely affect our business financial condition results of operations and cash flows and harm our reputation
Several operations particularly in developing countries are conducted through joint ventures In countries that require us to conduct business through a joint venture with a local joint venture partner the loss of a joint venture partner or a joint venture partner s loss of its ability to conduct business in such country may impact our ability to conduct business in that country Sanctions that apply to a partner of a joint venture or to a joint venture s directors or officers could also impact our ability to conduct business through that joint venture
In joint ventures we share ownership with one or more parties who may or may not have the same goals strategies priorities or resources as we do In general joint ventures are intended to be operated for the benefit of all co owners rather than for our exclusive benefit Operating a business as a joint venture often requires additional organizational formalities as well as time consuming procedures for sharing information accounting and making decisions In certain cases our joint venture partners must agree in order for the applicable joint venture to take certain actions including acquisitions the sale of assets borrowing money and granting liens on joint venture property Our inability to take unilateral action that we believe is in our best interest may have an adverse effect on the financial performance of the joint venture and the return on our investment Finally we may be required on a legal or practical basis or both to accept liability for obligations of a joint venture beyond our economic interest including in cases where our co owner becomes bankrupt or is otherwise unable to meet its commitments
The agreements that govern certain of our current joint ventures under certain circumstances provide the joint venture partner with the right to sell their participation in the joint venture to us or the right to acquire our participation in the joint venture Some of the joint venture agreements provide that the joint venture partner can sell its participation for a certain purchase price calculated on the basis of a fixed multiple Such put and call rights may result in financial risks for us In addition such rights could negatively impact our operations if as a result of their exercise we lose access to members of our management teams that are familiar with local markets or distribution and manufacturing channels
Our ability to attract develop and retain talented and qualified employees at all levels within our organization including production employees key managers and executives is critical to the success of our business We need an engaged workforce to serve our customers and meet our business objectives Competitive pressures and a tight labor market within and outside our industry may make it more difficult and expensive to attract hire and effectively onboard qualified employees Increased turnover of production employees the retirement of or unforeseen loss of key officers and employees without appropriate succession planning or the ability to develop or hire replacements could make it difficult to manage our business and meet our business objectives resulting in a material adverse effect on our business financial condition results of operations and cash flows In addition failing to promote gender equality and provide equal pay for work of equal value can lead to public backlash legal penalties brand damage reduced employee morale and productivity and failing to address violence and harassment in the workplace can result in internal and external risks including legal consequences regulatory penalties reputational risks decreased employee morale and productivity turnover absenteeism and loss of revenue
We are subject to the risk of work stoppages and other labor relations matters with approximately 38 of our employees around the world represented by unions We have experienced work stoppages and strikes in the past and there may be work stoppages and strikes in the future Any prolonged work stoppage or strike at any one of our principal manufacturing facilities could have a negative impact on our business financial condition results of operations and cash flows In addition upon the expiration of existing collective bargaining agreements we may not reach new agreements without union action and any such new agreements may not be on terms satisfactory to us
We are self insured or carry large deductibles for certain types of insurance claims which includes but is not limited to claims made under our employee medical and dental insurance programs and workers compensation auto and general liability claims We utilize outside actuarial services to establish reserves for estimated costs related to pending claims administrative fees and claims incurred but not reported Because establishing reserves is an inherently uncertain process involving estimates currently established reserves may not be adequate to cover the actual liability for claims made under our employee medical and dental insurance programs and for certain of our workers compensation and liability claims If it is concluded that our estimates are incorrect and our reserves are inadequate for these claims we will need to increase our reserves which could adversely affect our financial condition results of operations and cash flows
We have comprehensive liability fire and extended coverage insurance on our facilities and operations with policy specifications and insured limits customarily carried for similar properties However there are certain types of losses such as losses resulting from wars acts of terrorism windstorms floods wildfires earthquakes or other natural disasters or environmental conditions and pollution that may be uninsurable or subject to restrictive policy conditions or subject to very large deductibles In these instances should a loss occur in excess of insured limits we could lose capital invested in that property as well as the anticipated future revenues derived from the manufacturing activities conducted at that property while remaining obligated for any financial obligations related to the property Any such loss would adversely impact our business financial condition results of operations and cash flows We purchase insurance policies covering general liability and product liability with substantial policy limits However there can be no assurance that any liability claim would be adequately covered by our applicable insurance policies or would not be excluded from coverage based on the terms and conditions of the policy This could also apply to any applicable contractual indemnity We also purchase environmental liability policies where legally required and may elect to purchase coverage in other circumstances in order to transfer all or a portion of environmental liability risk through insurance However there can be no assurance that any environmental liability claim would be adequately covered by our applicable insurance policies or would not be excluded from coverage based on the terms and conditions of the policy We do not purchase crop insurance for our timberland holdings and a forest fire or other event could damage a material amount of timber
The costs of insurance coverage continue to increase along with increases in the level of deductibles and the availability of some insurance coverages is decreasing due to increased and more complex litigation extensive property damage caused by natural disasters increased cybersecurity breaches large jury verdicts and other business and employment litigation and losses Any substantial increases in our insurance premiums deductibles or the availability of insurance policies could adversely affect our business financial condition results of operations and cash flows
Our business is dependent upon our ability to execute in an efficient and uninterrupted fashion necessary business functions such as accessing key business data financial information order processing invoicing and the operation of IT dependent manufacturing equipment A significant portion of the communication between our employees customers and suppliers around the world depends on the reliability of our IT systems A significant interruption or major failure of the Internet a shut down of or inability to access one or more of our facilities a power outage unavailability obsolescence or a failure of one or more of our IT telecommunications or other systems would substantially impair our ability to perform daily functions on a timely basis and could result in a material adverse impact on our operations and adversely affect our sales
Initiatives intended to make our cost structure business processes and systems more efficient may not achieve the expected benefits and could inadvertently have an adverse effect on our business operating results financial condition and cash flows We continuously seek to make our cost structure and business processes more efficient including by implementing changes to our business information systems These efforts may involve a significant investment of financial and human resources and significant changes to our current operating processes
We have established a business continuity plan in an effort to ensure the continuation of core business operations in the event that normal operations could not be performed due to a catastrophic event While we continue to test and assess our business continuity plan to ensure it meets the needs of our core business operations and addresses multiple business interruption events there is no assurance that core business operations could be performed upon the occurrence of such an event which may have a material adverse effect on our business financial condition results of operations and cash flows
A Cyber Attack Security Breach of Customer Employee Supplier or Company Information and Data Privacy Risks and Costs of Compliance with New Regulations may have a Material Adverse Effect on our Business Financial Condition Results of Operations and Cash Flows
In the conduct of our business we rely extensively on computer systems including third party systems to collect use transmit store and report data on information systems and interact with customers vendors and employees Increased global IT security threats and more sophisticated and targeted computer crime and increased ransomware attacks pose a risk to the security of our systems and networks and third party systems and networks with our data including employee and customer data and the confidentiality availability and integrity of our data Despite our security measures our IT systems and infrastructure may be vulnerable to computer viruses cyber attacks and or security breaches caused by employee error malfeasance or other disruptions with heightened risks due to geopolitical conflicts These threats also may be further enhanced in frequency or effectiveness through threat actors use of artificial intelligence technologies which are becoming more widely adopted and increasingly sophisticated Any such threat could compromise our networks and the information stored there could be accessed publicly disclosed lost or stolen A security breach of our computer systems or third party systems with our data could interrupt or damage our operations or harm our reputation or both In addition we could be subject to legal claims or proceedings liability under laws that protect the privacy of personal information and regulatory penalties if confidential information relating to customers suppliers employees or other parties is misappropriated from our computer system or third party systems with our data To date we have seen no material impact on our business or operations from these threats However we cannot ensure that our security efforts will prevent unauthorized access or loss of functionality to our or our third party providers systems For further discussion pertaining to cybersecurity strategy and related roles and responsibilities see Part I Item 1C of this Form 10 K
The regulatory framework for privacy issues continues to evolve worldwide with increased regulatory and enforcement focus on data protection in the U S and abroad and an actual or alleged failure to comply with applicable U S or foreign data protection laws regulations or other data protection standards in the countries in which we do business may expose us to litigation including in some instances class action litigation fines sanctions or other penalties which could harm our business reputation and could have an adverse effect on our financial condition results of operations and cash flows The data privacy landscape is continuously expanding and has significantly increased responsibilities for companies collecting using and processing personal data as well as significantly increased penalties for noncompliance of security and data breach obligations specifically in the EU under the General Data Protection Regulation in China under the Personal Information Protection Law and in Brazil under the General Personal Data Protection Law in addition to U S privacy laws in numerous states Many of these regulations are complex and their interpretation application and enforcement are often uncertain This regulatory and enforcement environment is increasingly challenging and may present material obligations and risks to our business including significantly expanded compliance burdens and enforcement risks and could result in substantial costs and a material adverse effect on our business financial condition results of operations and cash flows
The multinational nature of our business subjects us to taxation in the United States and numerous foreign jurisdictions Due to economic and political conditions tax rates in various jurisdictions may be subject to significant change Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates changes in the valuation of deferred tax assets and liabilities or changes in tax laws or their interpretation
The Organization for Economic Cooperation and Development has issued proposed guidance which establishes a 15 global minimum tax Pillar Two tax In December 2022 the EU issued a directive requiring member states to enact a 15 minimum tax into their domestic laws effective for fiscal years beginning on or after December 31 2023 We do not anticipate the Pillar Two global minimum tax to have a material impact to our financial condition results of operations or cash flows We will continue to monitor the status of the Pillar Two tax implementation in the jurisdictions in which we operate
Tax laws are complex and subject to varying interpretations At this time we believe we are properly reflecting the provision for taxes on income using all current enacted global tax laws in every jurisdiction in which we operate However there can be
At October 31 2024 the carrying value of our goodwill was 1 953 7 million We may be required to record future impairments of our long lived assets as we continue to restructure our business Decisions to sell or close plants could reduce the estimated useful life of an asset group or indicate that the fair value of the asset group is less than the carrying value We may also experience declines in particular businesses due to competition or other outside forces indicating our long lived assets are not recoverable In addition certain future events and circumstances including deterioration of market conditions higher cost of capital a decline in actual and expected consumption and demand could result in changes to those assumptions and judgments Any resulting impairments will impact net income in the period in which the triggering event such as permanent or sustaining reduction in cash flows occurs and could be significant which could have an adverse effect on our financial condition and results of operations
There is continuing concern that emissions of greenhouse gases GHG and other human activities have or will cause significant changes in weather patterns and increase the frequency or severity of extreme weather events including droughts wildfires and flooding These types of extreme weather events have and may continue to adversely impact us our suppliers our customers and their ability to purchase our products and our ability to timely receive appropriate raw materials to manufacture and transport our products on a timely basis
We believe it is likely that the scientific and political attention to issues concerning the extent and causes of climate change will continue with new and more restrictive legislation regulations and focus on environmental social and governance ESG initiatives that could affect our financial condition results of operations and cash flows Foreign federal state and local regulatory and legislative bodies have enacted or proposed various legislative and regulatory measures relating to increased transparency and standardization of reporting related to factors that may include climate change regulating GHG emissions recycling of plastic materials and energy policies including waste tax and other governmental charges and mandates In March 2024 the U S Securities and Exchange Commission the SEC adopted final rules that among other things provide a framework for the reporting of climate related risks However the SEC voluntarily stayed implementation of the final rules pending completion of judicial review The final rules to the extent they survive ongoing and possibly additional forthcoming legal challenges will require us to provide certain climate related information beginning with our disclosures for the fiscal year ending September 30 2026 As such the final disclosure requirements and reporting timeline are currently unknown as is the cost of compliance with the new disclosure requirements in their final form The State of California has enacted legislation that will require large U S companies doing business in California to make broad based climate related disclosures starting as early as 2026 and other states are also considering new climate change disclosure requirements In addition the EU Corporate Sustainability Reporting Directive CSRD became effective in 2023 CSRD applies to both EU and non EU in scope entities and would require them to provide expansive disclosures on various sustainability topics Reporting obligations will start for fiscal year 2026 with the first publication in fiscal year 2027 The EU Corporate Sustainability Due Diligence Directive CS3D became effective in July 2024 We are further assessing our obligations under CSRD and CS3D while developing a compliance strategy and beginning to prepare for compliance and expect that compliance could require substantial effort in the future We will likely need to be prepared to contend with overlapping yet distinct climate related disclosure requirements in multiple jurisdictions The compliance with foreign federal state and local legislation and regulations concerning climate related disclosures may result in our Company incurring additional costs and capital expenditures and the failure to comply with such legislation and regulations could result in fines to our Company and could affect our business financial condition results of operations and cash flows We could also face increased costs related to defending and resolving legal claims and other litigation related to climate change and the alleged impact of our operations on climate change
We along with other companies in many business sectors including our customers are considering and implementing ESG and sustainability strategies specifically ways to reduce GHG emissions As a result our customers may request that changes be made to our products or facilities as well as other aspects of our production processes that increase costs and may require the investment of capital The failure to comply with these requests could adversely affect our relationships with some customers which in turn could adversely affect our business financial condition results of operations and cash flows
In April 2021 we announced a GHG emission reduction target to reduce our absolute Scope 1 and 2 emissions by 28 percent from a 2019 baseline by 2030 as part of our ESG and sustainability strategy Achievement of this target depends on our execution of operational strategies relating to investments in energy efficient equipment and options to utilize other alternative energy sources Execution of these strategies and achievements of our 2030 target is subject to risk and uncertainties many of which are out of our control These risks and uncertainties include but are not limited to our ability to execute our strategies and achieve our goals within the currently projected costs and expected timeframes availability use and success of on and off site renewable energy availability and cost of zero emissions electric equipment and vehicles outcome of research efforts and future technology developments such as growing our post consumer resin product offerings and downgauging our current portfolio availability of purchasing high quality recycled materials growing our life cycle services network the increased cost and availability of virtual power purchase agreements the long timeline to complete certain sustainability projects and the impact of acquisitions and divestitures There are no assurances that we will be able to successfully execute our strategies and achieve our 2030 target Failure to achieve our target could damage our reputation customer and investor relationships or our access to financing Further given investors increased focus related to environmental social and governance matters such a failure could cause stockholders to reduce their ownership holdings all of which in turn could adversely affect our business financial condition results of operations and cash flows and reduce our stock price
We must comply with extensive laws rules and regulations in the United States Europe and in each of the countries where we conduct business regarding environmental matters such as air soil and water quality and waste disposal We must also comply with extensive laws rules and regulations regarding safety health and corporate social responsibility matters There can be no assurance that compliance with existing and new laws rules and regulations will not require significant expenditures
In addition laws rules and regulations as well as the interpretation and administration of such laws and regulations by governmental agencies can change and restrict or prohibit the manner in which we conduct our current operations require additional permits to engage in some or all of our current operations or increase the cost of some or all our operations For example the U S EPA has indicated potential forthcoming changes to the regulatory framework that may impact our reconditioning business requiring a change to our processes and operations going forward Such changes could adversely affect our business financial condition results of operations and cash flows
We are also subject to transportation safety regulations promulgated by the U S Department of Transportation DOT and agencies in other jurisdictions Both the DOT regulations and standards issued by the United Nations and adopted by various jurisdictions outside the United States set forth requirements related to the transportation of both hazardous and nonhazardous materials in some of our packaging products and subject our Company to random inspections and testing to ensure compliance Failure to comply could result in fines to us and could affect our business financial condition results of operations and cash flows
We are subject to laws rules and regulations relating to certain raw materials used in our business or present in our products For example per and polyfluoroalkyl substances PFAS are a group of chemicals that have been manufactured and used in consumer and industrial products since the 1940 s PFAS compounds do not easily degrade and have been shown to accumulate over time in the environment In the U S Europe and other countries where we operate there is heightened governmental and regulatory scrutiny on PFAS usage in packaging products and its role in the contamination of soil air and water Governmental inquiries or requirements involving PFAS could lead to us incurring liability for damages or other costs civil proceedings including personal injury claims class actions the imposition of fines and penalties or other remedies as well as restrictions on or added costs for our business operations going forward These laws rules and regulations as well as investigations and resulting claims by individuals including class actions and other businesses could adversely affect our reputation with our customers generally and could adversely affect our business financial condition results of operations and cash flows
At the EU level many laws and regulations are designed to protect human health and the environment For example Directive 2004 35 EC concerns obligations to remedy damages to the environment which could require us to remediate contamination identified at sites we own or use Other EU regulations and directives limit pollution from industrial activities reduce emissions to air water and soil protect water resources reduce waste promote recycling reuse or reduction of materials used achieving a circular economy protect employee health and safety and regulate the registration evaluation authorization and restriction of chemicals The European Commission published its Fit for 55 package in July 2021 a collection of legislative proposals and amendments to existing rules aimed at implementing the EU s target of cutting greenhouse gas emissions by 55 by 2030 In addition to existing green taxes on energy use EU plastic taxes have been introduced Specifically there is heightened focus and in some cases a requirement by customers and regulators to use PCR to manufacture more sustainable packaging If we are
unable to effectively source PCR or innovate our current product offerings to meet this demand this could negatively affect our business and results of operations In addition the EU Packaging Packaging Waste Regulation that recently went into force is to be implemented over an 18 month period and imposes new requirements in terms of recycled content recyclability and reuse from 2030 for some of our products Failure to comply with these and other laws or a change in the applicable legal framework for example the increased enforcement of environmental regulations in the U S Europe China and other countries or customer requirements could affect our business financial condition results of operations and cash flows in addition to those of our customers
Our customers in the food and pharmaceutical industry are subject to increasing laws rules and regulations relating to safety As a result customers may demand that changes be made to our products or facilities as well as other aspects of our production processes that may require the investment of capital The failure to comply with these requests could adversely affect our relationships with some customers and result in negative effects on our business financial condition results of operations and cash flows
We produce packaging products and provide services for our customers products including sensitive products such as food ingredients pharmaceutical ingredients and hazardous substances Incidents involving these product types can involve risk of recall contamination spillage leakage fires and explosions which can threaten individual health impact the environment and cause the breakdown or failure of equipment or processes and the performance of facilities below expected levels of capacity If any of our customers have such incidents involving our products they may bring product liability claims against us While we have built extensive operational processes to ensure that the design and manufacture of our products meet rigorous quality standards there can be no assurance that we or our customers will not experience operational process failures that could result in potential product safety regulatory or environmental claims and associated litigation We are also subject to a variety of legal proceedings and legal compliance risks in our areas of operation around the globe Any such claims whether with or without merit could be time consuming and expensive to defend and could divert management s attention and resources In accordance with customary practice we maintain insurance against some but not all of these potential claims In the future we may not be able to maintain insurance at commercially acceptable premium and deductible levels at all In addition the levels of insurance we maintain may not be adequate to fully cover any and all losses or liabilities If any significant judgment or claim is not fully insured or indemnified against it could have a material adverse impact on our business financial condition results of operations and cash flows
We may Incur Fines or Penalties Damage to our Reputation or other Adverse Consequences if our Employees Agents or Business Partners Violate or are Alleged to have Violated Anti bribery Competition or Other Laws
We cannot provide assurance that our internal controls will always protect us from reckless or criminal acts committed by our employees agents or business partners that would violate U S and non U S laws including anti bribery competition trade sanctions and regulation and other laws Any such improper actions could subject us to civil or criminal investigations in the U S and in other jurisdictions could lead to substantial civil or criminal monetary and non monetary penalties against us or our subsidiaries and could damage our reputation Even the allegation or appearance of our employees agents or business partners acting improperly or illegally could damage our reputation and result in significant expenditures in investigating and responding to such actions
We recognize the importance of effective cybersecurity risk management to our operations and interests Our cybersecurity program is designed to protect our employees our customers and our assets through the effective identification and mitigation of cyber risks The program led by the Senior Director Global Information Technology IT Security under the oversight of the Chief Information and Digital Officer CIDO encompasses a broad range of preventative detective and responsive measures relevant to our business needs and designed to reduce our specific risks
The cybersecurity program is modeled after and assessed against the National Institute of Standards and Technology Cybersecurity Framework NIST CSF The NIST CSF is not a certification program and our use does not imply compliance with specific related standards the NIST CSF is used as a guide for designing and managing cybersecurity programs
Risks and exposures associated with our cybersecurity program are integrated into our overall enterprise risk management program and share common methodologies reporting channels and governance processes These processes and the governance for identifying and managing risks apply across our enterprise risk management program to other legal compliance strategic operational and financial risk areas
Partnerships with external providers where appropriate to supplement our internal expertise perform security assessments and penetration testing consult on best practices and support incident response activities with forensic analysis
While our Board has responsibility for oversight of risk management on an enterprise wide basis it has delegated certain risk oversight responsibilities to its committees The Audit Committee of our Board of Directors has responsibility for oversight of our cybersecurity risk management program Full responsibilities of the Audit Committee are set forth in the publicly available Audit Committee Charter on our website The Committee receives quarterly cybersecurity updates covering risks mitigation plans and cybersecurity incidents The full Board of Directors is provided with periodic cybersecurity updates from the CIDO or the Senior Director Global IT Security or both
In the event of an urgent cybersecurity incident where full Audit Committee or Board involvement is not practical or timely the Chairperson of the Board of Directors the Chairperson of the Audit Committee and the Chief Executive Officer have been appointed as an incident oversight group
The Senior Director Global IT Security has primary responsibility for the management of ongoing cyber risks under the oversight of the CIDO The Senior Director holds a Certified Information Systems Security Professional certification and has nearly 30 years of experience in technology including over 10 years in software development and enterprise architecture and over 15 years implementing maturing and leading cybersecurity programs The CIDO is responsible for global IT strategy and operations and has nearly 30 years of experience leading enterprise technology organizations The CIDO and Senior Director together with others on their teams are informed about the monitoring prevention detection mitigation and remediation of cybersecurity incidents through their management of and participation in the cybersecurity risk management policies processes and operations discussed above
The Company s management team has designated a Cybersecurity Advisory Council the Council which consists of members of management including the Senior Director Global IT Security and a cross section of Company leaders The Council ensures strong alignment within the Company with the objectives of the cyber program providing input on policy and risk decisions The Council receives periodic briefings on security status incidents and mitigation plans
The following are our principal operating locations that are either leased or owned as of October 31 2024 We consider our operating properties to be in satisfactory condition and adequate to meet our present needs However we expect to make further additions improvements and consolidations of our properties to support our business Our global headquarters is located in Delaware Ohio USA We utilize two main shared service center locations with one in North America and the other in Europe
From time to time we have been a party to legal proceedings arising at the country state or local level involving environmental sites to which we have shipped directly or indirectly small amounts of toxic waste such as paint solvents As of the filing date of this Form 10 K we have been classified only as a de minimis participant in such proceedings We are not a party to any legal proceedings involving a governmental authority and arising under any federal state or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment and involving potential monetary sanctions in excess of 300 000 other than as described below
On February 7 2023 TPG Plastics TPG a subsidiary of Ipackchem Group SAS which we acquired on March 26 2024 received a letter from the United States Environmental Protection Agency U S EPA informing TPG that the U S EPA had determined through testing that certain portable fuel containers PFCs that were sold between 2018 and 2022 had failed emission testing TPG also received a letter from The California Air Resources Board CARB dated November 7 2023 informing TPG that compliance testing performed by CARB revealed that certain PFCs sold in 2018 to 2022 were noncompliant with California s PFC performance standards TPG had already discontinued the manufacture of PFCs that were subject to the U S EPA in and CARB letters before the end of 2022
We have cooperated with the governmental agencies in these investigations and proceedings As of the filing date of this Form 10 K no citations have been issued or fines assessed with respect to any of these proceedings However we anticipate that monetary sanctions imposed by the U S EPA and the CARB will exceed 300 000 exclusive of interest and costs
We pay quarterly dividends of varying amounts computed on the basis described in Note 11 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10 K The annual dividends paid for the last two years are as follows
The terms of our current secured credit facilities and United States accounts receivable credit facility limit our ability to make restricted payments which include dividends and purchases redemptions and acquisitions of our equity interests The payment of dividends and other restricted payments are subject to the condition that certain defaults do not exist under the terms of our current secured credit facilities and United States accounts receivable credit facility and in the event that certain defaults exist are limited in amount by a formula based in part on our consolidated net income See Liquidity and Capital Resources Borrowing Arrangements in Item 7 of this Form 10 K
The following graph compares the performance of shares of our Class A and B Common Stock to that of the Standard and Poor s 500 S P 500 Index and the Dow Jones United States Containers and Packaging Index DJUSCP assuming 100 invested on October 31 2019 and reinvestment of dividends for each subsequent year The graph does not purport to represent our value
The Greif Business System is a quantitative systematic and disciplined business process that Greif has utilized for nearly 20 years Through our focus on continuous improvement on safety people mindset and culture we have accelerated our processes to Greif Business System 2 0 We believe this System increases our ability to quickly scale and implement innovation initiatives and best practices on a global basis In turn we expect this to facilitate improved productivity efficiency and value creation
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements which have been prepared in accordance with U S Generally Accepted Accounting Principles GAAP The preparation of these consolidated financial statements in accordance with these principles require us to make estimates and assumptions that affect the reported amount of assets and liabilities revenues and expenses and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements
The non GAAP financial measures of EBITDA and Adjusted EBITDA are used throughout the following discussion of our results of operations both for our consolidated and segment results For our consolidated results EBITDA is defined as net income plus interest expense net plus debt extinguishment charges plus income tax expense plus depreciation depletion and amortization and Adjusted EBITDA is defined as EBITDA plus acquisition and integration related costs plus restructuring charges plus non cash asset impairment charges plus gain loss on disposal of properties plants and equipment net plus gain loss on disposal of businesses net plus non cash pension settlement income charges plus other costs
Since we do not calculate net income by reportable segment EBITDA and Adjusted EBITDA by reportable segment are reconciled to operating profit by reportable segment In that case EBITDA is defined as operating profit by reportable segment less other income expense net less non cash pension settlement income charges less equity earnings of unconsolidated affiliates net of tax plus depreciation depletion and amortization expense for that reportable segment and Adjusted EBITDA is defined as EBITDA plus acquisition and integration related costs plus restructuring charges plus non cash asset impairment charges plus gain loss on disposal of properties plants and equipment net plus gain loss on disposal of businesses net plus non cash pension settlement income charges plus other costs for that reportable segment
We use EBITDA and Adjusted EBITDA as financial measures to evaluate our historical and ongoing operations and believe that these non GAAP financial measures are useful to enable investors to perform meaningful comparisons of our historical and current performance The foregoing non GAAP financial measures are intended to supplement and should be read together with our financial results These non GAAP financial 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 financial measures
We are changing our fiscal year end effective for the 2025 fiscal year Our 2025 fiscal year will begin on November 1 2024 and end on September 30 2025 and accordingly will consist of eleven months Our fourth fiscal quarter of 2025 will be the two months ending September 30 2025 Thereafter our fiscal year will begin on October 1 and end on September 30 of the following year
Information in this Management s Discussion and Analysis of Financial Condition and Results of Operations includes the financial results in our three reportable segments Global Industrial Packaging GIP Paper Packaging Services and Land Management Beginning with our first fiscal quarter of 2025 we implemented changes to our reporting structure moving to a material solution based structure We believe this structure will enable us to more efficiently utilize our robust scale and global network of facilities align operations to capitalize on our deep subject matter expertise enable further innovation and growth
Starting November 1 with the first fiscal quarter of 2025 we will report our financial results in four reportable segments Customized Polymer Solutions Durable Metal Solutions Sustainable Fiber Solutions and Integrated Solutions The products and services included in each of these reportable segments are as follows
Operations in the Customized Polymer Solutions reportable segment involve the production and sale of a comprehensive line of polymer based packaging products such as plastic drums rigid intermediate bulk containers and small plastics Our polymer based packaging products and services are sold on a global basis to customers in industries such as chemicals food and beverage agricultural pharmaceutical and mineral products among others
Operations in the Durable Metal Solutions reportable segment involve the production and sale of metal based packaging products including a wide variety of steel drums Our metal based packaging products are sold on a global basis to customers in industries such as chemicals petroleum agriculture and paints and coatings among others
Operations in the Sustainable Fiber Solutions reportable segment involve the production and sale of fiber based packaging products including fiber drums containerboard corrugated sheets corrugated containers tubes and cores and specialty partitions made from both containerboard uncoated recycled board and coated recycled board Our fiber based packaging products are sold in North America in industries such as packaging automotive construction food and beverage and building products In addition this reportable segment is involved in the management and sale of timber timberland and special use properties in the southeastern United States
Operations in the Integrated Solutions reportable segment involve the production and sale of complimentary packaging products such as paints linings and closure systems for industrial packaging products and related services such as container life cycle management In addition this reportable segment is involved in the purchase and sale of recycled fiber and the production and sale of adhesives used in our paperboard products These products and services are used internally by us and are also sold to external customers
Net sales were 5 448 1 million for 2024 compared with 5 218 6 million for 2023 The 229 5 million increase was primarily due to contributions from recent acquisitions and higher volumes across the Global Industrial Packaging segment and the Paper Packaging Services segment respectively partially offset by lower prices in the Paper Packaging Services segment due to lower published pricing indices See the Segment Review below for additional information on net sales by reportable segment
Gross profit was 1 070 8 million for 2024 compared with 1 146 1 million for 2023 The 75 3 million decrease was primarily due to higher raw material costs and higher costs for transportation and manufacturing partially offset by the same factors that impacted net sales See the Segment Review below for additional information on gross profit by reportable segment Gross profit margin was 19 7 percent for 2024 compared with 22 0 percent for 2023 primarily impacted by the Paper Packaging Services segment further explained in the respective segment commentary The decrease in gross profit margin was primarily due to higher raw material input costs in the Paper Packaging Services segment due to higher published index purchase prices
Selling general and administrative SG A expenses were 634 5 million for 2024 compared with 549 1 million for 2023 The 85 4 million increase was primarily due to recent acquisitions including amortization costs short term incentive costs and costs incurred for strategic investments SG A expenses were 11 6 percent of net sales for 2024 compared with 10 5 percent of net sales for 2023
Operating profit was 464 6 million for 2024 compared with 605 5 million for 2023 Net income was 295 5 million for 2024 compared with 379 1 million for 2023 Adjusted EBITDA was 694 3 million for 2024 compared with 822 2 million for 2023 The reasons for changes in operating profit and Adjusted EBITDA for each reportable segment are described below in the Segment Review
We anticipate that the multi year period of industrial contraction will continue into the 2025 fiscal year We have not identified any compelling demand inflection on the horizon although there has been increased demand for our containerboard products in the U S and some increased demand for industrial packaging in EMEA
Net sales were 3 124 3 million for 2024 compared with 2 936 8 million for 2023 The 187 5 million increase in net sales was primarily due to contributions from recent acquisitions higher volumes and higher average selling prices partially offset by negative foreign currency translation impacts
Gross profit was 669 4 million for 2024 compared with 634 4 million for 2023 The 35 0 million increase in gross profit was primarily due to contributions from recent acquisitions Gross profit margin was 21 4 percent for 2024 compared with 21 6 percent for 2023
Operating profit was 341 1 million for 2024 compared with 334 3 million for 2023 The 6 8 million increase was primarily due to a 46 1 million gain from the divestiture of Delta Petroleum Company Inc the Delta Divestiture during the third quarter of 2024 and the same factors that impacted gross profit partially offset by higher SG A expenses related to recent acquisitions including amortization costs compensation expenses and costs incurred for strategic investments Adjusted EBITDA was 423 7 million for 2024 compared with 425 4 million for 2023 The 1 7 million decrease was primarily due to higher SG A expenses related to recent acquisitions and compensation expenses offset by the same factors that impacted gross profit
Net sales were 2 303 5 million for 2024 compared with 2 260 5 million for 2023 The 43 0 million increase was primarily due to higher volumes and contributions from recent acquisitions partially offset by lower average selling prices as a result of lower published containerboard and boxboard prices
Gross profit was 391 6 million for 2024 compared with 502 5 million for 2023 The 110 9 million decrease in gross profit was primarily due to higher raw material costs transportation and manufacturing costs partially offset by the same factors that impacted net sales Gross profit margin was 17 0 percent for 2024 compared with 22 2 percent for 2023 The decrease in gross profit margin was primarily due to higher raw material input costs caused by higher published index purchase prices
Operating profit was 115 6 million for 2024 compared with 264 1 million for 2023 The 148 5 million decrease in operating profit was primarily due to the same factors that impacted gross profit a 54 6 million gain from the divestiture of Tama Paperboard LLC in the Paper Packaging Services segment the Tama Divestiture during the first quarter of 2023 and higher SG A expenses related to recent acquisitions including amortization costs and short term incentive costs Adjusted EBITDA was 261 5 million for 2024 compared with 387 9 million for 2023 The 126 4 million decrease was primarily due to the same factors that impacted gross profit and higher SG A expenses related to recent acquisitions and short term incentive costs
As of October 31 2024 our Land Management reportable segment consisted of approximately 175 000 acres of timber properties in the southeastern United States Key factors influencing profitability in the Land Management reportable segment are
In order to maximize the value of our timber properties we continue to review our current portfolio and explore the development of certain of these properties This process has led us to characterize our property as follows
We report the sale of core timberland property in timberland gains the sale of HBU and surplus property in gain on disposal of properties plants and equipment net and the sale of timber and development property under net sales and cost of products sold in our consolidated statements of income All HBU and development property together with surplus property is used to productively grow and sell timber until the property is sold
Whether timberland has a higher value for uses other than growing and selling timber is a determination based upon several variables such as proximity to population centers anticipated population growth in the area the topography of the land aesthetic considerations including access to lakes or rivers the condition of the surrounding land availability of utilities markets for timber and economic considerations both nationally and locally Given these considerations the characterization of land is not a static process but requires an ongoing review and re characterization as circumstances change
We had operations in over 35 countries during our fiscal year 2024 Our operations outside the United States are subject to additional risks that may not exist or be as significant within the United States Because of our global operations in numerous countries we are required to address different and complex tax systems and issues which are constantly changing
The Organization for Economic Co operation and Development proposed a global minimum tax of 15 of reported profits Pillar 2 that has been agreed upon in principle by over 140 countries During 2023 many countries began to incorporate Pillar 2 model rule concepts into their domestic laws Although the model rules provide a framework for applying the minimum tax countries may enact Pillar 2 slightly differently than the model rules and on different timelines and may adjust domestic tax incentives in response to Pillar 2 We do not anticipate the Pillar Two global minimum tax to have a material impact to our financial condition results of operations or cash flows
Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets liabilities revenues and expenses The numerous tax jurisdictions in which we operate along with the variety and complexity of the various tax laws creates a level of uncertainty and requires judgment when addressing the impact of complex tax issues Our effective tax rate and the amount of tax expense are dependent upon various factors including the following the tax laws of the jurisdictions in which income is earned the ability to realize deferred tax assets negotiation and dispute resolution with taxing authorities in the U S and international jurisdictions and changes in tax laws
The provision for income taxes is computed using the asset and liability method Under this method deferred tax assets and liabilities are recognized currently based on the anticipated future tax consequences of changes in the temporary differences between the book and tax bases of assets and liabilities This method includes an estimate of the future realization of tax benefits associated with tax losses Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those assets are expected to be realized or settled
Income tax expense for 2024 was 27 2 million on 319 6 million of pretax income and for 2023 was 117 8 million on 494 7 million of pretax income The 90 6 million decrease in income tax expense for 2024 was primarily attributable to a decrease in pre tax earnings in 2024 and the recognition of a deferred tax asset related to the onshoring of certain intangible property
We analyze potential income tax liabilities related to uncertain tax positions in the United States and international jurisdictions The analysis of potential income tax liabilities results in estimates recognized for uncertain tax positions following the guidance of Accounting Standards Codification ASC 740 Income Taxes The estimation of potential tax liabilities related to uncertain tax positions involves significant judgment in evaluating the impact of uncertainties in the application of ASC 740 and complex tax laws We periodically analyze both potential income tax liabilities and existing liabilities for uncertain tax positions resulting in both new reserves and adjustments to existing reserves in light of changing facts and circumstances This includes the release of existing liabilities for uncertain tax positions based on the expiration of statutes of limitation During 2024 the recognition of new uncertain tax position liabilities recorded during the current year were reduced by lapses in the statute of limitations resulting in an overall net increase in our uncertain tax position liability The net 2024 activity in uncertain tax positions provided a 0 8 million increase in tax expense over the prior year
The ultimate resolution of potential income tax liabilities may result in a payment that is materially different from our current estimates If our estimates recognized under ASC 740 prove to be different than what is ultimately resolved such resolution could have a material impact on our financial condition and results of operations While predicting the final outcome or the timing of the resolution of any particular tax matter is subject to various risks and uncertainties we believe that our tax accounts related to uncertain tax positions are appropriately stated
Our primary sources of liquidity are operating cash flows and borrowings under our senior secured credit facilities and proceeds from our trade accounts receivable credit facilities We use these sources to fund our working capital needs capital expenditures cash dividends debt repayment and acquisitions We anticipate continuing to fund these items in a like manner We currently expect that operating cash flows borrowings under our senior secured credit facilities and proceeds from our trade accounts receivable credit facilities will be sufficient to fund our anticipated working capital capital expenditures cash dividends debt repayment and other liquidity needs for at least 12 months
During 2024 and 2023 cash used in provided by change in accounts receivable was 43 4 million and 130 3 million respectively The unfavorable change in accounts receivable levels was primarily due to an increase in net sales
During 2024 and 2023 cash used in provided by change in inventories was 26 4 million and 101 0 million respectively The unfavorable change in inventories was primarily due to increases in raw material prices and purchases to meet demand
During 2024 and 2023 cash used in provided by change in accounts payable was 18 9 million and 79 8 million respectively The favorable change in accounts payable levels was primarily due to increase in raw material prices and purchases to meet demand
During 2024 and 2023 we invested 186 5 million and 213 6 million respectively of cash in capital expenditures These investments exclude 5 2 million and 6 0 million of cash purchases and investments in timber properties during 2024 and 2023 respectively
During 2024 we paid 568 8 million for the purchases of businesses net of cash acquired primarily for the acquisition of Ipackchem Group SAS Ipackchem on March 26 2024 Ipackchem Acquisition During 2023 we paid 542 4 million for purchases of businesses net of cash acquired primarily for the acquisition of Lee Container Corporate Inc Lee Container on December 15 2022 the Lee Container Acquisition the acquisition from approximately 10 to 80 of our ownership interest in Centurion Container LLC Centurion on March 31 2023 the Centurion Acquisition and the acquisition of a 51 ownership interest in ColePak LLC ColePak on August 23 2023 the ColePak Acquisition
During 2024 we received 89 0 million of cash from sale of businesses primarily from the Delta Divestiture During 2023 we received 105 3 million of cash from sale of businesses primarily from the Tama Divestiture
We paid cash dividends to our stockholders in the amount of 121 0 million and 116 5 million for the years ended October 31 2024 and 2023 respectively We paid dividends to non controlling interests in the amount of 25 7 million and 14 2 million for the years ended October 31 2024 and 2023 respectively with the increase primarily coming from recent acquisitions
The 2022 Credit Agreement provides for a an 800 0 million secured revolving credit facility consisting of a 725 0 million multicurrency facility and a 75 0 million U S dollar facility maturing on March 1 2027 b a 1 100 0 million secured term loan A 1 facility with quarterly principal installments that commenced on July 31 2022 and continue through January 31 2027 with any outstanding principal balance of such term loan A 1 facility being due and payable on maturity on March 1 2027 c a 515 0 million secured term loan A 2 facility with quarterly principal installments that commenced on July 31 2022 and continue through January 31 2027 with any outstanding principal balance of such term loan A 2 being due and payable on maturity on March 1 2027 and d as further described below a 300 0 million incremental secured term loan A 4 facility with quarterly principal installments that commenced on April 30 2024 and continue through January 31 2027 with any
outstanding principal balance of such term loan A 4 being due and payable on maturity on March 1 2027 Subject to the terms of the 2022 Credit Agreement the Company has an option to borrow additional funds under the 2022 Credit Agreement with the agreement of the lenders
On March 25 2024 the Company and certain of its subsidiaries entered into an incremental term loan agreement the Incremental Term Loan A 4 Agreement with a syndicate of financial institutions The Incremental Term Loan A 4 Agreement is an amendment to the 2022 Credit Agreement The Incremental Term Loan A 4 Agreement provided for a loan in the aggregate principal amount of 300 0 million that was made available in a single draw on March 25 2024 the Incremental Term Loan A 4 Amounts repaid or prepaid in respect of the Incremental Term Loan A 4 may not be reborrowed The Incremental Term Loan A 4 amortizes at 2 50 per annum in equal quarterly principal installments with the remaining outstanding principal balance due on March 1 2027 The terms and provisions of the Incremental Term Loan A 4 are identical in all material respects to the terms and provisions of the other term loans made under the 2022 Credit Agreement The Company s obligations with respect to the Incremental Term Loan A 4 are secured and guaranteed with the other obligations under the 2022 Credit Agreement on a
basis The Company used the proceeds from the Incremental Term Loan A 4 to repay funds drawn on the revolving credit facility under the 2022 Credit Agreement for the purchase of Ipackchem on March 26 2024
Interest is based on Secured Overnight Financing Rate SOFR plus a credit spread adjustment or a base rate that resets periodically plus in each case a calculated margin amount that is based on our leverage ratio Subject to the terms of the 2022 Credit Agreement we have an option to add borrowings to the 2022 Credit Agreement with the agreement of the lenders As of October 31 2024 we had 426 3 million of available borrowing capacity under the 800 0 million secured revolving credit facility
The repayment of all borrowings under the 2022 Credit Agreement is secured by a security interest in our personal property and the personal property of certain of our U S subsidiaries including equipment and inventory and certain intangible assets as well as a pledge of the capital stock of substantially all of our U S subsidiaries and is secured in part by the capital stock of the non U S borrowers However in the event that we receive and maintain an investment grade rating from either Moody s Investors Services Inc or Standard Poor s Financial Services LLC we may request the release of such collateral
The 2022 Credit Agreement contains certain covenants which include financial covenants that require us to maintain a certain leverage ratio and an interest coverage ratio The leverage ratio generally requires that at the end of any fiscal quarter we will not permit the ratio of a our total consolidated indebtedness less the aggregate amount of our unrestricted cash and cash equivalents to b our consolidated net income plus depreciation depletion and amortization interest expense including capitalized interest income taxes and minus certain extraordinary gains and non recurring gains or plus certain extraordinary losses and non recurring losses and plus or minus certain other items for the preceding twelve months as used in this paragraph only EBITDA to be greater than 4 00 to 1 00 provided that such leverage ratio is subject to i a covenant step up as defined in the 2022 Credit Agreement increase adjustment of 0 50 upon the consummation of and the following three fiscal quarters after certain specified acquisitions and ii a collateral release decrease adjustment of 0 25x during any collateral release period as defined in the 2022 Credit Agreement The interest coverage ratio generally requires that at the end of any fiscal quarter we will not permit the ratio of a our consolidated EBITDA to b our consolidated interest expense to the extent paid or payable to be less than 3 00 to 1 00 during the applicable preceding twelve month period As of October 31 2024 we were in compliance with the covenants and other agreements in the 2022 Credit Agreement
On May 17 2023 we and Greif Packaging LLC a direct wholly owned subsidiary of Greif Inc entered into a 300 0 million senior secured credit agreement the 2023 Credit Agreement with CoBank ACB CoBank who acted as lender and is acting as administrative agent of the 2023 Credit Agreement The 2023 Credit Agreement is permitted incremental equivalent debt under the terms of the 2022 Credit Agreement The 2023 Credit Agreement provides for a 300 0 million secured term loan facility with quarterly principal installments that commenced on July 31 2023 and continue through January 31 2028 with any outstanding principal balance of such term loan being due and payable on maturity on May 17 2028 We used the borrowing under the 2023 Credit Agreement to repay and refinance a portion of the outstanding borrowings under the 2022 Credit Agreement Interest accruing under the 2023 Credit Agreement is based on SOFR plus a credit spread adjustment or a base rate that resets periodically plus in each case a calculated margin amount that is based on our leverage ratio
The repayment of all borrowings under the 2023 Credit Agreement is secured by a security interest in certain of our personal property and certain of the personal property of certain of our U S subsidiaries including equipment and inventory and certain intangible assets as well as a pledge of the capital stock of substantially all of our U S subsidiaries However in the event that we receive and maintain an investment grade rating from either Moody s Investors Services Inc or Standard Poor s
Financial Services LLC we may request the release of such collateral Our obligations under the 2023 Credit Agreement are secured on a pari passu basis with the obligations arising under the 2022 Credit Agreement
The 2023 Credit Agreement contains covenants including financial covenants substantially the same as the covenants in 2022 Credit Agreement as described above and a most favored lender provision related to the 2022 Credit Agreement As of October 31 2024 we were in compliance with the covenants and other agreements in the 2023 Credit Agreement
We have a 300 0 million U S Receivables Financing Facility Agreement the U S RFA that matures on May 16 2025 As of October 31 2024 there was a 273 7 million 270 9 million as of October 31 2023 outstanding balance under the U S RFA that is reported as long term debt in the consolidated balance sheets because we intend to refinance these obligations on a long term basis and have the intent and ability to consummate a long term refinancing by renewing the existing agreement or entering into new financing arrangements The U S RFA also contains events of default and covenants that are substantially the same as the covenants under the 2022 Credit Agreement As of October 31 2024 we were in compliance with these covenants Proceeds of the U S RFA are available for working capital and general corporate purposes
We have a 100 0 million 108 2 million as of October 31 2024 European Receivables Financing Agreement the European RFA that matures on April 22 2025 As of October 31 2024 there was a 84 2 million outstanding balance on the European RFA that is reported as long term debt in the consolidated balance sheets because we intend to refinance these obligations on a long term basis and have the intent and ability to consummate a long term refinancing by renewing the existing agreement or entering into new financing arrangements As of October 31 2024 we were in compliance with the covenants that relate to the European RFA Proceeds of the European RFA are available for working capital and general corporate purposes
As of October 31 2024 we have various interest rate swaps with a total notional amount of 1 400 0 million 1 300 0 million as of October 31 2023 amortizing down over the term in which we receive variable interest rate payments based on SOFR and in return are obligated to pay interest at a weighted average fixed interest rate of 2 97 These derivatives are designated as cash flow hedges for accounting purposes and will mature between March 1 2027 and July 16 2029
Accordingly the gain or loss on these derivative instruments are reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transactions and in the same period during which the hedged transaction affects earnings
We conduct business in international currencies and are subject to risks associated with changing foreign exchange rates Our objective is to reduce volatility associated with foreign exchange rate changes to allow management to focus its attention on business operations Accordingly we enter into various contracts that change in value as foreign exchange rates change to protect the value of certain existing foreign currency assets and liabilities commitments and anticipated foreign currency cash flows
We have operations and investments in various international locations and are subject to risks associated with changing foreign exchange rates We have cross currency interest rate swaps that synthetically swap 447 6 million 319 3 million as of October 31 2023 of U S fixed rate debt to Euro denominated fixed rate debt We receive a weighted average rate of 1 27 These agreements are designated as either net investment hedges or cash flow hedges for accounting purposes and will mature between August 10 2026 and November 3 2028
Accordingly the gain or loss on the net investment hedge derivative instruments is included in the foreign currency translation component of other comprehensive income until the net investment is sold diluted or liquidated The gain or loss on the cash flow hedge derivative instruments is included in the unrealized foreign exchange component of other expense offset by the underlying gain or loss on the underlying cash flows that are being hedged Interest payments received from the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense net on the consolidated statements of income
We have no near term post retirement benefit plan funding obligations We intend to make a post retirement benefit plan contribution of 6 6 million during 2025 which we anticipate will consist of 1 2 million of employer contributions and 5 4 million of benefits paid directly by the employer See Note 9 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10 K for additional information regarding our post retirement benefit plans
Environmental reserves are estimates based on current remediation plans and actual liabilities could significantly differ from the reserve estimates See Note 10 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10 K for additional information regarding our contingent liabilities and environmental reserves
Our Board of Directors has authorized the repurchase of Class A Common Stock or Class B Common Stock or any combination of the foregoing As of October 31 2024 the remaining number of shares that could be repurchased under this authorization was 2 504 836 shares We did not repurchase any shares of our Class A or Class B Common Stock during 2024
See Note 11 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10 K for additional information regarding this program and the repurchase of shares of Class A and B Common Stock
A summary of our significant accounting policies is included in Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10 K We believe that the consistent application of these policies enables us to provide readers of the consolidated financial statements with useful and reliable information about our results of operations and financial condition The following are the accounting policies that we believe are most important to the portrayal of our results of operations and financial condition and require our most difficult subjective or complex judgments
Other items that could have a significant impact on the financial statements include the risks and uncertainties listed in Part I Item 1A Risk Factors Actual results could differ materially using different estimates and assumptions or if conditions are significantly different in the future
Under the acquisition method of accounting we allocate the fair value of purchase consideration transferred to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition The fair values assigned defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants are based on estimates and assumptions determined by management The excess purchase consideration over the aggregate fair value of tangible and intangible assets net of liabilities assumed is recorded as goodwill When determining the fair value of assets acquired and liabilities assumed we make significant estimates and assumptions especially with respect to intangible assets Our estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable and as a result actual results may differ from estimates During the measurement period not to exceed one year from the date of acquisition we may record adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date After the measurement period any subsequent adjustments are reflected in the consolidated statements of operations Acquisition costs such as legal and consulting fees are expensed as incurred See
We account for goodwill in accordance with ASC 350 Intangibles Goodwill and Other Under ASC 350 goodwill is not amortized but instead is tested for impairment either annually on August 1 or when events and circumstances indicate an impairment may have occurred Our goodwill impairment assessment is performed by reporting unit A reporting unit is the operating segment or a business one level below that operating segment the component level if discrete financial information is prepared and regularly reviewed by segment management However components are aggregated as a single reporting unit if they have similar economic characteristics In conducting the annual impairment tests the estimated fair value of each of our reporting units is compared to its carrying amount including goodwill If the estimated fair value exceeds the carrying amount then no impairment exists If the carrying amount exceeds the estimated fair value we record an impairment of goodwill equal to the amount by which the carrying value exceeds the fair value of the reporting unit not to exceed the recorded amount of goodwill
The Global Industrial Packaging reportable segment consists of five operating segments Global Industrial Packaging North America Global Industrial Packaging Latin America Global Industrial Packaging Europe Middle East and Africa Global Industrial Packaging Asia Pacific and Global Industrial Packaging Ipackchem Each of these operating segments also qualify as a component that has discrete financial information available that is reviewed by segment management on a regular basis As such these components also represent our reporting units for purposes of goodwill impairment testing
The Paper Packaging Services reportable segment is also an operating segment This operating segment consists of multiple components that have discrete financial information available that is reviewed by segment management on a regular basis We have evaluated those components and concluded that they are economically similar and should be aggregated into single reporting unit For the purpose of aggregating our components we review the long term performance of gross profit margin and operating profit margin Additionally we review qualitative factors such as common customers similar products similar manufacturing processes sharing of resources level of integration and interdependency of processes across components We place greater weight on the qualitative factors outlined in ASC 280 Segment Reporting and consider the guidance in ASC 350 in determining whether two or more components of an operating segment are economically similar and can be aggregated into a single reporting unit
The estimated fair value of the reporting units utilized in the impairment test is based on a discounted cash flow analysis or income approach and market multiple approach Under this method the principal valuation focus is on the reporting unit s cash generating capabilities The discount rates used for impairment testing are based on a market participant s weighted average cost of capital The use of alternative estimates peer groups or changes in the industry or adjusting the discount rate earnings before interest taxes depreciation depletion and amortization multiples or price earnings ratios used could affect the estimated fair value of the assets and potentially result in impairment Any identified impairment would result in an adjustment to our results of operations
In performing the test we first evaluate qualitative factors such as macroeconomic conditions and our overall financial performance to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount including goodwill We then evaluate how significant each of the identified factors could be to the fair value or carrying amount of a reporting unit and weigh those factors in totality in forming a conclusion of whether or not it is more likely than not that the fair value of a reporting unit is less than its carrying amount the Step 0 Test If necessary the next step in the goodwill impairment test involves comparing the fair value of each of the reporting units to the carrying value of those reporting units If the carrying value of a reporting unit exceeds the fair value of the reporting unit an impairment loss would be recognized not to exceed the carrying amount of goodwill We performed a Step 0 test on the Global Industrial Packaging Ipackchem reporting unit in 2024
For all other reporting units with goodwill balances we proceeded directly to the quantitative impairment testing and the fair value exceeded carrying value by at least 19 so no impairment was deemed to exist Net sales gross profit margin and operating expense forecasts as well as the selection of discount rates are the assumptions that are most sensitive and susceptible to change as they require significant management judgment In addition certain future events and circumstances including deterioration of market conditions higher cost of capital a decline in actual and expected consumption and demand could result in changes to those assumptions and judgments A revision of those assumptions could cause the fair value of the reporting unit to fall below its respective carrying value If in future years our reporting units actual results are not consistent with our estimates and assumptions used to calculate fair value we may be required to recognize material impairments to goodwill
We are subject to interest rate risk related to our financial instruments that include borrowings under the 2022 Credit Agreement the 2023 Credit Agreement and proceeds from U S RFA and the European RFA and cross currency and interest rate swap agreements We do not enter into financial instruments for trading or speculative purposes The interest rate swap agreements have been entered into to manage our exposure to variability in interest rates
We have various interest rate swaps with a total notional amount of 1 400 0 million maturing between March 1 2027 and July 16 2029 We receive variable interest rate payments based upon one month U S dollar SOFR and in return are obligated to pay interest at a weighted average fixed interest rate of 2 97
Gains losses reclassified to earnings under these interest rate swaps were recorded in the amount of 34 8 million 28 5 million and 8 4 million for the years ended October 31 2024 2023 and 2022 respectively
We have various cross currency interest rate swaps that synthetically swap 447 6 million of fixed rate debt to Euro denominated fixed rate debt We receive a weighted average rate of 1 27 These agreements are designated as either net investment hedges or cash flow hedges for accounting purposes and will mature between August 10 2026 and November 3 2028
The gain or loss on the net investment hedge derivative instruments is included in the foreign currency translation component of other comprehensive income until the net investment is sold diluted or liquidated The gain or loss on the cash flow hedge derivative instruments is included in the unrealized foreign exchange component of other expense offset by the underlying gain or loss on the underlying cash flows that are being hedged Interest payments received from the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense net on the consolidated statements of income
As a result of our international operations our operating results are subject to fluctuations in currency exchange rates The geographic presence of our operations mitigates this exposure to some degree Additionally our transaction exposure is somewhat limited because we produce and sell a majority of our products in local currency within most countries in which we operate
As of October 31 2024 and 2023 we had outstanding foreign currency forward contracts in the notional amount of 74 1 million and 66 0 million respectively The purpose of these contracts is to hedge our exposure to foreign currency transactions and short term intercompany loan balances in our international businesses These contracts resulted in realized gains losses recorded in other expense net of 1 0 million 1 2 million and 6 2 million for the years ended October 31 2024 2023 and 2022 respectively
A sensitivity analysis with respect only to these instruments to changes in the foreign currencies hedged indicates that if the U S dollar strengthened by 10 percent the fair value of these instruments would increase by 2 3 million to a net asset of 2 3 million Conversely if the U S dollar weakened by 10 percent the fair value of these instruments would decrease by 2 5 million to a net liability of 2 4 million
Greif Inc and its subsidiaries collectively Greif our or the Company principally manufacture rigid industrial packaging products such as steel fibre and plastic drums rigid intermediate bulk containers jerrycans and other small plastics closure systems for industrial packaging products transit protection products water bottles and remanufactured and reconditioned industrial containers and services such as container life cycle management logistics warehousing and other packaging services The Company produces and sells containerboard corrugated sheets corrugated containers and other corrugated products to customers in North America in industries such as packaging automotive food and building products The Company also produces and sells coated recycled paperboard and uncoated recycled paperboard some of which are used to produce and sell industrial products tubes and cores construction products and protective packaging The Company produces and sells bulk and specialty partitions made from both containerboard and uncoated recycled paperboard In addition the Company also purchases and sells recycled fiber and produces and sells adhesives used in the Company s paperboard products The Company owns timber properties in the southeastern United States which are actively harvested and regenerated The Company has operations in over 35 countries
Due to the variety of its products the Company has many customers buying different products and due to the scope of the Company s sales no one customer is considered principal in the total operations of the Company
The Company supplies a cross section of industries such as chemicals paints and pigments food and beverage petroleum industrial coatings agriculture pharmaceuticals minerals packaging automotive and building products and makes spot deliveries on a day to day basis as its products are required by its customers The Company does not operate on a backlog to any significant extent and maintains only limited levels of finished goods Many customers place their orders weekly for delivery during the same week
The consolidated financial statements include the accounts of Greif Inc all wholly owned and majority owned subsidiaries joint ventures controlled by the Company or for which the Company is the primary beneficiary and equity earnings of unconsolidated affiliates All intercompany transactions and balances have been eliminated in consolidation Investments in unconsolidated affiliates are accounted for using the equity method based on the Company s ownership interest in the unconsolidated affiliate
The Company s consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States GAAP Certain prior year amounts have been reclassified to conform to the current year presentation
For the 2024 fiscal year and preceding fiscal years presented herein the Company s fiscal year began on November 1 and ended on October 31 of the following year Any references to years or to any quarter of those years relates to the fiscal year or quarter as the case may be ended in that year unless otherwise stated The Company is changing its fiscal year end effective for the 2025 fiscal year The 2025 fiscal year will begin on November 1 2024 and end on September 30 2025 and accordingly will consist of eleven months The Company s fourth fiscal quarter of 2025 will be the two months ending September 30 2025 Thereafter the Company s fiscal year will begin on October 1 and end on September 30 of the following year
The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes Actual amounts could differ from estimates The Company reviews these estimates on an ongoing basis
The allowance for doubtful accounts totaled 6 7 million and 6 2 million as of October 31 2024 and 2023 respectively The Company recognizes allowances for bad debts based on the length of time receivables are past due with allowance percentages based on its historical experiences applied on a graduated scale relative to the age of the receivable amounts If the Company is aware of a specific customer s inability to meet its financial obligations to the Company the Company records a specific allowance for bad debts Amounts deemed uncollectible are written off against the allowance for doubtful accounts
The Company primarily uses the FIFO method of inventory valuation Reserves for slow moving and obsolete inventories are provided based on historical experience inventory aging and product demand The reserves for slow moving and obsolete inventories totaled 16 5 million and 12 6 million as of October 31 2024 and 2023 respectively The Company continuously evaluates the adequacy of these reserves and adjusts these reserves as required
Goodwill is the excess of the purchase price of an acquired entity over the amounts assigned to tangible and intangible assets and liabilities assumed in the business combination The Company accounts for goodwill and purchased indefinite lived intangible assets in accordance with Accounting Standards Codification ASC 350 Intangibles Goodwill and Other Under ASC 350 goodwill and purchased intangible assets with indefinite lives are not amortized but instead are tested for impairment at least annually The Company tests for impairment of goodwill and indefinite lived intangible assets as of August 1 or more frequently if certain indicators are present or changes in circumstances suggest that impairment may exist
In accordance with ASC 350 the Company has the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative test for goodwill impairment If the Company believes as a result of its qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying amount the quantitative impairment test is required The quantitative test for goodwill impairment is conducted at the reporting unit level by comparing the carrying value of each reporting unit to the estimated fair value of the unit If the carrying value of a reporting unit exceeds its estimated fair value then the goodwill of the reporting unit is impaired Goodwill impairment is recognized as the amount that the carrying value exceeds the fair value not to exceed the balance of goodwill attributable to the reporting unit When a portion of a reporting unit is disposed of goodwill is allocated to the gain or loss on that disposition based on the relative fair values of the portion of the reporting unit subject to disposition and the portion of the reporting unit that will be retained
The Company s determinations of estimated fair value of the reporting units are based on both the market approach and a discounted cash flow analysis utilizing the income approach Under the market approach the principal inputs are market prices and valuation multiples for public companies engaged in businesses that are considered comparable to the reporting unit Under the income approach the principal inputs are the reporting unit s cash generating capabilities and the discount rate The discount rates used in the income approach are based on a market participant s weighted average cost of capital The use of alternative estimates including different peer groups or changes in the industry or adjusting the discount rate earnings before interest taxes depreciation depletion and amortization forecasts or cash flow assumptions used could affect the estimated fair value of the reporting units and potentially result in goodwill impairment Any identified impairment would result in an expense to the Company s results of operations See Note 3 herein for additional information regarding goodwill and other intangible assets
The Company accounts for intangible assets in accordance with ASC 350 Definite lived intangible assets are amortized over their useful lives on a straight line basis with amortization expense being recorded on the same basis The useful lives for definite lived intangible assets vary depending on the type of asset and the terms of contracts or the valuation performed but generally have the range of
From time to time the Company acquires businesses and or assets that augment and complement its operations In accordance with ASC 805 Business Combinations these acquisitions are accounted for under the purchase method of accounting Under this method the Company allocates the fair value of purchase consideration transferred to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition The excess purchase consideration over the aggregate fair value of tangible and intangible assets net of liabilities assumed is recorded as goodwill The Company s estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable and as a result actual results may differ from estimates
During the measurement period not to exceed one year from the date of acquisition the Company may record adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date After the measurement period any subsequent adjustments are reflected in the consolidated statements of income Acquisition costs such as legal and consulting fees are expensed as incurred
The Company classifies costs incurred in connection with acquisitions and their integration as acquisition and integration related costs These costs are expensed as incurred and consist primarily of transaction costs legal and consulting fees integration costs and changes in the fair value of contingent payments earn outs and are recorded within Acquisition and Integration related Costs line item presented on the consolidated income statement Acquisition transaction costs are incurred during the initial evaluation of a potential targeted acquisition and primarily relate to costs to analyze negotiate and consummate the transaction as well as financial and legal due diligence activities Post acquisition integration activities are costs incurred to combine the operations of an acquired enterprise into the Company s operations
Internal use software is accounted for under ASC 985 Software Internal use software is software that is acquired internally developed or modified solely to meet the Company s needs and for which during the software s development or modification a plan does not exist to market the software externally Costs incurred to acquire and develop the software during the application development stage and for upgrades and enhancements that provide additional functionality are capitalized and then amortized over a 3 to 7 year period
Properties plants and equipment are stated at cost Depreciation on properties plants and equipment is provided on the straight line method over the estimated useful lives of the assets with general useful lives of the assets as follows
Depreciation expense was 167 9 million 156 8 million and 138 1 million in 2024 2023 and 2022 respectively Expenditures for repairs and maintenance are charged to expense as incurred When properties are retired or otherwise disposed of the cost and accumulated depreciation are eliminated from the asset and related allowance accounts Gains or losses are credited or charged to income as incurred
The Company tests for impairment of properties plants and equipment if certain indicators are present to suggest that impairment may exist Long lived assets are grouped together at the lowest level generally at the plant level for which identifiable cash flows are largely independent of cash flows of other groups of long lived assets As events warrant the Company evaluates the recoverability of long lived assets other than goodwill and indefinite lived intangible assets by assessing whether the carrying value can be recovered over their remaining useful lives through the expected future undiscounted operating cash flows of the underlying business Future decisions to change the Company s manufacturing processes exit certain businesses reduce excess capacity temporarily idle facilities and close facilities could also result in
As of October 31 2024 the Company s timber properties consisted of approximately 175 000 acres all of which were located in the southeastern United States The Company s land costs are maintained by tract Upon acquisition of a new timberland tract the Company records separate amounts for land merchantable timber and pre merchantable timber allocated as a percentage of the values being purchased The Company begins recording pre merchantable timber costs at the time the site is prepared for planting Costs capitalized during the establishment period include site preparation by aerial spray costs of seedlings including refrigeration rental and trucking planting costs herbaceous weed control woody release and labor and machinery use The Company does not capitalize interest costs in the process Property taxes are expensed as incurred New road construction costs are capitalized as land improvements and depreciated over a 10 to 20 year period Road repairs and maintenance costs are expensed as incurred Costs after establishment of the seedlings including management costs pre commercial thinning costs and fertilization costs are expensed as incurred Once the timber becomes merchantable the cost is transferred from the pre merchantable timber category to the merchantable timber category in the depletion block
Merchantable timber costs are maintained by five product classes pine sawtimber pine chip n saw pine pulpwood hardwood sawtimber and hardwood pulpwood within a depletion block with each depletion block based upon a geographic district or subdistrict Currently the Company has five depletion blocks These same depletion blocks are used for pre merchantable timber costs Each year the Company estimates the volume of the Company s merchantable timber for the five product classes by each depletion block and depletion costs recognized upon sales are calculated as volumes sold times the unit costs in the respective depletion block For the years ended October 31 2024 2023 and 2022 the Company s depletion expense was not material
Leases are accounted for under ASC 842 Leases and are categorized as operating or financing leases at inception The lease term is also determined at lease inception and generally begins on the date the Company takes possession of the full or partial portions of leased premises Operating lease right of use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term Operating lease liabilities represent the present value of lease payments not yet paid Operating lease right of use assets represent the Company s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments initial direct costs lease incentives and impairment of operating lease assets As most of the Company s leases do not provide an implicit rate the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments Operating lease expense is recognized on a straight line basis over the lease term For operating leases with variable payments dependent upon an index or rate that commence the Company applies the active index or rate as of the lease commencement date Variable lease payments not based on an index or rate are not included in the operating lease liability as they cannot be reasonably estimated and are recognized in the period in which the obligation for those payments is incurred Leases with a term of twelve months or less upon the commencement date are considered short term leases are not included on the Company s consolidated balance sheets and are expensed over the lease term
The Company is self insured for certain of the claims made under its employee medical and dental insurance programs The Company had recorded liabilities totaling 7 2 million and 7 0 million for estimated costs related to outstanding claims as of October 31 2024 and 2023 respectively These costs include an estimate for expected settlements on pending claims administrative fees and an estimate for claims incurred but not reported These estimates are based on management s assessment of outstanding claims historical analyses and current payment trends The Company recorded an estimate for the claims incurred but not reported using an estimated lag period based upon historical information
The Company has certain deductibles applied to various insurance policies including general liability product vehicle and workers compensation The Company maintains net liabilities totaling 21 1 million and 22 2 million for anticipated costs related to general liability product vehicle and workers compensation claims as of October 31 2024 and 2023 respectively These costs include an estimate for expected settlements on pending claims defense costs and an estimate for claims incurred but not reported These estimates are based on the Company s assessment of its deductibles outstanding claims historical analysis actuarial information and current payment trends
Income taxes are accounted for under ASC 740 Income Taxes In accordance with ASC 740 deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be settled or realized Valuation allowances are established when management believes it is more likely than not that some portion of the deferred tax assets will not be realized
The Company s effective tax rate is impacted by the amount of income generated in each taxing jurisdiction statutory tax rates and tax planning opportunities available to the Company in the various jurisdictions in which the Company operates Significant judgment is required in determining the Company s effective tax rate and in evaluating its tax positions
Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination including resolutions of any related appeals or litigation processes based on the technical merits The amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement The Company s effective tax rate includes the impact of reserve provisions and changes to reserves on uncertain tax positions that are not more likely than not to be sustained upon examination as well as related interest and penalties
A number of years may elapse before a particular matter for which the Company has established a reserve is audited and finally resolved The number of years with open tax audits varies depending on the tax jurisdiction While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter the Company believes that its reserves reflect the probable outcome of known tax contingencies Unfavorable settlement of any particular issue would require use of the Company s cash Favorable resolution would be recognized as a reduction to the Company s effective tax rate in the period of resolution
For termination costs associated with employees who are involuntarily terminated under the terms of a one time benefit arrangement the Company recognizes liabilities and associated costs as of announcement date unless the employees are required to stay for a certain period of time after restructuring announcement and ratable recognition between the announcement date and termination date is materially different from announcement date recognition For termination costs associated with a non lease contract and costs incurred without economic benefit as a result of restructuring activities the Company recognizes liabilities and associated costs as of contract termination date Facility exit and employee relocation costs are recognized and measured at their respective fair value in the period in which the liability is incurred The liability is not recognized before it is incurred even if the costs are incremental to other operating costs and will be incurred as a direct result of a plan
Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring goods or providing services Customer payment terms are typically less than one year and as such transaction prices are not adjusted for the effects of a significant financing component Standalone selling prices for each performance obligation are generally stated in the contract Variable consideration in the form of volume rebates is estimated based on contract terms and historical experience of actual results limited to the amount which is probable will not result in reversal of cumulative revenue recognized when the variable consideration is resolved Taxes collected from customers and remitted to governmental authorities are excluded from net sales
For the vast majority of revenues contracts with customers are either a purchase order or the combination of a purchase order with a master supply agreement A performance obligation is considered an individual unit sold The Company does not bundle products Prices negotiated with each individual customer are representative of the stand alone selling price of the product The Company typically satisfies the performance obligation at a point in time when control is transferred to customers The point in time when control of goods is transferred is largely dependent on delivery terms
Contract liabilities relate primarily to prepayments received from the Company s customers before revenue is recognized and from volume rebates to customers These amounts are included in other current liabilities in the consolidated balance sheets The Company does not have any material contract assets Freight charged to customers is included in net sales in the statement of income
The Company s contracts with customers are broadly similar in nature throughout its reportable segments but the amount timing and uncertainty of revenue and cash flows may vary in each reportable segment due to geographic factors See Note 13 herein for additional disclosures of revenue disaggregated by geography for each reportable segment
In accordance with ASC 830 Foreign Currency Matters the assets and liabilities denominated in a foreign currency are translated into United States dollars at the rate of exchange existing at period end and revenues and expenses are translated at average exchange rates
The cumulative translation adjustments which represent the effects of translating assets and liabilities of the Company s international operations are presented in the consolidated statements of changes in shareholders equity in accumulated other comprehensive income loss Transaction gains and losses on foreign currency transactions denominated in a currency other than an entity s functional currency are credited or charged to income The amounts included in other expense net related to foreign currency transaction losses were not material for the years ended October 31 2024 2023 and 2022
In accordance with ASC 815 Derivatives and Hedging the Company records all derivatives in the consolidated balance sheet as either assets or liabilities measured at fair value Dependent on the designation of the derivative instrument changes in fair value are recorded to earnings or shareholders equity through other comprehensive income loss
The Company may from time to time use interest rate swap agreements to hedge against changing interest rates For interest rate swap agreements designated as cash flow hedges the net gain or loss on the derivative instrument is reported as a component of other comprehensive income loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings The Company s interest rate swap agreements effectively convert a portion of floating rate debt to a fixed rate basis thus reducing the impact of interest rate changes on future interest expense
The Company s cross currency interest rate swap agreements synthetically swap United States dollar denominated fixed rate debt for Euro denominated fixed rate debt and are designated as either net investment hedges or cash flow hedges for accounting purposes The gain or loss on the net investment hedge derivative instruments is included in the foreign currency translation component of other comprehensive income until the net investment is sold diluted or liquidated The gain or loss on the cash flow hedge derivative instruments is included in the unrealized foreign exchange component of other expense offset by the underlying gain or loss on the underlying cash flows that are being hedged Interest payments received from the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense net on the consolidated statements of income
The Company enters into currency forward contracts to hedge certain currency transactions and short term intercompany loan balances with its international businesses Such contracts limit the Company s exposure to both favorable and unfavorable currency fluctuations These contracts are adjusted to reflect market value as of each balance sheet date with the resulting changes in fair value being recognized in other expense net
Any derivative contract that is either not designated as a hedge or is so designated but is ineffective has its changes to market value recognized in earnings immediately If a cash flow or fair value hedge ceases to qualify for hedge accounting the contract would continue to be carried on the balance sheet at fair value until settled and have the adjustments to the contract s fair value recognized in earnings If a forecasted transaction were no longer probable to occur amounts previously deferred in accumulated other comprehensive income loss would be recognized immediately in earnings
The Company uses ASC 820 Fair Value Measurements and Disclosures to account for fair value ASC 820 defines fair value establishes a framework for measuring fair value in GAAP and expands disclosures about assets and liabilities measured at fair value Additionally this standard established a three level fair value hierarchy that prioritizes the inputs used to measure fair value This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs
In December 2023 the Financial Accounting Standards Board FASB issued Accounting Standards Update ASU 2023 09 Income Taxes Topic 740 Improvements to Tax Disclosures which is intended to improve the effectiveness of income tax disclosures This ASU is effective for fiscal years beginning after December 15 2024 with early adoption permitted The effective date for the Company to adopt this ASU is for the fiscal year beginning October 1 2025 The Company is in the process of determining the potential impact of adopting this guidance on its financial position results of operations comprehensive income cash flow and disclosures
In November 2023 the FASB issued ASU 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures which is intended to improve reportable segment disclosure requirements This ASU is effective for fiscal years beginning after December 15 2023 and interim periods within fiscal years beginning after December 15 2024 with early adoption permitted The effective date for the Company to adopt this ASU is for the fiscal year and interim periods beginning November 1 2024 and October 1 2025 respectively The Company is in the process of determining the potential impact of adopting this guidance on its financial position results of operations comprehensive income cash flow and disclosures
In November 2024 the FASB issued ASU 2024 03 Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures Subtopic 220 40 Disaggregation of Income Statement Expenses which is intended to improve disclosures related to certain income statement expenses of the Company This ASU is effective for fiscal years beginning after December 15 2026 and interim periods within fiscal years beginning after December 15 2027 with early adoption permitted The effective date for the Company to adopt this ASU is for the fiscal year and interim periods beginning October 1 2027 and October 1 2028 respectively The Company is in the process of determining the potential impact of adopting this guidance on its financial position results of operations comprehensive income cash flow and disclosures
The Company recognized goodwill related to this acquisition of 276 2 million The goodwill recognized in this acquisition was attributable to the acquired assembled workforce expected synergies and economies of scale none of which qualify for recognition as a separate intangible asset Ipackchem is reported within the Global Industrial Packaging segment to which the goodwill was assigned The goodwill is not expected to be deductible for tax purposes
The cost approach was used to determine the fair value for land building improvements and equipment The cost approach measures the value by estimating the cost to acquire or construct comparable assets and adjusts for age and condition The Company assigned to land use rights building and improvements a useful life ranging from 1 year to 21 years and equipment a useful life ranging from 1 year to 10 years Acquired property plant and equipment are being depreciated over their estimated remaining useful lives on a straight line basis
The fair value for acquired customer relationship intangibles was determined as of the acquisition date based on estimates and judgments regarding expectations for the future after tax cash flows arising from the revenue from customer relationships that existed on the acquisition date over their estimated lives including the probability of expected future contract renewals and revenue less a contributory assets charge all of which is discounted to present value The fair value for acquired developed technology was determined as of the acquisition date based on estimates and judgments regarding expectations for the future after tax cash flows arising from the revenue from developed technology that existed on the acquisition date over their estimated lives The fair values of the trademark intangible assets were determined utilizing the relief from royalty method which is a form of the income approach Under this method a royalty rate based on observed market royalties is applied to projected revenue supporting the trademarks and discounted to present value using an appropriate discount rate
Acquired intangible assets are being amortized over the estimated useful lives on a straight line basis The following table summarizes the preliminary purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired as of the acquisition date
The Company has not yet finalized the determination of the fair value of assets acquired and liabilities assumed specifically income taxes and contingencies The Company expects to finalize these amounts within one year of the acquisition date The estimate of fair value and purchase price allocation were based on information available at the time of closing the acquisition and the Company continues to evaluate the underlying inputs and assumptions that are being used in the fair value estimates of all assets acquired and liabilities assumed Accordingly these preliminary estimates are subject to adjustments during the measurement period not to exceed one year from the acquisition date based upon new information obtained about facts and circumstances that existed as of the date of closing the acquisition
Ipackchem s results of operations have been included in the Company s financial statements for the period subsequent to the acquisition date of March 26 2024 Ipackchem contributed net sales of 138 8 million for the year ended October 31 2024
The following unaudited supplemental pro forma data presents consolidated information as if the Ipackchem Acquisition had been completed on November 1 2022 These amounts were calculated after adjusting Ipackchem s results to reflect interest expense incurred on the debt to finance the acquisition additional depreciation and amortization that would have been charged assuming the fair value of property plant and equipment and intangible assets had been applied from November 1 2022 the adjusted income tax expense and related transaction costs
The unaudited supplemental pro forma financial information is based on the Company s preliminary assignment of purchase price and therefore subject to adjustment upon finalizing the purchase price assignment The pro forma data should not be considered indicative of the results that would have occurred if the acquisition and related financing had been consummated on the assumed completion dates nor are they indicative of future results
The Company acquired a 51 ownership interest in ColePak LLC ColePak on August 23 2023 the ColePak Acquisition ColePak is a manufacturer of bulk and specialty partitions made from both containerboard and uncoated recycled board and is the second largest supplier of paper partitions in North America
The total purchase price for this acquisition net of cash acquired was 74 6 million The fair value of the remaining noncontrolling interest of 49 after the acquisition was 72 1 million which was determined using a Monte Carlo option pricing model and is redeemable through contractual terms
The Company recognized goodwill related to this acquisition of 60 1 million The goodwill recognized in this acquisition was attributable to the acquired assembled workforce expected synergies economies of scale and expanded market presence none of which qualify for recognition as a separate intangible asset ColePak is reported within the Paper Packaging Services segment to which the goodwill was assigned The goodwill is expected to be deductible for tax purposes
The fair value for acquired customer relationship intangibles was determined as of the acquisition date based on estimates and judgments regarding expectations for the future after tax cash flows arising from the revenue from customer relationships that existed on the acquisition date over their estimated lives including the probability of expected future contract renewals and revenue less a contributory assets charge all of which is discounted to present value The fair values of the trademark intangible assets were determined utilizing the relief from royalty method which is a form of the income approach Under this method a royalty rate based on observed market royalties is applied to projected revenue supporting the trademarks and discounted to present value using an appropriate discount rate
Acquired intangible assets are being amortized over the estimated useful lives on a straight line basis The following table summarizes the purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired as of the acquisition date
The total purchase price for this acquisition net of cash acquired was 144 5 million The fair value of the remaining noncontrolling interest of 20 after the acquisition was 40 9 million which was determined using the implied enterprise value based on the purchase price and redemption mechanism and is redeemable through contractual terms
Prior to the acquisition the Company accounted for its approximately 10 ownership interest under the equity method of accounting The acquisition of a controlling financial interest was accounted for as a step acquisition in accordance with ASC 805 As a result fair value of our previously held interest in Centurion of
16 8 million was valued using a discounted cash flow model resulting in a gain of 9 8 million The gain was reflected in the consolidated statements of income within the gain on disposal of businesses net line
The Company recognized goodwill related to this acquisition of 95 4 million The goodwill recognized in this acquisition was attributable to the acquired assembled workforce expanded market presence and enhanced business network none of which qualify for recognition as a separate intangible asset Centurion is reported within the Global Industrial Packaging segment to which the goodwill was assigned The goodwill is expected to be deductible for tax purposes
The fair value for acquired customer relationship intangibles was determined as of the acquisition date based on estimates and judgments regarding expectations for the future after tax cash flows arising from the revenue from customer relationships that existed on the acquisition date over their estimated lives including the probability of expected future contract renewals and revenue less a contributory assets charge all of which is discounted to present value The fair values of the trademark intangible assets were determined utilizing the relief from royalty method which is a form of the income approach Under this
Acquired intangible assets are being amortized over the estimated useful lives on a straight line basis The following table summarizes the purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired as of the acquisition date
The Company recognized goodwill related to this acquisition of 75 9 million The goodwill recognized in this acquisition was attributable to the acquired assembled workforce expected synergies and economies of scale none of which qualify for
recognition as a separate intangible asset Lee Container is reported within the Global Industrial Packaging segment to which the goodwill was assigned The goodwill is expected to be deductible for tax purposes
The cost approach was used to determine the fair value for building improvements and equipment The cost approach measures the value by estimating the cost to acquire or construct comparable assets and adjusts for age and condition The Company assigned building improvements a useful life ranging from 1 year to 9 years and equipment a useful life ranging from 1 year to 19 years Acquired property plant and equipment are being depreciated over their estimated remaining useful lives on a straight line basis
The fair value for acquired customer relationship intangibles was determined as of the acquisition date based on estimates and judgments regarding expectations for the future after tax cash flows arising from the revenue from customer relationships that existed on the acquisition date over their estimated lives including the probability of expected future contract renewals and revenue less a contributory assets charge all of which is discounted to present value The fair values of the trademark intangible assets were determined utilizing the relief from royalty method which is a form of the income approach Under this method a royalty rate based on observed market royalties is applied to projected revenue supporting the trademarks and discounted to present value using an appropriate discount rate
Acquired intangible assets are being amortized over the estimated useful lives on a straight line basis The following table summarizes the purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired as of the acquisition date
The following unaudited supplemental pro forma data presents consolidated information as if the ColePak Acquisition Centurion Acquisition and Lee Container Acquisition had been completed on November 1 2021 These amounts were calculated after adjusting ColePak s Centurion s and Lee Container s results to reflect interest expense incurred on the debt to finance the acquisitions additional depreciation and amortization that would have been charged assuming the fair value of property plant and equipment and intangible assets had been applied from November 1 2021 the adjusted tax expense and related transaction costs
The pro forma data should not be considered indicative of the results that would have occurred if the acquisition and related financing had been consummated on the assumed completion dates nor are they indicative of future results
During the third quarter of 2024 the Company completed its divestiture of a U S business in the Global Industrial Packaging segment Delta Petroleum Company Inc the Delta Divestiture for net cash proceeds of 91 2 million The Delta Divestiture did not qualify as discontinued operations because it did not represent a strategic shift that has had a major impact on the Company s operations or financial results The Delta Divestiture resulted in a 46 1 million gain on sale of business including goodwill allocated to the sale of 26 1 million
During the first quarter of 2023 the Company completed its divestiture of a U S business in the Paper Packaging Services segment Tama Paperboard LLC the Tama Divestiture for current net cash proceeds of 100 0 million The Tama Divestiture did not qualify as discontinued operations as it did not represent a strategic shift that has had a major impact on the Company s operations or financial results The Tama Divestiture resulted in a 54 6 million gain on sale of business including goodwill allocated to the sale of 22 5 million
The Company reviews goodwill by reporting unit and indefinite lived intangible assets for impairment as required by ASC 350 Intangibles Goodwill and Other either annually on August 1 or whenever events and circumstances indicate impairment may have occurred A reporting unit is the operating segment or a business unit one level below that operating segment the component level if discrete financial information is prepared and regularly reviewed by segment management The components are aggregated into reporting units for purposes of goodwill impairment testing to the extent they share similar qualitative and quantitative characteristics
The Company performed its annual goodwill impairment test as of August 1 2024 The Company s goodwill reporting units either passed the Step 0 test or the fair value of the Company s goodwill reporting units exceeded the carrying value resulting in no impairment Discount rates revenue growth rates and gross margins are the assumptions that are most sensitive and susceptible to change as they require significant management judgment In addition certain future events and circumstances including deterioration of market conditions higher cost of capital a decline in actual and expected consumption and demand could result in changes to these assumptions and judgments A revision of these assumptions could cause the fair value of the reporting unit to fall below its respective carrying value As for all of the Company s reporting units if in future years the reporting unit s actual results are not consistent with the Company s estimates and assumptions used to calculate fair value the Company may be required to recognize material impairments to goodwill
Gross intangible assets increased by 206 3 million for the year ended October 31 2024 The increase was attributable to 231 6 million additional assets from acquisitions and 5 0 million of currency fluctuations which was offset by the write off of 30 3 million fully amortized assets
Amortization expense was 91 5 million 71 9 million and 58 2 million for the years ended October 31 2024 2023 and 2022 respectively Amortization expense for the next five years is expected to be 96 8 million in 2025 96 6 million in 2026 96 5 million in 2027 91 9 million in 2028 and 87 6 million in 2029
Definite lived intangible assets for the periods presented are subject to amortization and are being amortized using the straight line method over periods that are contractually or legally determined or over the period a market participant would benefit from the asset Indefinite lived intangibles of approximately 7 9 million as of October 31 2024 related primarily to the Tri Sure trademark and trade names related to Box Board and Pachmas are not amortized but rather are tested for impairment at least annually
The focus for restructuring activities in 2024 was to optimize and integrate operations and close underperforming plants in the Paper Packaging Services reportable segment and to optimize and rationalize operations in the Global Industrial Packaging reportable segment During the year ended October 31 2024 the Company recorded restructuring charges of 5 4 million as compared to 18 7 million of restructuring charges recorded during the year ended October 31 2023 The restructuring activity for the year ended October 31 2024 consisted of 9 0 million release of prior period restructuring severance accrual no longer probable of occurring 7 6 million in employee separation costs and 6 8 million in other restructuring costs primarily consisting of professional fees and other fees associated with restructuring activities There were four plants closed or divested in 2024 and a total of 126 employees severed throughout 2024 as part of the Company s restructuring efforts
The focus for restructuring activities in 2023 was to optimize and integrate operations and close underperforming plants in the Paper Packaging Services reportable segment and to optimize and rationalize operations in the Global Industrial Packaging reportable segment During 2023 the Company recorded restructuring charges of 18 7 million consisting of 11 8 million in employee separation costs and 6 9 million in other restructuring costs primarily consisting of professional fees and other fees associated with restructuring activities There were nine plants closed or divested in 2023 and a total of 456 employees severed throughout 2023 as part of the Company s restructuring efforts
The focus for restructuring activities in 2022 was to optimize and integrate operations in the Paper Packaging Services reportable segment and to rationalize operations and close underperforming assets in the Global Industrial Packaging reportable segment During 2022 the Company recorded restructuring charges of 13 0 million consisting of 6 3 million in employee separation costs and 6 7 million in other restructuring costs primarily consisting of professional fees incurred for services specifically associated with employee separation and relocation There were seventeen plants closed or divested in 2022 and a total of 132 employees severed throughout 2022 as part of the Company s restructuring efforts
The following is a reconciliation of the total amounts expected to be incurred from open restructuring plans or plans that are being formulated and have not been announced as of the filing date of this Form 10 K Remaining amounts expected to be incurred were 12 7 million as of October 31 2024
The 2022 Credit Agreement provides for a an 800 0 million secured revolving credit facility consisting of a 725 0 million multicurrency facility and a 75 0 million U S dollar facility maturing on March 1 2027 b a 1 100 0 million secured term loan A 1 facility with quarterly principal installments that commenced on July 31 2022 and continue through January 31 2027 with any outstanding principal balance of such term loan A 1 facility being due and payable on maturity on March 1 2027 and c a 515 0 million secured term loan A 2 facility with quarterly principal installments that commenced on July 31 2022 and continue through January 31 2027 with any outstanding principal balance of such term loan A 2 being due and payable on maturity on March 1 2027 and d as further described below a 300 0 million incremental secured term loan A 4 facility with quarterly principal installments that commenced on April 30 2024 and continue through January 31 2027 with any outstanding principal balance of such term loan A 4 being due and payable on maturity on March 1 2027 Subject to the terms of the 2022 Credit Agreement the Company has an option to borrow additional funds under the 2022 Credit Agreement with the agreement of the lenders
On March 25 2024 the Company and certain of its subsidiaries entered into an incremental term loan agreement the Incremental Term Loan A 4 Agreement with a syndicate of financial institutions The Incremental Term Loan A 4 Agreement is an amendment to the 2022 Credit Agreement The Incremental Term Loan A 4 Agreement provided for a loan in the aggregate principal amount of 300 0 million that was made available in a single draw on March 25 2024 the Incremental Term Loan A 4 Amounts repaid or prepaid in respect of the Incremental Term Loan A 4 may not be reborrowed The Incremental Term Loan A 4 amortizes at 2 50 per annum in equal quarterly principal installments with the remaining outstanding principal balance due on March 1 2027 The terms and provisions of the Incremental Term Loan A 4 are identical in all material respects to the terms and provisions of the other term loans made under the 2022 Credit Agreement The Company s obligations with respect to the Incremental Term Loan A 4 are secured and guaranteed with the other obligations under the 2022 Credit Agreement on a
basis The Company used the proceeds from the Incremental Term Loan A 4 to repay funds drawn on the revolving credit facility under the 2022 Credit Agreement for the purchase of Ipackchem on March 26 2024
Interest is based on Secured Overnight Financing Rate SOFR plus a credit spread adjustment or a base rate that resets periodically plus in each case a calculated margin amount that is based on the Company s leverage ratio
On May 17 2023 the Company and Greif Packaging LLC a direct wholly owned subsidiary of Greif Inc Greif Packaging entered into a 300 0 million senior secured credit agreement the 2023 Credit Agreement and together with the 2022 Credit Agreement the 2022 and 2023 Credit Agreements with CoBank ACB CoBank which acted as a lender and is acting as administrative agent of the 2023 Credit Agreement The 2023 Credit Agreement is permitted incremental equivalent debt under the terms of the 2022 Credit Agreement The 2023 Credit Agreement provides for a 300 0 million secured term loan facility with quarterly principal installments that commenced on July 31 2023 and continue through January 31 2028 with any outstanding principal balance of such term loan being due and payable on maturity on May 17 2028 The Company
Interest accruing under the 2023 Credit Agreement is based on SOFR plus a credit spread adjustment or a base rate that resets periodically plus in each case a calculated margin amount that is based on the Company s leverage ratio
As of October 31 2024 2 369 9 million was outstanding under the 2022 and 2023 Credit Agreements The current portion was 95 8 million and the long term portion was 2 274 1 million The weighted average interest rate for borrowings under the 2022 and 2023 Credit Agreements was 6 52 for the year ended October 31 2024 The actual interest rate for borrowings under the 2022 and 2023 Credit Agreements was 6 36 as of October 31 2024 The deferred financing costs associated with the term loan portion of the 2022 and 2023 Credit Agreements totaled 7 0 million as of October 31 2024 and are recorded as a reduction of long term debt on the consolidated balance sheets The deferred financing costs associated with the revolving portion of the 2022 Credit Agreement totaled 2 5 million as of October 31 2024 and are recorded within other long term assets on the consolidated balance sheets
Greif Receivables Funding LLC Greif Funding Greif Packaging for itself and as servicer and certain other U S subsidiaries of the Company entered into a Third Amended and Restated Transfer and Administration Agreement dated as of September 24 2019 the Third Amended TAA with Bank of America N A as the agent managing agent administrator and committed investor and various investor groups managing agents and administrators from time to time parties thereto to provide for a receivables financing facility the U S RFA On May 17 2024 the Third Amended TAA was amended with a new maturity date of May 16 2025 and provides an accounts receivables facility of 300 0 million The weighted average interest rate for borrowings under the U S RFA was 6 21 for the year ended October 31 2024 The deferred financing costs associated with the U S RFA totaled 0 1 million as of October 31 2024 and are recorded as a reduction of long term debt on the consolidated balance sheets
Greif Funding is a direct subsidiary of Greif Packaging and is included in the Company s consolidated financial statements However because Greif Funding is a separate and distinct legal entity from the Company the assets of Greif Funding are not available to satisfy the liabilities and obligations of the Company Greif Packaging or other subsidiaries of the Company and the liabilities of Greif Funding are not the liabilities or obligations of the Company or its other subsidiaries
The U S RFA is secured by certain trade accounts receivables related to the Global Industrial Packaging and the Paper Packaging Services businesses of Greif Packaging and other subsidiaries of the Company in the United States and bears interest at a variable rate based on the London InterBank Offered Rate or an applicable base rate plus a margin or a commercial paper rate all as provided in the Third Amended TAA Interest is payable on a monthly basis and the principal balance is payable upon termination of the U S RFA As of October 31 2024 there was a 273 7 million 270 9 million as of October 31 2023 outstanding balance under the U S RFA that is reported as long term debt in the consolidated balance sheets because the Company intends to refinance this obligation on a long term basis and has the intent and ability to consummate a long term refinancing
On April 19 2024 Cooperage Receivables Finance B V and Greif Services Belgium BV an indirect wholly owned subsidiary of Greif Inc amended and restated the Nieuw Amsterdam Receivables Financing Agreement the European RFA with affiliates of a major international bank The amended and restated European RFA matures April 22 2025 The European RFA provides an accounts receivable financing facility of up to 100 0 million 108 2 million as of October 31 2024 secured by certain European accounts receivable As of October 31 2024 84 2 million 80 1 million as of October 31 2023 was outstanding on the European RFA that is reported as long term debt on the consolidated balance sheets because the Company intends to refinance these obligations on a long term basis and has the intent and ability to consummate a long term refinancing The weighted average interest rate for borrowings under the European RFA was 4 67 for the year ended October 31 2024
As of October 31 2024 annual scheduled payments and maturities including the current portion of long term debt were 455 0 million in 2025 95 8 million in 2026 1 912 0 million in 2027 266 3 million in 2028 and zero thereafter
The carrying amounts of cash and cash equivalents trade accounts receivable accounts payable current liabilities and short term borrowings as of October 31 2024 and 2023 approximate their fair values because of the short term nature of these items and are not included in this table
As of October 31 2024 the Company has various interest rate swaps with a total notional amount of 1 400 0 million 1 300 0 million as of October 31 2023 maturing between March 1 2027 and July 16 2029 The Company will receive variable rate interest payments based upon one month U S dollar SOFR and in return the Company will be obligated to pay interest at a weighted average fixed interest rate of 2 97 This effectively will convert the borrowing rate on an amount of debt equal to the notional amount of the interest rate swaps from a variable rate to a fixed rate
These derivatives are designated as cash flow hedges for accounting purposes Accordingly the gain or loss on these derivative instruments are reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings See Note 14 herein for additional disclosures of the aggregate gain or loss included within other comprehensive income The assumptions used in measuring fair value of these interest rate derivatives are considered level 2 inputs which are based upon observable market rates including SOFR and interest paid based upon a designated fixed rate over the life of the swap agreements
Gains losses reclassified to earnings under these contracts were 34 8 million 28 5 million and 8 4 million for the years ended October 31 2024 2023 and 2022 A derivative gain of 17 0 million based upon interest rates at October 31 2024 is expected to be reclassified from accumulated other comprehensive income loss to earnings in the next twelve months
The Company conducts business in various international currencies and is subject to risks associated with changing foreign exchange rates The Company s objective is to reduce volatility associated with foreign exchange rate changes Accordingly the Company enters into various contracts that change in value as foreign exchange rates change to protect the value of certain existing foreign currency assets and liabilities commitments and anticipated foreign currency cash flows As of October 31 2024 the Company had outstanding foreign currency forward contracts in the notional amount of 74 1 million 66 0 million as of October 31 2023
Adjustments to fair value are recognized in earnings offsetting the impact of the hedged profits The assumptions used in measuring fair value of foreign exchange hedges are considered level 2 inputs which were based on observable market pricing for similar instruments principally foreign exchange futures contracts
Realized gains losses recorded in other expense net under fair value contracts were 1 0 million 1 2 million and 6 2 million for the years ended October 31 2024 2023 and 2022 respectively Unrealized net gains losses recognized by the Company in other expense net were 0 1 million zero and 0 2 million for the years ended October 31 2024 2023 and 2022 respectively
As of October 31 2024 the Company has various cross currency interest rate swaps that synthetically swap 447 6 million 319 3 million as of October 31 2023 of U S fixed rate debt to Euro denominated fixed rate debt The Company receives a weighted average rate of 1 27 on these swaps These agreements are designated as either net investment hedges or cash flow hedges for accounting purposes and will mature between August 10 2026 and November 3 2028
The gain or loss on the net investment hedge derivative instruments is included in the foreign currency translation component of other comprehensive income until the net investment is sold diluted or liquidated See Note 14 herein for additional disclosures of the aggregate gain or loss included within other comprehensive income The gain or loss on the cash flow hedge derivative instruments is included in the unrealized foreign exchange component of other expense offset by the underlying gain or loss on the underlying cash flows that are being hedged Interest payments received for the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense net on the consolidated statements of income The assumptions used in measuring fair value of the cross currency swap are considered level 2 inputs which are based upon the Euro to United States dollar exchange rate market
The fair values of the Company s 2022 Credit Agreement the 2023 Credit Agreement the U S RFA and the European RFA do not materially differ from carrying value as the Company s cost of borrowing is variable and approximates current borrowing rates The fair values of the Company s long term obligations are estimated based on either the quoted market prices for the same or similar issues or the current interest rates offered for the debt of the same remaining maturities which are considered level 2 inputs in accordance with ASC 820 Fair Value Measurements and Disclosures
On an annual basis the Company compares the asset holdings of its pension plan to targets it previously established The pension plan assets are categorized as equity securities debt securities fixed income securities insurance annuities or other assets which are considered level 1 level 2 and level 3 fair value measurements The typical asset holdings include
The assumptions used in measuring fair value of long lived assets are considered level 3 inputs which include bids received from third parties recent purchase offers market comparable information and discounted cash flows based on assumptions that market participants would use The assumptions used in measuring fair value of assets and liabilities held for sale are considered level 3 inputs which include recent purchase offers market comparables and or data obtained from commercial real estate brokers On an annual basis or when events or circumstances indicate impairment may have occurred the Company performs impairment tests for goodwill and indefinite lived intangibles as defined under ASC 350 Intangibles Goodwill and Other
The following table presents quantitative information about the significant unobservable inputs used to determine the fair value of the impairment of long lived assets held and used net assets held for sale goodwill and indefinite lived intangibles for the twelve months ended October 31 2024 and 2023
During the year ended October 31 2024 the Company wrote down long lived assets with a carrying value of 10 7 million to a fair value of 8 1 million resulting in recognized asset impairment charges of 2 6 million These charges include 1 3 million related to properties plants and equipment net in the Global Industrial Packaging reportable segment and 1 3 million related to properties plants and equipment net in the Paper Packaging Services reportable segment
During the year ended October 31 2023 the Company wrote down long lived assets with a carrying value of 30 5 million to a fair value of 10 2 million resulting in recognized asset impairment charges of 20 3 million These charges include 1 9 million related to properties plants and equipment net in the Global Industrial Packaging reportable segment and 18 4 million related to properties plants and equipment net in the Paper Packaging Services reportable segment
During the year ended October 31 2022 the Company wrote down long lived assets with a carrying value of 4 0 million to a fair value of 0 0 million resulting in recognized asset impairment charges of 4 0 million These charges include 2 3 million related to properties plants and equipment net in the Global Industrial Packaging reportable segment and 1 7 million related to properties plants and equipment net in the Paper Packaging Services reportable segment During the year ended October 31 2022 the Company entered into a definitive agreement to divest its approximately 50 equity interest in the Flexible Products Services business the FPS Divestiture This agreement triggered the reclassification of the Flexible Products Services business to assets and liabilities held for sale which further resulted in recognized impairment charges of 62 4 million in the first quarter of 2022 During the year ended October 31 2022 the Company wrote down indefinite lived intangible resulting in recognized impairment charges of 4 6 million
Stock based compensation is accounted for in accordance with ASC 718 Compensation Stock Compensation which requires companies to estimate the fair value of share based awards on the date of grant using an option pricing model
The Company s material stock based compensation plans include the Long Term Incentive Plan which consists of the 2020 Long Term Incentive Plan the 2020 LTIP and the 2006 Amended and Restated Long Term Incentive Plan the 2006
LTIP and the Amended and Restated Outside Directors Equity Award Plan the Outside Directors Plan The total stock compensation expense recorded under all plans was 16 8 million 21 4 million and 34 4 million for periods ended October 31 2024 2023 and 2022 respectively
The Long Term Incentive Plan is intended to focus management on the key measures that drive superior performance over the longer term The Long Term Incentive Plan provides key employees with incentive compensation based upon consecutive and overlapping three year performance periods that commence at the start of every year For each three year performance period the performance goals are based on performance criteria as determined by the Compensation Committee
For the three year performance periods ending after fiscal 2021 awards have been made under the 2020 LTIP Participants may be granted restricted stock units RSUs or performance stock units PSUs or a combination thereof
The Company grants RSUs based on a three year vesting period on the basis of service only The RSUs are an equity classified plan measured at fair value on the grant date recognized ratably over the service period Dividend equivalent rights may be granted in connection with an RSU award and are recognized in conjunction with the Company s dividend issuance and settled upon vesting of the award Upon vesting the RSUs are to be awarded in shares of Class A Common Stock
During 2024 the Company issued 53 060 shares of Class A Common Stock which excludes shares withheld for the payment of taxes owed by recipients for RSUs vested for the performance period commenced on November 1 2020 and ended October 31 2023
The Company grants PSUs for a three year performance period based upon service performance criteria and market conditions The performance criteria are based on targeted levels of a adjusted earnings before interest taxes depreciation depletion and amortization and b total shareholder return as determined by the Compensation Committee The PSUs are a liability classified plan wherein the fair value of the PSUs awarded is determined at each reporting period using a Monte Carlo simulation A Monte Carlo simulation uses assumptions including the risk free interest rate expected volatility of the Company s stock price and expected life of the awards to determine a fair value of the market condition throughout the vesting period If earned the PSUs are to be awarded in shares of Class A Common Stock
During 2024 the Company issued 229 859 shares of Class A Common Stock which excludes shares withheld for the payment of taxes owed by recipients for PSUs vested for the performance period commenced on November 1 2020 and ended October 31 2023
For the three year performance period ending in fiscal 2021 awards were made under the 2006 LTIP with the performance goals based on targeted levels of adjusted earnings before interest taxes depreciation depletion and amortization For this performance period awards were to be paid 50 in cash and 50 in restricted stock All restricted stock awards under the 2006 LTIP were fully vested at the date of award Under the 2006 LTIP the Company granted 51 593 shares of restricted Class A Common Stock with a grant date fair value of 59 83 for 2022
Under the Outside Directors Plan the Company granted 20 925 shares of restricted Class A Common Stock with a grant date fair value of 63 31 in 2024 and 18 144 shares of restricted Class A Common Stock with a grant date fair value of 70 41 in 2023 The total expense recorded under the Outside Directors Plan was 1 3 million 1 3 million and 1 3 million for the periods ended October 31 2024 2023 and 2022 respectively All restricted stock awards under the Outside Directors Plan are fully vested at the date of award
The U S income before income tax expense was 85 1 million 240 7 million and 333 5 million in 2024 2023 and 2022 respectively The non U S income before income tax expense was 234 5 million 254 0 million and 192 2 million in 2024 2023 and 2022 respectively
The primary items that decreased the Company s effective income tax rate from the federal statutory rate in 2024 were recognition of a deferred tax asset related to the onshoring of certain intangible property tax credits and release of valuation allowances The decreases were partially offset by permanent differences between book income and taxable income including the allocation of goodwill to the Delta Divestiture for which a tax benefit will not be realized and withholding taxes
The primary items that increased the Company s effective income tax rate from the federal statutory rate in 2023 were changes in the mix of earnings among tax jurisdictions including jurisdictions for which valuation allowances have been recorded state and local taxes and withholding taxes The increases were partially offset by tax credits and release of valuation allowances
The primary items that increased the Company s effective income tax rate from the federal statutory rate in 2022 were changes in the mix of earnings among tax jurisdictions including jurisdictions for which valuation allowances have been recorded state and local taxes withholding taxes and the net 58 6 million book loss recorded for the FPS Divestiture and other disposals of businesses for which limited tax benefits were available The increases were partially offset by decreases in valuation allowances and recording additional capital losses which are expected to be fully utilized
As of October 31 2024 and 2023 the Company had deferred income tax benefits of 126 5 million and 104 9 million respectively from net operating losses and other tax credit carryforwards For the fiscal year ended October 31 2024 these losses and carryforwards consist of 19 5 million 10 2 million and 96 8 million in U S Federal U S state and non U S jurisdictions respectively For the fiscal year ended October 31 2023 these losses and carryforwards consist of 7 5 million 10 1 million and 87 3 million in U S Federal U S state and non U S jurisdictions respectively The Company has recorded valuation allowances of 65 2 million and 82 8 million against non U S deferred tax assets as of October 31 2024 and 2023 respectively The Company has also recorded valuation allowances against U S deferred tax assets of 22 2 million and 14 5 million as of October 31 2024 and 2023 respectively The Company had net changes in valuation allowances in 2024 of 9 9 million
The 2024 net increase in unrecognized tax benefits is primarily related to increases in unrecognized tax benefits related to the prior and current year offset by decreases related to lapses in the statute of limitations The Company files income tax returns in the U S federal jurisdiction various U S state jurisdictions and various non U S jurisdictions and is subject to audit by various taxing authorities for 2016 through the current year The Company has completed its U S federal tax audit for the tax years through 2016 and the statues of limitations have expired for years 2017 through 2020 The Company has filed a refund claim for 2019 and is under audit for this year Adjustments may only be made up to the amount of the refund claim
The October 31 2024 2023 2022 balances include 25 5 million 23 4 million and 24 3 million respectively of unrecognized tax benefits that if recognized would have an impact on the effective tax rate The Company also recognizes
accrued interest and penalties related to unrecognized tax benefits in income tax expense net of tax as applicable As of October 31 2024 and 2023 the Company had accrued for the payment of interest and penalties in the amounts of 3 8 million and 4 8 million respectively
The Company has estimated the reasonably possible expected net change in unrecognized tax benefits through October 31 2024 under ASC 740 Income Taxes The Company s estimate is based on lapses of the applicable statutes of limitations settlements and payments of uncertain tax positions Though actual results may materially differ the estimated net decrease in unrecognized tax benefits for the next 12 months could be up to 6 3 million
The Company has certain non contributory defined benefit pension plans for salaried and hourly employees in the United States Germany the Netherlands and the United Kingdom The Company uses a measurement date of October 31 for its pension plans The salaried employees plans benefits are based primarily on years of service and earnings The hourly employees plans benefits are based primarily upon years of service and certain benefit provisions are subject to collective bargaining The Company contributes an amount that is not less than the minimum funding and not more than the maximum tax deductible amount to these plans Salaried employees in the United States who commence service on or after November 1 2007 are not eligible to participate in the U S defined benefit pension plan but are eligible to participate in a defined contribution retirement program Salaried employees outside the U S also have various dates in which they are not eligible to participate in the respective defined benefit pension plans but are eligible to participate in a defined contribution retirement program The category International represents the non contributory defined benefit pension plans in Germany the Netherlands and the United Kingdom for October 31 2024 and Canada Germany the Netherlands South Africa and the United Kingdom for October 31 2023
Pension plan contributions by the Company totaled 7 9 million during 2024 which consisted of 3 4 million of employer contributions and 4 5 million of benefits paid directly by the Company Pension plan contributions including benefits paid directly by the Company totaled 27 5 million and 31 4 million during 2023 and 2022 respectively Contributions including benefits paid directly by the Company during 2025 are expected to be approximately 5 9 million
The discount rate is determined by developing a hypothetical portfolio of individual high quality corporate bonds available at the measurement date the coupon and principal payments of which would be sufficient to satisfy the plans expected future benefit payments as defined for the projected benefit obligation The discount rate by country is equivalent to the average yield on that hypothetical portfolio of bonds and is a reflection of current market settlement rates on such high quality bonds government treasuries and annuity purchase rates To determine the expected long term rate of return on pension plan assets the Company considers current and expected asset allocations as well as historical and expected returns on various categories of plan assets In developing future return expectations for the defined benefit pension plans assets the Company formulates views on the future economic environment both in the U S and globally The Company evaluates general market trends and historical relationships among a number of key variables that impact asset class returns such as expected earnings growth inflation valuations yields and spreads using both internal and external sources The Company takes into account expected volatility by asset class and diversification across classes to determine expected overall portfolio results given current and expected allocations The Company uses published mortality tables for determining the expected lives of plan participants and believes that the tables selected are most closely associated with the expected lives of plan participants as the tables are based on the country in which the participant is employed
Based on the Company s analysis of future expectations of asset performance past return results and its current and expected asset allocations the Company has assumed a 5 84 long term expected return on those assets for cost recognition in 2024 For the defined benefit pension plans the Company applies its expected rate of return to a market related value of assets which stabilizes variability in the amounts to which the Company applies that expected return
During the year ended October 31 2023 plan assets of 7 7 million were used to purchase 5 9 million in annuity contracts and pay 1 8 million in lump sums to retirees to settle the pension obligation and close the Canada pension plans The settlement items described above resulted in non cash pension settlement charges of 3 5 million of unrecognized net actuarial loss included in accumulated other comprehensive loss for the year ended October 31 2023
During the year ended October 31 2022 2 4 million of projected benefit obligation for plan participants in Turkey was irrevocably transferred to a third party buyer through the sale of business part of the FPS Divestiture resulting in a 1 0 million loss in accumulated other comprehensive income for the year ended October 31 2022 that was recognized as a loss on sale of business
Benefit obligations are described in the following tables Accumulated and projected benefit obligations ABO and PBO represent the obligations of a pension plan for past service as of the measurement date ABO is the present value of benefits earned to date with benefits computed based on current compensation levels PBO is ABO increased to reflect expected future compensation
The investment policy reflects the long term nature of the plans funding obligations The assets are invested to provide the opportunity for both income and growth of principal This objective is pursued as a long term goal designed to provide required benefits for participants without undue risk It is expected that this objective can be achieved through a well diversified asset portfolio All equity investments are made within the guidelines of quality marketability and diversification mandated by the Employee Retirement Income Security Act and or other relevant statutes and laws Investment managers are directed to maintain equity portfolios at a risk level approximately equivalent to that of the specific benchmark established for that portfolio
The fair value of the pension plans investments is presented below The inputs and valuation techniques used to measure the fair value of the assets are consistently applied and described in Note 6 of the Notes to the Consolidated Financial Statements
The Company has a supplemental employee retirement plan that is an unfunded plan providing supplementary retirement benefits primarily to certain executives and longer service employees The present benefit obligation of the supplemental employee retirement plan is included in the United States defined benefit pension plans above
The Company has several voluntary 401 k savings plans that cover eligible employees in the U S For certain plans the Company matches a percentage of each employee s contribution up to a maximum percentage of base salary The Company s contributions to the 401 k plans were 29 0 million 29 1 million and 24 4 million in 2024 2023 and 2022 respectively
The Company may become involved from time to time in litigation and regulatory matters incidental to its business including governmental investigations enforcement actions personal injury claims product liability employment health and safety matters commercial disputes intellectual property matters disputes regarding environmental clean up costs litigation in connection with acquisitions and divestitures and other matters arising out of the normal conduct of its business The Company intends to vigorously defend itself in such litigation The Company does not believe that the outcome of any pending litigation will have a material adverse effect on its consolidated financial statements
The Company will accrue for contingencies related to litigation and regulatory matters if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated Because litigation is inherently unpredictable and unfavorable resolutions can occur assessing contingencies is highly subjective and requires judgments about future events The Company regularly reviews contingencies to determine whether its accruals are adequate The amount of ultimate loss may differ from these estimates
As of October 31 2024 and October 31 2023 the Company has accrued 9 8 million for the Diamond Alkali Superfund Site It is possible that there could be resolution of uncertainties in the future that would require the Company to record charges which could be material to future earnings
Aside from the Diamond Alkali Superfund Site other environmental reserves of the Company as of October 31 2024 and October 31 2023 included 9 3 million and 7 5 million respectively for its various facilities around the world
As of October 31 2024 and October 31 2023 the Company s environmental reserves were 19 1 million and 17 3 million respectively These reserves are principally based on environmental studies and cost estimates provided by third parties but also take into account management estimates The estimated liabilities are reduced to reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of relevant costs
The Company has two classes of common stock and as such applies the two class method of computing earnings per share EPS as prescribed in ASC 260 Earnings Per Share In accordance with this guidance earnings are allocated in the same fashion as dividends would be distributed Under the Company s certificate of incorporation any distribution of dividends in any year must be made in proportion of one cent a share for Class A Common Stock to one and one half cents a share for Class B Common Stock which results in a 40 to 60 split to Class A and B shareholders respectively In accordance with this earnings are allocated first to Class A and Class B Common Stock to the extent that dividends are actually paid and the remainder is allocated assuming all of the earnings for the period have been distributed in the form of dividends
The Class A Common Stock has no voting rights unless four quarterly cumulative dividends upon the Class A Common Stock are in arrears The Class B Common Stock has full voting rights There is no cumulative voting for the election of directors
The Board of Directors has authorized the Company to repurchase shares of the Company s Class A Common Stock or Class B Common Stock or any combination of the foregoing As of October 31 2024 the remaining number of shares that may be repurchased under this authorization were 2 504 836 There were no shares repurchased during 2024
The Company leases certain buildings warehouses land transportation equipment operating equipment and office equipment with remaining lease terms from less than 1 year up to 18 years The Company reviews all options to extend terminate or purchase a right of use asset at the time of lease inception and accounts for options deemed reasonably certain
The Company combines lease and non lease components for all leases except real estate for which these components are presented separately Leases with an initial term of twelve months or less are not capitalized and are recognized on a straight line basis over the lease term The implicit rate is not readily determinable for substantially all of the Company s leases therefore the initial present value of lease payments is calculated utilizing an estimated incremental borrowing rate determined at the portfolio level based on market and Company specific information
Certain of the Company s leases include variable costs As the right of use asset recorded on the balance sheet was determined based upon factors considered at the commencement date changes in these variable expenses are not capitalized and are expensed as incurred throughout the lease term
The Company has seven operating segments which are aggregated into three reportable segments Global Industrial Packaging Paper Packaging Services and Land Management The Global Industrial Packaging reportable segment is the aggregation of five operating segments Global Industrial Packaging North America Global Industrial Packaging Latin America Global Industrial Packaging Europe Middle East and Africa Global Industrial Packaging Asia Pacific and Global Industrial Packaging Ipackchem
Operations in the Global Industrial Packaging reportable segment involve the production and sale of rigid industrial packaging products such as steel fibre and plastic drums rigid intermediate bulk containers jerrycans and other small plastics closure systems for industrial packaging products transit protection products water bottles and remanufactured and reconditioned industrial containers and services such as container life cycle management logistics warehousing and other packaging services These products and services are sold to customers in industries such as chemicals paints and pigments food and beverage petroleum industrial coatings agriculture pharmaceuticals and mineral products among others
On March 26 2024 the Company completed the Ipackchem Acquisition Ipackchem is a global market leader in the production of high performance plastic packaging including premium barrier and non barrier jerrycans and other small plastic containers
Operations in the Paper Packaging Services reportable segment involve the production and sale of containerboard corrugated sheets corrugated containers and other corrugated and specialty products to customers in North America in industries such as packaging automotive food and building products The Company s corrugated container products are used to ship such diverse products as home appliances small machinery grocery products automotive components books and furniture as well as numerous other applications The Company also produces and sells coated and uncoated recycled paperboard along with tubes and cores and a diverse mix of specialty products to customers in North America Further the Company produces and sells bulk and specialty partitions made from both containerboard and uncoated recycled paperboard In addition the reportable segment is involved in the purchase and sale of recycled fiber
Operations in the Land Management reportable segment involve the management and sale of timber and special use properties from approximately 175 000 acres of timber properties in the southeastern United States Land Management s operations focus on the active harvesting and regeneration of its timber properties to achieve sustainable long term yields While timber sales are subject to fluctuations the Company seeks to maintain a consistent cutting schedule within the limits of market and weather conditions The Company also sells from time to time timberland and special use properties which consists of surplus properties higher and better use HBU properties and development properties
In order to maximize the value of timber property the Company continues to review its current portfolio and explore the development of certain of these properties This process has led the Company to characterize property as follows
The disposal of surplus and HBU property is reported in the consolidated statements of income under gain on disposals of properties plants and equipment net and the sale of development property is reported under net sales and cost of products sold All HBU development and surplus property is used by the Company to productively grow and sell timber until sold
Whether timberland has a higher value for uses other than growing and selling timber is a determination based upon several variables such as proximity to population centers anticipated population growth in the area the topography of the land aesthetic considerations including access to water the condition of the surrounding land availability of utilities markets for timber and economic considerations both nationally and locally Given these considerations the characterization of land is not a static process but requires an ongoing review and re characterization as circumstances change
Redeemable noncontrolling interests related to joint ventures are held by the respective noncontrolling interest owners The holders of these interests share in the profits and losses of these entities on a pro rata basis with the Company However the noncontrolling interest owners have the right to put all or a portion of those noncontrolling interests to the Company at a formulaic price after a set period of time specific to each agreement
Redeemable noncontrolling interests are reflected in the consolidated balance sheets at redemption value The following table provides the rollforward of the redeemable noncontrolling interest for the years ended October 31 2024 and 2023
We have audited the accompanying consolidated balance sheets of Greif Inc and subsidiary companies the Company as of October 31 2024 and 2023 and the related consolidated statements of income comprehensive income changes in shareholders equity and cash flows for each of the three years in the period ended October 31 2024 and the related notes collectively referred to as the financial statements In our opinion the financial statements present fairly in all material respects the consolidated financial position of the Company as of October 31 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended October 31 2024 in conformity with accounting principles generally accepted in the United States of America
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of October 31 2024 based on criteria established in
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 23 2024 expressed an unqualified opinion on the Company s internal control over financial reporting
These financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements We believe that our audits provide a reasonable basis for our opinion
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
The Company s evaluation of goodwill for impairment involves comparing the carrying value of the reporting unit to the estimated fair value of the reporting unit The Company s determination of the estimated fair value of the reporting units is based on both the market approach and a discounted cash flow analysis utilizing the income approach The determination of the estimated fair value of the reporting units using the market approach and the income approach requires management to make significant estimates and assumptions related to the valuation of the reporting units Changes in these assumptions could have a significant impact on either the fair value of the reporting unit the amount of any goodwill impairment charge or both The Company s consolidated goodwill balance was 1 954 billion as of October 31 2024 of which 805 million and 96 million were allocated to the Paper Packaging Services PPS reporting unit and Global Industrial Packaging Asia Pacific GIP APAC reporting unit respectively The estimated fair value of the PPS and GIP APAC reporting units exceeded their carrying value therefore no impairment was recognized
We identified the valuation of the PPS and the GIP APAC reporting units as a critical audit matter because of the significant judgments made by management to estimate their fair values This required a high degree of auditor judgment and an increased extent of effort to evaluate the reasonableness of management s estimates and assumptions related to the forecasts of future net sales gross profit margins and operating expenses as well as the selection of valuation multiples and discount rates including the need to involve our internal fair value specialists
Our audit procedures related to the forecasts of future net sales gross profit margins and operating expenses as well as the selection of valuation multiples and discount rates for the PPS and GIP APAC reporting units included the following among others
We tested the effectiveness of internal controls over management s goodwill impairment evaluation including those over the determination of the fair value of the PPS and GIP APAC reporting units such as controls related to management s forecast of future net sales gross profit margins operating expenses and EBITDA as well as the selection of valuation multiples and discount rates
We evaluated management s ability to accurately forecast net sales gross profit margins operating expenses and EBITDA and evaluated the reasonableness of these assumptions by comparing management s forecasts for historical periods to actual results for those periods
We evaluated the reasonableness of management s forecasts of future net sales gross profit margins operating expenses and EBITDA by comparing the forecasts to historical and forecasted information included in third party macroeconomic benchmarking reports
Testing the source information underlying the determination of long term net sales growth rates the selection of valuation multiples and discount rates including the mathematical accuracy of the calculations
There has been no change in our internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting
March 26 2024 The scope of our assessment of the effectiveness of internal controls over financial reporting for the fiscal year ended October 31 2024 will not include the Ipackchem Acquisition This exclusion is in accordance with the Securities and Exchange Commission s general guidance that an assessment of a recently acquired business may be omitted from the scope of assessment in the year of acquisition
With the participation of our principal executive officer and principal financial officer our management has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a 15 e under the Securities Exchange Act of 1934 as amended the Exchange Act as of the end of the period covered by this report Based upon that evaluation our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this report
Information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded processed summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission
Information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management including our principal executive officer and principal financial officer as appropriate to allow timely decisions regarding required disclosure and
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting Internal control over financial reporting is the process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States Our internal control over financial reporting includes those policies and procedures that
provide reasonable assurance that transactions are recorded as necessary to allow for the preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of our assets that could have a material effect on our consolidated financial statements and
All internal control systems have inherent limitations including the possibility of circumvention and overriding of controls and therefore can provide only reasonable assurance of achieving the designed control objectives The Company s internal control system is supported by written policies and procedures contains self monitoring mechanisms and is audited by the internal audit function Appropriate actions are taken by management to correct deficiencies as they are identified As allowed by the Securities and Exchange Commission s general guidance management excluded Ipackchem which was acquired in 2024 from its assessment of internal control over financial reporting This acquisition constituted approximately 10 of total assets and approximately 3 of net sales included in our consolidated financial statements as of and for the year ended October 31 2024
As of October 31 2024 management has assessed the effectiveness of the Company s internal control over financial reporting In making this assessment we used the criteria described in Internal Control Integrated Framework 2013 issued by the
Committee of Sponsoring Organizations of the Treadway Commission Based on our assessment management concluded that the Company s internal control over financial reporting was effective as of October 31 2024
Our internal control over financial reporting as of October 31 2024 has been audited by Deloitte Touche LLP an independent registered public accounting firm as stated in their report which appears herein
We have audited the internal control over financial reporting of Greif Inc and subsidiary companies the Company as of October 31 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO In our opinion the Company maintained in all material respects effective internal control over financial reporting as of October 31 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by COSO
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated financial statements as of and for the year ended October 31 2024 of the Company and our report dated December 23 2024 expressed an unqualified opinion on those financial statements
As described in Management s Annual Report on Internal Control over Financial Reporting management excluded from its assessment the internal control over financial reporting at Ipackchem Group SAS which was acquired on March 26 2024 and whose financial statements constitute approximately 10 of total assets and approximately 3 of total net sales of the consolidated financial statement amounts as of and for the year ended October 31 2024 Accordingly our audit did not include the internal control over financial reporting at Ipackchem Group SAS
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Annual Report on Internal Control over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects Our audit included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists testing and evaluating the design and operating effectiveness of internal control based on the assessed risk and performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
Information regarding our directors required by Items 401 a and d f of Regulation S K will be found under the caption Proposal Number 1 Election of Directors in the 2025 Proxy Statement which information is incorporated herein by reference Information regarding our executive officers required by Items 401 b and d f of Regulation S K will be contained under the caption Corporate Governance Executive Officers of the Company in the 2025 Proxy Statement which information is incorporated herein by reference
We have a separately designated standing Audit Committee established in accordance with Section 3 a 58 A of the Exchange Act As of the date of this filing the members of the Audit Committee were Robert Patterson Karen Morrison Jillian Evanko and B Andrew Rose Mr Patterson is Chairperson of the Audit Committee Our Board of Directors has determined that Mr Patterson is an Audit Committee Financial Expert as that term is defined in Item 401 h 2 of Regulation S K and Independent as that term is defined in Rule 10A 3 of the Exchange Act
Information regarding the filing of reports of ownership under Section 16 a of the Exchange Act by our officers and directors and persons owning more than 10 percent of a registered class of our equity securities required by Item 405 of Regulation S K will be found under the caption Corporate Governance Stock Holdings of Certain Owners and Management Delinquent Section 16 a Reports in the 2025 Proxy Statement which information is incorporated herein by reference
Information concerning the procedures by which stockholders may recommend nominees to our Board of Directors will be found under the caption Other Matters Stockholder Recommendations for Director Nominees in the 2025 Proxy Statement There has been no material change to the nomination procedures we previously disclosed in the proxy statement for our 2024 annual meeting of stockholders
Our Board of Directors has adopted a code of ethics that applies to our principal executive officer principal financial officer principal accounting officer controller and persons performing similar functions This code of ethics is posted on our Internet Web site at www greif com under Investors Corporate Governance Governance Documents Copies of this code of ethics are also available to any person without charge by making a written request to us Requests should be directed to Greif Inc Attention Corporate Secretary 425 Winter Road Delaware Ohio 43015 Any amendment other than any technical administrative or other non substantive amendment to or waiver from a provision of this code will be posted on our website described above within four business days following its occurrence
The 2025 Proxy Statement will contain information regarding the following matters information regarding executive compensation required by Item 402 of Regulation S K will be found under the caption Compensation Discussion and Analysis information required by Item 407 e 4 of Regulation S K will be found under the caption Compensation Committee Matters Compensation Committee Interlocks and Insider Participation and information required by Item 407 e 5 of Regulation S K will be found under the caption Compensation Committee Matters Compensation Committee Report This information is incorporated herein by reference
Information regarding security ownership of certain beneficial owners and management required by Item 403 of Regulation S K will be found under the caption Corporate Governance Stock Holdings of Certain Owners and Management in the 2025 Proxy Statement which information is incorporated herein by reference
Information regarding equity compensation plan information required by Item 201 d of Regulation S K will be found under the caption Executive Compensation Tables Equity Compensation Plan Information in the 2025 Proxy Statement which information is incorporated herein by reference
Information regarding certain relationships and related transactions required by Item 404 of Regulation S K will be found under the caption Other Matters Certain Relationships and Related Transactions in the 2025 Proxy Statement which information is incorporated herein by reference
Information regarding the independence of our directors required by Item 407 a of Regulation S K will be found under the caption Corporate Governance Director Independence in the 2025 Proxy Statement which information is incorporated herein by reference
Information regarding principal accounting fees and services required by Item 9 e of Schedule 14A will be found under the caption Audit Committee Matters Fees of Independent Registered Public Accounting Firm in the 2025 Proxy Statement which information is incorporated herein by reference
Sale and Purchase Agreement dated November 17 2023 among the sellers listed in Schedule 1 thereto SK Impact Group S à r l Ipack Ipack II Fuluolin II Ipackchem Group SAS Greif International Holding B V and Greif Packaging LLC
Amendment No 1 dated March 26 2024 to the Sale and Purchase Agreement dated November 17 2023 among the sellers listed in Schedule 1 thereto SK Impact Group S à r l Ipack Ipack II Fuluolin II Ipackchem Group SAS Greif France Holding SAS and Greif Packaging LLC
Second Amended and Restated Credit Agreement dated March 1 2022 among Greif Inc Greif Packaging LLC Greif International Holding B V and Greif Beheer B V as borrowers each financial institution party thereto as lenders Wells Fargo Securities LLC JPMorgan Chase Bank National Association BOFA Securities Inc MUFG Bank Ltd U S Bank National Association and TD Bank N A as joint lead arrangers and joint book managers and JPMorgan Chase Bank as administrative agent for the lenders
Incremental Term Loan Agreement dated March 25 2024 as an amendment to the Second Amended and Restated Credit Agreement dated March 1 2022 among Greif Inc as borrower and certain other Greif US subsidiaries as guarantors a syndicate of lenders as lenders Wells Fargo Securities LLC as Lead Arranger and JPMorgan Chase Bank as Administrative Agent
Credit Agreement dated May 17 2023 among Greif Inc as the Company Greif Packaging LLC as the Borrower CoBank ACB as Administrative Agent and the Other Lenders Party hereto CoBank ACB as Lead Arranger and Bookrunner
Letter dated April 19 2024 between Coöperatieve Rabobank U A Nieuw Amsterdam Receivables Corporation B V Greif Inc Greif Service Belgium BV and Cooperage Receivables Finance B V extending the maturity date of the European receivables financing arrangement to April 22 2025
Third Amended and Restated Sale Agreement dated September 24 2019 by and among Greif Packaging LLC Delta Petroleum Company Inc American Flange Manufacturing Co Inc Caraustar Mill Group Inc Caraustar Industrial and Consumer Products Group Inc Caraustar Recovered Fiber Group Inc The Newark Group Inc Caraustar Consumer Products Group LLC Caraustar Custom Packaging Group Inc Tama Paperboard LLC Cascade Paper Converters Co and each other entity from time to time party hereto as an Originator as Originators and Greif Receivables Funding LLC
Third Amended and Restated Transfer and Administration Agreement dated September 24 2019 by and among Greif Receivables Funding LLC Greif Packaging LLC Greif Packaging LLC Delta Petroleum Company Inc American Flange Manufacturing Co Inc Caraustar Mill Group Inc Caraustar Industrial and Consumer Products Group Inc Caraustar Recovered Fiber Group Inc The Newark Group Inc Caraustar Consumer Products Group LLC Caraustar Custom Packaging Group Inc Tama Paperboard LLC Cascade Paper Converters Co and each other entity from time to time party hereto as an Originator as Originators Bank of America N A and the various investor groups managing agents and administrators from time to time parties here to
Omnibus Amendment No 6 dated May 17 2024 to the Third Amended and Restated Transfer and Administration Agreement dated September 24 2019 by and among Greif Receivables Funding LLC as seller Container Life Cycle Management LLC Lee Container LLC and Lee Container Iowa LLC Greif Packaging LLC Delta Petroleum Company Inc American Flange Manufacturing Co Inc Caraustar Mill Group Inc Caraustar Industrial and Consumer Products Group Inc Caraustar Recovered Fiber Group Inc The Newark Group Inc Caraustar Consumer Products Group LLC and Cascade Paper Converters Co as originators
Assignment agreement dated March 31 2020 by and among Greif Receivables Funding LLC Greif Packaging LLC Custom Packaging Group LLC the other Originators party hereto Greif Inc the Investors Administrators and Managing Agents party hereto and Bank of America N A as Agent
The following financial statements from the Company s Annual Report on Form 10 K for the year ended October 31 2024 formatted in Inline XBRL Extensive Business Reporting Language i Consolidated Statements of Income ii Consolidated Statements of Comprehensive Income iii Consolidate Balance Sheets iv Consolidated Statements of Cash Flow v Consolidated Statements of Changes in Shareholders Equity and vi Notes to Consolidated Financial Statements
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
The undersigned Ole G Rosgaard by signing his name hereto does hereby execute this Form 10 K on behalf of each of the above named persons pursuant to powers of attorney duly executed by such persons and filed as an exhibit to this Form 10 K

Company Name	GREIF, INC Vist SEC web-site
Category	METAL SHIPPING BARRELS, DRUMS, KEGS & PAILS
Trading Symbol	GEF