Hot stock to watch: Greif, Inc. Class A (NYSE: GEF)

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Greif, Inc. Class A (NYSE: GEF) stock rose over 3% in the pre-market session of June 4th, 2020 (Source: Google finance) despite mixed results for the second quarter of FY 20. The company has completed the divestiture of the Consumer Packaging Business to Graphic Packaging Holding Company for $85.0 million in cash, which is however subject to closing adjustments. The company has during the quarter announced the permanent closure of the Mobile, Alabama Uncoated Recycled Board Mill (URB) as part of the Company’s commitment to optimize the URB mill network. After the #1 machine in October 2019 (approximately 65,000 tons) closed along with the closure of the #2 machine (approximately 75,000 tons) has reduced about 140,000 tons of URB capacity from Greif’s network. The Company will transfer the existing customer business to other mills in its system. The company has also acquired a minority stake in Centurion Container LLC to further expand the Company’s IBC reconditioning network in North America.

Meanwhile, the company has withdrawn fiscal 2020 adjusted Class A earnings per share and adjusted free cash flow guidance due to end market uncertainty. The company has cash balances of $72.4 million as of April 30, 2020 and the Company has $690.3 million of available borrowing capacity under its $800.0 million revolving credit facility. The Company’s Euro €200 million notes are due in July of 2021, and the Company has no other sizable debt maturities due until 2024. Further, the Company is taking further steps to improve liquidity and to reduce 2020 capital spending by delaying certain growth projects, closely managing its working capital and reducing operating costs and selling, general and administrative expenses across the portfolio.

GEF in the second quarter of FY 20 has reported the adjusted earnings per share of 95 cents, beating the analysts’ estimates for the adjusted earnings per share of 81 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 35.9 percent to $1.16 billion in the second quarter of FY 20.

Additionally, the company has declared quarterly cash dividends of $0.44 per share on its Class A Common Stock, and $0.66 per share on its Class B Common Stock. These dividends will get paid on July 1, 2020, to stockholders of record at the close of business on June 18, 2020.

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