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Longbow ResearchP & P k i C fPaper & Packaging Conference
November 6, 2008
Safe HarborForward-Looking Statements
This presentation contains certain forward-looking information within the meaning of the PrivateSecurities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “estimate,”“target,” and similar expressions, among others, identify forward-looking statements. All forward-looking statements are based on information currently available to management. Such forward-lookingstatements are subject to certain risks and uncertainties that could cause events and the Company’sactual results to differ materially from those expressed or implied. Please see the disclosure regardingforward-looking statements immediately preceding Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2007. The Company assumes no obligation to update anyforward-looking statements.
Regulation G
This presentation includes certain non-GAAP financial measures that exclude restructuring and otherunusual charges and gains that are volatile from period to period. Management believes the non-GAAPmeas res pro ide a better indication of operational performance and a more stable platform on hichmeasures provide a better indication of operational performance and a more stable platform on whichto compare the historical performance of the Company than the most nearly equivalent GAAP data. Allnon-GAAP data in the presentation are indicated by footnotes. Tables showing the reconciliationbetween GAAP and non-GAAP measures are available at the end of this presentation and on the GreifW b it t if
2
Web site at www.greif.com.
Company Profile
• Founded in 1877 as a packaging company
• Public company since 1926
• Diversified business platform
• Leading industrial packaging companywith over 30% global market share
• Approximately 210 operations in more than 40 countries
3
Diversified Business Platform(Dollars in millions)(Twelve months ended July 31, 2008)
Sales $3,681
Operating Profit * $398
Industrial Packaging
Sales $2 970
Paper Packaging
S l $691
Timber
S l $20Sales $2,970
Operating Profit * $304
Sales $691
Operating Profit * $73
Sales $20
Operating Profit * $20
4
* Before restructuring charges and timberland disposals, net. See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation.
Performance Trajectory(D ll i illi )(Dollars in millions)
1997 2008(1) CAGR
Net Sales $688 $3,681 17%
Operating Profit(2) $35 $398 25%
“Re earn the“Earn
Operating Profit(2) $35 $398 25%
“Re-earn theRight to Grow”
andGrow”
(1)
March 30, 1998Acquired Sonoco Products’ industrial packaging business f $223 illi
March 2, 2001Acquired Van Leer Industrial Packaging from Huhtamaki for
March 4, 2003Launched
Transformation toGreif Business System
September 22, 2006Acquired Delta Petroleum for $98 million
(1)
for $223 million
November 1, 1998CorrChoice joint venture formed (Greif ownership 63.24%)
$555 million
September 30, 2003Remaining interest in CorrChoice obtained
November 30, 2006Acquired steel drum and closures businesses of Blagden Packaging for €205 million
5
€205 million
(1) Twelve months ended July 31, 2008.(2) Before restructuring charges and timberland disposals, net. See GAAP to Non -GAAP reconciliation included in the Appendix of this presentation.
Investment Thesis
• Diversity (geographic/segment/asset class) – a competitive advantage
• Financial flexibility and access to alternate sources of liquidity
• Rigorous enterprise risk management processg p g p
• Contingency actions to protect profits/mitigate headwinds
• GBS a catalyst for creating value and "controlling the• GBS – a catalyst for creating value and controlling the controllable"
• Balanced focus on defense and offense – execute growthBalanced focus on defense and offense execute growth strategy
Focus Discipline Passionp
6
Our AspirationsBreak-away momentum• Organic growth: ≥ 5% (GDP + 2
points)• Operating profit margin: ≥12 5%
Preferred productivity partner• Compelling value proposition
based on what customers are willing to pay for
GrowthOperating profit margin: ≥12.5%
• SG&A/net sales: ≤ 7.5%• RONA: ≥ 25%• ROIC ≥ WACC: 5 points
willing to pay for• Low-cost provider of high-quality
products with consistent and reliable delivery
Value
People Productivity
Strong performance ethicT t
Productivity imperative• Real-cost productivity: ≥ 4% per year
• Transparent governance structure
• Performance and consequence management
• Talent and succession
• Capital productivity› OWC/net sales: ≤ 7.5%› Asset turns: ≥ 2x› World-class strategic sourcing
7
• Talent and succession management
g gcapabilities
The Framework for Achieving Aspirations
The Greif WayGreif Production System
Greif
WorkingCapital
Gl b l Greif Operating System
Operational Excellence
Commercial Excellence
Global Supply Chain
Strategy People Performance Management
Core Processes
Excellence
8
g Processes
Industrial PackagingNet sales Operating profit(2)
2002 2008(1) CAGR
$1,268 $2,970 16%
2002 2008(1) CAGR
$41 $304 42%
Served markets Competitive advantages
(1) (1)
▲ Leading market position
▲ Global footprint
▲ Compelling value proposition
Chemicals, paints and pigments, petroleum, industrial coatings
▲ Compelling value proposition
▲ Comprehensive product portfolio
▲ Strong customer relationships
Agriculture
Pharmaceutical
9(1) Twelve months ended July 31, 2008.(2) Before restructuring charges. See GAAP to Non-GAAP reconciliation
included in the Appendix of this presentation.
Most Comprehensive Industrial Packaging Portfolio
Plastic FibreSteelWater BottlesIBC ClosuresGlobal
Presence
#1 #1#2 #4 #1#1
Mauser*
Schutz
Greif’s global market share exceeds 30%
10* Acquired by Dubai International Capital LLC in 2007.
Paper PackagingNet sales Operating profit(2)
2002 2008(1) CAGR
$324 $691 14%
2002 2008(1) CAGR
$21 $73 24%
Served markets Competitive advantages
(1) (1)
▲ Customer focus
▲ Fully-integrated containerboard networknetwork
▲ Highly efficient sheet feeder footprint
Improving fundamentalsPackaging Feed and
Seed
11
▲ Improving fundamentals(1) Twelve months ended July 31, 2008.(2) Before restructuring charges. See GAAP to Non-GAAP reconciliation
included in the Appendix of this presentation.
Fully-integrated Paper Packaging Network
Box Plants4
Massillon, Ohio Mill SpecialtyCorrugated Plants
6
Riverville, Virginia Mill6 Sheet
Feeder PlantsMultiwall Bag Plants
2
600 000 tons
Production
800 000 tons
Consumption
Annual containerboard requirements >100% of production capacity
600,000 tons 800,000 tons
12
Annual containerboard requirements >100% of production capacity
TimberServed Markets
Timber, timberland, special use properties.▲ Properties located in Alabama, Louisiana▲ Properties located in Alabama, Louisiana
and Mississippi in the United States and the Quebec and Ontario provinces in Canada.
▲ 66,250 acres (22%) identified as special use properties at 7/31/08.
Competitive advantages
▲ Undervalued timberland assets (book value $199 million at 7/31/08).
▲ Opportunities to monetize special use
p g2001 Timber established as a line of
business and portfolio began to be actively managed.
2001 2007 Over $200 million of timber ▲ Opportunities to monetize special use properties.
▲ 295,400 acres in North America in attractive locations, including 267,950 acres in the United States and 27 450 acres in Canada
2001 – 2007 Over $200 million of timber assets have been monetized.
2006 Special use properties identified. Gains total $29.4
13
United States and 27,450 acres in Canada.million since the beginning of 2006.
Financial Review
Financial ProfileDollars in millions
(1) (1)2002 2003 2004 2005 2006 2007 2007 (1) 2008 (1)
Net Sales $1,633 $1,916 $2,209 $2,424 $2,628 $3,322 $3,176 $3,681
O ti P fit(2)
$ 92 $ 121 $ 155 $ 171 $ 238 $ 311 $ 293 $ 398Operating Profit( )
$ 92 $ 121 $ 155 $ 171 $ 238 $ 311 $ 293 $ 398
Net Income(2)
$ 32 $ 43 $ 83 $ 96 $ 140 $ 190 $ 177 $255
(2)RONA
(2)7.5% 10.1% 13.3% 15.9% 21.5% 21.3% 21.3% 24.4%
Free Cash Flow $ 112 $ 52 $ 180 $ 175 $ 164 $ 296 $ 164 $164
(1) Twelve months ended July 31.
(2) Before restructuring charges, debt extinguishment charges, timberland disposals, net and cumulative effect of change in accounting principle.
15
See GAAP to Non-GAAP reconciliation included in the Appendix of this presentation.
Strong Cash Generation(1)
(Dollars in millions)
Purchases ofPurchases of PP&E, net
$300
Operating Cash Flow
$1,279
Acquisitions$523
Di id d
Free Cash Flow
$979
Other$262
Dividends$159 Share
Repurchases$35
15% of Operating Cash Flow Returned to Shareholders
16(1) Fiscal 2002 to 2007
2007-2009: Earn and Grow Phase
Greif Business System Growth
I d t 2009 Goals
Value Creation+ =
Industry consolidation
Emerging
2009 GoalsOperatingProfit Margin(1) ≥ 12.5%
SG&A/
The Greif Way
Working Emerging markets
Core business
Net Sales ≤ 7.5%
OWC(2)/ Net Sales ≤ 7.5%
Performance
Operational Excellence
Commercial Excellence
CapitalGlobal Supply Chain
adjacencies Return onNet Assets(3) ≥ 25.0%
Strategy People Performance Management
(1) Operating profit margin equals operating profit, before restructuring charges and timberland disposals, net, divided by net sales.(2) Operating working capital equals accounts receivable (less allowances) plus inventories less accounts payable
Focus Discipline Passion
17
(2) Operating working capital equals accounts receivable (less allowances) plus inventories less accounts payable. (3) Return on net assets equals operating profit, before restructuring charges and timberland disposals, net, divided by long-term debt plus short-term borrowings
less cash and cash equivalents, plus shareholders’ equity.
Same-Structure(1) Roadmap to 2009 Targets(D ll i illi )
$75
$60
$40 $450(Dollars in millions)
Operating Profit(2)Net Sales
$3,600
$275
$75$3,100
$ ,
+5%CAG
Greif Business System
2006 Organic 20092006 2009 Strategic Operational
CAGR
Roadmap/Agenda Workstream Target1. Organic Growth Commercial Excellence ≥ 5%
Adjusted(1)g
Growth TargetAdjusted(2) OrganicTarget
gSourcing
pExcellence
1. Organic Growth Commercial Excellence ≥ 5%
2. Low-cost Producer Operational Excellence 3 - 5% of cost of products sold
3. Leverage Global Spend Strategic Sourcing 3 - 5% of total spend
4. Scalable Infrastructure Administrative Excellence ≤ 7.5% SG&A to net sales
5 Asset Utilization Working Capital ≤ 7 5% OWC to net sales
18
5. Asset Utilization Working Capital ≤ 7.5% OWC to net sales
(1) Includes the impact of Delta and Blagden acquisitions.(2) Before restructuring charges and timberland disposals, net. See GAAP to
Non-GAAP reconciliation included in the Appendix of this presentation.
(D ll i illi )
2009 Pro Forma RONA Value StreamOP Impact
(Dollars in millions)
Sales
100%3600 Volume*
GDP+2%
Price
Value > Sales/Comex
> Sales/Comex
$36
$12
x+
p1% ChangeAccountability
Labor
MaterialsOperating Profit
12.5%
COGS
76%
Depreciation450
GDP+2%
53%> Sourcing $19+
-
RONA
25%
4%
SG&A
7 5%
8%
Overhead
10%x +
+-
-
> Operations
> Operations
$3
$4
25% 7.5%
Fixed Capital
Freight
5%
A/RROIC
+
+
> Sourcing $2
Capital Turnover
2 Turns
3 Turns
Working Capital
12 Turns
1800
A/R
10 Turns
Inventories
12 Turns
18%
WACC
+
++
+
-
> Sales/Comex
> Sourcing Cash FlowBenefit
19
12 Turns 12 Turns
A/P
10 Turns
8.5%
* Volume impact = sales - material - labor – freight.
- > Sourcing
Financial Targets
2007 - 2009
Annual Organic Sales Growth (average) 5%
Net Debt to Net Capitalization 30% - 40%p % %
Annual Dividend Payout 30% - 35%
Annual Capital Expenditures ($ in millions) $110 - $135
Spread Over Cost of Capital 7.5% - 10%p p
20
Compelling Investment Opportunity
• Diversity: customers, products, geography and people• Leading market positions in industrial packagingLeading market positions in industrial packaging• Focused, fully-integrated paper
packaging networkThe Greif Way
• Undervalued timber portfolio• Greif Business System: proven
catalyst for unlocking value Operational
WorkingCapital
Global
Strategy People Performance Management
catalyst for unlocking value• Record of strong top-line growth and
value creation
Operational Excellence
Commercial Excellence
Supply Chain
• Experienced management team
Focus Discipline PassionFocus Discipline Passion
21
Appendix
GAAP to Non-GAAP ReconciliationR N AReturn on Net Assets
UNAUDITED (Dollars in millions)
2002 2003 2004 2005 2006 2007
GAAP operating profit $ 101.2 $ 65.4 $ 108.7 $ 191.9 $ 246.2 $ 289.6 Restructuring charges 2.8 60.7 54.1 35.7 33.2 21.2 Timberland disposals, net (12.1) (5.6) (7.5) (56.3) (41.3) 0.6
Non-GAAP - operating profit before restructuring charges and timberland disposals, net $ 91.9 $ 120.5 $ 155.3 $ 171.3 $ 238.1 $ 311.5
Average cash (1) $ (30.8) $ (27.2) $ (36.1) $ (67.9) $ (148.9) $ (120.4)Average short-tern borrowings(1) 19.3 21.5 16.6 17.9 24.6 34.9 Average current portion of long-term debt(1) 30.0 3.0 1.2 - - -Average long-term debt(1) 627.8 634.3 592.8 446.8 449.7 645.1 Average shareholders' equity(1) 583.7 566.9 590.0 677.9 779.6 904.0 Average net assets $ 1,230.0 $ 1,198.5 $ 1,146.5 $ 1,074.7 $ 1,105.0 $ 1,463.6
GAAP return on net assets (GAAP operating profit divided by average net assets) 8.2% 5.5% 9.3% 17.9% 22.3% 19.8%
Non-GAAP return on net assets (non-GAAP operating profit before restructuring
(1) Amounts used in the calculation for this graph are based upon the average balances as of the beginning of the fiscal yearand end of each fiscal quarter for the years presented.
Non GAAP return on net assets (non GAAP operating profit before restructuring charges and timberland disposals, net divided by average net assets) 7.5% 10.1% 13.3% 15.9% 21.5% 21.3%
23
GAAP to Non-GAAP ReconciliationO ti P fit d R t N t A tOperating Profit and Return on Net Assets
2007 (1) 2008 (1)
UNAUDITED (Dollars in millions)
GAAP operating profit $ 270.6 364.0$ Restructuring charges 22.6 33.5Timberland disposals, net 0.1 -
Non-GAAP operating profit before restructuring charges and timberland disposals, net $ 293.3 397.5$
Average cash (2) (129.1)$ (104.9)$ Average short-term borrow ings 36.1 44.7Average long-term debt 604.6 687.6Average shareholders' equity 862.4 1,003.1Average net assets 1,374.0$ 1,630.5$ g ,$ ,$
GAAP return on net assets (GAAP operating profit divided by average net assets) 19.7% 22.3%
Non-GAAP return on net assets (non-GAAP operating profit before restructuring charges and
(1) Twelve months ended July 31.
timberland disposals, net divided by average net assets) 21.3% 24.4%
24
(2) Amounts used in the calculation for this graph are based upon the average balances as of the beginning of the fiscal year and end of each fiscal quarter for the years presented.
GAAP to Non-GAAP ReconciliationO ti P fitOperating Profit
UNAUDITED (Dollars in millions) 1997(Dollars in millions) 1997
GAAP operating profit 29.8$ Restructuring charges 6.2 Timberland disposals, net (0.8)Timberland disposals, net (0.8)
Non-GAAP operating profit before restructuring charges and timberland disposals, net 35.2$
25
GAAP to Non-GAAP ReconciliationO ti P fit b S tOperating Profit by SegmentUNAUDITED (Dollars in millions)
2002 2003 2004 2005 2006 2007 2008 (1)
Industrial PackagingGAAP - operating profit 38.9$ 21.9$ 67.0$ 91.4$ 143.4$ 213.4$ 275.0$
Restructuring charges 2.3 47.9 45.0 31.4 24.0 16.0 29.4 Non-GAAP - operating profit before restructuring charges 41.2$ 69.8$ 112.0$ 122.8$ 167.4$ 229.4$ 304.4$
Paper PackagingGAAP - operating profit 20.2$ 17.9$ 20.5$ 36.3$ 50.8$ 62.5$ 69.0$
Restructuring charges 0.4 12.5 8.9 4.3 9.2 5.2 4.0 Non-GAAP - operating profit b f t t i h 20 6$ 30 4$ 29 4$ 40 6$ 60 0$ 67 7$ 73 0$before restructuring charges 20.6$ 30.4$ 29.4$ 40.6$ 60.0$ 67.7$ 73.0$
TimberGAAP - operating profit 42.1$ 25.5$ 21.2$ 64.2$ 51.9$ 13.7$ 20.2$
Restructuring charges 0.1 0.4 0.2 0.1 - - 0.1 Ti b l d di l t (12 1) (5 6) (7 5) (56 3) (41 3) 0 6Timberland disposals, net (12.1) (5.6) (7.5) (56.3) (41.3) 0.6 -
Non-GAAP - operating profit before restructuring charges and timberland disposals, net 30.1$ 20.3$ 13.9$ 8.0$ 10.6$ 14.3$ 20.3$
26
(1) Twelve months ended July 31.
GAAP to Non-GAAP ReconciliationN t INet IncomeUNAUDITED (Dollars in millions)
2002 2003 2004 2005 2006 2007
GAAP - net income $ 31.0 $ 9.5 $ 47.8 $ 104.7 $ 142.1 156.4$ Restructuring charges, net of tax 1.8 42.0 40.9 25.7 23.4 15.9 Debt extinguishment charge, net of tax 6.6 - - 2.0 - 17.5 Timberland disposals, net of tax (7.8) (3.9) (5.7) (36.2) (26.0) 0.5 Cumulative effect of change in gaccounting principle - (4.8) - - - -
Non-GAAP - net income before restructuring charges, debt extinguishment charge, timberland disposals, net and cumulative effect of change in accounting principle $ 31.6 $ 42.8 $ 83.0 $ 96.2 $ 139.5 $ 190.3
27
GAAP to Non-GAAP ReconciliationN t IUNAUDITED (Dollars in millions)
Net Income
2007 (1) 2008 (1)
GAAP - net income $ 143.1 $ 228.9 Restructuring charges, net of tax 16.3 25.6 Debt extinguishment charge net of tax 17 3 0 2Debt extinguishment charge, net of tax 17.3 0.2 Timberland disposals, net of tax 0.1 -
Non-GAAP - net income before restructuring charges, debt extinguishment charge and timberland disposals, net
$ 176 8 $ 254 7$ 176.8 $ 254.7
28
(1) Twelve months ended July 31.
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