2019 Sustainability Report
Committed to using financial, natural and human resources wisely without compromising the ability of future generations to meet their needs
Focusing on the future while creating value today.
Our financial performance and sustainability strategy are mutually beneficial. We leverage our strong financial performance to invest in the sustainability efforts that we believe in—a pillar of The Greif Way. Our sustainability strategy enables stronger sales, increased efficiency and reduced costs that create greater value for our shareholders.
We celebrated our 142nd year of operation in FY 2019. We continued our strong trend of financial performance by increasing Adjusted EBITDA by more than 30 percent over Fiscal 2018. We also generated $267.8 million in Adjusted Free Cash Flow while returning more than $100 million to our shareholders via dividends paid.
In 2019, we completed the acquisition of Caraustar Industries, significantly expanding our Paper Products and Services business. Through the acquisition we gained 106 new operating sites, warehouses and offices, and expanded our paper services significantly, allowing us to better serve our customers. We originally forecasted run rate synergies of $45 million from the acquisition, but have been pleased to increase that forecast to at least $70 million by the end of Fiscal 2022. $24 million in synergies were realized in 2019 and provided a meaningful contribution to our 2019 performance.
Our commitments to delivering the highest level of customer satisfaction through product quality and service excellence enabled us to improve our Customer Satisfaction Index, Net Promoter and Corrective Action Rate scores, all contributing to our efforts to attract and retain customers. We also continue to incorporate sustainability further into our products and conversations with customers, which reinforces the value our services provide. We are building stronger relationships with our customers, which is leading to greater strategic partnerships.
We are continuing to invest in our end-of-life services to provide our customers with efficient steel, plastic and Intermediate Bulk Container (IBC) reconditioning options, reducing demand for virgin materials. We completed the acquisition of Tholu in 2019, expanding our IBC reconditioning footprint in Europe. Additionally, through our acquisition of Caraustar, we can now offer more comprehensive paper recollection and recycling services.
We work closely with our customers to create new and innovative products. Our collaborative approach to product innovation and end-of-life solutions enables us to support our customers in solving the business challenges they face while lowering input costs and contributing to sustainability performance.
Greif’s focus on sustainable activities reduces our operational footprint while providing economic and environmental benefits. We are actively working to reduce energy and waste, as they tie directly to cost savings, and our efforts to drive raw material and water efficiencies. Our compliance management system (CMS) reduces the risk of regulatory fines and aligns to our initiatives that address ethics, security risks and business continuity. Our CMS is also becoming increasingly important to how we track and manage waste data. All Greif sites globally are required to submit waste data and supporting documentation to CMS monthly, improving the speed, efficiency, accuracy, and ultimately the ability to effectively manage waste across our entire business.
Our colleagues make these efforts possible. We are creating a workplace that our colleagues want to participate in by creating a safe and productive environment. We focus on colleague retention and development to ensure our colleagues have a customer service mindset and do business The Greif Way.
Our 2019 financial performance was supported by lower raw material costs and better than anticipated results and synergy capture from the Caraustar acquisition, offset by weaker demand in our Rigid Industrial Packaging & Services (RIPS), Flexible Products & Services (FPS) and legacy paper businesses in part due to uncertain global trade dynamics. Given the uncertain market environment, we focused on controllable aspects of our business such as tight cost controls and customer service excellence. We reorganized our RIPS business under a single leadership team that now oversees all global RIPS operations. This new structure will allow for more impactful management of costs, commercial initiatives and sustainability. We invested in growth capital projects in our RIPS facilities to expand our IBC and plastics capacity to better meet customer needs. We also expanded the CorrChoice network with the addition of a new sheet feeder in northeast Pennsylvania to penetrate an attractive market. Finally, we invested in maintenance projects across our facilities to ensure our business continues to perform at optimal levels and continued to make investments in our facilities to protect against the risk of damages from extreme weather events, protecting not just our facilities, but our colleagues.
As a result of our efforts, we generated $3.96 in Adjusted Class A Earnings per Share in Fiscal 2019, near the high end of our stated guidance range for the year. We also exceeded our Adjusted Free Cash Flow expectation for Fiscal 2019 in part due to better than expected synergies from the Caraustar acquisition and stronger operating working capital performance.
In 2020 we will advance the implementation of a new single system ERP platform around our portfolio and expect to continue realizing synergies from the Caraustar integration. We will also bring new IBC and plastics projects online that will help deliver high quality, sustainable solutions to our customers.
Our 2020 financial goals are: