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DELAWARE, Ohio---- Greif, Inc. (NYSE: GEF, GEF.B), a world leader in industrial packaging products and services, announced third quarter 2017 results.

Third Quarter Highlights (all results compared to the third quarter 2016 unless otherwise noted):

Net sales increased by $116.8 million to $961.8 million.
Gross profit increased by $10.6 million to $187.1 million.
Operating profit increased by $17.9 million to $89.5 million and operating profit before special items1 increased by $10.6 million to $94.5 million, despite $2.0 million of professional fees related to tax planning expected to generate $3.0 million in recurring savings in fiscal 2017 and an incremental $12 million to $20 million annually, thereafter.
Net income of $43.9 million or $0.74 per diluted Class A share compared to net income of $46.1 million or $0.78 per diluted Class A share. The third quarter of 2016 included a one time discrete tax benefit from tax restructuring activities that increased net income per diluted Class A share for the third quarter of 2016 by $0.17 per share.
Net income, excluding the impact of special items, of $49.7 million or $0.85 per diluted Class A share compared to net income, excluding the impact of special items, of $53.6 million or $0.91 per diluted Class A share. The third quarter of 2016 included a one time discrete tax benefit from tax restructuring activities that increased net income, excluding the impact of special items, per diluted Class A share for the third quarter of 2016 by $0.17 per share.
Interest expense decreased by $6.1 million to $13.7 million due primarily to the repayment of Senior Notes with borrowings under the Company's credit agreement and lower year-over-year debt balances.
Cash provided by operating activities decreased by $10.7 million to $89.6 million primarily due to an increase in operating working capital.
Free cash flow2 decreased by $9.5 million due to an increase in operating working capital, partially offset by a $1.2 million decrease in cash paid for properties, plants, and equipment.
Modified the guidance range for fiscal year 2017 Class A earnings per share before special items3 to $2.81 - $2.95 per share, due to ongoing competitive pressures in Asia Pacific, timing of raw material price adjustment mechanisms in customer contracts and our current assessment of a $2.5 million headwind impact related to Hurricane Harvey.
Reaffirm guidance for fiscal year 2017 free cash flow of $180.0 million to $200.0 million.

“Greif delivered solid operating and financial results during the fiscal third quarter,” said Greif’s President and Chief Executive Officer, Pete Watson. “Customer service levels continue to improve and our operating profit before special items rose by more than 13 percent year over year. We are on track to achieve our 2017 Transformation commitments and remain confident that consistent execution of our strategy will result in superior value creation for our customers and shareholders.”

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1 A summary of all special items that are excluded from operating profit before special items, from net income before special items, and from earnings per diluted Class A share before special items is set forth in the Selected Financial Highlights table following the Dividend Summary in this release.
2 Free cash flow is defined as net cash provided by operating activities less cash paid for purchases of properties, plants and equipment.
3

2017 GAAP Class A Earnings Per Share guidance is not provided in this release due to the potential for one or more of the following, the timing and magnitude of which we are unable to reliably forecast: gains or losses on the disposal of businesses, timberland or properties, plants and equipment, net, non-cash asset impairment charges due to unanticipated changes in the business, restructuring-related activities, non-cash pension settlements or acquisition costs, and the income tax effects of these items and other income tax-related events. No reconciliation of the guidance for fiscal year 2017 Class A earnings per share before special items, a non-GAAP financial measure which excludes gains and losses on the disposal of businesses, timberland and property, plant and equipment, acquisition costs, non-cash pension settlement charges, restructuring and impairment charges, is included in this release because, due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible, we are unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts. A reconciliation of 2017 free cash flow guidance to forecasted net cash provided by operating activities, the most directly comparable GAAP financial measure, is included in this release.


Note: A reconciliation of the differences between all non-GAAP financial measures used in this release with the most directly comparable GAAP financial measures is included in the financial schedules that are a part of this release. These non-GAAP financial measures are intended to supplement and should be read together with our financial results. They 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 these non-GAAP financial measures.

Notable Business Highlights

Our three strategic priorities are:

Invest in our people and teams to foster a strong culture of employee engagement and accountability.
Deliver industry leading customer service excellence to achieve superior customer satisfaction and loyalty.
Strive for and realize performance excellence, leading to enhanced free cash flow and value creation.

Our goal is to be the best performing customer service company in industrial packaging in the world. Our consolidated customer satisfaction index (CSI) improved by almost 5 percent versus the prior year quarter, primarily related to improved performance in the Rigid Industrial Packaging & Services (RIPS) and Flexible Products & Services (FPS) segments. From an operational standpoint, the business delivered a solid quarter. RIPS - our largest business segment by revenue and operating profit - generated higher year-over-year sales and profits, but gross profit margin was impacted by the timing of contractual pass through mechanisms that will recover in the coming quarters. Paper Packaging & Services (PPS) - which consists of two paper mills and one of the newest corrugator networks in the containerboard industry - delivered strong volumes, which helped to offset the significant impact of year-over-year raw material inflation. PPS increased sales of specialty products on a year-over-year basis and fully implemented April’s announced containerboard price increase, which will help to expand its profits and margin year-over-year in the fiscal fourth quarter. FPS - the world’s largest producer of industrial flexible intermediate bulk containers - continues to demonstrate improvement. FPS delivered its 7th consecutive quarter of operating profit improvement and recorded higher year-over-year sales.

We hosted our most recent Investor Day during the third quarter. Materials from the event are available on our website at http://investor.greif.com. Highlights from Greif’s Investor Day 2017 include:

The disclosure of long term 2020 financial targets:
2020 consolidated operating profit before special items range of $425 million - $465 million
2020 free cash flow range of $230 million - $270 million
The introduction of Greif’s “Path to Growth” plan, which highlights the process, strategy and acquisition priorities the Company has in place to grow profitability.

Segment Results (all results compared to the third quarter of 2016 unless otherwise noted)

Net sales are impacted mainly by the volume of primary products4 sold, selling prices, product mix and the impact of changes in foreign currencies against the U.S. Dollar. The tables below show the percentage impact of each of these items on net sales for our primary products, both including and excluding the impact of divestitures, for the third quarter of 2017 as compared to the third quarter of 2016 for the business segments with manufacturing operations:

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