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What changed in GREIF, INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GREIF, INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+232 added−262 removedSource: 10-K (2023-12-18) vs 10-K (2022-12-16)

Top changes in GREIF, INC's 2023 10-K

232 paragraphs added · 262 removed · 173 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

28 edited+15 added−3 removed29 unchanged
Biggest changeThe acquired business operates manufacturing facilities in Georgia, Iowa and Texas, with over 500 employees throughout the United States. The operations of the acquired business will be reported in our Global Industrial Packaging business segment. (d) Financial Information about Geographic Areas Our operations are located in North and South America, Europe, the Middle East, Africa and the Asia Pacific regions.
Biggest change(d) Financial Information about Geographic Areas 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.
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, 2022.
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, 2023.
(c) Narrative Description of Business Sales 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, 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, filling, logistics, warehousing and other packaging services.
(c) Narrative Description of Business Sales 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, filling, logistics, warehousing and other packaging services.
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.
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. 5 Table of Contents 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 offer a comprehensive line of rigid industrial packaging products, such as steel, fibre and plastic drums, rigid intermediate bulk containers, 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, filling, logistics, warehousing and other packaging services.
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, filling, 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 we use to produce and sell industrial products (tubes and cores, construction products, and protective packaging).
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 have a performance development review and talent 6 Table of Contents 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.
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.
In addition, we also purchase and sell recycled fiber and produce and sell adhesives used in out 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.
In addition, we purchase and sell recycled fiber and produce and sell adhesives used in our paperboard products. 4 Table of Contents 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.
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. Starting in 2023, Greif University will allow employees to access LinkedIn Learning, an online learning and skill building platform that empowers employees to develop skills to grow their career.
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.
Other Information As of October 31, 2022, our approximately 12,000 full-time employees were located in the following geographic regions: 58% in North America; 27% in Europe, Middle East and Africa; 6% in Asia Pacific; and 9% in Latin America. Our global workforce is 15% female and 85% male, with approximately 37% represented by labor unions.
Other Information As of October 31, 2023, our approximately 12,000 full-time employees were located in the following geographic regions: 58% in North America; 27% in Europe, Middle East and Africa; 6% in Asia Pacific; and 9% in Latin America. Our global workforce is 17% female and 83% male, with approximately 27% represented by labor unions.
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.
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.
We work to accomplish this goal by looking to our purpose, vision and values set forth in “The Greif Way.” In fiscal 2022, we launched our “Build to Last Strategy,” which 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.
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.
We do not anticipate any material capital expenditures related to environmental control in 2023. 5 Table of Contents 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, 2022, 2021 and 2020, and our reserves for environmental liabilities as of October 31, 2022 and 2021.
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, 2023, 2022 and 2021, and our reserves for environmental liabilities as of October 31, 2023 and 2022.
Diversity, Equity and Inclusion In accordance with our values, we encourage our employees to embrace diversity of culture, 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.
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.
Talent Development 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 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.
In addition, we also purchase and sell recycled fiber and produce and sell adhesives used in our paperboard products. We are a leading global producer of flexible intermediate bulk containers and related services. We sell timber to third parties from our timberland in the southeastern United States that we manage to maximize long-term value.
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 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. Our efforts to continue to grow our global diversity, equity and inclusion programs and to increase diversity within our Company is a top organizational priority.
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.
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.
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.
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 we use to produce and sell industrial products (tubes and cores, construction products, and protective packaging).
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.
In our other paper packaging businesses, we compete by offering a comprehensive range of uncoated and coated paperboard products and diverse tube, core and other specialty products. In addition, over the past several years we have closed higher cost facilities and otherwise restructured our operations, which we believe has significantly improved our cost competitiveness.
In addition, over the past several years we have closed higher cost facilities and otherwise restructured our operations, which we believe has significantly improved our cost competitiveness.
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.
Markets 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.
Due to the variety of our products, we have many customers buying different types of our products, and due to the scope of our sales, no one customer is considered principal in our total operations. 4 Table of Contents Markets The markets in which we sell our products are highly competitive with many participants.
As of October 31, 2023, we owned approximately 175,000 acres of timber properties in the southeastern United States. Due to the variety of our products, we have many customers buying different types of our products, and due to the scope of our sales, no one customer is considered principal in our total operations.
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.
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. Diversity, Equity and Inclusion In accordance with our values, we encourage our employees to embrace diversity of culture, language, location and thought.
As used in this Form 10-K, the terms “Greif,” the “Company,” “we,” “us,” and “our” refer to Greif, Inc. and its subsidiaries. (b) Financial Information about Segments We operate in six operating segments, which are aggregated into three reportable segments: Global Industrial Packaging; Paper Packaging & Services; and Land Management.
As used in this Form 10-K, the terms “Greif,” the “Company,” “we,” “us,” and “our” refer to Greif, Inc. and its subsidiaries.
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. (e) Available Information We maintain a website at www.greif.com. We file reports with the United States Securities and Exchange Commission (“SEC”).
(e) Available Information We maintain a website at www.greif.com. We file reports with the United States Securities and Exchange Commission (“SEC”).
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. The health and safety of our employees is our first and foremost priority, and we have established safety policies, programs, procedures, and training for our manufacturing operations.
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.
To promote a continuous focus on safety, we have safety committees that consist of employees and management at all our facilities, and we conduct safety meetings before the start of a shift to create a safety mindset that everyone is a safety leader regardless of their position, so that our safety culture is understood and practiced every day.
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 subject to extensive federal, state, local, and international laws, regulations, rules and ordinances relating to occupational health and safety, and our safety programs include measures required for compliance with these government laws and regulations.
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.
Removed
As of October 31, 2022, we owned approximately 175,000 acres of timber properties in the southeastern United States.
Added
See subsection (g) of this Item 1, Recent Events - Proposed Acquisition of Ipackchem, for information concerning our planned acquisition of Ipackchem Group SAS (“Ipackchem”), a global market leader in the production of high performance plastic packaging, including premium barrier and non-barrier jerrycans and small plastic containers, which was announced on October 31, 2023.
Removed
We also utilize a global safety scorecard with standardized safety metrics within each business unit to help ensure that we are evaluating safety similarly across all of or our operations globally.
Added
Unless expressly identified herein, information in this Form 10-K does not reflect our proposed acquisition of Ipackchem or its business operations, products, services or financial results. (b) Financial Information about Segments We operate in six operating segments, which are aggregated into three reportable segments: Global Industrial Packaging; Paper Packaging & Services; and Land Management.
Removed
Recent Events On December 15, 2022, we completed our previously announced acquisition of Lee Container Corporation, Inc., an industry-leading manufacturer of high-performance barrier and conventional blow molded containers, primarily serving customers in the agrochemical, other specialty chemical, oil and lubricant and pet care segments.
Added
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 also produce and sell bulk and specialty partitions made from both containerboard and uncoated recycled board.
Added
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 and other specialty products.
Added
We do not anticipate any material capital expenditures related to environmental control in 2024.
Added
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.
Added
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.
Added
Our efforts to continue 6 Table of Contents to grow our global diversity, equity and inclusion programs and to increase diversity within our Company is a top organizational priority. Talent Development Attracting, developing and retaining talented employees is an integral aspect of our human capital strategy and critical to our success.
Added
(g) Recent Events - Proposed Acquisition of Ipackchem On November 17, 2023, we entered into a definitive sale and purchase agreement (the “SPA”) with the owners of the parent company of Ipackchem pursuant to which we are to acquire Ipackchem for a purchase price valued at $538.0 million, subject to certain adjustments.
Added
The acquisition is subject to the satisfaction or waiver of certain conditions, including, among other matters, receipt of certain government and regulatory approvals in France, South Africa and Brazil, as well as Ipackchem’s disposition of certain immaterial assets.
Added
The SPA may be terminated, and the acquisition may be abandoned at any time prior to the closing, as follows: (i) by mutual written agreement of us and Ipackchem’s parent; (ii) by either us or Ipackchem’s parent if the conditions set forth in the SPA have not been fulfilled on or before October 31, 2024 (subject to a 20 day extension option by either party); (iii) by Ipackchem’s parent if we fail to comply with our obligation to make certain closing date deliveries or 7 Table of Contents by us if Ipackchem’s parent fails to comply with its obligation to make certain closing date deliveries; and (iv) by us if Ipackchem’s disposition of certain immaterial assets is not completed within six or nine months after October 31, 2023.
Added
Ipackchem is a global market leader in the production of high performance plastic packaging, including premium barrier and non-barrier jerrycans and small plastic containers. Ipackchem specializes in crop protection, specialty chemicals and pharmaceutical industries, operating out of 12 facilities across nine countries. We plan to use our existing credit facilities to finance our proposed acquisition of Ipackchem.
Added
See Item 7 of this Form 10-K, Liquidity and Capital Resources – Financial Obligations – Borrowing Arrangements, for information concerning our existing credit facilities. However, the receipt of the financing described herein or any other financing is not a condition to the closing of the proposed acquisition.
Added
Our proposed acquisition of Ipackchem is subject to certain risks and uncertainties, including the following: the ability to successfully complete the acquisition of Ipackchem on a timely basis, including the receipt of required regulatory approvals and Ipackchem’s disposition of certain immaterial assets; the occurrence of any event, change or other circumstance that could give rise to the termination of the transaction; the outcome of any legal proceedings that may be instituted against the parties and others related to the transaction or the acquisition of Ipackchem; the satisfaction of certain conditions to the completion of the transaction or the acquisition of Ipackchem; if the acquisition of Ipackchem is completed, the ability to retain the acquired businesses’ customers and employees, the ability to successfully integrate the acquired businesses into our operations, and the ability to achieve the expected synergies as well as accretion in margins, earnings or cash flow; competitive pressures in our various lines of business; the risk of non-renewal or a default under one or more key customer or supplier arrangements or changes to the terms of or level of purchases under those arrangements; uncertainties with respect to U.S. and international tax or trade laws; the effects of any investigation or action by any regulatory authority; and changes in foreign currency rates and the cost of commodities.
Added
See Item 1A of this Form 10-K for a discussion of other significant risks and uncertainties that could cause our actual results to differ materially from those projected.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

57 edited+13 added−36 removed103 unchanged
Biggest changeSanctions 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.
Biggest changeIn 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.
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.
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.
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.
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.
In addition, some of our products are made from raw materials that are subject to pronounced and at times, rapid price fluctuations, such as steel, which is used in the manufacture of steel drums and containers, old corrugated containers ("OCC"), which impacts our paper products, and oil, which in turn affects the price of resin for plastic drums and containers.
In addition, some of our products are made from raw materials that are subject to pronounced and at times, rapid price fluctuations, such as steel, which is used in the manufacture of steel drums and containers, old corrugated containers (“OCC”), which impacts our paper products, and oil, which in turn affects the price of resin for plastic drums and containers.
Governmental inquiries or lawsuits 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.
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.
There is continuing concern from members of the scientific community and the general public 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.
There is continuing concern from members of the scientific community and the general public 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.
As a result, changes in industry demands (including any resulting industry over-capacity) and increased new capacity for production of industrial packaging products by competitors, may cause substantial price competition and, in turn, we may not 10 Table of Contents 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.
As a result, changes in industry demands (including any resulting industry over-capacity) and increased new capacity for production of industrial packaging 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.
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 Depends on the Uninterrupted Operations of our Facilities, Systems and Business Functions, Including our Information Technology ("IT") and Other Business Systems.
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 Depends on the Uninterrupted Operations of our Facilities, Systems and Business Functions, Including our Information Technology (“IT”) and Other Business Systems.
A 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.
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.
Legislation/Regulation Related to Environmental and Health and Safety Matters and Corporate Social Responsibility Could Negatively Impact our Operations and Financial Performance. We must comply with extensive laws, rules and regulations in the United States and in each of the countries where we conduct business regarding environmental matters, such as air, soil and water quality and waste disposal.
Legislation/Regulation Related to Environmental and Health and Safety Matters Could Negatively Impact our Operations and Financial Performance. We must comply with extensive laws, rules and regulations in the United States and in each of the countries where we conduct business regarding environmental matters, such as air, soil and water quality and waste disposal.
Our Business may be Adversely Impacted by Work Stoppages and Other Labor Relations Matters. We are subject to the risk of work stoppages and other labor relations matters, with approximately 37% of our employees around the world represented by unions.
Our Business may be Adversely Impacted by Work Stoppages and Other Labor Relations Matters. We are subject to the risk of work stoppages and other labor relations matters, with approximately 27% of our employees around the world represented by unions.
Because we supply a cross section of industries, such as chemicals, lubricants, films, paints and pigments, food and 7 Table of Contents beverage, personal care, fragrances, petroleum, industrial coatings, carpeting, agriculture, 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.
Because we supply a cross section of industries, such as 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.
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. Raw Material, Price Fluctuations, Global Supply Chain Disruptions and Increased Inflation may Adversely Impact our Results of Operations.
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. Raw Material Shortages, Price Fluctuations, Global Supply Chain Disruptions and High Inflation may Adversely Impact our Results of Operations.
Failure to achieve or delays in achieving projected levels of efficiencies and cost savings from such measures, or unanticipated 12 Table of Contents 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.
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.
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.
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 13 Table of Contents derived from the manufacturing activities conducted at that property, while remaining obligated for any financial obligations related to the property.
Management of global operations is extremely 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 Russia and Eastern and Western Europe.
Management of global operations is extremely complex, and our operations outside the United States are 8 Table of Contents 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 Russia and Eastern and Western Europe.
If it is concluded that our estimates are 13 Table of Contents 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.
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.
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.
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.
These laws, rules and regulations, as well as investigations and resulting claims by individuals and other businesses, 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.
These laws, rules and regulations, as well as investigations and resulting claims by individuals 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.
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 16 Table of Contents investment of capital.
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.
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.
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. 17 Table of Contents
Our Global Operations Subject us to Political Risks, Instability and Currency Exchange that Could Adversely Affect our Results of Operations. We are a global company with operations in over 35 countries with approximately 38% of our fiscal 2022 sales derived from non-U.S. operations.
Our Global Operations Subject us to Political Risks, Instability and Currency Exchange that Could Adversely Affect our Results of Operations. We are a global company with operations in over 35 countries with approximately 36% of our fiscal 2023 sales derived from non-U.S. operations.
The overall demand and prices for our products and services could decline as a result of a large number of factors outside our control, including an economic recession, increased labor costs, availability of and increased cost of energy, specifically in Europe, the COVID-19 global pandemic 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.
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.
For example, Directive 2004/35/EC concerns obligations to remedy damages to the environment, which could require us to remediate contamination 17 Table of Contents identified at sites we own or use.
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.
The principal raw materials used in the manufacture of our products are steel, resin, pulpwood, and recycled pulp from OCC and recycled coated and uncoated boxboard, containerboard and used industrial packaging for reconditioning, which we purchase or otherwise acquire in highly competitive, price sensitive markets. These raw materials have historically exhibited price and demand cyclicality.
The principal raw materials used in the manufacture of our products are steel, resin, pulpwood, recycled pulp from OCC and 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.
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.
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, 14 Table of Contents specifically in the European Union (“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.
Foreign, federal, state and local regulatory and legislative bodies, such as the Security and Exchange Commission have 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.
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.
With the volatility in the current global economic climate, inflation and geopolitical events around the world, including the Russian invasion of Ukraine, and the lingering impact of COVID-19 pandemic, it is difficult for us to predict the complete impact of the forgoing matters on our business and results of operations.
With the volatility in the current global economic climate, inflation and geopolitical events around the world, including the Russian invasion of Ukraine and the Israel-Hamas conflict, it is difficult for us to predict the complete impact of the forgoing matters on our business and results of operations.
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 difficulty in forecasting revenues and operating results may result in volatility in the market price of our common stock. 9 Table of Contents 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.
Our Business is Sensitive to Changes in Industry Demands and Customer Preferences. 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 inflationary pressures, causing competitive pricing for those products.
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 inflationary pressures, causing competitive pricing for those products.
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 the confidentiality, availability and integrity of our data.
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.
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, 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.
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.
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.
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. 10 Table of Contents Our Business is Sensitive to Changes in Industry Demands and Customer Preferences.
In the U.S., Europe and other countries where we operate, there is heightened governmental and regulatory scrutiny on PFAS and contamination of soil, air and water, specifically in drinking water.
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.
At October 31, 2022, the carrying value of our goodwill was $1,464.5 million. 15 Table of Contents We may be required to record future impairments of our long-lived assets as we continue to restructure our business.
At October 31, 2023, the carrying value of our goodwill was $1,693.0 million. We may be required to record future impairments of our long-lived assets as we continue to restructure our business.
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.
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. 12 Table of Contents 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 addition, the imposition of new or increased sanctions, tariffs, quotas, exchange or price controls, trade barriers or similar restrictions resulting from the Russian invasion of Ukraine could negatively impact our business and operations. In response to the Russian invasion of Ukraine, we suspended all outside investments in Russia starting in early March 2022.
In addition, the imposition of new or increased sanctions, tariffs, quotas, exchange or price controls, trade barriers or similar restrictions resulting from the Russian invasion of Ukraine could negatively impact our business and operations.
Despite the actions we have undertaken to minimize the impacts, there can be no assurances that unforeseen future events in the global supply chain, and our ability to pass on inflationary costs on to our customers could have a material adverse effect on our business, financial condition and results of operations.
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 inflationary costs on to our customers could have a material adverse effect on our business, financial condition and results of operations.
Despite our security measures, our IT systems and infrastructure may be vulnerable to computer viruses, cyber-attacks, security breaches caused by employee error or malfeasance or other disruptions, and heightened focus since the beginning of the Russian invasion of Ukraine.
Despite our security measures, our IT systems and infrastructure may be vulnerable to computer viruses, cyber-attacks, security breaches caused by employee error or malfeasance or other disruptions, and heightened focus since the beginning of the Russian invasion of Ukraine. Any such threat could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen.
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. To date, we have seen no material impact on our business or operations from these threats.
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.
Energy and Transportation Price Fluctuations and Shortages may Adversely Impact our Manufacturing Operations and Costs. The cost of producing our products is sensitive to the price of energy, including its impact on transport costs.
The cost of producing our products is sensitive to the price of energy, including its impact on transport costs.
However, we cannot ensure that our security efforts will prevent unauthorized access or loss of functionality to our or our third-party providers' systems.
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.
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.
Further, we may experience challenges in forecasting revenues and operating results due to these global economic conditions.
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.
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.
We may Encounter Difficulties or Liabilities Arising from Acquisitions or Divestitures. 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 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.
There can be no assurance that we will be able to recoup any past or future increases in the cost of energy and transportation. Risks Related to our Operations We may not Successfully Implement our Business Strategies, Including Achieving our Growth Objectives.
There can be no assurance that we will be able to recoup any past or future increases in the cost of energy and transportation. 11 Table of Contents Risks Related to our Operations We may Encounter Difficulties or Liabilities Arising from Acquisitions or Divestitures.
We have long-term supply contracts in place for obtaining a portion of our principal raw materials. The disruptions to the global economy starting in 2020 and continuing throughout 2022, which were intensified by the Russian invasion of Ukraine, have impeded global supply chains in some regions in which we operate more than others, resulting in longer lead times.
The disruptions to the global economy starting in 2020 and continuing throughout 2023, which were intensified by the Russian invasion of Ukraine, have impeded global supply chains in some regions in which we operate more than others, resulting in longer lead times. Energy and Transportation Price Fluctuations and Shortages may Adversely Impact our Manufacturing Operations and Costs.
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. The COVID-19 Pandemic Could Continue to Impact Any Combination of our Business, Financial Condition, Results of Operations and Cash Flows.
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. Risks Related to Industry Conditions The Continuing Consolidation of our Customer Base and Suppliers may Intensify Pricing Pressure.
Risks Related to Industry Conditions The Continuing Consolidation of our Customer Base and Suppliers may Intensify Pricing Pressure. 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.
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.
Furthermore, we may decide in the future to cease operations in Russia, in which case the sale or other disposition of our Russian operations would result in an impairment charge, as we would not likely generate a fair market return on those assets.
Furthermore, 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, we manufacture certain component parts for our rigid industrial packaging products and those of some of our competitors. Some of these materials and component parts have been, and in the future may be, in short supply.
Some of these materials and component parts have been, and in the future may be, in short supply.
In addition, per- and polyfluoroalkyl substances (“PFAS”) are a group of manufactured chemicals used in consumer and industrial products with properties that resist oil, water, temperature, chemicals and fire. The strength of these PFAS compounds also means that they do not easily degrade and have been shown to accumulate overtime in the environment.
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 16 Table of Contents over time in the environment.
With the global economic uncertainty surrounding inflationary pressures, the economic slowdown, the Russian invasion of Ukraine, the COVID-19 pandemic, supply chain disruptions and transportation delays, we may continue to incur significant raw material prices increases in the future which would likely have an adverse effect on our operating margins.
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.
However, there can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge. Full Realization of our Deferred Tax Assets may be Affected by a Number of Factors.
However, there can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge. We have a Significant Amount of Goodwill and Long-lived Assets Which, if Impaired in the Future, Would Adversely Impact our Results of Operations.
If such legislation or regulations are enacted, we could incur increased energy, environmental and other costs and capital expenditures to comply with the limitations. Failure to comply with these regulations could result in fines to our Company and could affect our business, financial condition, results of operations and cash flows.
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.
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 increased pricing pressures from our customers. The consolidation of our largest suppliers has resulted in limited sources of supply and increased cost pressures from our suppliers.
This consolidation has increased the concentration of our largest customers, resulting in, in some cases, 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 such threat 14 Table of Contents could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. A security breach of our computer systems could interrupt or damage our operations or harm our reputation, or both.
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.
Removed
In addition, we have not withdrawn cash or earnings from Russia since the invasion began, but we are in the process to do so in compliance with all applicable laws.
Added
The length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable.
Removed
These risks include the following: • political, social, economic and labor instability • war, invasion, civil disturbance or acts of terrorism; • taking of property by nationalization or expropriation without fair compensation; • changes in government policies and regulations and enforcement thereof, including selectivity or discrimination in the enforcement thereof; • loss or non-renewal of treaties or similar agreements with foreign tax authorities; • difficulties in enforcement of contractual obligations; • difficulties withdrawing or limitations with respect to accessing cash or earnings from our international subsidiaries and the conversion of currencies into U.S. dollars, including the remittance of dividends and other payments by our international subsidiaries; • imposition or increase of withholding and other taxes on income remittances and other payments by international subsidiaries; • hyperinflation, currency devaluation or defaults in certain countries; 8 Table of Contents • impositions or increase of investment and other restrictions or requirements by non-U.S. governments; • national and regional labor strikes, whether legal or illegal and other labor or social actions; • restrictive governmental trade policies, customs, tariffs, trade-wars, international boycotts, sanctions, import/export and other trade compliance regulations; and • financial uncertainties in our major international markets.
Added
Although we have been able to distribute some earnings from our Russian operations in compliance with all applicable laws, access to cash and earnings in Russia remains limited.
Removed
The global impact from the COVID-19 pandemic on our business depends on future developments which are uncertain, such as the duration of the pandemic, the severity and continued transmission of the virus, the emergence of new variant strains and the availability and effectiveness of vaccines in the regions in which we operate.
Added
These risks, which can vary substantially by country, may include economic or political instability, geopolitical events (such as the Russian invasion of Ukraine, the Israel-Hamas conflict and increasing tensions between China and Taiwan), 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.
Removed
The initial impact from the COVID-19 pandemic to our business has stabilized, but we continue to experience operational disruptions including, supply chain bottlenecks, increased labor costs and transportation challenges, in addition to other impacts not currently known.
Added
Moreover, we anticipate that the lower customer demand patterns that we experienced throughout fiscal year 2023 will continue on an overall basis through 2024, 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.
Removed
With the likelihood of new variants that continue the spread of the virus, governments may seek to re-impose business shut downs and various operational restrictions, such as restricting, for example, the movement of our employees and product within locked downed 9 Table of Contents regions within China, which could further impact our business, our customers, their end markets, and our suppliers.
Added
In addition, disruptions within our customer’ 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 see to offset the impacts of these pressures by focusing on quality and customer service.
Removed
To attempt to mitigate the financial risks directly related to the COVID-19 pandemic, we have developed and implemented operational contingency plans that we believe will help us be prepared to continue supplying our products and services to our customers.
Added
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, we manufacture certain component parts for our rigid industrial packaging products and those of some of our competitors.
Removed
As a result, depending on the region in which we operate, the COVID-19 pandemic may continue to have a negative impact on our financial condition, results of operations and cash flows and, at this time, we cannot reasonably estimate the full impact of the COVID-19 pandemic.
Added
Many of these regulations are complex and their interpretation, application and enforcement are often uncertain.
Removed
However, we have not recently experienced any significant difficulty in obtaining our principal raw materials or component parts.
Added
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.
Removed
We have taken steps to minimize the impact of these increased costs by working closely with our suppliers and customers.
Added
We will continue to monitor the status of the Pillar Two tax implementation in the jurisdictions in which we operate. Implementation of the Pillar Two tax by jurisdictions in different ways may cause increased complexities as to compliance and increased audit controversy with tax authorities over the application or interpretation of the applicable rules.
Removed
We are highly reliant on the trucking industry for the transportation of our products. The overall profitability of our operations may be negatively impacted by higher transportation costs as freight carriers raise prices to address the continued shortage of drivers and market tightness.
Added
For instance, it is anticipated that the Securities and Exchange Commission will issue a climate change disclosure rule in 2024, which, if implemented as proposed, would significantly expand climate-related disclosure obligations.
Removed
We may not be able to fully implement our build to last business strategy or realize, in whole or in part within the expected time frames, the anticipated benefits of our growth and other initiatives. Our various business strategies and initiatives are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control.
Added
The State of California has enacted legislation that will require large U.S. companies doing business in California to make broad-based climate-related 15 Table of Contents disclosures starting as early as 2026, and other states are also considering new climate change disclosure requirements. In addition, the European Union Corporate Sustainability Reporting Directive (“CSRD”) became effective in 2023.
Removed
In addition, we may incur certain costs to achieve efficiency improvements and growth in our business and we may not meet anticipated implementation timetables or stay within budgeted costs.

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Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeLocation Global Industrial Packaging Paper Packaging & Services Total Argentina 3 — 3 Belgium 2 — 2 Brazil 8 — 8 Canada 1 4 5 China 8 — 8 France 3 — 3 Germany 4 — 4 Hungary 1 — 1 Israel 1 — 1 Italy 3 — 3 Mexico 2 — 2 Netherlands 5 — 5 Poland 1 — 1 Portugal 1 — 1 Russia 9 — 9 Saudi Arabia 2 — 2 Singapore 1 — 1 Spain 3 — 3 Sweden 1 — 1 United Kingdom 2 — 2 United States 31 78 109 Totals 92 82 174 Classification Global Industrial Packaging Paper Packaging & Services Total Owned 60 47 107 Leased 32 35 67 Totals 92 82 174 We also own a substantial amount of timber properties.
Biggest changeLocation Global Industrial Packaging Paper Packaging & Services Total Argentina 3 — 3 Belgium 2 — 2 Brazil 8 — 8 Canada 2 4 6 China 8 — 8 France 3 — 3 Germany 4 — 4 Hungary 1 — 1 Israel 1 — 1 Italy 3 — 3 Mexico 2 — 2 Netherlands 5 — 5 Poland 1 — 1 Portugal 1 — 1 Russia 8 — 8 Saudi Arabia 2 — 2 Singapore 1 — 1 Spain 3 — 3 Sweden 1 — 1 United Kingdom 2 — 2 United States 42 73 115 Totals 103 77 180 Classification Global Industrial Packaging Paper Packaging & Services Total Owned 59 41 100 Leased 44 36 80 Totals 103 77 180 We also own a substantial amount of timber properties.
ITEM 2. PROPERTIES The following are our principal operating locations that are either leased or owned as of October 31, 2022. 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.
ITEM 2. PROPERTIES The following are our principal operating locations that are either leased or owned as of October 31, 2023. 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 timber properties consisted of approximately 175,000 acres in the southeastern United States as of October 31, 2022.
Our timber properties consisted of approximately 175,000 acres in the southeastern United States as of October 31, 2023.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+2 added−5 removed4 unchanged
Biggest changeDistrict Court, Eastern District of Wisconsin, seeking the Court’s approval of the Proposed CLCM Consent Decree. Under the Proposed CLCM Consent Decree, CLCM, without admitting any wrongdoing, has agreed to modify certain existing operational practices, install and operate specific environmental controls and pay civil penalties of approximately $1.6 million.
Biggest changeUnder the Proposed CLCM Consent Decree, CLCM, without admitting any wrongdoing, agreed to modify certain existing operational practices, install and operate specific environmental controls and pay civil penalties of approximately $1.6 million. On November 30, 2022, the U.S. EPA and the WDNR filed an action in the U.S.
In July 2017, the Wisconsin Department of Natural Resources (“WDNR”) issued Notices of Violation to us and Container Life Cycle Management LLC, our U.S. reconditioning joint venture ("CLCM") with respect to three reconditioning facilities in the 19 Table of Contents Milwaukee, Wisconsin area that are or were owned by CLCM regarding alleged violations of Wisconsin laws related to hazardous waste, air management and industrial storm water.
EPA”) and the Wisconsin Department of Natural Resources (“WDNR”) on a proposed consent decree (the “Proposed CLCM Consent Decree”) that would resolve various investigations and proceedings against CLCM with respect to three reconditioning facilities in the Milwaukee, Wisconsin area that are or were owned by CLCM regarding alleged violations of Wisconsin laws related to hazardous waste, air management and industrial storm water.
Removed
In November 2017, the United States Environmental Protection Agency (“U.S.
Added
As previously reported under Item 3 of our Annual Report on Form 10-K for the fiscal year ended October 31, 2022, in November 2022, Container Life Cycle Management LLC, our U.S. reconditioning joint venture (“CLCM”), reached agreement 19 Table of Contents with the United States Environmental Protection Agency (“U.S.
Removed
EPA”) issued a Notice of Violation to us and CLCM with respect to these same reconditioning facilities regarding alleged violations of the federal Resource Conservation and Recovery Act (“RCRA”), primarily related to the alleged unlawful storage and treatment of hazardous wastes without RCRA licenses and alleged violations of RCRA’s requirements related to hazardous waste determinations and hazardous waste activity notifications, and Wisconsin laws related to hazardous waste.
Added
District Court, Eastern District of Wisconsin (the “Court”), seeking the Court’s approval of the Proposed CLCM Consent Decree. On July 27, 2023, the Court approved the Proposed CLCM Consent Decree as presented. The civil penalties have been paid by CLCM.
Removed
In November 2017, the U.S. EPA issued Notices and Findings of Violations to CLCM with respect to two of these reconditioning facilities regarding alleged violations of the federal Clean Air Act, primarily related to air management, and Wisconsin laws related to air management. The U.S.
Removed
EPA and the WDNR have rescinded the Notices of Violations relating to us and have reached agreement with CLCM on a proposed consent decree that would resolve these investigations and proceedings against CLCM (the “Proposed CLCM Consent Decree”). On November 30, 2022, the U.S. EPA and the WDNR filed an action in the U.S.
Removed
The Proposed CLCM Consent Decree is not final and effective unless and until approved by the Court.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+1 added−5 removed2 unchanged
Biggest changeAs of October 31, 2022, 170,980 shares of Class B Common Stock had been repurchased under the OSR program. 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.
Biggest changeSee 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. 20 Table of Contents Performance Graph 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, 2018 and reinvestment of dividends for each subsequent year.
The payment of dividends and other restricted payments are subject to the condition that certain defaults 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.
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.
On June 23, 2022, we entered into a $75.0 million accelerated share repurchase agreement ("ASR") with Bank of America, N.A. for the repurchase shares of our Class A Common Stock.
On June 23, 2022, we entered into a $75.0 million accelerated share repurchase agreement (“ASR”) with Bank of America, N.A. for the repurchase of shares of our Class A Common Stock.
The annual dividends paid for the last two years are as follows: 2022 Dividends per Share – Class A $1.88; Class B $2.81 2021 Dividends per Share – Class A $1.78; Class B $2.66 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 annual dividends paid for the last two years are as follows: 2023 Dividends per Share – Class A $2.02; Class B $3.02 2022 Dividends per Share – Class A $1.88; Class B $2.81 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.
As of December 12, 2022, there were 328 stockholders of record of the Class A Common Stock and 58 stockholders of record of the Class B Common Stock. 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.
As of December 12, 2023, there were 312 stockholders of record of the Class A Common Stock and 53 stockholders of record of the Class B Common Stock. 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 graph does not purport to represent our value. 22 Table of Contents
The graph does not purport to represent our value. 21 Table of Contents
In addition, we plan to repurchase an aggregate of $75.0 million of shares of our Class A or Class B Common Stock, or any combination thereof, in open market purchases ("OSR program").
In addition, at that time we initiated a plan to repurchase an aggregate of $75.0 million of shares of our Class A or Class B Common Stock, or any combination thereof, in open market purchases (“OSR program”).
Under the ASR, on June 24, 2022, we made a payment of $75.0 million and received an initial delivery of approximately 80% of the expected share repurchases, or 1,021,451 shares of Class A Common Stock, with any remaining shares expected to be delivered by our second quarter 2023.
Under the ASR, on June 24, 2022, we made a payment of $75.0 million and received an initial delivery of approximately 80% of the expected share repurchases, or 1,021,451 shares of Class A Common Stock. On February 28, 2023, we received the remaining 94,259 shares of Class A Common Stock.
We began making repurchases of Class B Common Stock under the OSR program on September 9, 2022, and we may continue to make open market repurchases over the next 12 to 18 months under this program, all in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934.
We began making repurchases of Class B Common Stock under the OSR program on September 9, 2022 and repurchases of Class A Common Stock under the OSR program on March 16, 2023 in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934.
Removed
The ASR has been accounted for as a purchase of shares of Class A Common Stock and a forward purchase contract. The final number of shares of Class A Common Stock to be repurchased will be based on the volume-weighted average price of the shares of our Class A Common Stock during the term of the ASR less a discount.
Added
The OSR program was completed on May 26, 2023, with $25.0 million of shares of Class A Common Stock, or 406,343 shares, and $50.0 million of shares of Class B Common Stock, or 676,598 shares, being repurchased under the OSR program.
Removed
We have treated the shares of Class A Common Stock delivered as treasury shares as of the date the shares were physically delivered in computing the weighted average shares outstanding of Class A Common Stock for both basic and diluted earnings 20 Table of Contents per share.
Removed
The forward stock purchase contract was determined to be indexed to our own stock and met all of the applicable criteria for equity classification.
Removed
The timing of any such repurchases will depend on market conditions and will be made at our discretion. While we intend to repurchase up to $75.0 million of shares, we are not obligated to repurchase any dollar amount or number or class of shares and may suspend or discontinue repurchases at any time.
Removed
During the three months ended October 31, 2022, our repurchases of shares of our Class A and Class B Common Stock were as follows: Period Total Number of Shares of Class A Common Stock Purchased Average Price Paid per Share of Class A Common Stock* Total Number of Shares of Class B Common Stock Purchased Average Price Paid per Share of Class B Common Stock* Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value That May Yet be Purchased Under the Program August 1 to August 31, 2022 — $ — — $ — — $ 75,000,000 September 1 to September 30, 2022 — — 68,117 63.68 68,117 70,662,545 October 1 to October 31, 2022 — — 102,863 65.87 102,863 63,887,403 Total — — 170,980 64.99 170,980 *Average price paid per share reflects the weighted average purchase price paid for shares. 21 Table of Contents Performance Graph 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 Index and the Dow Jones United States Containers and Packaging Index ("DJUSCP") assuming $100 invested on October 31, 2017 and reinvestment of dividends for each subsequent year.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+27 added−40 removed34 unchanged
Biggest changeAccordingly, users of this financial information should not place undue reliance on the non-GAAP financial measures. 23 Table of Contents The following table sets forth the net sales, operating profit, EBITDA and Adjusted EBITDA for each of our reportable segments for 2022, 2021 and 2020: Year Ended October 31, (in millions) 2022 2021 2020 Net sales: Global Industrial Packaging $ 3,652.4 $ 3,316.7 $ 2,571.8 Paper Packaging & Services 2,675.1 2,218.4 1,916.9 Land Management 22.0 21.0 26.3 Total net sales $ 6,349.5 $ 5,556.1 $ 4,515.0 Operating profit: Global Industrial Packaging $ 313.7 $ 350.2 $ 225.4 Paper Packaging & Services 298.5 131.0 71.0 Land Management 9.0 104.0 8.5 Total operating profit $ 621.2 $ 585.2 $ 304.9 EBITDA: Global Industrial Packaging $ 383.5 $ 432.7 $ 307.0 Paper Packaging & Services 439.0 269.9 225.9 Land Management 11.8 107.3 13.0 Total EBITDA $ 834.3 $ 809.9 $ 545.9 Adjusted EBITDA: Global Industrial Packaging $ 458.2 $ 453.3 $ 324.3 Paper Packaging & Services 450.5 302.0 306.4 Land Management 8.8 8.9 11.9 Total Adjusted EBITDA $ 917.5 $ 764.2 $ 642.6 24 Table of Contents The following table sets forth EBITDA and Adjusted EBITDA, reconciled to net income and operating profit, for our consolidated results for 2022, 2021 and 2020: Year Ended October 31, (in millions) 2022 2021 2020 Net income $ 394.0 $ 413.2 $ 124.3 Plus: interest expense, net 61.2 92.7 115.8 Plus: debt extinguishment charges 25.4 — — Plus: income tax expense 137.1 69.6 63.3 Plus: depreciation, depletion and amortization expense 216.6 234.4 242.5 EBITDA $ 834.3 $ 809.9 $ 545.9 Net income $ 394.0 $ 413.2 $ 124.3 Plus: interest expense, net 61.2 92.7 115.8 Plus: debt extinguishment charges 25.4 — — Plus: income tax expense 137.1 69.6 63.3 Plus: non-cash pension settlement charges — 9.1 0.3 Plus: other expense, net 8.9 4.8 2.7 Plus: equity earnings of unconsolidated affiliates, net of tax (5.4) (4.2) (1.5) Operating profit 621.2 585.2 304.9 Less: other expense, net 8.9 4.8 2.7 Less: non-cash pension settlement charges — 9.1 0.3 Less: equity earnings of unconsolidated affiliates, net of tax (5.4) (4.2) (1.5) Plus: depreciation, depletion and amortization expense 216.6 234.4 242.5 EBITDA 834.3 809.9 545.9 Plus: restructuring charges 13.0 23.1 38.7 Plus: timberland gains, net — (95.7) — Plus: acquisition and integration related costs 8.7 9.1 17.0 Plus: non-cash asset impairment charges 71.0 8.9 18.5 Plus: non-cash pension settlement charges — 9.1 0.3 Plus: incremental COVID-19 costs, net — 3.3 2.6 Plus: (gain) loss on disposal of properties, plants, equipment, and businesses, net (9.5) (3.5) 19.6 Adjusted EBITDA $ 917.5 $ 764.2 $ 642.6 25 Table of Contents The following table sets forth EBITDA and Adjusted EBITDA for each of our reportable segments, reconciled to the operating profit for each reportable segment, for 2022, 2021 and 2020: Year Ended October 31, (in millions) 2022 2021 2020 Global Industrial Packaging Operating profit $ 313.7 $ 350.2 $ 225.4 Less: other expense, net 9.5 4.5 4.0 Less: non-cash pension settlement charges — 0.3 0.4 Less: equity earnings of unconsolidated affiliates, net of tax (5.4) (4.2) (1.5) Plus: depreciation and amortization expense 73.9 83.1 84.5 EBITDA 383.5 432.7 307.0 Plus: restructuring charges 9.1 17.1 28.8 Plus: acquisition and integration related costs 0.4 — — Plus: non-cash asset impairment charges 69.4 2.7 6.0 Plus: non-cash pension settlement charges — 0.3 0.4 Plus: incremental COVID-19 costs, net — 1.8 0.7 Plus: gain on disposal of properties, plants, equipment, and businesses, net (4.2) (1.3) (18.6) Adjusted EBITDA $ 458.2 $ 453.3 $ 324.3 Paper Packaging & Services Operating profit $ 298.5 $ 131.0 $ 71.0 Less: other (income) expense, net (0.6) 0.3 (1.3) Less: non-cash pension settlement charges (income) — 8.8 (0.1) Plus: depreciation and amortization expense 139.9 148.0 153.5 EBITDA 439.0 269.9 225.9 Plus: restructuring charges 3.9 5.9 9.9 Plus: acquisition and integration related costs 8.3 9.1 17.0 Plus: non-cash asset impairment charges 1.6 5.0 12.5 Plus: non-cash pension settlement charges (income) — 8.8 (0.1) Plus: incremental COVID-19 costs, net — 1.5 1.9 Plus: (gain) loss on disposal of properties, plants, equipment, and businesses, net (2.3) 1.8 39.3 Adjusted EBITDA $ 450.5 $ 302.0 $ 306.4 Land Management Operating profit $ 9.0 $ 104.0 $ 8.5 Plus: depreciation and depletion expense 2.8 3.3 4.5 EBITDA 11.8 107.3 13.0 Plus: restructuring charges — 0.1 — Plus: timberland gains, net — (95.7) — Plus: non-cash asset impairment charges — 1.2 — Plus: gain on disposal of properties, plants, equipment, and businesses, net (3.0) (4.0) (1.1) Adjusted EBITDA $ 8.8 $ 8.9 $ 11.9 26 Table of Contents Year 2022 Compared to Year 2021 Net Sales Net sales were $6,349.5 million for 2022 compared with $5,556.1 million for 2021.
Biggest changeAccordingly, users of this financial information should not place undue reliance on the non-GAAP financial measures. 22 Table of Contents The following table sets forth the net sales, operating profit, EBITDA and Adjusted EBITDA for each of our reportable segments for 2023, 2022 and 2021: Year Ended October 31, (in millions) 2023 2022 2021 Net sales: Global Industrial Packaging $ 2,936.8 $ 3,652.4 $ 3,316.7 Paper Packaging & Services 2,260.5 2,675.1 2,218.4 Land Management 21.3 22.0 21.0 Total net sales $ 5,218.6 $ 6,349.5 $ 5,556.1 Operating profit: Global Industrial Packaging $ 334.3 $ 313.7 $ 350.2 Paper Packaging & Services 264.1 298.5 131.0 Land Management 7.1 9.0 104.0 Total operating profit $ 605.5 $ 621.2 $ 585.2 EBITDA: Global Industrial Packaging $ 415.7 $ 383.5 $ 432.7 Paper Packaging & Services 398.8 439.0 269.9 Land Management 9.3 11.8 107.3 Total EBITDA $ 823.8 $ 834.3 $ 809.9 Adjusted EBITDA: Global Industrial Packaging $ 423.7 $ 458.2 $ 453.3 Paper Packaging & Services 386.2 450.5 302.0 Land Management 8.9 8.8 8.9 Total Adjusted EBITDA $ 818.8 $ 917.5 $ 764.2 23 Table of Contents The following table sets forth EBITDA and Adjusted EBITDA, reconciled to net income and operating profit, for our consolidated results for 2023, 2022 and 2021: Year Ended October 31, (in millions) 2023 2022 2021 Net income $ 379.1 $ 394.0 $ 413.2 Plus: interest expense, net 96.3 61.2 92.7 Plus: debt extinguishment charges — 25.4 — Plus: income tax expense 117.8 137.1 69.6 Plus: depreciation, depletion and amortization expense 230.6 216.6 234.4 EBITDA $ 823.8 $ 834.3 $ 809.9 Net income $ 379.1 $ 394.0 $ 413.2 Plus: interest expense, net 96.3 61.2 92.7 Plus: debt extinguishment charges — 25.4 — Plus: income tax expense 117.8 137.1 69.6 Plus: other expense, net 11.0 8.9 4.8 Plus: non-cash pension settlement charges 3.5 — 9.1 Plus: equity earnings of unconsolidated affiliates, net of tax (2.2) (5.4) (4.2) Operating profit 605.5 621.2 585.2 Less: other expense, net 11.0 8.9 4.8 Less: non-cash pension settlement charges 3.5 — 9.1 Less: equity earnings of unconsolidated affiliates, net of tax (2.2) (5.4) (4.2) Plus: depreciation, depletion and amortization expense 230.6 216.6 234.4 EBITDA 823.8 834.3 809.9 Plus: restructuring charges 18.7 13.0 23.1 Plus: timberland gains, net — — (95.7) Plus: acquisition and integration related costs 19.0 8.7 9.1 Plus: non-cash asset impairment charges 20.3 71.0 8.9 Plus: non-cash pension settlement charges 3.5 — 9.1 Plus: incremental COVID-19 costs, net — — 3.3 Plus: gain on disposal of properties, plants, equipment, and businesses, net (66.5) (9.5) (3.5) Adjusted EBITDA $ 818.8 $ 917.5 $ 764.2 24 Table of Contents The following table sets forth EBITDA and Adjusted EBITDA for each of our reportable segments, reconciled to the operating profit for each reportable segment, for 2023, 2022 and 2021: Year Ended October 31, (in millions) 2023 2022 2021 Global Industrial Packaging Operating profit $ 334.3 $ 313.7 $ 350.2 Less: other expense, net 12.6 9.5 4.5 Less: non-cash pension settlement charges 3.5 — 0.3 Less: equity earnings of unconsolidated affiliates, net of tax (2.2) (5.4) (4.2) Plus: depreciation and amortization expense 95.3 73.9 83.1 EBITDA 415.7 383.5 432.7 Plus: restructuring charges 4.2 9.1 17.1 Plus: acquisition and integration related costs 12.2 0.4 — Plus: non-cash asset impairment charges 1.9 69.4 2.7 Plus: non-cash pension settlement charges 3.5 — 0.3 Plus: incremental COVID-19 costs, net — — 1.8 Plus: gain on disposal of properties, plants, equipment, and businesses, net (13.8) (4.2) (1.3) Adjusted EBITDA $ 423.7 $ 458.2 $ 453.3 Paper Packaging & Services Operating profit $ 264.1 $ 298.5 $ 131.0 Less: other (income) expense, net (1.6) (0.6) 0.3 Less: non-cash pension settlement charges — — 8.8 Plus: depreciation and amortization expense 133.1 139.9 148.0 EBITDA 398.8 439.0 269.9 Plus: restructuring charges 14.5 3.9 5.9 Plus: acquisition and integration related costs 6.8 8.3 9.1 Plus: non-cash asset impairment charges 18.4 1.6 5.0 Plus: non-cash pension settlement charges — — 8.8 Plus: incremental COVID-19 costs, net — — 1.5 Plus: (gain) loss on disposal of properties, plants, equipment, and businesses, net (52.3) (2.3) 1.8 Adjusted EBITDA $ 386.2 $ 450.5 $ 302.0 Land Management Operating profit $ 7.1 $ 9.0 $ 104.0 Plus: depreciation and depletion expense 2.2 2.8 3.3 EBITDA 9.3 11.8 107.3 Plus: restructuring charges — — 0.1 Plus: timberland gains, net — — (95.7) Plus: non-cash asset impairment charges — — 1.2 Plus: gain on disposal of properties, plants, equipment, and businesses, net (0.4) (3.0) (4.0) Adjusted EBITDA $ 8.9 $ 8.8 $ 8.9 25 Table of Contents Year 2023 Compared to Year 2022 Net Sales Net sales were $5,218.6 million for 2023 compared with $6,349.5 million for 2022.
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 restructuring charges, plus timberland gains, net, plus acquisition and integration related costs, plus non-cash asset impairment charges, plus non-cash pension settlement charges, plus incremental COVID-19 costs, net, plus (gain) loss on disposal of properties, plants, equipment and businesses, net, for that 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 restructuring charges, plus timberland gains, net, plus acquisition and integration related costs, plus non-cash asset impairment charges, plus non-cash pension settlement (income) charges, plus incremental COVID-19 costs, net, plus (gain) loss on disposal of properties, plants, equipment and businesses, net, for that reportable segment.
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. Contingent Liabilities and Environmental Reserves Environmental reserves are estimates based on current remediation plans; actual liabilities could significantly differ from the reserve estimates.
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. Contingent Liabilities and Environmental Reserves Environmental reserves are estimates based on current remediation plans, and actual liabilities could significantly differ from the reserve estimates.
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 32 Table of Contents 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 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).
Segment Review Global Industrial Packaging Key factors influencing profitability in the Global Industrial Packaging reportable segment are: • Selling prices, product mix, customer demand and sales volumes; • Raw material costs, primarily steel, resin, containerboard and used industrial packaging for reconditioning; • Energy and transportation costs; • Benefits from executing the Greif Business System; • Restructuring charges; 27 Table of Contents • Acquisition of businesses and facilities; • Divestiture of businesses and facilities; and • Impact of foreign currency translation.
Segment Review Global Industrial Packaging Key factors influencing profitability in the Global Industrial Packaging reportable segment are: • Selling prices, product mix, customer demand and sales volumes; • Raw material costs, primarily steel, resin, containerboard and used industrial packaging for reconditioning; • Energy and transportation costs; • Benefits from executing the Greif Business System; • Restructuring charges; • Acquisition of businesses and facilities; 26 Table of Contents • Divestiture of businesses and facilities; and • Impact of foreign currency translation.
As of October 31, 2022 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. See Note 5 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for additional information regarding our financial obligations.
As of October 31, 2023, 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. See Note 5 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for additional information regarding our financial obligations.
Historical revenues and earnings may or may not be representative of future operating results due to various economic and other factors. See "Risk Factors" in Item 1A of this Form 10-K. 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.
Historical revenues and earnings may or may not be representative of future operating results due to various economic and other factors. See “Risk Factors” in Item 1A of this Form 10-K. 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.
Year 2021 Compared to Year 2020 Results of our fiscal year 2021 compared to our fiscal year 2020 are included in our Annual Report on Form 10-K for the year ended October 31, 2021, File No. 001-00566 (see Item 7 therein).
Year 2022 Compared to Year 2021 Results of our fiscal year 2022 compared to our fiscal year 2021 are included in our Annual Report on Form 10-K for the year ended October 31, 2022, File No. 001-00566 (see Item 7 therein).
RESULTS OF OPERATIONS 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").
RESULTS OF OPERATIONS 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”).
Receivables Facility 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 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.
Receivables Facility also contains events of default and covenants, which are substantially the same as the covenants under the 2022 Credit Agreement. As of October 31, 2022 we were in compliance with these covenants. Proceeds of the U.S. Receivables Facility are available for working capital and general corporate purposes.
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, 2023, we were in compliance with these covenants. Proceeds of the U.S. RFA are available for working capital and general corporate purposes.
Financial Instruments Interest Rate Derivatives As of October 31, 2022, we have various interest rate swaps with a total notional amount of $1,150.0 million, 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 2.50%, plus a spread.
Financial Instruments Interest Rate Derivatives As of October 31, 2023, we have various interest rate swaps with a total notional amount of $1,300.0 million, 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 2.62%.
On June 23, 2022, we entered into a $75.0 million accelerated share repurchase agreement ("ASR") with Bank of America, N.A. for the repurchase of shares of our Class A Common Stock.
On June 23, 2022, we entered into a $75.0 million accelerated share repurchase agreement (“ASR”) with Bank of America, N.A. for the repurchase of shares 32 Table of Contents of our Class A Common Stock.
The $96.4 million outstanding on the European RFA as of October 31, 2022 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, 2023, there was a $80.1 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.
The repayment of this facility 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.
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.
Interest is based on Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment, Euro Interbank Offer Rate ("EURIBOR") or a base rate that resets periodically plus, in each case, a calculated margin amount that is based on our leverage ratio.
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.
Other Liquidity Considerations Post-Retirement Benefit Plans We have no near-term post-retirement benefit plan funding obligations. We intend to make a post-retirement benefit plan contribution of $29.4 million during 2023, which we anticipate will consist of $24.2 million of employer contributions and $5.2 million of benefits paid directly by the employer.
Other Liquidity Considerations Post-Retirement Benefit Plans We have no near-term post-retirement benefit plan funding obligations. We intend to make a post-retirement benefit plan contribution of $21.9 million during 2024, which we anticipate will consist of $16.2 million of employer contributions and $5.7 million of benefits paid directly by the employer.
Financing Activities We paid cash dividends to stockholders of Greif, Inc. in the amount of $111.3 million and $105.8 million for the years ended October 31, 2022 and 2021, respectively. We paid dividends to non-controlling interests in the amount of $17.2 million and $7.8 million for the years ended October 31, 2022 and 2021, respectively.
Financing Activities We paid cash dividends to stockholders of Greif, Inc. in the amount of $116.5 million and $111.3 million for the years ended October 31, 2023 and 2022, respectively. We paid dividends to non-controlling interests in the amount of $14.2 million and $17.2 million for the years ended October 31, 2023 and 2022, respectively.
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, potential acquisitions of businesses and other liquidity needs for at least 12 months. 30 Table of Contents Cash Flow Year Ended October 31, (in millions) 2022 2021 Net cash provided by operating activities $ 657.5 $ 396.0 Net cash (used in) provided by investing activities (28.2) 46.8 Net cash used in financing activities (531.0) (422.9) Reclassification of cash to assets held for sale — 0.5 Effects of exchange rates on cash (75.8) (1.7) Net increase in cash and cash equivalents 22.5 18.7 Cash and cash equivalents at beginning of year 124.6 105.9 Cash and cash equivalents at end of year $ 147.1 $ 124.6 Operating Activities The $140.4 million decrease in accounts receivable to $749.1 million as of October 31, 2022 from $889.5 million as of October 31, 2021 was primarily due to decreases in net sales during the last fiscal quarter of 2022.
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, potential acquisitions of businesses and other liquidity needs for at least 12 months. 28 Table of Contents Cash Flow Year Ended October 31, (in millions) 2023 2022 Net cash provided by operating activities $ 649.5 $ 657.5 Net cash used in investing activities (670.2) (28.2) Net cash provided by (used in) financing activities 69.7 (531.0) Effects of exchange rates on cash (15.2) (75.8) Net increase in cash and cash equivalents 33.8 22.5 Cash and cash equivalents at beginning of year 147.1 124.6 Cash and cash equivalents at end of year $ 180.9 $ 147.1 Operating Activities The $89.7 million decrease in accounts receivable to $659.4 million as of October 31, 2023 from $749.1 million as of October 31, 2022 was primarily due to decreases in net sales.
We continue to actively monitor the impact and consequences of the invasion of Ukraine by Russia. As of October 31, 2022, our operations in Russia account for approximately 3 percent of our total sales, approximately 6 percent of our operating profit, and approximately 2 percent of our total assets.
We continue to actively monitor the impact and consequences of the Russian invasion of Ukraine. As of October 31, 2023, our operations in Russia account for approximately 4 percent of our net sales, approximately 9 percent of our operating profit and approximately 2 percent of our total assets.
LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are operating cash flows and borrowings under our senior secured credit facilities, proceeds from the senior notes we have issued 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.
LIQUIDITY AND CAPITAL RESOURCES 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.
International Trade Accounts Receivable Credit Facilities We have a €100.0 million ($99.6 million as of October 31, 2022) European Receivables Financing Agreement (the "European RFA that matures on April 24, 2023.
International Trade Accounts Receivable Credit Facilities We have a €100.0 million ($105.7 million as of October 31, 2023) European Receivables Financing Agreement (the “European RFA”) that matures on April 24, 2024.
As of October 31, 2022, 170,980 shares of Class B Common Stock had been repurchased under the OSR program. 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.
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.
Under the ASR, on June 24, 2022, we made a payment of $75.0 million and received an initial delivery of approximately 80% of the expected share repurchases, or 1,021,451 shares of Class A Common Stock, with any remaining shares expected to be delivered by our second quarter 2023.
Under the ASR, on June 24, 2022, we made a payment of $75.0 million and received an initial delivery of approximately 80% of the expected share repurchases, or 1,021,451 shares of Class A Common Stock. On February 28, 2023, we received the remaining 94,259 shares of Class A Common Stock.
We report the sale of timberland property in "timberland gains, net," 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.
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 interim condensed consolidated statements of income.
In addition, we plan to repurchase an aggregate of $75.0 million of shares of our Class A or Class B Common Stock, or any combination thereof, in open market purchases ("OSR program").
In addition, at that time we initiated a plan to repurchase an aggregate of $75.0 million of shares of our Class A or Class B Common Stock, or any combination thereof, in open market purchases (“OSR program”) (collectively, the “Stock Repurchase Program”).
During 2022, we paid down $189.4 million of long-term debt, net of proceeds. We paid $20.8 million of debt extinguishment charges and debt issuance costs related to our debt refinancing. During 2022, we paid $86.1 million for the share repurchase program.
During 2023, we borrowed $257.0 million of long-term debt, net of proceeds. During 2022, we paid down $189.4 million of long-term debt, net of proceeds and we paid $20.8 million of debt extinguishment charges and debt issuance costs related to our debt refinancing.
The $143.2 million decrease in accounts payable to $561.3 million as of October 31, 2022 from $704.5 million as of October 31, 2021 was primarily due to decreased raw material prices and timing of payable settlements. Investing Activities During 2022 and 2021, we invested $176.3 million and $140.7 million, respectively, of cash in capital expenditures.
The $63.5 million decrease in accounts payable to $497.8 million as of October 31, 2023 from $561.3 million as of October 31, 2022 was primarily due to decreased raw material prices and purchases. Investing Activities During 2023 and 2022, we invested $213.6 million and $176.3 million, respectively, of cash in capital expenditures.
Key factors influencing profitability in the Land Management reportable segment are: • Planned level of timber sales; • Selling prices and customer demand; • Gains on timberland sales; and • Gains on the disposal of development, surplus and HBU properties (“special use property”).
Key factors influencing profitability in the Land Management reportable segment are: • Planned level of timber sales; • Selling prices and customer demand; • Gains on timberland sales; and • Gains on the disposal of development, surplus and HBU properties (“special use property”). 27 Table of Contents Net sales were $21.3 million for 2023 compared with $22.0 million for 2022.
Adjusted EBITDA was $8.8 million and $8.9 million for 2022 and 2021, respectively. 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.
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.
The $95.9 million decrease in inventories to $403.3 million as of October 31, 2022 from $499.2 million as of October 31, 2021 was primarily due to decreases in raw material prices and decreased purchases during the last fiscal quarter of 2022, in line with decreased demand.
The $64.7 million decrease in inventories to $338.6 million as of October 31, 2023 from $403.3 million as of October 31, 2022 was primarily due to decreases in raw material prices and decreased purchases, in line with decreased demand.
Income tax expense for 2022 was $137.1 million on $525.7 million of pretax income and for 2021 was $69.6 million on $478.6 million of pretax income.
Income Tax Expense Income tax expense for 2023 was $117.8 million on $494.7 million of pretax income and for 2022 was $137.1 million on $525.7 million of pretax income.
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.
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.
We began making repurchases of Class B Common Stock under the OSR program on September 9, 2022, and we may continue to make open market repurchases over the next 12 to 18 months under this program, all in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934.
We began making repurchases of Class B Common Stock under the OSR program on September 9, 2022 and repurchases of Class A Common Stock under the OSR program on March 16, 2023 in accordance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934.
These derivatives are designated as cash flow hedges for accounting purposes and will mature between March 11, 2024 and July 15, 2029. We are actively monitoring the interest rate market and will execute new interest rate swaps as appropriate. Subsequent to October 31, 2022, we entered into $100.0 million of additional interest rate swaps maturing March 1, 2028.
These derivatives are designated as cash flow hedges for accounting purposes and will mature between March 11, 2024 and July 16, 2029. We are actively monitoring the interest rate market and may execute new interest rate swaps as appropriate.
Accordingly, we enter into various contracts that change in value as foreign exchange rates change to 33 Table of Contents protect the value of certain existing foreign currency assets and liabilities, commitments and anticipated foreign currency cash flows.
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. As of October 31, 2023 and 2022, we had outstanding foreign currency forward contracts in the notional amount of $66.0 million and $132.1 million, respectively.
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 did not utilize any Step 0 tests in 2022.
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).
As of October 31, 2022, we estimated that there were 18,800 acres in the United States of special use property, which we expect will be available for sale in the next four to six years.
Given these considerations, the characterization of land is not a static process, but requires an ongoing review and re-characterization as circumstances change. As of October 31, 2023, we estimated that there were 18,800 acres in the United States of special use property, which we expect will be available for sale in the next four to six years.
The following table summarizes the carrying amount of goodwill by reporting unit for the year ended October 31, 2022 and 2021: Goodwill Balance (in millions) October 31, 2022 October 31, 2021 Global Industrial Packaging North America $ 286.0 $ 286.0 Europe, Middle East and Africa 315.4 364.1 Asia Pacific 95.2 97.2 Paper Packaging & Services 767.9 768.1 Total $ 1,464.5 $ 1,515.4 *The Global Industrial Packaging: Latin America and Land Management reporting units have no goodwill balance at either reporting period.
The following table summarizes the carrying amount of goodwill by reporting unit for the year ended October 31, 2023 and 2022: Goodwill Balance (in millions) October 31, 2023 October 31, 2022 Global Industrial Packaging North America $ 461.6 $ 286.0 Europe, Middle East and Africa 330.0 315.4 Asia Pacific 96.0 95.2 Paper Packaging & Services 805.4 767.9 Total $ 1,693.0 $ 1,464.5 *The Global Industrial Packaging: Latin America and Land Management reporting units have no goodwill balance at either reporting period. 34 Table of Contents Recent Accounting Standards See Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for a detailed description of recently issued and newly adopted accounting standards.
The $167.5 million increase in operating profit was primarily due to the same factors that impacted gross profit, partially offset by higher SG&A expenses. Adjusted EBITDA was $450.5 million for 2022 compared with $302.0 million for 2021. The $148.5 million increase was due primarily to the same factors that impacted operating profit.
Adjusted EBITDA was $423.7 million for 2023 compared with $458.2 million for 2022. The $34.5 million decrease was primarily due to the same factors that impacted gross profit, partially offset by lower SG&A expenses.
The $8.5 million increase in gross profit was primarily due to the same factors that impacted net sales, partially offset by higher raw material, utility and transportation costs. Gross profit margin decreased to 19.0 percent in 2022 from 20.6 percent in 2021. Operating profit was $313.7 million for 2022 compared with $350.2 million for 2021.
Gross profit was $634.4 million for 2023 compared with $692.6 million for 2022. The $58.2 million decrease in gross profit was primarily due to the same factors that impacted net sales, largely offset by lower raw material, transportation and manufacturing costs. Gross profit margin increased to 21.6 percent in 2023 from 19.0 percent in 2022.
During 2021, we paid at maturity the €200.0 million Senior Notes due 2021 in full from the proceeds of the $225.0 million Incremental Term A-3 Loan. 31 Table of Contents Financial Obligations Borrowing Arrangements Long-term debt is summarized as follows: (in millions) October 31, 2022 October 31, 2021 2022 Credit Agreement - Term Loans $ 1,565.0 $ — 2019 Credit Agreement - Term Loans — 1,247.3 Senior Notes due 2027 — 495.9 Accounts receivable credit facilities 311.4 391.1 2022 Credit Agreement - Revolving Credit Facility 41.9 — 2019 Credit Agreement - Revolving Credit Facility — 50.5 Other debt 0.4 0.6 1,918.7 2,185.4 Less current portion 71.1 120.3 Less deferred financing costs 8.3 10.3 Long-term debt, net $ 1,839.3 $ 2,054.8 2022 Credit Agreement On March 1, 2022, we and certain of our U.S. subsidiaries entered into a second amended and restated senior secured credit agreement (the “2022 Credit Agreement”) with a syndicate of financial institutions.
During 2022, we paid $86.1 million for the Stock Repurchase Program. 29 Table of Contents Financial Obligations Borrowing Arrangements Long-term debt is summarized as follows: (in millions) October 31, 2023 October 31, 2022 2022 Credit Agreement - Term Loans $ 1,493.8 $ 1,565.0 2023 Credit Agreement - Term Loans 296.3 — Accounts receivable credit facilities 351.0 311.4 2022 Credit Agreement - Revolving Credit Facility 77.3 41.9 Other debt — 0.4 2,218.4 1,918.7 Less current portion 88.3 71.1 Less deferred financing costs 8.7 8.3 Long-term debt, net $ 2,121.4 $ 1,839.3 2022 Credit Agreement We and certain of our subsidiaries are parties to a senior secured credit agreement (the “2022 Credit Agreement”) with a syndicate of financial institutions.
Recent Accounting Standards See Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for a detailed description of recently issued and newly adopted accounting standards.
See Note 8 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for further information.
The $183.2 million increase in gross profit was primarily due to the same factors that impacted net sales, partially offset by higher raw material, transportation, labor, and utility costs. Gross profit margin increased to 21.8 percent in 2022 from 18.1 percent in 2021. Operating profit was $298.5 million for 2022 compared with $131.0 million for 2021.
The $82.0 million decrease in gross profit was primarily due to the same factors that impacted net sales, partially offset by lower old corrugated container and other raw material input costs, as well as lower transportation and labor costs. Gross profit margin increased to 22.2 percent in 2023 from 21.8 percent in 2022.
SG&A expenses were 9.2 percent of net sales for 2022 compared with 10.2 percent of net sales for 2021. Financial Measures Operating profit was $621.2 million for 2022 compared with $585.2 million for 2021. Net income was $394.0 million for 2022 compared with $413.2 million for 2021. Adjusted EBITDA was $917.5 million for 2022 compared with $764.2 million for 2021.
The $31.9 million decrease was primarily due to incentive compensation expense reduction. SG&A expenses were 10.5 percent of net sales for 2023 compared with 9.2 percent of net sales for 2022. Financial Measures Operating profit was $605.5 million for 2023 compared with $621.2 million for 2022. Net income was $379.1 million for 2023 compared with $394.0 million for 2022.
United States Trade Accounts Receivable Credit Facility We have a $300.0 million U.S. Receivables Facility, as defined in Note 5 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K, which matures on May 17, 2023. As of October 31, 2022, there was a $215.0 million outstanding balance under the U.S.
United States Trade Accounts Receivable Credit Facility We have a $300.0 million U.S. Receivables Financing Facility Agreement (the “U.S. RFA”) that matures on May 17, 2024. As of October 31, 2023, there was a $270.9 million outstanding balance under the U.S.
Net sales were $2,675.1 million for 2022 compared with $2,218.4 million for 2021. The $456.7 million increase was primarily due to higher average sale prices of containerboard and boxboard, partially offset by lower volumes. Gross profit was $584.5 million for 2022 compared with $401.3 million for 2021.
Net sales were $2,260.5 million for 2023 compared with $2,675.1 million for 2022. The $414.6 million decrease was primarily due to lower volumes and lower average selling prices due to lower published containerboard prices. Gross profit was $502.5 million for 2023 compared with $584.5 million for 2022.
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.
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. 33 Table of Contents The Global Industrial Packaging reportable segment consists of four 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.
We have cross currency interest rate swaps that synthetically swap $334.4 million of fixed rate debt to Euro denominated fixed rate debt. We receive a weighted average rate of 1.56%. These agreements are designated as either net investment hedges or cash flow hedges for accounting purposes and will mature between March 6, 2023 and October 5, 2026.
These agreements are designated as either net investment hedges or cash flow hedges for accounting purposes and will mature between March 2, 2024 and October 5, 2026. We are actively monitoring the cross currency interest rate swap market and may execute new cross currency interest rate swaps as appropriate.
For all reporting units with goodwill balances, we proceeded directly to the quantitative impairment testing and the fair value exceeded carrying value by at least 29%, so no impairment was deemed to exist. Discount rates and revenue growth rates are the assumptions that are most sensitive and susceptible to change as they require significant management judgment.
We did not utilize any Step 0 tests in 2023. For all reporting units with goodwill balances, we proceeded directly to the quantitative impairment testing and the fair value exceeded carrying value by at least 31%, so no impairment was deemed to exist.
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.
Subsequent to October 31, 2023, we entered into additional interest rate swaps with a total notional amount of $250.0 million maturing November 3, 2028, in which we receive variable rate interest payments based on SOFR and in return are obligated to pay interest at a weighted average fixed interest rate of 4.20%. 31 Table of Contents 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.
These investments exclude $6.7 million and $6.6 million of cash purchases and investments in timber properties during 2022 and 2021, respectively. During 2022, we received $139.2 million of cash from sale of businesses, primarily from the FPS Divestiture.
These investments exclude $6.0 million and $6.7 million of cash purchases and investments in timber properties during 2023 and 2022, respectively. During 2023, we paid $542.4 million for purchases of businesses, net of cash acquired, primarily for the acquisition of Lee Container Corporate, Inc.
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.
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, 2023, we had $722.7 million of available borrowing capacity under the $800.0 million secured revolving credit facility.
Net sales were $3,652.4 million for 2022 compared with $3,316.7 million for 2021. The $335.7 million increase in net sales was primarily due to higher average sale prices, partially offset by lower volumes, foreign currency translation and the impact to net sales resulting from the FPS Divestiture. Gross profit was $692.6 million for 2022 compared with $684.1 million for 2021.
Net sales were $2,936.8 million for 2023 compared with $3,652.4 million for 2022. The $715.6 million decrease in net sales was primarily due to lower volumes, lower average selling prices as a result of contractual price adjustment mechanisms, the $148.8 million impact to net sales resulting from the FPS Divestiture and negative foreign currency translation impacts.
The $36.5 million decrease was primarily due to the $62.4 million non-cash impairment charge related to the FPS Divestiture, partially offset by the same factors that increased gross profit and a reduction in SG&A expenses. Adjusted EBITDA was $458.2 million for 2022 compared with $453.3 million for 2021.
The $20.6 million increase was primarily due to the $62.4 million non-cash impairment charge during the first quarter of 2022 related to the FPS Divestiture, a $9.8 million gain recognized on our previously held minority ownership interest in Centurion and lower SG&A expenses, partially offset by the same factors that impacted gross profit.
As of October 31, 2022 and 2021, we had outstanding foreign currency forward contracts in the notional amount of $132.1 million and $81.8 million, respectively. Cross Currency Swaps We have operations and investments in various international locations and are subject to risks associated with changing foreign exchange rates.
Cross Currency Swaps 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 $319.3 million of fixed rate debt to Euro denominated fixed rate debt. We receive a weighted average rate of 1.39%.
The respective reasons for changes in gross profit for each reportable segment are described below in the "Segment Review." Gross profit margin was 20.2 percent for 2022 compared to 19.7 percent for 2021. Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses increased $15.1 million to $581.0 million for 2022 from $565.9 million for 2021.
See the “Segment Review” below for additional information on gross profit by reportable segment. Gross profit margin was 22.0 percent for 2023 compared to 20.2 percent for 2022. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses were $549.1 million for 2023 compared with $581.0 million for 2022.
The $67.5 million increase in income tax expense for 2022 was primarily attributable to an increase in pre-tax earnings in 2022 and a net $58.6 million of book losses that were recorded as a result of the disposal of the Flexible Products and other businesses for which limited tax benefits were available.
These reductions to income tax expense were offset by a decrease in tax benefit of uncertain tax position of $6.9 million, primarily driven by lapses in the statute of limitations. Additionally, in 2022 we recognized a net book loss of $58.6 million related to the FPS Divestiture and disposal of other businesses for which limited tax benefits were available.
Land Management As of October 31, 2022, our Land Management reportable segment consisted of approximately 175,000 acres of timber properties in the southeastern United States.
Adjusted EBITDA was $386.2 million for 2023 compared with $450.5 million for 2022. The $64.3 million decrease was primarily due to the same factors that impacted gross profit, partially offset by lower SG&A expenses. Land Management As of October 31, 2023, our Land Management reportable segment consisted of approximately 175,000 acres of timber properties in the southeastern United States.
The price of old corrugated containers will remain stable into the second quarter, but then start to increase throughout the year. We anticipate resin prices and the prices of other direct materials, as well as prices for transportation, labor, and utilities, to remain relatively stable through the year.
Although we have seen some increase in demand for our containerboard products in the U.S. the past two months, we do not see that as an overall inflection point. We expect the prices for steel, old corrugated containers, resin and other direct materials, as well as prices for transportation, labor and utilities, to remain relatively stable through the year.
The $793.4 million increase was primarily due to higher average selling prices across the reportable segments, partially offset by lower volumes, foreign currency translation, and the impact to net sales resulting from the divestiture of the Flexibles Product & Services business in the second quarter of 2022 (the "FPS Divestiture").
The $1,130.9 million decrease was primarily due to lower average selling prices and lower volumes across the Global Industrial Packaging segment and the Paper Packaging & Services segment and the $148.8 million impact to net sales resulting from the sale of our approximately 50% equity interest in the Flexible Products & Services business in the second quarter of 2022 (the “FPS Divestiture”).
Actual results could differ materially using different estimates and assumptions, or if conditions are significantly different in the future.
Actual results could differ materially using different estimates and assumptions, or if conditions are significantly different in the future. Business Combinations 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.
See the "Segment Review" below for additional information on net sales by reportable segment during 2021. Gross Profit Gross profit increased $192.4 million to $1,285.4 million for 2022 from $1,093.0 million for 2021.
See the “Segment Review” below for additional information on net sales by reportable segment. Gross Profit Gross profit was $1,146.1 million for 2023 compared with $1,285.4 million for 2022. The $139.3 million decrease was primarily due to the same factors that impacted net sales, partially offset by lower raw material, transportation and manufacturing costs.
Removed
The respective reasons for the improvement or decline in Adjusted EBITDA, as the case may be, for each reportable segment are described below in the "Segment Review." Trends We anticipate that overall customer demand for our Global Industrial Packaging products will continue to weaken through the first quarter and remain soft through the second quarter due to the unsettled macroeconomic environment.
Added
Adjusted EBITDA was $818.8 million for 2023 compared with $917.5 million for 2022. The reasons for changes in operating profit and Adjusted EBITDA for each reportable segment are described below in the “Segment Review.” Trends We anticipate that the lower customer demand patterns that we experienced throughout the 2023 fiscal year will continue into the 2024 fiscal year.
Removed
In addition, we expect steel prices to continue to decline in Europe and North America through the first quarter, which will continue to compress gross profit margins in the Global Industrial Packaging business segment through the second quarter.
Added
The foregoing discussion of 2024 trends in our businesses does not consider the impact of our proposed acquisition of Ipackchem. See Item 1(g) of this Form 10-K, Recent Events - Proposed Acquisition of Ipackchem, for information concerning this proposed acquisition.
Removed
During the second half of the year, we expect customer demand to improve and higher priced steel inventory to work through our system, which in turn will improve gross profit margins.
Added
Operating profit was $334.3 million for 2023 compared with $313.7 million for 2022.
Removed
In our Paper Packaging and Services business segment, we anticipate that weakness in customer demand will continue through the first quarter and the beginning of the second quarter and then start to sequentially improve, particularly over the second half of the year.
Added
Operating profit was $264.1 million for 2023 compared with $298.5 million for 2022.
Removed
The $4.9 million increase was primarily due to the same factors that impacted gross profit.
Added
The $34.4 million decrease in operating profit was primarily due to the same factors that impacted gross profit, partially offset by the $54.3 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 lower SG&A expenses.
Removed
Net sales increased to $22.0 million for 2022 compared with $21.0 million for 2021. 28 Table of Contents Operating profit decreased to $9.0 million for 2022 from $104.0 million for 2021. During 2021, we completed the sale of approximately 69,200 acres of timberlands in southwest Alabama (the "2021 Timberland Sale") which resulted in timberland gains of $95.7 million.
Added
Gross profit was $9.2 million for 2023 compared with $8.3 million for 2022. Operating profit was $7.1 million for 2023 compared with $9.0 million for 2022. Adjusted EBITDA was $8.9 million for 2023 compared with $8.8 million for 2022.
Removed
Given these considerations, the characterization of land is not a static process, but requires an ongoing review and re-characterization as circumstances change. Income Tax Expense We had operations in over 35 countries during 2022. Operations outside the United States are subject to additional risks that may not exist, or be as significant, within the United States.
Added
The $19.3 million decrease in income tax expense for 2023 was primarily attributable to a decrease in pre-tax earnings in 2023, as well as an increase in tax benefit of $5.4 million related to a net decrease in valuation allowances, including releases of valuation allowances.
Removed
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 Inflation Reduction Act (“IRA”) was enacted on August 16, 2022.
Added
(“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”), the acquisition of a 51% ownership interest in ColePak, LLC (“ColePak”) on August 23, 2023 (the “ColePak Acquisition”), and the acquisition of Reliance Products, Ltd.
Removed
The Act includes various tax provisions including a 1 percent excise tax on stock repurchases, various tax credits to incentivize clean energy investments and a corporate minimum tax generally applicable to US corporations with average adjusted financial statement income exceeding $1.0 billion.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+1 added−0 removed2 unchanged
Biggest changeCurrency Risk 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.
Biggest changeGains on the cross currency swap agreement was recorded in interest expense for the amount of $5.1 million, $5.8 million and $2.2 million for the years ended October 31, 2023, 2022 and 2021, respectively. Currency Risk As a result of our international operations, our operating results are subject to fluctuations in currency exchange rates.
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 2.50%, plus a spread.
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 2.62%, plus a spread.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We are subject to interest rate risk related to our financial instruments that include borrowings under the 2022 Credit Agreement and proceeds from U.S. Receivables Facility and the European RFA, and cross currency and interest rate swap agreements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk 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 $1,150.0 million, maturing between March 11, 2024 and July 15, 2029.
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 $1,300.0 million, maturing between March 11, 2024 and July 16, 2029.
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 $6.9 million to a net asset of $6.6 million.
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 $0.5 million to a net asset of $0.5 million.
Conversely, if the U.S. dollar weakened by 10 percent, the fair value of these instruments would decrease by $6.6 million to a net liability of $6.8 million. Commodity Price Risk We purchase commodities such as steel, resin, containerboard, pulpwood and energy. We do not currently engage in material hedging of these commodities. 37 Table of Contents
Conversely, if the U.S. dollar weakened by 10 percent, the fair value of these instruments would decrease by $0.4 million to a net liability of $0.4 million. Commodity Price Risk We purchase commodities such as steel, resin, containerboard, pulpwood and energy. We do not currently engage in material hedging of these commodities. 35 Table of Contents
Losses reclassified to earnings under these interest rate swaps were recorded in the amount of $8.4 million, $18.1 million and $16.5 million for the years ended October 31, 2022, 2021 and 2020, respectively. We have various cross currency interest rate swaps that synthetically swap $334.4 million of fixed rate debt to Euro denominated fixed rate debt.
Gains (losses) reclassified to earnings under these interest rate swaps were recorded in the amount of $28.5 million, $(8.4) million and $(18.1) million for the years ended October 31, 2023, 2022 and 2021, respectively. We have various cross currency interest rate swaps that synthetically swap $319.3 million of fixed rate debt to Euro denominated fixed rate debt.
We receive a weighted average rate of 1.56%. These agreements are designated as either net investment hedges or cash flow hedges for accounting purposes and will mature between March 6, 2023 and October 5, 2026.
We receive a weighted average rate of 1.39%. These agreements are designated as either net investment hedges or cash flow hedges for accounting purposes and will mature between March 2, 2024 and October 5, 2026.
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 $(6.2) million, $0.4 million and $(3.2) million for the years ended October 31, 2022, 2021 and 2020, respectively.
These contracts resulted in realized gains (losses) recorded in other expense, net of $1.2 million, $(6.2) million and $0.4 million for the years ended October 31, 2023, 2022 and 2021, respectively.
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. 36 Table of Contents Gains on the cross currency swap agreement was recorded in interest expense for the amount of $5.8 million, $2.2 million and $2.4 million for the years ended October 31, 2022, 2021 and 2020, respectively.
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.
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, 2022 and 2021 we had outstanding foreign currency forward contracts in the notional amount of $132.1 million and $81.8 million, respectively.
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.
Added
As of October 31, 2023 and 2022 we had outstanding foreign currency forward contracts in the notional amount of $66.0 million and $132.1 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.

Other GEF 10-K year-over-year comparisons