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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The terms “Greif,” the “Company,” “we,” “us” and “our” as used in this discussion refer to Greif, Inc. and its subsidiaries.

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"). The preparation of these consolidated financial statements, in accordance with these principles, require us to make estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements.

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. For our consolidated results, EBITDA is defined as net income, plus interest expense, net, including debt extinguishment charges, plus income tax expense, plus depreciation, depletion and amortization, and Adjusted EBITDA is defined as EBITDA plus restructuring charges, less 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.

Since we do not calculate net income by reportable segment, EBITDA and Adjusted EBITDA by reportable segment are reconciled to operating profit by 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, less 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.

We use EBITDA and Adjusted EBITDA as financial measures to evaluate our historical and ongoing operations and believe that these non-GAAP financial measures are useful to enable investors to perform meaningful comparisons of our historical and current performance. In addition, we present our U.S. and non-U.S. income before income taxes after eliminating the impact of non-cash asset impairment charges, non-cash pension settlement (income) charges, restructuring charges, timberland gains, net, acquisition and integration related costs, incremental COVID-19 costs, net, and (gains) losses on sales of businesses, net, which are non-GAAP financial measures. We believe that excluding the impact of these adjustments enable investors to perform a meaningful comparison of our current and historical performance that investors find valuable. The foregoing non-GAAP financial measures are intended to supplement and should be read together with our financial results. These non-GAAP financial measures should not be considered an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of this financial information should not place undue reliance on the non-GAAP financial measures.

The following table sets forth the net sales, operating profit, EBITDA and Adjusted EBITDA for each of our reportable segments for 2021, 2020 and 2019:

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Net sales:

Operating profit:

EBITDA:

Adjusted EBITDA:

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The following table sets forth EBITDA and Adjusted EBITDA, reconciled to net income and operating profit, for our consolidated results for 2021, 2020 and 2019:

Plus: debt extinguishment charges — — 22.0

Plus: depreciation, depletion and amortization expense 234.4 242.5 206.1

Plus: debt extinguishment charges — — 22.0

Plus: non-cash pension settlement charges 9.1 0.3 —

Plus: other expense, net 4.8 2.7 2.6

Plus: equity earnings of unconsolidated affiliates, net of tax (4.2) (1.5) (2.9)

Less: other expense, net 4.8 2.7 2.6

Less: non-cash pension settlement charges 9.1 0.3 —

Less: equity earnings of unconsolidated affiliates, net of tax (4.2) (1.5) (2.9)

Plus: depreciation, depletion and amortization expense 234.4 242.5 206.1

Less: timberland gains, net 95.7 — —

Plus: acquisition and integration related costs 9.1 17.0 29.7

Plus: non-cash asset impairment charges 8.9 18.5 7.8

Plus: non-cash pension settlement charges 9.1 0.3 —

Plus: incremental COVID-19 costs, net 3.3 2.6 —

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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 2021, 2020 and 2019:

Global Industrial Packaging

Less: other expense, net 4.5 4.0 6.0

Less: non-cash pension settlement charges 0.3 0.4 —

Less: equity earnings of unconsolidated affiliates, net of tax (4.2) (1.5) (2.9)

Plus: depreciation and amortization expense 83.1 84.5 82.5

Plus: acquisition and integration related costs — — 0.6

Plus: non-cash asset impairment charges 2.7 6.0 2.7

Plus: non-cash pension settlement charges 0.3 0.4 —

Plus: incremental COVID-19 costs, net 1.8 0.7 —

Paper Packaging & Services

Less: other (income) expense, net 0.3 (1.3) (3.4)

Less: non-cash pension settlement (income) charges 8.8 (0.1) —

Plus: depreciation and amortization expense 148.0 153.5 119.3

Plus: restructuring charges 5.9 9.9 6.2

Plus: acquisition and integration related costs 9.1 17.0 29.1

Plus: non-cash asset impairment charges 5.0 12.5 5.1

Plus: non-cash pension settlement (income) charges 8.8 (0.1) —

Plus: incremental COVID-19 costs, net 1.5 1.9 —

Land Management

Plus: depreciation and depletion expense 3.3 4.5 4.3

Plus: restructuring charges 0.1 — 0.1

Less: timberland gains, net 95.7 — —

Plus: non-cash asset impairment charges 1.2 — —

Year 2021 Compared to Year 2020

Net Sales

Net sales were $5,556.1 million for 2021 compared with $4,515.0 million for 2020. The $1,041.1 million increase was primarily due to higher volumes and higher average sale prices across the reportable segments. See the "Segment Review" below for additional information on net sales by reportable segment during 2021.

Gross Profit

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Gross profit was $1,093.0 million for 2021 compared with $914.7 million for 2020. The reasons for the improvement in gross profit for each reportable segment are described below in the "Segment Review." Gross profit margin was 19.7 percent for 2021 compared to 20.3 percent for 2020.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses increased $49.9 million to $565.9 million for 2021 from $516.0 million for 2020. SG&A expenses were 10.2 percent of net sales for 2021 compared with 11.4 percent of net sales for 2020. The increase in SG&A expense was primarily due to increased incentive accruals.

Timberland Gains

Timberland gains were $95.7 million for 2021. During the second quarter of 2021, we sold approximately 69,200 acres of our timberland properties in southwest Alabama to Weyerhaeuser Company for approximately $145.1 million in cash after closing costs, which totaled $4.3 million. Proceeds were applied to debt repayment. No timberland properties were sold during 2020.

Financial Measures

Operating profit was $585.2 million for 2021 compared with $304.9 million for 2020. Net income was $413.2 million for 2021 compared with $124.3 million for 2020. Adjusted EBITDA was $764.2 million for 2021 compared with $642.6 million for 2020. 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."

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Trends

We anticipate that overall customer demand for our products will continue to be consistent and solid through 2022, although inflation, supply chain disruptions and labor shortages may negatively impact some of our customers. Prices for steel are expected to decline slightly around the world, but less so in North America, and prices for resin and old corrugated containers are expected to remain relatively stable to slightly declining through the year. In addition, we anticipate that other raw material prices and costs of transportation, labor and energy will continue to increase through the year.

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;

•Divestiture of businesses and facilities; and

•Impact of foreign currency translation.

Net sales were $3,316.7 million for 2021 compared with $2,571.8 million for 2020. The $744.9 million increase in net sales was due primarily increased average sale prices driven by contractual price adjustment mechanisms related to raw material price increases, as well as increased volumes and favorable foreign currency translation.

Gross profit was $684.1 million for 2021 compared with $522.8 million for 2020. The $161.3 million increase in gross profit was primarily due to the same factors that impacted net sales, primarily offset by higher raw material costs, labor costs, maintenance costs and transportation expenses. Gross profit margin increased to 20.6 percent in 2021 from 20.3 percent in 2020.

Operating profit was $350.2 million for 2021 compared with $225.4 million for 2020. The $124.8 million increase was primarily attributable to the same factors that impacted gross profit, along with higher SG&A expenses in 2021 as a result of increased incentive accruals. Adjusted EBITDA was $453.3 million for 2021 compared with $324.3 million for 2020. The $129.0 million increase was primarily due to the same factors that impacted operating profit. Depreciation and amortization expenses were $83.1 million and $84.5 million for 2021 and 2020, respectively.

Paper Packaging & Services

Key factors influencing profitability in the Paper Packaging & Services reportable segment are:

•Selling prices, product mix, customer demand and sales volumes;

•Raw material costs, primarily old corrugated containers;

•Energy and transportation costs;

•Benefits from executing the Greif Business System;

•Acquisition of businesses and facilities;

•Restructuring charges; and

•Divestiture of businesses and facilities.

Net sales were $2,218.4 million for 2021 compared with $1,916.9 million for 2020. The $301.5 million increase was primarily due to increased average sale prices of containerboard and boxboard, as well as increased volumes, partially offset by impact to net sales attributed to the divested Consumer Packaging Group ("CPG") business, which was sold during the second quarter of 2020.

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Gross profit was $401.3 million for 2021 compared with $382.7 million for 2020. The $18.6 million increase in gross profit was primarily due to the same factors that impacted net sales, mainly offset by higher old corrugated container costs, other raw material input costs and higher transportation expenses. Gross profit margin decreased to 18.1 percent in 2021 from 20.0 percent in 2020.

Operating profit was $131.0 million for 2021 compared with $71.0 million for 2020. The $60.0 million increase in operating profit was primarily due to the same factors that impacted net sales. In addition, the 2020 operating profit was impacted by the $39.5 million loss on the divestment of the CPG business, which primarily related to the allocation of goodwill to that transaction. Adjusted EBITDA was $302.0 million for 2021 compared with $306.4 million for 2020. The decrease was due primarily to the impact of higher SG&A costs resulting from higher incentive accruals, partially offset by the same factors that impacted gross profit. Depreciation and amortization expenses were $148.0 million and $153.5 million for 2021 and 2020, respectively.

Land Management

As of October 31, 2021, our Land Management reportable segment consisted of approximately 175,000 acres of timber properties in the southeastern United States. 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”).

As of October 31, 2021, 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.

Net sales decreased to $21.0 million for 2021 compared with $26.3 million for 2020, primarily due to reduced timber available for sale as a result of acreage sold in the second quarter.

Operating profit increased to $104.0 million for 2021 from $8.5 million for 2020, due to $95.7 million of timberland gains, as previously described.

Adjusted EBITDA was $8.9 million and $11.9 million for 2021 and 2020, respectively. Depreciation and depletion expenses were $3.3 million and $4.5 million for 2021 and 2020, 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. This process has led us to characterize our property as follows:

•Surplus property, meaning land that cannot be efficiently or effectively managed by us, whether due to parcel size, lack of productivity, location, access limitations or for other reasons;

•HBU property, meaning land that in its current state has a higher market value for uses other than growing and selling timber;

•Development property, meaning HBU land that, with additional investment, may have a significantly higher market value than its HBU market value; and

•Core Timberland, meaning land that is best suited for growing and selling timber.

We report the sale of 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 consolidated statements of income. All HBU and development property, together with surplus property, is used to productively grow and sell timber until the property is sold.

Whether timberland has a higher value for uses other than growing and selling timber is a determination based upon several variables, such as proximity to population centers, anticipated population growth in the area, the topography of the land, aesthetic considerations, including access to lakes or rivers, the condition of the surrounding land, availability of utilities, markets for timber and economic considerations both nationally and locally. Given these considerations, the characterization of land is not a static process, but requires an ongoing review and re-characterization as circumstances change.

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Income Tax Expense

We had operations in over 40 countries during 2021. Operations outside the United States are subject to additional risks that may not exist, or be as significant, within the United States. Because of our global operations in numerous countries we are required to address different and complex tax systems and issues which are constantly changing.

Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets and liabilities; and revenues and expenses as of the balance sheet date. The numerous tax jurisdictions in which we operate, along with the variety and complexity of the various tax laws, creates a level of uncertainty, and requires judgment when addressing the impact of complex tax issues. Our effective tax rate and the amount of tax expense are dependent upon various factors, including the following: the tax laws of the jurisdictions in which income is earned; the ability to realize deferred tax assets; negotiation and dispute resolution with taxing authorities in the U.S. and international jurisdictions; and changes in tax laws.

The provision for income taxes is computed using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized currently based on the anticipated future tax consequences of changes in the temporary differences between the book and tax bases of assets and liabilities. This method includes an estimate of the future realization of tax benefits associated with tax losses. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those assets are expected to be realized or settled.

Income tax expense for 2021 was $69.6 million on $478.6 million of pretax income and for 2020 was $63.3 million on $186.1 million of pretax income. For 2021, the mix of income and losses among various jurisdictions resulted in a net tax increase of $24.0 million on $159.3 million more of pretax income.

Further, in 2021 there was an increase of $37.5 million in pre-tax income and a corresponding decrease of $8.5 million in tax expense attributed to non-deductible goodwill from the divestment of the CPG business. The sale of timberland had no net federal tax expense, as capital gains from the sale were fully offset by capital losses.

Additional decreases in tax expense of $10.2 million were the result of the resolution of audit settlements, releases in uncertain tax positions due to the expiration of statute of limitations and the recording of return to provision adjustments. Other miscellaneous decreases in tax expense of $4.3 million were offset by increases of $8.2 million related to withholding tax.

We analyze potential income tax liabilities related to uncertain tax positions in the United States and international jurisdictions. The analysis of potential income tax liabilities results in estimates recognized for uncertain tax positions following the guidance of ASC 740, “Income Taxes.” The estimation of potential tax liabilities related to uncertain tax positions involves significant judgment in evaluating the impact of uncertainties in the application of ASC 740 and complex tax laws. We periodically analyze both potential income tax liabilities and existing liabilities for uncertain tax positions resulting in both new reserves and adjustments to existing reserves in light of changing facts and circumstances. This includes the release of existing liabilities for uncertain tax positions based on the expiration of statutes of limitation. During 2021, lapses in the statute of limitations, which were partially offset by the recognition of new uncertain tax position liabilities recorded during the current year, resulted in an overall net decrease in our uncertain tax position liability.

The ultimate resolution of potential income tax liabilities may result in a payment that is materially different from our current estimates. If our estimates recognized under ASC 740 prove to be different than what is ultimately resolved, such resolution could have a material impact on our financial condition and results of operations. While predicting the final outcome or the timing of the resolution of any particular tax matter is subject to various risks and uncertainties, we believe that our tax accounts related to uncertain tax positions are appropriately stated.

See Note 8 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for further information.

Year 2020 Compared to Year 2019

Net Sales

Net sales were $4,515.0 million for 2020 compared with $4,595.0 million for 2019. The $80.0 million decrease was primarily due to decreased volumes and sale prices across the reportable segments, the impact to net sales resulting from the CPG divestiture and the negative impacts of foreign currency translation, partially offset by a full year contribution from the acquired Caraustar operations.

Gross Profit

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Gross profit was $914.7 million for 2020 compared with $959.9 million for 2019. The respective reasons for the improvement or decline in gross profit, as the case may be, for each reportable segment are described below in the "Segment Review." Gross profit margin was 20.3 percent for 2020 compared to 20.9 percent for 2019.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses increased $8.6 million to $516.0 million for 2020 from $507.4 million for 2019. SG&A expenses were 11.4 percent of net sales for 2020 compared with 11.0 percent of net sales for 2019.

Financial Measures

Operating profit was $304.9 million for 2020 compared with $399.1 million for 2019. Net income was $124.3 million for 2020 compared with $194.2 million for 2019. Adjusted EBITDA was $642.6 million for 2020 compared with $658.9 million for 2019. 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."

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;

•Divestiture of businesses and facilities; and

•Impact of foreign currency translation.

Net sales were $2,571.8 million for 2020 compared with $2,788.1 million for 2019. The $216.3 million decrease in net sales was due primarily to decreased volumes and decreased average sale prices driven by contractual price adjustment mechanisms related to raw material price decreases, as well as negative impacts of foreign currency translation.

Gross profit was $522.8 million for 2020 compared with $524.3 million for 2019. The $1.5 million decrease was primarily attributable to the same factors that impacted net sales, offset by lower priced raw materials, the timing of contractual pass through pricing, product mix shifts and strategic pricing actions. Gross profit margin increased to 20.3 percent in 2020 from 18.8 percent in 2019.

Operating profit was $225.4 million for 2020 compared with $204.9 million for 2019. The $20.5 million increase was primarily attributable to a decrease in the reportable segment's SG&A expenses due to strategic cost management efforts. Adjusted EBITDA was $324.3 million for 2020 compared with $298.5 million for 2019. The $25.8 million increase was primarily due to the same factors that impacted operating profit. Depreciation and amortization expenses were $84.5 million and $82.5 million for 2020 and 2019, respectively.

Paper Packaging & Services

Key factors influencing profitability in the Paper Packaging & Services reportable segment are:

•Selling prices, product mix, customer demand and sales volumes;

•Raw material costs, primarily old corrugated containers;

•Energy and transportation costs;

•Benefits from executing the Greif Business System;

•Acquisition of businesses and facilities;

•Restructuring charges; and

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•Divestiture of businesses and facilities.

Net sales were $1,916.9 million for 2020 compared with $1,780.0 million for 2019. The $136.9 million increase was primarily due to full year contribution from the acquired Caraustar operations, partially offset by lower published containerboard and boxboard prices, decreased volumes and the impact to net sales resulting from the CPG divestiture.

Gross profit was $382.7 million for 2020 compared with $425.4 million for 2019. The decrease in gross profit was primarily due to the same factors that impacted net sales and higher old corrugated container input costs. Gross profit margin decreased to 20.0 percent in 2020 from 23.9 percent in 2019.

Operating profit was $71.0 million for 2020 compared with $184.3 million for 2019. The decrease in operating profit was primarily due to the factors discussed above in gross profit, the loss on sale of the CPG divestiture and the reportable segment receiving a greater portion of allocated corporate costs. Adjusted EBITDA was $306.4 million for 2020 compared with $348.3 million for 2019. The decrease was due primarily to the same factors that impacted gross profit and the reportable segment receiving a greater portion of allocated corporate costs. Depreciation and amortization expenses were $153.5 million and $119.3 million for 2020 and 2019, respectively.

Land Management

As of October 31, 2020, our Land Management reportable segment consisted of approximately 244,000 acres of timber properties in the southeastern United States. 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”).

As of October 31, 2020, 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.

Net sales decreased to $26.3 million for 2020 compared with $26.9 million for 2019.

Operating profit decreased to $8.5 million for 2020 from $9.9 million for 2019.

Adjusted EBITDA was $11.9 million and $12.1 million for 2020 and 2019, respectively. Depreciation and depletion expenses were $4.5 million and $4.3 million for 2020 and 2019, respectively.

Income Tax Expense

We had operations in over 40 countries during 2020. Operations outside the United States are subject to additional risks that may not exist, or be as significant, within the United States. Because of our global operations in numerous countries we are required to address different and complex tax systems and issues which are constantly changing.

Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets and liabilities; and revenues and expenses as of the balance sheet date. The numerous tax jurisdictions in which we operate, along with the variety and complexity of the various tax laws, creates a level of uncertainty and requires judgment when addressing the impact of complex tax issues. Our effective tax rate and the amount of tax expense are dependent upon various factors, including the following: the tax laws of the jurisdictions in which income is earned; the ability to realize deferred tax assets; negotiation and dispute resolution with taxing authorities in the U.S. and international jurisdictions; and changes in tax laws.

Income tax expense for 2020 was $63.3 million on $186.1 million of pretax income and for 2019 was $70.7 million on $262.0 million of pretax income. For 2020, the mix of income and losses among various jurisdictions resulted in a net tax decrease of

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$17.0 million on $75.9 million less of pretax income, which was offset by additional tax expense of $7.5 million related to non-deductible goodwill allocated to the CPG divestiture. Various other items resulted in a net tax increase of $2.1 million.

Included in the net tax decrease of $17.0 million noted in the previous paragraph was a $28.4 million net decrease in valuation allowances. This decrease was primarily due to the ability to utilize foreign tax credits for which a valuation allowance had previously been provided. The release of the valuation allowance related to foreign tax credits resulted in the reduction of the valuation allowance and a tax benefit of $21.5 million. Other decreases in the valuation allowances related to foreign jurisdictions resulted in an additional decrease of $6.9 million. The valuation allowance activity resulted in an overall decrease in the valuation allowance account from 2019 to 2020 of $34.7 million. Offsetting these amounts was tax expense of $31.0 million as a result of a one-time elimination related to an intra-company sale. This one-time activity was the primary driver that resulted in an overall net increase in permanent items for 2019 to 2020 of $28.3 million.

We analyze potential income tax liabilities related to uncertain tax positions in the U.S. and international jurisdictions. The analysis of potential income tax liabilities results in estimates of income tax liabilities recognized for uncertain tax positions following the guidance of ASC 740, “Income Taxes.” The estimation of potential tax liabilities related to uncertain tax positions involves significant judgment in evaluating the impact of uncertainties in the application of ASC 740 and complex tax laws. We periodically analyze both potential income tax liabilities and existing liabilities for uncertain tax positions resulting in both new reserves and adjustments to existing reserves in light of changing facts and circumstances. This includes the release of existing liabilities for uncertain tax positions based on the expiration of statutes of limitation. During 2020, lapses in the statute of limitations, which were partially offset by the recognition of new uncertain tax position liabilities recorded during the current year, resulted in an overall net decrease in our uncertain tax position liability.

See Note 8 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for further information.

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. We anticipate continuing to fund these items in a like manner. 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.

Cash Flow

Net cash provided by operating activities $ 396.0 $ 454.7

Net cash provided by (used in) investing activities 46.8 (25.2)

Net cash used in financing activities (422.9) (405.3)

Reclassification of cash to assets held for sale 0.5 —

Effects of exchange rates on cash (1.7) 4.4

Net increase in cash and cash equivalents 18.7 28.6

Cash and cash equivalents at beginning of year 105.9 77.3

Cash and cash equivalents at end of year $ 124.6 $ 105.9

Operating Activities

The $252.9 million increase in accounts receivable to $889.5 million as of October 31, 2021 from $636.6 million as of October 31, 2020 was primarily due to the increase in net sales and higher average sale prices.

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The $205.6 million increase in inventories to $499.2 million as of October 31, 2021 from $293.6 million as of October 31, 2020 was primarily due to increased raw material prices and increased purchases to accommodate increased volume demand.

The $253.8 million increase in accounts payable to $704.5 million as of October 31, 2021 from $450.7 million as of October 31, 2020 was primarily due to increased raw material prices and timing of payable settlements.

Investing Activities

During 2021 and 2020, we invested $140.7 million and $131.4 million, respectively, of cash in capital expenditures. These investments exclude $6.6 million and $5.4 million of cash purchases and investments in timber properties during 2021 and 2020, respectively.

During 2021, we sold approximately 69,200 acres of our timberland properties in southwest Alabama to Weyerhaeuser Company for approximately $145.1 million in cash after closing costs, which totaled $4.3 million. Proceeds were applied to debt repayment.

During 2020, we completed the divestiture of the CPG business, a U.S. business in the Paper Packaging & Services reportable segment for net cash proceeds of $79.6 million.

Financing Activities

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, discussed below in "Financial Obligations - Borrowing Arrangements - 2019 Credit Agreement" and " - Senior Notes."

We paid cash dividends to stockholders of Greif, Inc. in the amount of $105.8 million and $104.3 million for the years ended October 31, 2021 and 2020, respectively. We paid dividends to non-controlling interests in the amount of $7.8 million and $13.4 million for the years ended October 31, 2021 and 2020, respectively.

Financial Obligations

Borrowing Arrangements

Long-term debt is summarized as follows:

Accounts receivable credit facilities 391.1 310.0

2019 Credit Agreement - Revolving Credit Facility 50.5 —

Other debt 0.6 —

Less deferred financing costs 10.3 11.1

2019 Credit Agreement

As of October 31, 2021, we had $749.5 million of available borrowing capacity under the $800.0 million secured revolving credit facility provided by the 2019 Credit Agreement, as defined in Note 5 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K. Our obligations under the 2019 Credit Agreement are guaranteed by certain of our U.S. and non-U.S. subsidiaries. As of October 31, 2021, we were in compliance with the covenants and other agreements in the 2019 Credit Agreement.

On November 13, 2020 the Company and certain of its U.S. subsidiaries entered into an incremental term loan agreement (the "Incremental Term A-3 Loan Agreement") with a syndicate of farm credit institutions. The Incremental Term A-3 Loan

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Agreement provided for a loan commitment in the aggregate principal amount of $225.0 million, which was drawn on July 14, 2021 (the "Incremental Term A-3 Loan"). The Incremental Term A-3 Loan matures on July 15, 2026, with quarterly installments of principal payable on the last day of each fiscal quarter, which commenced on July 31, 2021. The Company utilized the Incremental Term A-3 Loan proceeds to pay all of the outstanding principal of and interest on the Senior Notes due 2021, discussed below.

The 2019 Credit Agreement contains certain covenants, which include financial covenants that require us to maintain a certain leverage ratio and an interest coverage ratio. The leverage ratio generally requires that, at the end of any quarter, we will not permit the ratio of (a) its total consolidated indebtedness, to (b) its 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 4.75 to 1.00 and stepping down annually by 0.25 increments beginning on July 31, 2020 to 4.00 on July 31, 2023. The current leverage ratio covenant requirement was 4.50 as of October 31, 2021. The interest coverage ratio generally requires that, at the end of any quarter, we will not permit the ratio of (a) its consolidated EBITDA, to (b) its consolidated interest expense to the extent paid or payable, to be less than 3.00 to 1.00, during the applicable preceding twelve month period. As of October 31, 2021, we were in compliance with the covenants and other agreements in the 2019 Credit Agreement.

Senior Notes

Our $500.0 million 6.50% Senior Notes are due March 1, 2027 (the "Senior Notes due 2027"). Interest on the Senior Notes due 2027 is payable semi-annually. Our obligations under the Senior Notes due 2027 are guaranteed by our U.S. subsidiaries that guarantee the 2019 Credit Agreement. As of October 31, 2021, we were in compliance with the covenants that relate to the Senior Notes due 2027.

On July 15, 2011, Greif, Inc.’s wholly-owned subsidiary, Greif Nevada Holdings, Inc., S.C.S., issued €200.0 million of 7.375% Senior Notes due July 15, 2021 (the "Senior Notes due 2021"). As discussed above, the Senior Notes due 2021 were paid in full on July 14, 2021 from the proceeds of the Incremental Term A-3 Loan.

United States Trade Accounts Receivable Credit Facility

We have a $275.0 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 26, 2022. As of October 31, 2021, there was a $275.0 million outstanding balance under the U.S. Receivables Facility that is reported as long-term debt in the consolidated balance sheets because the Company intends to refinance these obligations on a long-term basis and has the intent and ability to consummate a long-term refinancing by exercising the renewal option in the respective 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 2019 Credit Agreement As of October 31, 2021 we were in compliance with these covenants. Proceeds of the U.S. Receivables Facility are available for working capital and general purposes.

International Trade Accounts Receivable Credit Facilities

We have a€100.0 million ($116.1 million as of October 31, 2021) European Receivables Financing Agreement (the "European RFA that matures on April 26, 2022.The $116.1 million outstanding on the European RFA as of October 31, 2021 is reported as long-term debt in the consolidated balance sheets because the Company intends to refinance these obligations on a long-term basis and has the intent and ability to consummate a long-term refinancing by exercising the renewal option in the respective agreement or entering into new financing arrangements. As of October 31, 2021 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 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.

Financial Instruments

Interest Rate Derivatives

As of October 31, 2021, we have various interest rate swaps with a total notional amount of $1,000 million in which we receive variable interest rate payments and in return are obligated to pay interest at a weighted average fixed interest rate of 1.78%, plus an interest spread.

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These derivatives are designated as cash flow hedges for accounting purposes. 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.

Foreign Exchange Hedges

We conduct business in international currencies and are subject to risks associated with changing foreign exchange rates. Our objective is to reduce volatility associated with foreign exchange rate changes to allow management to focus its attention on business operations. 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, 2021 and 2020, we had outstanding foreign currency forward contracts in the notional amount of $81.8 million and $268.6 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. 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 a mixture of net investment hedges and cash flow hedges for accounting purposes and will mature between March 6, 2023 and October 5, 2026. Accordingly, the gain or loss on this derivative instrument is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. 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.

See Note 6 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for additional disclosures regarding our financial instruments.

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 $36.8 million during 2022, which we anticipate will consist of $30.9 million of employer contributions and $5.9 million of benefits paid directly by the employer. 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 10 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for additional information regarding our contingent liabilities and environmental reserves.

Stock Repurchase Program and Other Share Acquisitions

Our Board of Directors has authorized the repurchase of Class A Common Stock or Class B Common Stock or any combination of the foregoing. As of October 31, 2021, the remaining number of shares that could be repurchased under this authorization was 4,703,487shares. We did not repurchase any shares of our Class A or Class B Common Stock during 2021 or 2020. 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 Class B Common Stock.

Critical Accounting Policies

A summary of our significant accounting policies is included in Note 1 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K. We believe that the consistent application of these policies enables us to provide readers of the consolidated financial statements with useful and reliable information about our results of operations and financial condition. The following are the accounting policies that we believe are most important to the portrayal of our results of operations and financial condition and require our most difficult, subjective or complex judgments.

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Other items that could have a significant impact on the financial statements include the risks and uncertainties listed in Part I, Item 1A – Risk Factors. Actual results could differ materially using different estimates and assumptions, or if conditions are significantly different in the future.

Goodwill Impairment Testing

We account for goodwill in accordance with ASC 350, “Intangibles – Goodwill and Other.” Under ASC 350, purchased goodwill is not amortized, but instead is tested for impairment either annually on August 1 or when events and circumstances indicate an impairment may have occurred. Our goodwill impairment assessment is performed by reporting unit. A reporting unit is the operating segment, or a business one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. However, components are aggregated as a single reporting unit if they have similar economic characteristics. In conducting the annual impairment tests, the estimated fair value of each of our reporting units is compared to its carrying amount including goodwill. If the estimated fair value exceeds the carrying amount, then no impairment exists. 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.

The Company has made changes to the operational and financial management practices and procedures of the Rigid Industrial Packaging & Services and Flexible Products & Services reportable segments and combined the two reportable segments under a single global leadership team. As a result of these changes, during the first quarter of 2021, the Rigid Industrial Packaging & Services reportable segment and the Flexible Products & Services reportable segment have been combined into a single reportable segment known as Global Industrial Packaging. This change in reportable segments also led to a re-evaluation of operating segments. After the change, 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. Each of these operating segments has two components: Rigid Industrial Packaging & Services and Flexible Products & Services that have discrete financial information available that is reviewed by segment management on a regular basis. As such, these components also represent our eight reporting units for purposes of goodwill impairment testing: Rigid Industrial Packaging & Services – North America; Rigid Industrial Packaging & Services – Latin America; Rigid Industrial Packaging & Services – Europe, Middle East and Africa; Rigid Industrial Packaging & Services – Asia Pacific; Flexible Products & Services – North America; Flexible Products & Services – Latin America; Flexible Products & Services – Europe, Middle East and Africa; and Flexible Products & Services – Asia Pacific. Five of these components have no goodwill. As part of the realignment, goodwill was reassigned from the Rigid Industrial Packaging – Tri-Sure reporting unit to each of the other Rigid Industrial Packaging & Services reporting units using a relative fair value approach.

The Paper Packaging & Services reportable segment is also an operating segment. This operating segment consists of multiple components that have discrete financial information available that is reviewed by segment management on a regular basis. We have evaluated those components and concluded that they are economically similar and should be aggregated into single reporting unit. For the purpose of aggregating our components, we review the long-term performance of gross profit margin and operating profit margin. Additionally, we review qualitative factors such as common customers, similar products, similar manufacturing processes, sharing of resources, level of integration and interdependency of processes across components. We place greater weight on the qualitative factors outlined in ASC 280 “Segment Reporting” and consider the guidance in ASC 350 in determining whether two or more components of an operating segment are economically similar and can be aggregated into a single reporting unit. However, our assessment of the aggregation includes both qualitative and quantitative factors and is based on the facts and circumstances specific to the components.

The estimated fair value of the reporting units utilized in the impairment test is based on a discounted cash flow analysis or income approach and market multiple approach. Under this method, the principal valuation focus is on the reporting unit’s cash-generating capabilities. The discount rates used for impairment testing are based on a market participant’s weighted average cost of capital. The use of alternative estimates, peer groups or changes in the industry, or adjusting the discount rate, earnings before interest, taxes, depreciation, depletion and amortization multiples or price earnings ratios used could affect the estimated fair value of the assets and potentially result in impairment. Any identified impairment would result in an adjustment to our results of operations.

In performing the test, we first evaluate qualitative factors, such as macroeconomic conditions and our overall financial performance to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. We then evaluate how significant each of the identified factors could be to the fair value or carrying amount of a reporting unit and weigh those factors in totality in forming a conclusion of whether or not it is more likely than not that the fair value of a reporting unit is less than its carrying amount (the Step 0 Test). 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

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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). We did not utilize any Step 0 tests in 2021.

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 30%, 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. In addition, certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in actual and expected consumption and demand, could result in changes to those assumptions and judgments. A revision of those assumptions could cause the fair value of the reporting unit to fall below its respective carrying value. If in future years, our reporting units' actual results are not consistent with our estimates and assumptions used to calculate fair value, we may be required to recognize material impairments to goodwill.

The following table summarizes the carrying amount of goodwill by reporting unit for the year ended October 31, 2021 and 2020:

Goodwill Balance

Rigid Industrial Packaging & Services

Europe, Middle East and Africa 364.1 331.4

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.

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 2019 Credit Agreement and proceeds from our Senior Notes, U.S. Receivables Facility 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 four interest rate swaps with an aggregate notional amount of $200.0 million as of October 31, 2021. Under these agreements, we receive variable rate interest payments based upon one-month U.S. dollar LIBOR, and in return we are obligated to pay interest at a weighted-average interest rate of 0.90%, plus a spread.

We have six interest rate swap agreements with an aggregate notional amount of $500.0 million as of October 31, 2021. Under these agreements, we receive variable rate interest payments based upon one-month U.S. dollar LIBOR, and in return we are obligated to pay interest at a weighted-average interest rate of 2.49%, plus a spread.

We have three other interest rate swap agreements with an aggregate notional amount of $300.0 million as of October 31, 2021. Under these agreements, we receive interest monthly from the counterparties equal to one-month U.S. LIBOR and pay interest at a fixed rate of 1.19%, plus a spread, over the life of the contracts.

(Losses)/Gains reclassified to earnings under these interest rate swaps were recorded in the amount of $(18.1) million, $(16.5) million and $3.0 million for the years ended October 31, 2021, 2020 and 2019, respectively.

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We have a two cross currency interest rate swap agreements that synthetically swap $116.8 million of fixed rate debt to Euro denominated fixed rate debt at a weighted average rate of 1.26%, plus a spread. These agreements are designated as cash flow hedges for accounting purposes and will mature on October 5, 2026.

We have two cross currency interest rate swap agreements that synthetically swap $117.6 million of fixed rate debt to Euro denominated fixed rate debt at a weighted average rate of 1.19%, plus a spread. These agreements are designated as net investment hedges for accounting purposes and will mature on August 10, 2026.

We have two cross currency interest rate swap agreements that synthetically swaps $100.0 million of fixed rate debt to Euro denominated fixed rate debt at a rate of 2.35%, plus a spread. These agreements are designated as a net investment hedge for accounting purposes and will mature on March 6, 2023.

The gain or loss on these net investment hedge derivative instruments is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. The gain or loss on the cash flow hedge derivative instruments is included in the unrealized foreign exchange component of other expense, offset by the underlying gain of loss on the underlying cash flows that are being hedged. Interest payments received for 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. Gains on the cross currency swap agreement was recorded in interest expense for the amount of $2.2 million, $2.4 million and $2.4 million for the years ended October 31, 2021, 2020 and 2019, respectively.

Currency 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. 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, 2021 and 2020 we had outstanding foreign currency forward contracts in the notional amount of $81.8 million and $268.6 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. These contracts resulted in realized gains (losses) recorded in other expense, net of $0.4 million, $(3.2) million and $4.6 million for the years ended October 31, 2021, 2020 and 2019, respectively.

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 decrease by $0.4 million to a net liability of $0.4 million. Conversely, if the U.S. dollar weakened by 10 percent, the fair value of these instruments would increase by $0.4 million to a net asset 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 commodities, although in the past we have sometimes engaged in hedges in natural gas. There were no material commodity hedging contracts outstanding as of October 31, 2021 and 2020.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME

Year Ended October 31, (in millions, except per share amounts) 2021 2020 2019

Selling, general and administrative expenses 565.9 516.0 507.4

Timberland gains (95.7) — —

Acquisition and integration related costs 9.1 17.0 29.7

Non-cash asset impairment charges 8.9 18.5 7.8

Gain on disposal of properties, plants and equipment, net (3.7) (19.2) (13.9)

Loss on disposal of businesses, net 0.2 38.8 3.7

Debt extinguishment charges — — 22.0

Non-cash pension settlement charges 9.1 0.3 —

Equity earnings of unconsolidated affiliates, net of tax (4.2) (1.5) (2.9)

Net income attributable to noncontrolling interests (22.5) (15.5) (23.2)

Net income attributable to Greif, Inc. $ 390.7 $ 108.8 $ 171.0

Basic earnings per share attributable to Greif, Inc. common shareholders:

Diluted earnings per share attributed to Greif, Inc. common shareholders:

See accompanying Notes to Consolidated Financial Statements.

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GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Other comprehensive income (loss), net of tax:

Foreign currency translation (1.6) (9.8) (4.5)

Derivative financial instruments 21.1 (12.0) (26.1)

Other comprehensive income (loss), net of tax 69.9 (6.7) (55.9)

Comprehensive income attributable to noncontrolling interests 21.4 2.6 23.9

Comprehensive income attributable to Greif, Inc. $ 461.7 $ 115.0 $ 114.4

See accompanying Notes to Consolidated Financial Statements.

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GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

ASSETS

Current assets

Cash and cash equivalents $ 124.6 $ 105.9

Trade accounts receivable, net of allowance 889.5 636.6

Inventories:

Work-in-process 1.5 5.4

Assets held for sale 6.9 57.0

Assets held by special purpose entities — 50.9

Long-term assets

Other intangible assets, net of amortization 648.4 715.3

Properties, plants and equipment

Timber properties, net of depletion 224.6 224.5

See accompanying Notes to Consolidated Financial Statements.

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GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Accrued payroll and employee benefits 160.3 122.3

Restructuring reserves 20.3 21.6

Current portion of long-term debt 120.3 123.1

Short-term borrowings 50.5 28.4

Liabilities held for sale 0.9 —

Liabilities held by special purpose entities — 43.3

Current portion of operating lease liabilities 54.0 52.3

Long-term liabilities

Post-retirement benefit obligations 11.0 11.6

Contingent liabilities and environmental reserves 19.5 20.2

Long-term income tax payable 27.8 27.8

Commitments and Contingencies (Note 10)

Redeemable Noncontrolling Interests (Note 15) 24.1 20.0

Equity

Common stock, without par value 179.3 170.2

Accumulated other comprehensive income (loss), net of tax:

Foreign currency translation (295.4) (294.9)

Derivative financial instruments (3.6) (24.7)

Minimum pension liabilities (57.5) (107.9)

Total Greif, Inc. shareholders’ equity 1,514.3 1,152.2

Noncontrolling interests 61.3 48.5

Total liabilities and shareholders’ equity $ 5,815.8 $ 5,510.9

See accompanying Notes to Consolidated Financial Statements.

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GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

Timberland gains (95.7) — —

Non-cash asset impairment charges 8.9 18.5 7.8

Non-cash pension settlement charges 9.1 0.3 —

Gain on disposals of properties, plants and equipment, net (3.7) (19.2) (13.9)

Loss on disposals of businesses, net 0.2 38.8 3.7

Unrealized foreign exchange (gain) loss 1.0 (4.2) 3.0

Deferred income tax (benefit) expense (47.2) 16.7 2.1

Transition tax benefit — — (0.8)

Debt extinguishment charges — — 14.0

Non-cash lease expense 40.0 57.4 —

Increase (decrease) in cash from changes in certain assets and liabilities:

Deferred purchase price on sold receivables — — (6.9)

Restructuring reserves (1.4) 10.2 6.7

Operating leases (43.5) (56.8) —

Pension and post-retirement benefit liabilities (11.5) (13.3) (15.3)

Cash flows from investing activities:

Acquisitions of companies, net of cash acquired — — (1,857.9)

Purchases of properties, plants and equipment (140.7) (131.4) (156.8)

Purchases of and investments in timber properties (6.6) (5.4) (5.4)

Proceeds from the sale of businesses 2.7 80.9 1.5

Proceeds on timberlands 145.1 — —

Collections on receivables of SPE 50.9 — —

Payments for issuance of loans receivable (15.0) — —

Net cash provided by (used in) investing activities 46.8 (25.2) (1,989.3)

Cash flows from financing activities:

Proceeds on short-term borrowings, net 21.1 17.0 2.2

Proceeds from trade accounts receivable credit facility 106.0 76.8 181.4

Payments on trade accounts receivable credit facility (23.1) (122.9) (89.2)

Payments for liabilities in SPE (43.3) — —

Dividends paid to Greif, Inc. shareholders (105.8) (104.3) (104.0)

Dividends paid to noncontrolling interests (7.8) (13.4) (9.2)

Payments for debt extinguishment and issuance costs — — (44.1)

Purchases of redeemable noncontrolling interest — — (11.9)

Cash contribution from noncontrolling interest holder — — 1.6

Net cash provided by (used in) financing activities (422.9) (405.3) 1,583.5

Reclassification of cash to assets held for sale 0.5 — —

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Effects of exchange rates on cash (1.7) 4.4 (0.6)

Net increase (decrease) in cash and cash equivalents 18.7 28.6 (16.9)

Cash and cash equivalents at beginning of year 105.9 77.3 94.2

Cash and cash equivalents at end of year $ 124.6 $ 105.9 $ 77.3

Supplemental information:

Non-cash transactions:

Capital expenditures included in accounts payable $ 38.7 $ 17.2 $ 18.6

Schedule of interest and income taxes paid:

See accompanying Notes to Consolidated Financial Statements.

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GREIF, INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Shares Amount Shares Amount

Other comprehensive income (loss):

– Foreign currency translation (5.2) (5.2) 0.7 (4.5)

Net income allocated to redeemable noncontrolling interests (2.3) (2.3)

Dividends paid to noncontrolling interests (7.9) (7.9)

Acquisition of noncontrolling interest and other (0.6) (0.6) (2.1) (2.7)

Other comprehensive income (loss):

– Foreign currency translation 3.1 3.1 (12.9) (9.8)

Net income allocated to redeemable noncontrolling interests (0.1) (0.1)

Dividends paid to noncontrolling interests (12.0) (12.0)

Shared based compensation — 1.5 — — 1.5 1.5

Restricted stock, executive 3 0.1 (3) — 0.1 0.1

Other comprehensive income (loss):

– Foreign currency translation (0.5) (0.5) (1.1) (1.6)

Net income allocated to redeemable noncontrolling interests (2.4) (2.4)

Dividends paid to noncontrolling interests and other (6.2) (6.2)

Dividends earned on RSU shares (0.6) (0.6) (0.6)

Share based compensation — 3.9 — — 3.9 3.9

Restricted stock, executive 3 0.1 (3) — 0.1 0.1

See accompanying Notes to Consolidated Financial Statements.

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GREIF, INC. AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Business

Greif, Inc. and its subsidiaries (collectively, “Greif,” “our,” or the “Company”), principally manufacture 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 provides services, such as container life cycle management, filling, logistics, warehousing and other packaging services. The Company 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. The Company 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, protective packaging and adhesives). In addition, the Company also purchase and sell recycled fiber. The Company is a leading global producer of flexible intermediate bulk containers. In addition, the Company owns timber properties in the southeastern United States which are actively harvested and regenerated. The Company has operations in over 40 countries.

Due to the variety of its products, the Company has many customers buying different products and due to the scope of the Company’s sales, no one customer is considered principal in the total operations of the Company.

The Company supplies a cross section of industries, such as chemicals, paints and pigments, food and beverage, petroleum, industrial coatings, agriculture, pharmaceuticals, minerals, packaging, automotive and building products, and makes spot deliveries on a day-to-day basis as its products are required by its customers. The Company does not operate on a backlog to any significant extent and maintains only limited levels of finished goods. Many customers place their orders weekly for delivery during the same week.

The Company’s raw materials are principally steel, resin, containerboard, old corrugated containers, pulpwood, recycled coated and uncoated paperboard and used industrial packaging for reconditioning.

There were approximately 16,000 full time employees of the Company as of October 31, 2021.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Greif, Inc., all wholly-owned and majority-owned subsidiaries, joint ventures controlled by the Company or for which the Company is the primary beneficiary and equity earnings of unconsolidated affiliates. All intercompany transactions and balances have been eliminated in consolidation. Investments in unconsolidated affiliates are accounted for using the equity method based on the Company’s ownership interest in the unconsolidated affiliate.

The Company’s consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain prior year amounts have been reclassified to conform to the current year presentation.

The Company’s fiscal year begins on November 1 and ends on October 31 of the following year. Any references to years or to any quarter of those years, relates to the fiscal year or quarter, as the case may be, ended in that year, unless otherwise stated.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Though actual amounts could significantly or materially differ from estimates, the most significant estimates are related to:

•Expected useful lives assigned to properties, plants and equipment;

•Goodwill and other intangible assets;

•Estimates of fair value;

•Environmental liabilities;

•Pension and post-retirement benefits, including plan assets;

•Income taxes;

•Net assets held for sale; and contingencies.

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Cash and Cash Equivalents

The Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. The carrying value of cash equivalents approximates fair value.

Allowance for Doubtful Accounts

Trade receivables represent amounts owed to the Company through its operating activities and are presented net of allowance for doubtful accounts. The allowance for doubtful accounts totaled $6.1 million and $9.4 million as of October 31, 2021 and 2020, respectively. The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations to the Company, the Company records a specific allowance for bad debts against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. In addition, the Company recognizes allowances for bad debts based on the length of time receivables are past due with allowance percentages, based on its historical experiences, applied on a graduated scale relative to the age of the receivable amounts. If circumstances such as higher than expected bad debt experience or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to the Company were to occur, the recoverability of amounts due to the Company could change by a material amount. Amounts deemed uncollectible are written-off against the allowance for doubtful accounts.

Concentration of Credit Risk and Major Customers

The Company maintains cash depository accounts with banks throughout the world and invests in high quality short-term liquid instruments. Such investments are made only in instruments issued by high quality institutions and mature within three months. The Company did not incur any losses related to these investments during the years ended October 31, 2021, 2020, and 2019.

Trade receivables can be potentially exposed to a concentration of credit risk with customers or in particular industries. Such credit risk is considered by management to be limited due to the Company’s many customers, none of which are considered principal in the total operations of the Company, and its geographic scope of operations in a variety of industries throughout the world. The Company does not have an individual customer that exceeds 10 percent of total revenue. In addition, the Company performs ongoing credit evaluations of its customers’ financial conditions and maintains reserves for credit losses. Such losses historically have been within management’s expectations.

Inventory

The Company primarily uses the FIFO method of inventory valuation. Reserves for slow moving and obsolete inventories are provided based on historical experience, inventory aging and product demand. The Company continuously evaluates the adequacy of these reserves and adjusts these reserves as required.

Net Assets Held for Sale

Net assets held for sale represent land, buildings and other assets and liabilities for locations that have met the criteria of “held for sale” accounting, as specified by Accounting Standards Codification ("ASC") 360, “Property, Plant, and Equipment,” at the lower of carrying value or fair value less cost to sell. Fair value is based on the estimated proceeds from the sale of the assets utilizing recent purchase offers, market comparables and/or reliable third party data. The Company's estimate as to fair value is regularly reviewed and assets are subject to changes, such as in the commercial real estate markets and the Company's continuing evaluation as to the asset’s acceptable sale price. The net assets held for sale are being marketed for sale and it is the Company’s intention to complete the sales of these assets within the upcoming year, assuming offers deemed sufficient by management are received as result of marketing efforts. See Note 6 herein for additional information regarding assets and liabilities held for sale.

Goodwill and Indefinite-Lived Intangibles

Goodwill is the excess of the purchase price of an acquired entity over the amounts assigned to tangible and intangible assets and liabilities assumed in the business combination. The Company accounts for purchased goodwill and indefinite-lived intangible assets in accordance with ASC 350, “Intangibles – Goodwill and Other.” Under ASC 350, purchased goodwill and intangible assets with indefinite lives are not amortized, but instead are tested for impairment at least annually. The Company tests for impairment of goodwill and indefinite-lived intangible assets as of August 1, or more frequently if certain indicators are present or changes in circumstances suggest that impairment may exist.

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In accordance with ASC 350, the Company has the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative test for goodwill impairment. If the Company believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. The quantitative test for goodwill impairment is conducted at the reporting unit level by comparing the carrying value of each reporting unit to the estimated fair value of the unit. If the carrying value of a reporting unit exceeds its estimated fair value, then the goodwill of the reporting unit is impaired. Goodwill impairment is recognized as the amount that the carrying value exceeds the fair value; not to exceed the balance of goodwill attributable to the reporting unit. When a portion of a reporting unit is disposed of, goodwill is allocated to the gain or loss on that disposition based on the relative fair values of the portion of the reporting unit subject to disposition and the portion of the reporting unit that will be retained.

The Company’s determinations of estimated fair value of the reporting units are based on both the market approach and a discounted cash flow analysis utilizing the income approach. Under the market approach, the principal inputs are market prices and valuation multiples for public companies engaged in businesses that are considered comparable to the reporting unit. Under the income approach, the principal inputs are the reporting unit’s cash-generating capabilities and the discount rate. The discount rates used in the income approach are based on a market participant’s weighted average cost of capital. The use of alternative estimates, including different peer groups or changes in the industry, or adjusting the discount rate, earnings before interest, taxes, depreciation, depletion and amortization forecasts or cash flow assumptions used could affect the estimated fair value of the reporting units and potentially result in goodwill impairment. Any identified impairment would result in an expense to the Company’s results of operations. See Note 2 for additional information regarding goodwill and other intangible assets.

Other Intangibles

The Company accounts for intangible assets in accordance with ASC 350. Definite lived intangible assets are amortized over their useful lives on a straight-line basis. The useful lives for definite lived intangible assets vary depending on the type of asset and the terms of contracts or the valuation performed. Amortization expense on intangible assets is recorded on the straight-line method over their useful lives as follows:

Years

Customer relationships 5-23

Non-compete agreements 3-10

Other intangibles 7-15

Acquisitions

From time to time, the Company acquires businesses and/or assets that augment and complement its operations. In accordance with ASC 805, “Business Combinations,” these acquisitions are accounted for under the purchase method of accounting. Under this method, the Company allocates 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. The excess purchase consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill. The Company's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations. Acquisition costs, such as legal and consulting fees, are expensed as incurred.

The Company classifies costs incurred in connection with acquisitions and their integration as acquisition and integration related costs. These costs are expensed as incurred and consist primarily of transaction costs, legal and consulting fees, integration costs and changes in the fair value of contingent payments (earn-outs) and are recorded within Acquisition and Integration related Costs line item presented on the consolidated income statement. Acquisition transaction costs are incurred during the initial evaluation of a potential targeted acquisition and primarily relate to costs to analyze, negotiate and consummate the transaction as well as financial and legal due diligence activities. Post-acquisition integration activities are costs incurred to combine the operations of an acquired enterprise into the Company’s operations.

The consolidated financial statements include the results of operations from these business combinations from the date of acquisition.

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Internal Use Software

Internal use software is accounted for under ASC 985, “Software.” Internal use software is software that is acquired, internally developed or modified solely to meet the Company’s needs and for which, during the software’s development or modification, a plan does not exist to market the software externally. Costs incurred to develop the software during the application development stage and for upgrades and enhancements that provide additional functionality are capitalized and then amortized over a three-year period. Internal use software is capitalized as a component of machinery and equipment on the consolidated balance sheets.

Long-Lived Assets

Properties, plants and equipment are stated at cost. Depreciation on properties, plants and equipment is provided on the straight-line method over the estimated useful lives of the assets as follows:

Years

Buildings 30

Machinery and equipment 10-15

Depreciation expense was $164.6 million, $169.1 million and $149.0 million in 2021, 2020 and 2019, respectively. Expenditures for repairs and maintenance are charged to expense as incurred. When properties are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and related allowance accounts. Gains or losses are credited or charged to income as incurred.

The Company capitalizes interest on long-term fixed asset projects using a rate that approximates the weighted average cost of borrowing. For the years ended October 31, 2021, 2020 and 2019, the Company's capitalized interest costs were not material.

The Company tests for impairment of properties, plants and equipment if certain indicators are present to suggest that impairment may exist. Long-lived assets are grouped together at the lowest level, generally at the plant level, for which identifiable cash flows are largely independent of cash flows of other groups of long-lived assets. As events warrant, the Company evaluates the recoverability of long-lived assets, other than goodwill and indefinite-lived intangible assets, by assessing whether the carrying value can be recovered over their remaining useful lives through the expected future undiscounted operating cash flows of the underlying business. Impairment indicators include, but are not limited to, a significant decrease in the market price of a long-lived asset; a significant adverse change in the manner in which the asset is being used or in its physical condition; a significant adverse change in legal factors or the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; current period operating or cash flow losses combined with a history of operating or cash flow losses associated with the use of the asset; or a current expectation that it is more likely than not that a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Future decisions to change our manufacturing processes, exit certain businesses, reduce excess capacity, temporarily idle facilities and close facilities could also result in material impairment losses. Any impairment loss that may be required is determined by comparing the carrying value of the assets to their estimated fair value.

As of October 31, 2021, the Company's timber properties consisted of approximately 175,000 acres, all of which were located in the southeastern United States. The Company’s land costs are maintained by tract. Upon acquisition of a new timberland tract, the Company records separate amounts for land, merchantable timber and pre-merchantable timber allocated as a percentage of the values being purchased. The Company begins recording pre-merchantable timber costs at the time the site is prepared for planting. Costs capitalized during the establishment period include site preparation by aerial spray, costs of seedlings, including refrigeration rental and trucking, planting costs, herbaceous weed control, woody release and labor and machinery use. The Company does not capitalize interest costs in the process. Property taxes are expensed as incurred. New road construction costs are capitalized as land improvements and depreciated over a 10 to 20 year period. Road repairs and maintenance costs are expensed as incurred. Costs after establishment of the seedlings, including management costs, pre-commercial thinning costs and fertilization costs, are expensed as incurred. Once the timber becomes merchantable, the cost is transferred from the pre-merchantable timber category to the merchantable timber category in the depletion block.

Merchantable timber costs are maintained by five product classes: pine sawtimber, pine chip-n-saw, pine pulpwood, hardwood sawtimber and hardwood pulpwood, within a depletion block, with each depletion block based upon a geographic district or subdistrict. Currently, the Company has five depletion blocks. These same depletion blocks are used for pre-merchantable timber costs. Each year, the Company estimates the volume of the Company’s merchantable timber for the five product classes by each depletion block and depletion costs recognized upon sales are calculated as volumes sold times the unit costs in the

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respective depletion block. For the years ended October 31, 2021, 2020 and 2019, the Company's depletion expense was not material.

Contingencies

Various lawsuits, claims and proceedings have been or may be instituted or asserted against the Company, including those pertaining to environmental, product liability and safety and health matters. While the amounts claimed may be substantial, the ultimate liability cannot currently be determined because of the considerable uncertainties that exist.

All lawsuits, claims and proceedings are considered by the Company in establishing reserves for contingencies in accordance with ASC 450, “Contingencies.” In accordance with the provisions of ASC 450, the Company accrues for a litigation-related liability when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on currently available information known to the Company, the Company believes that its reserves for these litigation-related liabilities are reasonable and that the ultimate outcome of any pending matters is not likely to have a material effect on the Company’s financial position or results of operations.

Environmental Cleanup Costs

The Company accounts for environmental cleanup costs in accordance with ASC 410, “Asset Retirement and Environmental Obligations.” The Company expenses environmental expenditures related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible. Expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. The Company determines its liability on a site-by-site basis and records a liability at the time when it is probable and can be reasonably estimated. The Company’s estimated liability is reduced to reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of the relevant costs.

Self-insurance

The Company is self-insured for certain of the claims made under its employee medical and dental insurance programs. The Company had recorded liabilities totaling $7.4 million and $7.2 million for estimated costs related to outstanding claims as of October 31, 2021 and 2020, respectively. These costs include an estimate for expected settlements on pending claims, administrative fees and an estimate for claims incurred but not reported. These estimates are based on management’s assessment of outstanding claims, historical analyses and current payment trends. The Company recorded an estimate for the claims incurred, but not reported using an estimated lag period based upon historical information.

The Company has certain deductibles applied to various insurance policies including general liability, product, vehicle and workers’ compensation. The Company maintains liabilities totaling $24.0 million and $24.7 million for anticipated costs related to general liability, product, vehicle and workers’ compensation claims as of October 31, 2021 and 2020, respectively. These costs include an estimate for expected settlements on pending claims, defense costs and an estimate for claims incurred but not reported. These estimates are based on the Company’s assessment of its deductibles, outstanding claims, historical analysis, actuarial information and current payment trends.

Income Taxes

Income taxes are accounted for under ASC 740, “Income Taxes.” In accordance with ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be settled or realized. Valuation allowances are established when management believes it is more likely than not that some portion of the deferred tax assets will not be realized.

The Company’s effective tax rate is impacted by the amount of income generated in each taxing jurisdiction, statutory tax rates and tax planning opportunities available to the Company in the various jurisdictions in which the Company operates. Significant judgment is required in determining the Company’s effective tax rate and in evaluating its tax positions.

Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. The amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement. The Company’s effective tax rate includes the impact of reserve provisions and changes to reserves on uncertain tax positions that are not more likely than not to be sustained upon examination as well as related interest and penalties.

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A number of years may elapse before a particular matter, for which the Company has established a reserve, is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its reserves reflect the probable outcome of known tax contingencies. Unfavorable settlement of any particular issue would require use of the Company’s cash. Favorable resolution would be recognized as a reduction to the Company’s effective tax rate in the period of resolution.

Equity earnings of unconsolidated affiliates, net of tax

Equity earnings of unconsolidated affiliates, net of tax represent the Company’s share of earnings of affiliates in which the Company does not exercise control, but has significant influence. Investments in such affiliates are accounted for using the equity method of accounting. The Company has an equity interest in three such affiliates as of October 31, 2021. If the fair value of an investment in an affiliate is below its carrying value and the difference is deemed to be other than temporary, the difference between the fair value and the carrying value is charged to earnings.

Other Comprehensive Income

The Company's other comprehensive income is significantly impacted by foreign currency translation, effective cash flow hedges and defined benefit pension and post-retirement benefit adjustments.

The impact of foreign currency translation is affected by the translation of assets, liabilities and operations of the Company's foreign subsidiaries which are denominated in functional currencies other than the U.S. dollar and the recognition of accumulated foreign currency translation upon the disposal of foreign entities. The primary assets and liabilities affecting the adjustments are: cash and cash equivalents; accounts receivable; inventory; properties, plants and equipment; accounts payable; pension and other post-retirement benefit obligations; and certain intercompany loans payable and receivable. The primary currencies in which these assets and liabilities are denominated are the Euro, Brazilian real and Chinese yuan. Currently, cross currency swaps are held by the Company to synthetically swap U.S. dollar denominated fixed rate debt into Euro denominated fixed rate debt, thus reducing the impact of foreign currency translation for operations and investments we have in various international locations. The Company uses the critical terms match method for assessing the effectiveness of the swaps.

The impact of effective cash flow hedges is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Currently, interest rate swaps are held by the Company to effectively convert a portion of floating rate debt to a fixed rate basis, thus reducing the impact of interest rate increases on future interest expense. The Company uses the regression method for assessing the effectiveness of the swaps.

The impact of defined benefit pension and post-retirement benefit adjustments is primarily affected by unrecognized actuarial gains and losses related to the Company's defined benefit and other post-retirement benefit plans, as well as the subsequent amortization of gains and losses from accumulated other comprehensive income in periods following the initial recording of such items. These actuarial gains and losses are determined using various assumptions, the most significant of which are (i) the weighted average rate used for discounting the liability, (ii) the weighted average expected long-term rate of return on pension plan assets, (iii) the method used to determine market-related value of pension plan assets, (iv) the weighted average rate of future salary increases and (v) the anticipated mortality rate tables.

Restructuring Charges

The Company accounts for all exit or disposal activities in accordance with ASC 420, “Exit or Disposal Cost Obligations.” Under ASC 420, a liability is measured at its fair value and recognized as incurred.

Employee-related costs primarily consist of one-time termination benefits provided to employees who have been involuntarily terminated. A one-time benefit arrangement is an arrangement established by a plan of termination that applies for a specified termination event or for a specified future period. A one-time benefit arrangement exists at the date the plan of termination meets all of the following criteria and has been communicated to employees:

(1)Management, having the authority to approve the action, commits to a plan of termination.

(2)The plan identifies the number of employees to be terminated, their job classifications or functions and their locations and the expected completion date.

(3)The plan establishes the terms of the benefit arrangement, including the benefits that employees will receive upon termination (including but not limited to cash payments), in sufficient detail to enable employees to determine the type and amount of benefits they will receive if they are involuntarily terminated.

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(4)Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Facility exit and other costs consist of equipment relocation costs and project consulting fees. A liability for other costs associated with an exit or disposal activity is recognized and measured at its fair value in the period in which the liability is incurred (generally, when goods or services associated with the activity are received). The liability is not recognized before it is incurred, even if the costs are incremental to other operating costs and will be incurred as a direct result of a plan.

Pension and Post-retirement Benefits

Under ASC 715, “Compensation – Retirement Benefits,” the Company recognizes the funded status of its defined benefit pension and other post-retirement plans on the consolidated balance sheet and records as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that have not been recognized as components of the net periodic benefit cost.

Stock-Based Compensation Expense

The Company recognizes stock-based compensation expense in accordance with ASC 718, “Compensation – Stock Compensation.” ASC 718 requires the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards made to employees and directors, including stock options, restricted stock and restricted stock units.

Revenue Recognition

Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring goods or providing services. Customer payment terms are typically less than one year and as such, transaction prices are not adjusted for the effects of a significant financing component. Standalone selling prices for each performance obligation are generally stated in the contract. Variable consideration in the form of volume rebates is estimated based on contract terms and historical experience of actual results limited to the amount which is probable will not result in reversal of cumulative revenue recognized when the variable consideration is resolved. Taxes collected from customers and remitted to governmental authorities are excluded from net sales.

For the vast majority of revenues, contracts with customers are either a purchase order or the combination of a purchase order with a master supply agreement. A performance obligation is considered an individual unit sold. The Company does not bundle products. Prices negotiated with each individual customer are representative of the stand-alone selling price of the product. The Company typically satisfies the performance obligation at a point in time when control is transferred to customers. The point in time when control of goods is transferred is largely dependent on delivery terms.

Contract liabilities relate primarily to prepayments received from the Company’s customers before revenue is recognized and from volume rebates to customers. These amounts are included in other current liabilities in the consolidated balance sheets. The Company does not have any material contract assets. Freight charged to customers is included in net sales in the statement of income.

The Company's contracts with customers are broadly similar in nature throughout its reportable segments, but the amount, timing and uncertainty of revenue and cash flows may vary in each reportable segment due to geographic factors. See Note 13 herein for additional disclosures of revenue disaggregated by geography for each reportable segment.

Shipping and Handling Fees and Costs

The Company includes shipping and handling fees and costs in cost of products sold.

Other Expense, net

Other expense, net primarily represents foreign currency transaction gains and losses, non-service cost components of net periodic post-retirement benefit costs and other infrequent non-operating items.

Currency Translation

In accordance with ASC 830, “Foreign Currency Matters,” the assets and liabilities denominated in a foreign currency are translated into United States dollars at the rate of exchange existing at period-end, and revenues and expenses are translated at average exchange rates.

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The cumulative translation adjustments, which represent the effects of translating assets and liabilities of the Company’s international operations, are presented in the consolidated statements of changes in shareholders’ equity in accumulated other comprehensive income (loss). Transaction gains and losses on foreign currency transactions denominated in a currency other than an entity’s functional currency are credited or charged to income. The amounts included in other expense, net related to foreign currency transaction losses were not material for the years ended October 31, 2021, 2020 and 2019.

Derivative Financial Instruments

In accordance with ASC 815, “Derivatives and Hedging,” the Company records all derivatives in the consolidated balance sheet as either assets or liabilities measured at fair value. Dependent on the designation of the derivative instrument, changes in fair value are recorded to earnings or shareholders’ equity through other comprehensive income (loss).

The Company may from time to time use interest rate swap agreements to hedge against changing interest rates. For interest rate swap agreements designated as cash flow hedges, the net gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The Company's interest rate swap agreements effectively convert a portion of floating rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense.

The Company's cross currency interest rate swap agreement synthetically swaps United States ("U.S.") dollar denominated fixed rate debt for Euro denominated fixed rate debt and is designated as a net investment hedge for accounting purposes. The gain or loss on this derivative instrument is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. Interest payments received for 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.

The Company enters into currency forward contracts to hedge certain currency transactions and short-term intercompany loan balances with its international businesses. Such contracts limit the Company’s exposure to both favorable and unfavorable currency fluctuations. These contracts are adjusted to reflect market value as of each balance sheet date, with the resulting changes in fair value being recognized in other expense, net.

Any derivative contract that is either not designated as a hedge, or is so designated but is ineffective, has its changes to market value recognized in earnings immediately. If a cash flow or fair value hedge ceases to qualify for hedge accounting, the contract would continue to be carried on the balance sheet at fair value until settled and have the adjustments to the contract’s fair value recognized in earnings. If a forecasted transaction were no longer probable to occur, amounts previously deferred in accumulated other comprehensive income (loss) would be recognized immediately in earnings.

Variable Interest Entities

The Company evaluates whether an entity is a variable interest entity (“VIE”) and determines if the primary beneficiary status is appropriate on a quarterly basis. The Company consolidates VIEs for which it is the primary beneficiary. If the Company is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity method of accounting. When assessing the determination of the primary beneficiary, the Company considers all relevant facts and circumstances, including: the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; the obligation to absorb the expected losses; and/or the right to receive the expected returns of the VIE.

Fair Value

The Company uses ASC 820, “Fair Value Measurements and Disclosures” to account for fair value. ASC 820 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about assets and liabilities measured at fair value. Additionally, this standard established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used to measure fair values are as follows:

•Level 1 – Observable inputs such as unadjusted quoted prices in active markets for identical assets and liabilities.

•Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities.

•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.

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The Company presents various fair value disclosures in Note 6 and Note 9 of the Notes to the consolidated financial statements.

Newly Adopted Accounting Standards

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a current expected credit loss model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for years beginning after December 15, 2019, including interim periods within those years, with early adoption permitted. The Company adopted this ASU on November 1, 2020. The adoption of this guidance did not have a material impact on financial position, results of operations, comprehensive income, cash flows or disclosures.

Recently Issued Accounting Standards

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. This ASU is effective for years beginning after December 15, 2020, including interim periods within those years, with early adoption permitted. The effective date for the Company to adopt this ASU is November 1, 2021. The Company has completed its assessment related to the adoption of the ASU and based on the current structure of the Company and its operations, the ASU is not expected to have a material impact on the financial position, result of operations, comprehensive income, cash flows or disclosures.

NOTE 2 – GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes the changes in the carrying amount of goodwill by reportable segment for the years ended October 31, 2021 and 2020:

(in millions) Global Industrial Packaging (1) PaperPackaging & Services Total

Goodwill adjustments related to acquisitions 1.1 17.4 18.5

Currency translation 18.4 — 18.4

Goodwill allocated to divestitures and businesses held for sale (0.4) — (0.4)

GEF US Equity

GEF · 10-K · period ended 2021-10-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GEF US Equity☆

GEF · 10-K · period ended 2021-10-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GEF US Equity