GREIF, INC (GEF) FY 2021 MD&A

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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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:

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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:

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.

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 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.

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.

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

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:

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 4,703,487 shares. 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:

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.