GREIF, INC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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GENERAL


The terms "Greif," "our company," "we," "us" and "our" as used in this
discussion refer to Greif, Inc. and its subsidiaries. Our fiscal year begins on
November 1 and ends on October 31 of the following year. Any references in
unaudited interim condensed consolidated financial statements included in the
Quarterly Report on Form 10-Q ("this Form 10-Q") to the 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.

The discussion and analysis presented below relates to the material changes in
financial condition and results of operations for our interim condensed
consolidated balance sheets as of January 31, 2022 and October 31, 2021, and for
the interim condensed consolidated statements of income for the three months
ended January 31, 2022 and 2021. This discussion and analysis should be read in
conjunction with the interim condensed consolidated financial statements that
appear elsewhere in this Form 10-Q and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in our Annual Report on
Form 10-K for the fiscal year ended October 31, 2021 (the "2021 Form 10-K").
Readers are encouraged to review the entire 2021 Form 10-K, as it includes
information regarding Greif not discussed in this Form 10-Q. This information
will assist in your understanding of the discussion of our current period
financial results.

All statements, other than statements of historical facts, included in this
Form 10-Q, including without limitation, statements regarding our future
financial position, business strategy, budgets, projected costs, goals, trends,
and plans and objectives of management for future operations, are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "aspiration," "objective," "project," "believe,"
"continue," "on track" or "target" or the negative thereof or variations thereon
or similar terminology. All forward-looking statements made in this Form 10-Q
are based on assumptions, expectations and other information currently available
to management. Although we believe that the expectations reflected in
forward-looking statements have a reasonable basis, we can give no assurance
that these expectations will prove to be correct.

Forward-looking statements are subject to risks and uncertainties that could
cause our actual results to differ materially from those forecasted, projected
or anticipated, whether expressed in or implied by the statements. Such risks
and uncertainties that might cause a difference include, but are not limited to,
the following: (i) historically, our business has been sensitive to changes in
general economic or business conditions, (ii) our global operations subject us
to political risks, instability and currency exchange that could adversely
affect our results of operations, (iii) the COVID-19 pandemic could continue to
impact any combination of our business, financial condition, results of
operations and cash flows, (iv) the current and future challenging global
economy and disruption and volatility of the financial and credit markets may
adversely affect our business, (v) the continuing consolidation of our customer
base and suppliers may intensify pricing pressure, (vi) we operate in highly
competitive industries, (vii) our business is sensitive to changes in industry
demands and customer preferences, (viii) raw material, price fluctuations,
global supply chain disruptions and inflation may adversely impact our results
of operations, (ix) energy and transportation price fluctuations and shortages
may adversely impact our manufacturing operations and costs, (x) the frequency
and volume of our timber and timberland sales will impact our financial
performance, (xi) we may not successfully implement our business strategies,
including achieving our growth objectives, (xii) we may encounter difficulties
or liabilities arising from acquisitions or divestitures, (xiii) we may incur
additional restructuring costs and there is no guarantee that our efforts to
reduce costs will be successful, (xiv) several operations are conducted by joint
ventures that we cannot operate solely for our benefit, (xv) certain of the
agreements that govern our joint ventures provide our partners with put or call
options, (xvi) our ability to attract, develop and retain talented and qualified
employees, managers and executives is critical to our success, (xvii) our
business may be adversely impacted by work stoppages and other labor relations
matters, (xviii) we may be subject to losses that might not be covered in whole
or in part by existing insurance reserves or insurance coverage and general
insurance premium and deductible increases, (xix) our business depends on the
uninterrupted operations of our facilities, systems and business functions,
including our information technology and other business systems, (xx) a security
breach of customer, employee, supplier or our information and data privacy risks
and costs of compliance with new regulations may have a material adverse effect
on our business, financial condition, results of operations and cash flows,
(xxi) we could be subject to changes to our tax rates, the adoption of new U.S.
or foreign tax legislation or exposure to additional tax liabilities, (xxii)
full realization of our deferred tax assets may be affected by a number of
factors, (xxiii) we have a significant amount of goodwill and long-lived assets
which, if impaired in the future, would adversely impact our results of
operations, (xxiv) our pension and post-retirement plans are underfunded and
will require future cash contributions, and our required future cash
contributions could be higher than we expect, each of which could have a
material adverse effect on our financial condition and liquidity, (xxv)
legislation/regulation related to environmental and health and safety matters
and corporate social responsibility could negatively impact our operations and
financial performance, (xxvi) product liability claims and other legal
proceedings could adversely affect our operations and financial performance,
(xxvii) we may incur fines or penalties, damage to our reputation or other
adverse consequences if our employees, agents or business partners violate, or
are alleged to have violated, anti-bribery, competition or other laws, (xxviii)
changing climate, global climate change regulations and greenhouse gas effects
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may adversely affect our operations and financial performance, (xxix) we may be
unable to achieve our greenhouse gas emission reduction targets by 2030. The
risks described above are not all-inclusive, and given these and other possible
risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. For a detailed
discussion of the most significant risks and uncertainties that could cause our
actual results to differ materially from those forecasted, projected or
anticipated, see "Risk Factors" in Part I, Item 1A of our most recently filed
Form 10-K and our other filings with the Securities and Exchange Commission. All
forward-looking statements made in this Form 10-Q are expressly qualified in
their entirety by reference to such risk factors. Except to the limited extent
required by applicable law, we undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

OVERVIEW

Business Segments

We operate in three reportable business segments: Global industrial packaging;
Paper packaging and services; and land management.


In the Global Industrial Packaging segment, we are a leading global producer of
industrial packaging products, such as steel, fibre and plastic drums, rigid and
flexible intermediate bulk containers, closure systems for industrial packaging
products, transit protection products, water bottles and remanufactured and
reconditioned industrial containers, and services, such as container life cycle
management, filling, logistics, warehousing and other packaging services. Our
flexible intermediate bulk containers consist of a polypropylene-based woven
fabric that is produced at our production sites, as well as sourced from
strategic regional suppliers. We sell our industrial packaging products on a
global basis to customers in industries such as chemicals, paints and pigments,
food and beverage, petroleum, industrial coatings, agriculture, pharmaceutical
and minerals, among others.

In the Paper Packaging & Services segment, we produce and sell containerboard,
corrugated sheets, corrugated containers, and other corrugated products to
customers in North America in industries such as packaging, automotive, food and
building products. Our corrugated container products are used to ship such
diverse products as home appliances, small machinery, grocery products,
automotive components, books and furniture, as well as numerous other
applications. We also produce and sell coated recycled paperboard and uncoated
recycled paperboard, some of which we use to produce and sell industrial
products (tubes and cores, construction products, protective packaging, and
adhesives). In addition, we also purchase and sell recycled fiber.

In the Land Management segment, we are focused on the active harvesting and
regeneration of our United States timber properties to achieve sustainable
long-term yields. While timber sales are subject to fluctuations, we seek to
maintain a consistent cutting schedule, within the limits of market and weather
conditions. We also sell, from time to time, timberland and special use land,
which consists of surplus land, higher and better use ("HBU") land and
development land. As of January 31, 2022, we owned approximately 175,000 acres
of timber property in the southeastern United States, which includes 18,800
acres of special use land.

CRITICAL ACCOUNTING METHODS


The discussion and analysis of our financial condition and results of operations
are based upon our interim condensed consolidated financial statements, which
have been prepared in accordance with GAAP. The preparation of these interim
condensed 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 as of the date of our interim
condensed consolidated financial statements.

Our critical accounting policies are discussed in Part II, Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations of the
2021 Form 10-K. We believe that the consistent application of these policies
enables us to provide readers of the interim condensed consolidated financial
statements with useful and reliable information about our results of operations
and financial condition. There have been no material changes to our critical
accounting policies from the disclosures contained in the 2021 Form 10-K.

Recently issued and newly adopted accounting standards


See Note 1 to the interim condensed consolidated financial statements included
in Item 1 of this Form 10-Q for a detailed description of recently issued and
newly adopted accounting standards.

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RESULTS OF OPERATIONS


The following comparative information is presented for the three months ended
January 31, 2022 and 2021. Historical revenues and earnings may or may not be
representative of future operating results as a result of various economic and
other factors.

Items that could have a significant impact on the financial statements include
the risks and uncertainties listed in Part I, Item 1A - Risk Factors, of the
2021 Form 10-K. Actual results could differ materially using different estimates
and assumptions, or if conditions are significantly different in the future.

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, plus income tax expense, plus
depreciation, depletion and amortization expense, and Adjusted EBITDA is defined
as EBITDA plus restructuring charges, plus integration related costs, plus
non-cash asset impairment charges, plus non-cash pension settlement charges,
plus incremental COVID-19 costs, net, plus loss (gain) on disposal of
properties, plants, equipment and businesses, net. Since we do not calculate net
income by business segment, EBITDA and Adjusted EBITDA by business segment are
reconciled to operating profit by business segment. In that case, EBITDA is
defined as operating profit by business segment less non-cash pension settlement
charges, less other expense, net, less equity earnings of unconsolidated
affiliates, net of tax, plus depreciation, depletion and amortization expense
for that business segment, and Adjusted EBITDA is defined as EBITDA plus any
restructuring charges, plus integration related costs, plus non-cash asset
impairment charges, plus non-cash pension settlement charges, plus incremental
COVID-19 costs, net, plus loss (gain) on disposal of properties, plants,
equipment and businesses, net, plus timberlands gains, net, for that business
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
restructuring charges, integration related costs, non-cash asset impairment
charges, non-cash pension settlement charges, incremental COVID-19 costs, net
and (gain) loss on disposal of properties, plants, equipment and businesses, net
which are non-GAAP financial measures. We believe that excluding the impact of
these adjustments enables 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.


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First quarter results


The following table sets forth the net sales, operating profit, EBITDA and
Adjusted EBITDA for each of our business segments for the three months ended
January 31, 2022 and 2021:

                                  Three Months Ended
                                     January 31,
(in millions)                    2022           2021
Net sales:
Global Industrial Packaging   $   949.1      $   659.3
Paper Packaging & Services        610.0          480.9
Land Management                     5.2            6.3
Total net sales               $ 1,564.3      $ 1,146.5
Operating profit:
Global Industrial Packaging   $    31.0      $    54.0
Paper Packaging & Services         38.3           14.3
Land Management                     2.7            1.7
Total operating profit        $    72.0      $    70.0
EBITDA:
Global Industrial Packaging   $    51.0      $    75.8
Paper Packaging & Services         76.2           42.9
Land Management                     3.5            2.8
Total EBITDA                  $   130.7      $   121.5
Adjusted EBITDA:
Global Industrial Packaging   $   114.2      $    79.5
Paper Packaging & Services         80.5           56.1
Land Management                     2.1            2.9
Total Adjusted EBITDA         $   196.8      $   138.5



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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 the three months
ended January 31, 2022 and 2021:

                                                                            Three Months Ended
                                                                                January 31,
(in millions)                                                             2022                 2021
Net income                                                          $     18.6             $    30.9
Plus: interest expense, net                                               17.1                  25.2

Plus: income tax expense                                                  35.6                   6.1
Plus: depreciation, depletion and amortization expense                    59.4                  59.3
EBITDA                                                              $    130.7             $   121.5
Net income                                                          $     18.6             $    30.9
Plus: interest expense, net                                               17.1                  25.2
Plus: income tax expense                                                  35.6                   6.1
Plus: non-cash pension settlement charges                                    -                   8.5

Plus: other expense, net                                                   2.0                     -
Plus: equity earnings of unconsolidated affiliates, net of tax            (1.3)                 (0.7)
Operating profit                                                          72.0                  70.0
Less: non-cash pension settlement charges                                    -                   8.5
Less: other expense, net                                                   2.0                     -
Less: equity earnings of unconsolidated affiliates, net of tax            (1.3)                 (0.7)
Plus: depreciation, depletion and amortization expense                    59.4                  59.3
EBITDA                                                                   130.7                 121.5
Plus: restructuring charges                                                3.5                   3.1

Plus: integration related costs                                            1.6                   2.0
Plus: non-cash asset impairment charges                                   62.4                   1.3
Plus: non-cash pension settlement charges                                    -                   8.5
Plus: incremental COVID-19 costs, net                                        -                   0.6
Plus: (gain) loss on disposal of properties, plants, equipment, and
businesses, net                                                           (1.4)                  1.5
Adjusted EBITDA                                                     $    196.8             $   138.5



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The following table presents the EBITDA and Adjusted EBITDA of our business segments, reconciled to the operating profit of each segment, for the three months ended January 31, 2022 and 2021:

                                                                             Three Months Ended
                                                                                 January 31,
(in millions)                                                              2022                  2021
Global Industrial Packaging
Operating profit                                                    $      31.0              $    54.0
Less: other expense (income), net                                           1.9                   (0.1)
Less: equity earnings of unconsolidated affiliates, net of tax             (1.3)                  (0.7)
Plus: depreciation and amortization expense                                20.6                   21.0
EBITDA                                                                     51.0                   75.8
Plus: restructuring charges                                                 2.1                    2.8

Plus: non-cash asset impairment charges                                    62.4                    1.3
Plus: incremental COVID-19 costs, net                                         -                    0.3
Plus: gain on disposal of properties, plants, equipment, and
businesses, net                                                            (1.3)                  (0.7)
Adjusted EBITDA                                                     $     114.2              $    79.5
Paper Packaging & Services
Operating profit                                                    $      38.3              $    14.3
Less: non-cash pension settlement charges                                     -                    8.5
Less: other expense, net                                                    0.1                    0.1
Plus: depreciation and amortization expense                                38.0                   37.2
EBITDA                                                                     76.2                   42.9
Plus: restructuring charges                                                 1.4                    0.3
Plus: integration related costs                                             1.6                    2.0
Plus: non-cash pension settlement charges                                     -                    8.5
Plus: incremental COVID-19 costs, net                                         -                    0.3
Plus: loss on disposal of properties, plants, equipment, and
businesses, net                                                             1.3                    2.1
Adjusted EBITDA                                                     $      80.5              $    56.1
Land Management
Operating profit                                                    $       2.7              $     1.7
Plus: depreciation, depletion and amortization expense                      0.8                    1.1
EBITDA                                                                      3.5                    2.8
Plus: (gain) loss on disposal of properties, plants, equipment, and
businesses, net                                                            (1.4)                   0.1
Adjusted EBITDA                                                     $       2.1              $     2.9


Net Sales

Net sales were $1,564.3 million for the first quarter of 2022 compared with
$1,146.5 million for the first quarter of 2021. The $417.8 million increase was
primarily due to higher volumes and higher average sale prices across the Global
Industrial Products and the Paper Packaging & Services segments. See the
"Segment Review" below for additional information on net sales by segment for
the first quarter of 2022.

Gross Profit

Gross profit was $289.7 million for the first quarter of 2022 compared with
$212.2 million for the first quarter of 2021. The reasons for the changes in
gross profit for each segment are described below in the "Segment Review." Gross
profit margin was 18.5 percent for both the first quarter of 2022 and 2021.

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Selling, general and administrative expenses


Selling, general and administrative ("SG&A") expenses were $151.6 million for
the first quarter of 2022 and $134.3 million for the first quarter of 2021. SG&A
expenses were 9.7 percent and 11.7 percent of net sales for the first quarter of
2022 and 2021, respectively. The increase in SG&A expenses was primarily due to
increased incentive accruals.

Financial Measures

Operating profit was $72.0 million for the first quarter of 2022 compared with
$70.0 million for the first quarter of 2021. Net income was $18.6 million for
the first quarter of 2022 compared with $30.9 million for the first quarter of
2021. Adjusted EBITDA was $196.8 million for the first quarter of 2022 compared
with $138.5 million for the first quarter of 2021. The reasons for the changes
in Adjusted EBITDA for each segment are described below in the "Segment Review."

Tendencies


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 continue 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. In addition, we anticipate that other raw
material prices and costs of transportation, labor and energy will continue to
increase through the year.

The foregoing is subject to the impact and consequences of the invasion of the
Ukraine by Russia. As described in Part I, Item 1A - Risk Factors, of the 2021
Form 10-K, our global operations subject us to general economic and business
conditions and political, social, economic and labor instability, including war,
invasion and civil disturbance, that could adversely affect our business and
results of operations. In addition, demand for our products and services has
historically corresponded to changes in general economic and business conditions
of the industries and countries in which we operate. However, our operations in
Russia and the Ukraine on a combined basis account for approximately 3% of our
total sales and approximately 1.3% of our total assets. We will continue to
actively monitor this situation.

Sector review

Global industrial packaging


Our Global Industrial Packaging segment offers a comprehensive line of
industrial packaging products, such as steel, fibre and plastic drums, rigid and
flexible intermediate bulk containers, closure systems for industrial packaging
products, transit protection products, water bottles and remanufactured and
reconditioned industrial containers, and services, such as container life cycle
management, filling, logistics, warehousing and other packaging services. Key
factors influencing profitability in the Global Industrial Packaging segment
are:

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

•Costs of raw materials, mainly steel, resin, corrugated cardboard and used industrial packaging to be reconditioned;

• Energy and transportation costs;

• Benefits from running the Greif Business System;

•Restructuring charges;

•Acquisition of businesses and facilities;

• Disposal of businesses and facilities; and

• Impact of foreign currency conversion.


Net sales were $949.1 million for the first quarter of 2022 compared with $659.3
million for the first quarter of 2021. The $289.8 million increase in net sales
was primarily due to higher volumes and higher average sale prices.

The gross profit was $177.1 million for the first quarter of 2022 compared to
$130.3 million for the first quarter of 2021. The $46.8 million the increase in gross margin is primarily due to the same factors that impacted net sales, partially offset by higher raw material costs. Gross profit margin was 18.7% and 19.8% for the three months ended January 31, 2022 and 2021, respectively.

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Operating profit was $31.0 million for the first quarter of 2022 compared with
operating profit of $54.0 million for the first quarter of 2021. The
$23.0 million decrease is primarily due to a $62.4 million non-cash impairment
charge related to a definitive agreement to divest our approximately 50% equity
interest in the Flexible Products and Services business to our joint venture
partner, Gulf Refined Packaging (the "FPS Divestiture"), offset by the same
factors that impacted gross profit. Adjusted EBITDA was $114.2 million for the
first quarter of 2022 compared with $79.5 million for the first quarter of 2021.
The $34.7 million increase in Adjusted EBITDA was primarily due to the same
factors that impacted gross profit.

Paper packaging and services


Our Paper Packaging & Services segment produces and sells containerboard,
corrugated sheets, corrugated containers, and other corrugated products to
customers in North America in industries such as packaging, automotive, food and
building products. Our corrugated container products are used to ship such
diverse products as home appliances, small machinery, grocery products,
automotive components, books and furniture, as well as numerous other
applications. We also produce and sell coated recycled paperboard and uncoated
recycled paperboard, some of which we use to produce and sell products which
ultimately serve both industrial and consumer markets. In addition, we also
purchase and sell recycled fiber. Key factors influencing profitability in the
Paper Packaging & Services segment are:

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

•Costs of raw materials, mainly old corrugated cardboard containers;

• Energy and transportation costs;

• Benefits from running the Greif Business System;

•Acquisition of businesses and facilities;

•Restructuring charges; and

• Disposal of businesses and facilities.


Net sales were $610.0 million for the first quarter of 2022 compared with $480.9
million for the first quarter of 2021. The $129.1 million increase was primarily
due to higher volumes and higher published containerboard and boxboard prices.

Gross profit was $110.8 million for the first quarter of 2022 compared with
$79.6 million for the first quarter of 2021. The increase in gross profit was
primarily due to the same factors that impacted net sales, partially offset by
higher raw material, transportation and utility costs. Gross profit margin was
18.2 percent and 16.6 percent for the first quarter of 2022 and 2021,
respectively.

Operating profit was $38.3 million for the first quarter of 2022 compared with
$14.3 million for the first quarter of 2021 primarily due to the same factors as
gross profit. Adjusted EBITDA was $80.5 million for the first quarter of 2022
compared with $56.1 million for the first quarter of 2021. The $24.4 million
increase in Adjusted EBITDA was primarily due to the same factors that impacted
operating profit.

Land Management

From January 31, 2022our land management segment included approximately 175,000 acres of forest properties in the southeast United States. The main factors influencing the profitability of the Land Management segment are:

•Expected level of timber sales;

•Sale price and customer demand;

• Gains on the sale of exploitable forest land; and

•Gains on the disposal of properties under development, surplus and HBU (“special purpose properties”).

From January 31, 2022we had about 18,800 acres of special use property in United States.

Net sales decreased to $5.2 million for the first quarter of 2022 compared to
$6.3 million for the first quarter of 2021, mainly due to the reduction in wood available for sale due to the area sold in the previous year.

The gross profit was $1.8 million for the first quarter of 2022 compared to $2.3 million for the first quarter of 2021.

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Operating profit increased to $2.7 million for the first quarter of 2022 compared to $1.7 million for the first quarter of 2021. Adjusted EBITDA was
$2.1 million and $2.9 million for the first quarter of 2022 and 2021, respectively.


In order to maximize the value of our timber property, 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 we cannot effectively or effectively manage, whether due to parcel size, lack of productivity, location, access limitations or for other reasons;

•HBU property, ie land which, in its current state, has a higher market value for uses other than the cultivation and sale of timber;

•Development property, ie HBU land which, with additional investment, may have a market value significantly above its HBU market value; and

• Core timberland, ie the land best suited for the cultivation and sale of timber.


We report the sale of core timberland property in timberland gains, the sale of
HBU and surplus property in gain on disposal of properties, plants and
equipment, net and the sale of timber and development property under net sales
and cost of products sold in our interim condensed consolidated statements of
income. 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.

income tax expense


Our quarterly income tax expense was computed in accordance with Accounting
Standards Codification 740-270 "Income Taxes - Interim Reporting." In accordance
with this accounting standard, annual estimated tax expense is computed based on
forecasted annual earnings and other forecasted annual amounts, including, but
not limited to items such as uncertain tax positions and withholding taxes.
Additionally, losses from jurisdictions for which a valuation allowance has been
provided have not been included in the annual estimated tax rate. Income tax
expense each quarter is provided for on a current year-to-date basis using the
annual estimated tax rate, adjusted for discrete taxable events that occur
during the interim period.

Income tax expense for the first quarter of 2022 was $35.6 million on
$52.9 million of pretax income and income tax expense for the first quarter of
2021 was $6.1 million on $36.3 million of pretax income. In addition to higher
pretax income, this increase was impacted by the increase of unfavorable
discrete items of $8.9 million. The increase in discrete items was primarily due
to adjustments of certain assumptions regarding 2021 tax-only capital losses
previously applied to the 2021 timberland sale and tax basis in certain tangible
property, net of reductions in previously unrecognized tax benefits due to
expiration of statutes of limitation and audit settlements. Additionally, a
$62.4 million impairment loss was recorded in the first quarter of 2022 related
to the FPS Divestiture, for which no tax benefit is expected.

We are subject to audits by U.S. federal, state and local tax authorities and
foreign tax authorities. We believe that adequate provisions have been made for
any adjustments that may result from tax examinations. However, the outcome of
tax audits cannot be predicted with certainty. If any issues addressed in the
tax audits are resolved in a manner not consistent with management's
expectations, we could be required to adjust our provision for income taxes in
the period such resolution occurs.

The estimated net decrease in unrecognized tax benefits for the next 12 months
ranges from zero to $9.1 million. Actual results may differ materially from this
estimate.

CASH AND CAPITAL RESOURCES


Our primary sources of liquidity are operating cash flows and borrowings under
our senior secured credit facilities and proceeds from our trade accounts
receivable credit facilities. We use these sources to fund our working capital
needs, capital expenditures, cash dividends, debt repayment and acquisitions. We
anticipate continuing to fund these items in a like manner. 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.

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