Greif(GEF) - 2025 Q3 - Quarterly Results

Executive Summary & Strategic Overview Greif executed significant portfolio divestitures, achieved cost savings, and generated strong adjusted free cash flow, improving its financial position despite mixed demand Key Strategic Actions and Announcements Greif announced significant portfolio changes, including the definitive agreement to divest its Containerboard Business for $1.8 billion and the planned sale of its timberlands business for $462.0 million. The company is also making progress on cost optimization initiatives, achieving $20.0 million in run-rate savings by Q3 2025 - Divestiture of Containerboard Business: Entered into a definitive agreement to sell for $1.8 billion in an all-cash transaction, expected to close effective August 31, 2025. This business is now presented as discontinued operations[3][6] - Sale of Timberlands Business: Signed definitive agreement for $462.0 million, with closing anticipated October 1, 2025[6] - Cost Optimization: Achieved run-rate savings of $20.0 million by the end of Q3 2025, reaching the midpoint of the committed $15 - $25 million range[6] CEO Commentary CEO Ole Rosgaard highlighted strong adjusted free cash flow generation of $171 million, emphasizing the company's focus on cash production, cost optimization, and executing portfolio changes to achieve long-term commitments and create shareholder value despite mixed demand - CEO Ole Rosgaard stated, "Greif continued to execute this quarter, as evidenced in particular by our strong $171 million of adjusted free cash flow generation"[5] - The company is focused on "driving cash production, ramping up our cost optimization, and executing on portfolio changes" to achieve long-term commitments and create value for investors[5] Fiscal Third Quarter 2025 Financial Highlights For continuing operations, net income decreased significantly due to a prior-year gain, but net income excluding adjustments increased by 11.6%. Combined Adjusted EBITDA saw an 11% increase, and adjusted free cash flow surged by $136.4 million. The company also reduced total and net debt, improving its leverage ratio to 3.1x Net Income (Continuing Operations) Comparison (in millions, except per share amounts) | Metric | Q3 2025 | Q3 2024 | Change (%) | | :----------------------------------- | :-------- | :-------- | :--------- | | Net income | $39.3 | $78.0 | -49.6% | | Diluted Class A share | $0.67 | $1.35 | | | Net income (excluding adjustments) | $60.4 | $54.1 | +11.6% | | Diluted Class A share (excluding adjustments) | $1.03 | $0.92 | | Adjusted EBITDA Comparison (in millions) | Metric | Q3 2025 | Q3 2024 | Change (%) | | :-------------------------- | :-------- | :-------- | :--------- | | Combined Adjusted EBITDA | $220.9 | $199.4 | +11% | | Adjusted EBITDA (continuing) | $160.7 | $157.0 | +2.4% | Cash Flow Comparison (in millions) | Metric | Q3 2025 | Q3 2024 | Change ($M) | | :--------------------------------- | :-------- | :-------- | :---------- | | Net cash provided by operating activities | $199.9 | $76.8 | +$123.1 | | Adjusted free cash flow | $170.7 | $34.3 | +$136.4 | Debt & Leverage Comparison (in millions, except leverage ratio) | Metric | Q3 2025 | Q3 2024 | Change ($M) | | :---------- | :---------- | :---------- | :---------- | | Total debt | $2,717.0 | $2,909.5 | -$192.5 | | Net debt | $2,431.8 | $2,715.3 | -$283.5 | | Leverage ratio | 3.1x | 3.6x | -0.5x | - The Board of Directors declared quarterly cash dividends reflecting an increase of $0.02 per share on Class A Common Stock and $0.03 per share on Class B Common Stock[6] Segment Results (Continuing Operations) Segment performance varied, with Customized Polymer Solutions showing growth, Durable Metal and Sustainable Fiber Solutions improving profitability despite sales declines, and Integrated Solutions experiencing overall decreases Net Sales Impact by Driver The table illustrates the percentage impact of currency translation, volume, and selling prices/product mix on net sales for each segment in Q3 2025 compared to Q3 2024. Customized Polymer Solutions saw overall growth, while Durable Metal and Sustainable Fiber Solutions experienced declines, primarily due to lower volumes Net Sales Impact by Segment (Q3 2025 vs Q3 2024) | Segment | Currency Translation | Volume | Selling Prices and Product Mix | Total Impact | | :----------------------- | :------------------- | :----- | :--------------------------- | :----------- | | Customized Polymer Solutions | 2.4% | 2.2% | 3.3% | 7.9% | | Durable Metal Solutions | 2.7% | (5.8)% | (2.7)% | (5.8)% | | Sustainable Fiber Solutions | (0.1)% | (7.6)% | 2.1% | (5.6)% | | Integrated Solutions | 0.8% | 2.6% | 1.2% | 4.6% | Customized Polymer Solutions This segment reported increased net sales and gross profit, driven by higher volumes, selling prices, and positive foreign currency translation. However, operating profit and Adjusted EBITDA slightly decreased due to higher SG&A and restructuring charges - Net sales increased by $25.1 million to $339.8 million, primarily due to $7.0 million from higher volumes and $10.5 million from higher average selling prices and positive foreign currency translation impacts[11][39] Customized Polymer Solutions Financials (in millions) | Metric | 2025 | 2024 | Change ($M) | | :------------------- | :----- | :----- | :---------- | | Gross profit | $70.7 | $60.6 | +$10.1 | | Operating profit | $8.8 | $9.6 | -$0.8 | | Adjusted EBITDA | $39.4 | $40.5 | -$1.1 | Durable Metal Solutions Despite a decrease in net sales primarily due to lower volumes, this segment achieved an increase in gross profit, operating profit, and Adjusted EBITDA, mainly benefiting from lower raw material costs - Net sales decreased by $24.3 million to $399.8 million, primarily due to $24.6 million attributable to lower volumes[13][39] Durable Metal Solutions Financials (in millions) | Metric | 2025 | 2024 | Change ($M) | | :------------------- | :----- | :----- | :---------- | | Gross profit | $86.4 | $85.7 | +$0.7 | | Operating profit | $37.6 | $36.2 | +$1.4 | | Adjusted EBITDA | $47.7 | $45.6 | +$2.1 | - The increase in gross profit was primarily due to lower raw material costs[13] Sustainable Fiber Solutions This segment experienced a decline in net sales due to lower volumes, partially offset by higher prices. However, gross profit and Adjusted EBITDA increased, primarily due to lower raw material and manufacturing costs, despite a decrease in operating profit from higher restructuring charges - Net sales decreased by $17.6 million to $308.0 million, primarily due to $24.5 million attributable to lower volumes, partially offset by $6.8 million from higher published containerboard and boxboard prices[15][39] Sustainable Fiber Solutions Financials (in millions) | Metric | 2025 | 2024 | Change ($M) | | :------------------- | :----- | :----- | :---------- | | Gross profit | $75.4 | $67.9 | +$7.5 | | Operating profit | $23.2 | $35.9 | -$12.7 | | Adjusted EBITDA | $65.5 | $57.1 | +$8.4 | - The increase in gross profit was primarily due to lower raw material costs and lower manufacturing costs[15] Integrated Solutions The Integrated Solutions segment saw decreases across net sales, gross profit, operating profit, and Adjusted EBITDA, largely attributed to the Delta Divestiture in the prior year - Net sales decreased by $13.4 million to $87.1 million, primarily due to a $14.3 million impact from the Delta Divestiture during the third quarter of 2024[17][39] Integrated Solutions Financials (in millions) | Metric | 2025 | 2024 | Change ($M) | | :------------------- | :----- | :----- | :---------- | | Gross profit | $24.8 | $30.7 | -$5.9 | | Operating profit | $3.5 | $55.0 | -$51.5 | | Adjusted EBITDA | $8.1 | $13.8 | -$5.7 | - Operating profit decreased primarily due to a $46.1 million gain from the Delta Divestiture during the third quarter of 2024[18] Financial Position, Dividends & Outlook Greif reported Q3 2025 tax rates, declared increased quarterly dividends, and provided fiscal 2025 guidance for Combined Adjusted EBITDA and Adjusted free cash flow Tax Summary Greif recorded an income tax rate of 21.1% for Q3 2025, with an adjusted tax rate of 22.4%. The company anticipates its fiscal 2025 tax rate, both reported and excluding adjustments, to range between 27.0% and 32.0% Q3 2025 Tax Rates | Metric | Rate | | :------------------------------------ | :----- | | Income tax rate | 21.1% | | Tax rate excluding the impact of adjustments | 22.4% | - For fiscal 2025, the company expects its tax rate and its tax rate excluding adjustments to range between 27.0% to 32.0%[19] Dividend Summary The Board of Directors declared increased quarterly cash dividends of $0.56 per share for Class A Common Stock and $0.84 per share for Class B Common Stock, payable on October 1, 2025 Quarterly Cash Dividends Declared (August 26, 2025, per share) | Stock Class | Dividend Per Share | | :------------------- | :----------------- | | Class A Common Stock | $0.56 | | Class B Common Stock | $0.84 | - These dividends reflect an increase of $0.02 per share on Class A Common Stock and $0.03 per share on Class B Common Stock from the prior quarter's dividends[6] Company Outlook Greif provided its fiscal 2025 outlook for Combined Adjusted EBITDA and Adjusted free cash flow, with the latter including cash flows from the Containerboard Business Fiscal 2025 Outlook (in millions) | Metric | Reported at Q3 Range | | :---------------------- | :------------------- | | Combined Adjusted EBITDA | $725 - $735 | | Adjusted free cash flow | $305 - $315 | - Fiscal 2025 Adjusted free cash flow guidance includes cash flows from the Containerboard Business[21][53] Condensed Consolidated Financial Statements (Unaudited) The unaudited financial statements show a slight decrease in net sales, increased operating cash flow, a stronger balance sheet with reduced debt, and higher total assets Statements of Income For the three months ended July 31, 2025, net sales from continuing operations were $1,134.7 million, a slight decrease from the prior year. Net income from continuing operations was $44.7 million, while net income from discontinued operations was $24.7 million Condensed Consolidated Statements of Income (Three Months Ended July 31, in millions) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Net sales | $1,134.7 | $1,164.9 | | Gross profit | $257.3 | $244.9 | | Operating profit | $73.1 | $136.7 | | Net income from continuing operations | $44.7 | $84.5 | | Net income from discontinued operations, net of tax | $24.7 | $9.1 | | Net income attributable to Greif, Inc. | $64.0 | $87.1 | Diluted Earnings Per Share Attributable to Greif, Inc. Common Shareholders (Class A, per share) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Earnings from continuing operations per Class A common stock | $0.67 | $1.34 | | Earnings from discontinued operations per Class A common stock | $0.43 | $0.16 | | Class A common stock (total) | $1.10 | $1.50 | Balance Sheets As of July 31, 2025, total assets increased to $6,735.1 million from $6,647.6 million at October 31, 2024. Current assets saw a notable increase, primarily driven by cash and cash equivalents and current assets held for sale. Total debt decreased, contributing to a stronger equity position Condensed Consolidated Balance Sheets (in millions) | Metric | July 31, 2025 | October 31, 2024 | | :-------------------------- | :------------ | :--------------- | | Total Assets | $6,735.1 | $6,647.6 | | Cash and cash equivalents | $285.2 | $197.7 | | Current assets held for sale | $465.2 | $202.4 | | Total Liabilities | $4,405.6 | $4,400.2 | | Total Greif, Inc. equity | $2,194.2 | $2,082.4 | - Total debt (current portion of long-term debt + long-term debt) decreased from $2,722.0 million (Oct 31, 2024) to $2,315.1 million (July 31, 2025)[31] Statements of Cash Flows For the three months ended July 31, 2025, net cash provided by operating activities significantly increased to $199.9 million from $76.8 million in the prior year. Net cash used in investing activities remained relatively stable, while net cash used in financing activities increased substantially due to net payments on long-term debt and purchases of redeemable noncontrolling interest Condensed Consolidated Statements of Cash Flows (Three Months Ended July 31, in millions) | Metric | 2025 | 2024 | | :---------------------------------------- | :----- | :----- | | Net cash provided by operating activities | $199.9 | $76.8 | | Net cash provided by (used in) investing activities | $(38.5) | $(41.2) | | Net cash provided by (used in) financing activities | $(136.8) | $(43.2) | | Net increase (decrease) in cash and cash equivalents | $32.5 | $(1.8) | | Cash and cash equivalents, end of period | $285.2 | $194.2 | - Cash flows from the Containerboard Business are included within the adjusted free cash flow[33] Non-GAAP Financial Measures Reconciliations This section provides detailed reconciliations for key non-GAAP financial measures, including Adjusted EBITDA, free cash flow, net debt, and leverage ratio, highlighting improved performance and fiscal 2025 guidance Adjusted EBITDA from Discontinued Operations Adjusted EBITDA from discontinued operations (Containerboard Business) for the three months ended July 31, 2025, was $60.2 million, a significant increase from $42.4 million in the prior year, primarily driven by higher net income from discontinued operations Adjusted EBITDA from Discontinued Operations (Three Months Ended July 31, in millions) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Net income - discontinued operations | $24.7 | $9.1 | | Operating profit - discontinued operations | $53.1 | $34.3 | | Adjusted EBITDA - discontinued operations | $60.2 | $42.4 | Combined Adjusted EBITDA Combined Adjusted EBITDA, which includes both continuing and discontinued operations, increased by 11% to $220.9 million for the third quarter of 2025, reflecting growth in both segments Combined Adjusted EBITDA (Three Months Ended July 31, in millions) | Metric | 2025 | 2024 | Change ($M) | | :-------------------------- | :----- | :----- | :---------- | | Adjusted EBITDA (continuing) | $160.7 | $157.0 | +$3.7 | | Adjusted EBITDA (discontinued) | $60.2 | $42.4 | +$17.8 | | Combined Adjusted EBITDA | $220.9 | $199.4 | +$21.5 | Financial Highlights by Segment (Non-GAAP) This section provides a breakdown of net sales, gross profit, operating profit, and Adjusted EBITDA for each of Greif's continuing segments, as well as Combined Adjusted EBITDA. Customized Polymer Solutions and Sustainable Fiber Solutions showed growth in gross profit and Adjusted EBITDA, while Durable Metal Solutions maintained strong Adjusted EBITDA despite sales decline. Integrated Solutions saw declines across the board Net Sales by Segment (Three Months Ended July 31, in millions) | Segment | 2025 | 2024 | Change ($M) | | :----------------------- | :----- | :----- | :---------- | | Customized Polymer Solutions | $339.8 | $314.7 | +$25.1 | | Durable Metal Solutions | $399.8 | $424.1 | -$24.3 | | Sustainable Fiber Solutions | $308.0 | $325.6 | -$17.6 | | Integrated Solutions | $87.1 | $100.5 | -$13.4 | | Total net sales | $1,134.7 | $1,164.9 | -$30.2 | Adjusted EBITDA by Segment (Three Months Ended July 31, in millions) | Segment | 2025 | 2024 | Change ($M) | | :----------------------- | :----- | :----- | :---------- | | Customized Polymer Solutions | $39.4 | $40.5 | -$1.1 | | Durable Metal Solutions | $47.7 | $45.6 | +$2.1 | | Sustainable Fiber Solutions | $65.5 | $57.1 | +$8.4 | | Integrated Solutions | $8.1 | $13.8 | -$5.7 | | Total Adjusted EBITDA | $160.7 | $157.0 | +$3.7 | Combined Adjusted EBITDA (Three Months Ended July 31, in millions) | Metric | 2025 | 2024 | Change ($M) | | :------------------------ | :----- | :----- | :---------- | | Combined Adjusted EBITDA | $220.9 | $199.4 | +$21.5 | Consolidated Adjusted EBITDA This reconciliation details the calculation of Consolidated Adjusted EBITDA from net income for continuing operations, showing an increase to $160.7 million in Q3 2025 from $157.0 million in Q3 2024 Consolidated Adjusted EBITDA Reconciliation (Three Months Ended July 31, in millions) | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Net income (continuing operations) | $44.7 | $84.5 | | Operating profit | $73.1 | $136.7 | | Adjusted EBITDA | $160.7 | $157.0 | | Plus: Adjusted EBITDA - discontinued operations | $60.2 | $42.4 | | Combined Adjusted EBITDA | $220.9 | $199.4 | Segment Adjusted EBITDA This section provides a detailed reconciliation of Adjusted EBITDA for each segment, starting from operating profit. It highlights the specific adjustments made for depreciation, acquisition costs, restructuring, impairment, and other items to arrive at segment-level Adjusted EBITDA and Combined Adjusted EBITDA Segment Adjusted EBITDA Reconciliation (Three Months Ended July 31, 2025, in millions) | Metric | Customized Polymer Solutions | Durable Metal Solutions | Sustainable Fiber Solutions | Integrated Solutions | Consolidated | | :------------------------------------ | :--------------------------- | :---------------------- | :-------------------------- | :------------------- | :----------- | | Operating profit | $8.8 | $37.6 | $23.2 | $3.5 | $73.1 | | Depreciation and amortization expense | $23.7 | $7.3 | $25.4 | $2.4 | $58.8 | | Restructuring and other charges | $3.3 | $5.2 | $15.6 | $1.1 | $25.2 | | Adjusted EBITDA | $39.4 | $47.7 | $65.5 | $8.1 | $160.7 | | Plus: Adjusted EBITDA - discontinued operations | — | — | $60.2 | — | $60.2 | | Combined Adjusted EBITDA | $39.4 | $47.7 | $125.7 | $8.1 | $220.9 | Adjusted Free Cash Flow Adjusted free cash flow significantly increased to $170.7 million in Q3 2025 from $34.3 million in Q3 2024, driven by a substantial increase in net cash provided by operating activities and adjustments for nonrecurring costs Adjusted Free Cash Flow Reconciliation (Three Months Ended July 31, in millions) | Metric | 2025 | 2024 | Change ($M) | | :---------------------------------------- | :----- | :----- | :---------- | | Net cash provided by operating activities | $199.9 | $76.8 | +$123.1 | | Cash paid for purchases of properties, plants and equipment | $(40.8) | $(44.8) | +$4.0 | | Free cash flow | $159.1 | $32.0 | +$127.1 | | Cash paid for acquisition and integration related costs | $1.3 | $2.0 | -$0.7 | | Cash paid for integration related ERP systems and equipment | $1.1 | $0.2 | +$0.9 | | Cash paid for other nonrecurring costs | $9.2 | $0.1 | +$9.1 | | Adjusted free cash flow | $170.7 | $34.3 | +$136.4 | - The cash flows from Containerboard Business are included within adjusted free cash flow[46] Net Income, Class A EPS, and Tax Rate Before Adjustments This reconciliation shows that while reported net income and diluted Class A EPS decreased year-over-year, net income and diluted Class A EPS excluding adjustments increased for Q3 2025, indicating improved underlying operational performance Net Income, Class A EPS, and Tax Rate Before Adjustments (Three Months Ended July 31, 2025, in millions, except per share amounts) | Metric | Reported | Excluding Adjustments | | :------------------------------------ | :------- | :-------------------- | | Net Income Attributable to Greif, Inc. | $39.3 | $60.4 | | Diluted Class A Per Share | $0.67 | $1.03 | | Tax Rate | 21.1% | 22.4% | Net Income, Class A EPS, and Tax Rate Before Adjustments (Three Months Ended July 31, 2024, in millions, except per share amounts) | Metric | Reported | Excluding Adjustments | | :------------------------------------ | :------- | :-------------------- | | Net Income Attributable to Greif, Inc. | $78.0 | $54.1 | | Diluted Class A Per Share | $1.34 | $0.92 | | Tax Rate | 28.6% | 23.0% | Net Debt Greif's net debt decreased by $283.5 million to $2,431.8 million as of July 31, 2025, compared to July 31, 2024, primarily due to a reduction in total debt and an increase in cash and cash equivalents Net Debt Reconciliation (in millions) | Metric | July 31, 2025 | July 31, 2024 | Change ($M) | | :---------------------- | :------------ | :------------ | :---------- | | Total debt | $2,717.0 | $2,909.5 | -$192.5 | | Cash and cash equivalents | $(285.2) | $(194.2) | -$91.0 | | Net debt | $2,431.8 | $2,715.3 | -$283.5 | Leverage Ratio The company's leverage ratio improved to 3.1x as of July 31, 2025, down from 3.6x in the prior year, reflecting a decrease in adjusted net debt and an increase in trailing twelve-month Credit Agreement EBITDA Leverage Ratio Reconciliation | Metric | Trailing Twelve Months Ended 7/31/2025 | Trailing Twelve Months Ended 7/31/2024 | Change ($M) | | :------------------------------------ | :------------------------------------- | :------------------------------------- | :---------- | | Credit Agreement EBITDA | $775.1 million | $730.5 million | +$44.6 million | | Adjusted net debt | $2,382.2 million | $2,608.5 million | -$226.3 million | | Leverage ratio | 3.1x | 3.6x | -0.5x | - Credit Agreement EBITDA includes total company consolidated results, which includes continuing operations and discontinued operations, as approved by creditors[51] Projected 2025 Guidance Reconciliation: Adjusted Free Cash Flow Greif provided a reconciliation for its fiscal 2025 Adjusted free cash flow guidance, projecting a range of $305.0 million to $315.0 million, which includes cash flows from the Containerboard Business Fiscal 2025 Guidance Range for Adjusted Free Cash Flow (in millions) | Metric | Scenario 1 | Scenario 2 | | :---------------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $430.0 | $435.0 | | Cash paid for purchases of properties, plants and equipment | $(150.5) | $(139.5) | | Free cash flow | $279.5 | $295.5 | | Adjusted free cash flow | $305.0 | $315.0 | - Cash flows from the Containerboard Business are included in the fiscal 2025 Adjusted free cash flow guidance[53] Corporate Information This section provides details on the upcoming conference call, an overview of Greif's business, and important disclaimers regarding forward-looking statements and associated risks Conference Call & Investor Relations Greif will host a conference call on August 28, 2025, to discuss Q3 2025 results. Investor relations contact information is provided for further inquiries - A conference call to discuss third quarter 2025 results will be held on August 28, 2025, at 8:30 a.m. Eastern Time (ET)[22] - Investor Relations contact: Bill D'Onofrio, Vice President, Corporate Development & Investor Relations[23] About Greif Greif, founded in 1877, is a global leader in performance packaging across 40 countries, offering innovative solutions in Customized Polymer, Sustainable Fiber, Durable Metal, and Integrated Solutions, with a focus on customer service, operational excellence, and sustainability - Founded in 1877, Greif is a global leader in performance packaging located in 40 countries[23] - The company delivers trusted, innovative, and tailored solutions across Customized Polymer, Sustainable Fiber, Durable Metal, and Integrated Solutions[23] - Greif is committed to legendary customer service, operational excellence, and global sustainability[23] Forward-Looking Statements The report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from projections. Investors are cautioned not to place undue reliance on these statements, and a detailed discussion of risks is available in the company's Form 10-K - All forward-looking statements are based on assumptions and expectations, but the Company can give no assurance that these expectations will prove to be correct[24] - Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those forecasted, projected or anticipated[24] - Investors should not place undue reliance on forward-looking statements and should refer to "Risk Factors" in Part I, Item 1A of the most recently filed Form 10-K for a detailed discussion of significant risks[26]