Greif(GEF_B) - 2025 Q3 - Quarterly Results

Executive Summary Fiscal Third Quarter 2025 Financial Highlights Greif's Q3 2025 saw reported net income decline due to a prior year gain, offset by increased adjusted net income and Combined Adjusted EBITDA, strong cash flow, and reduced debt Fiscal Third Quarter 2025 Financial Highlights (YoY Change): | Metric | Q3 2025 (Millions) | Q3 2024 (Millions) | Change (%) | | :------------------------------------ | :----------------- | :----------------- | :--------- | | Net income | $39.3 | $78.0 | -49.6% | | Net income (excluding adjustments) | $60.4 | $54.1 | +11.6% | | Combined Adjusted EBITDA | $220.9 | $199.4 | +11.0% | | Adjusted EBITDA (continuing operations) | $160.7 | $157.0 | +2.4% | | Net cash provided by operating activities | $199.9 | $76.8 | +159.9% | | Adjusted free cash flow | $170.7 | $34.3 | +397.7% | | Total debt | $2,717.0 | $2,909.5 | -6.7% | | Net debt | $2,431.8 | $2,715.3 | -10.4% | | Leverage ratio | 3.1x | 3.6x | -13.9% | - Net income decreased primarily due to a $46.1 million gain from the divestiture of Delta Petroleum Company, Inc. during the third quarter of 2024[6] Strategic Actions and Announcements Greif continued its portfolio optimization with the planned divestiture of its Containerboard Business and timberlands, while also making progress on cost optimization initiatives and increasing shareholder returns through dividends - Entered into a definitive agreement to divest the Containerboard Business for $1.8 billion, expected to close by August 31, 2025. This business is now presented as discontinued operations[3][6] - Signed a definitive agreement for the sale of the timberlands business for $462.0 million, with closing anticipated on October 1, 2025[6] - Achieved run-rate savings of $20.0 million by the end of Q3 2025 from cost optimization initiatives, reaching the midpoint of the committed $15 - $25 million range[6] - The Board of Directors declared increased quarterly cash dividends for Class A Common Stock ($0.02 per share increase) and Class B Common Stock ($0.03 per share increase)[6] CEO Commentary CEO Ole Rosgaard highlighted strong adjusted free cash flow generation and ongoing execution of cost optimization and portfolio changes, expressing confidence in achieving long-term commitments despite mixed demand - CEO Ole Rosgaard emphasized strong adjusted free cash flow generation of $171 million[5] - The company is focused on driving cash production, ramping up cost optimization, and executing portfolio changes[5] - Confidence in achieving long-term commitments and creating value for investors, despite mixed demand[5] Non-GAAP Financial Measures Definitions Non-GAAP Financial Measures Definitions This section provides detailed definitions and explanations for the non-GAAP financial measures used in the release, including Adjusted EBITDA, Adjusted free cash flow, Net debt, and Leverage ratio, along with their reconciliation to the most directly comparable GAAP measures - Adjustments excluded from net income and EPS before adjustments include acquisition/integration costs, restructuring charges, asset impairment, and gains/losses on business/property disposals[8] - Adjusted EBITDA is defined as net income plus interest, other expense, income tax, depreciation, and various non-recurring or non-cash charges[8] - Adjusted free cash flow is net cash from operating activities minus capital expenditures, plus cash paid for acquisition/integration costs, ERP systems, and other nonrecurring costs, including cash flows from the Containerboard Business[8] - Net debt is total debt less cash and cash equivalents, while the leverage ratio is adjusted net debt divided by trailing twelve-month Adjusted EBITDA, as calculated under the 2022 Credit Agreement[8] Segment Performance Analysis Net Sales Impact Factors 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 Q3 2025 Net Sales Impact by Segment (vs. Q3 2024): | Net Sales Impact | Customized Polymer Solutions | Durable Metal Solutions | Sustainable Fiber Solutions | Integrated Solutions | | :--------------- | :--------------------------- | :---------------------- | :-------------------------- | :------------------- | | Currency Translation | 2.4% | 2.7% | (0.1)% | 0.8% | | Volume | 2.2% | (5.8)% | (7.6)% | 2.6% | | Selling Prices and Product Mix | 3.3% | (2.7)% | 2.1% | 1.2% | | Total Impact | 7.9% | (5.8)% | (5.6)% | 4.6% | Customized Polymer Solutions This segment experienced an increase in net sales and gross profit, driven by higher volumes, selling prices, and positive currency translation, despite a slight decrease in operating profit and Adjusted EBITDA due to higher SG&A and restructuring costs - Net sales increased by $25.1 million to $339.8 million, primarily due to higher volumes ($7.0 million), higher average selling prices ($10.5 million), and positive foreign currency translation[11] - Gross profit increased by $10.1 million to $70.7 million[11] - Operating profit decreased by $0.8 million to $8.8 million, and Adjusted EBITDA decreased by $1.1 million to $39.4 million, mainly due to higher SG&A expenses and restructuring charges[12] Durable Metal Solutions The Durable Metal Solutions segment saw a decrease in net sales primarily due to lower volumes, but managed to increase gross profit, operating profit, and Adjusted EBITDA due to lower raw material costs - Net sales decreased by $24.3 million to $399.8 million, primarily due to lower volumes ($24.6 million)[13] - Gross profit increased by $0.7 million to $86.4 million, mainly due to lower raw material costs[13] - Operating profit increased by $1.4 million to $37.6 million, and Adjusted EBITDA increased by $2.1 million to $47.7 million[13][14] Sustainable Fiber Solutions This segment experienced a decrease in net sales due to lower volumes, but improved gross profit and Adjusted EBITDA, primarily benefiting from lower raw material and manufacturing costs, despite higher restructuring charges impacting operating profit - Net sales decreased by $17.6 million to $308.0 million, primarily due to lower volumes ($24.5 million), partially offset by higher containerboard and boxboard prices ($6.8 million)[15] - Gross profit increased by $7.5 million to $75.4 million, driven by lower raw material and manufacturing costs[15] - Operating profit decreased by $12.7 million to $23.2 million due to higher restructuring and other charges related to plant closures[16] - Adjusted EBITDA increased by $8.4 million to $65.5 million[16] Integrated Solutions The Integrated Solutions segment reported decreases across net sales, gross profit, operating profit, and Adjusted EBITDA, primarily attributable 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 Q3 2024[17] - Gross profit decreased by $5.9 million to $24.8 million, primarily due to the Delta Divestiture[17] - Operating profit decreased by $51.5 million to $3.5 million, largely due to a $46.1 million gain from the Delta Divestiture in Q3 2024[18] - Adjusted EBITDA decreased by $5.7 million to $8.1 million[18] Consolidated Financial Performance Tax Summary Greif recorded an income tax rate of 21.1% for Q3 2025, with an adjusted tax rate of 22.4%, and anticipates its fiscal 2025 tax rate to range between 27.0% and 32.0% Income Tax Rates: | Period | Reported Tax Rate | Tax Rate Excluding Adjustments | | :----- | :---------------- | :----------------------------- | | Q3 2025 | 21.1% | 22.4% | | FY 2025 Outlook | 27.0% - 32.0% | 27.0% - 32.0% | - Fluctuations in quarterly effective tax rates are common due to interim period income tax expense calculations[19] Dividend Summary The Board of Directors declared increased quarterly cash dividends for both Class A and Class B Common Stock, payable in October 2025 Quarterly Cash Dividends Declared (August 26, 2025): | Stock Class | Dividend Per Share | | :---------- | :----------------- | | Class A Common Stock | $0.56 | | Class B Common Stock | $0.84 | - Dividends are payable on October 1, 2025, to stockholders of record as of September 16, 2025[20] Company Outlook Fiscal 2025 Outlook Greif provided its fiscal 2025 outlook for Combined Adjusted EBITDA and Adjusted free cash flow, noting that net income guidance is not provided due to the unpredictability of certain excluded items Fiscal 2025 Outlook (in millions): | Metric | Reported at Q3 | | :-------------------- | :------------- | | Combined Adjusted EBITDA | $725 - $735 | | Adjusted free cash flow | $305 - $315 | - Net income guidance is not provided due to the high variability and difficulty in forecasting items such as gains/losses on business disposals, non-cash asset impairment charges, and restructuring costs[21] Corporate Information Conference Call Details Greif announced details for a conference call to discuss Q3 2025 results, including registration information and replay availability - A conference call to discuss Q3 2025 results will be held on August 28, 2025, at 8:30 a.m. Eastern Time[22] - Participants can register online, and a digital replay will be available on the company's website[22] About Greif Greif, founded in 1877, is a global leader in industrial packaging, operating in 40 countries, providing tailored solutions with a focus on customer service, operational excellence, and sustainability - Greif, founded in 1877, is a global leader in performance packaging with operations in 40 countries[23] - The company provides trusted, innovative, and tailored solutions for demanding and fast-growing industries[23] - Greif is committed to customer service, operational excellence, and global sustainability, offering Customized Polymer, Sustainable Fiber, Durable Metal, and Integrated Solutions[23] Forward-Looking Statements and Risk Factors This section contains cautionary statements regarding forward-looking information, highlighting various risks and uncertainties that could cause actual results to differ materially from projections, and advises investors not to place undue reliance on such statements - Forward-looking statements are based on assumptions and expectations, but there is no assurance that these expectations will be correct[24] - Risks and uncertainties include general economic conditions, global operations (political risks, currency exchange), market volatility, competition, raw material/energy price fluctuations, acquisitions/divestitures, labor matters, cyber-attacks, tax changes, and environmental regulations[25] - Investors should not place undue reliance on forward-looking statements, and a detailed discussion of risks is available in the company's most recently filed Form 10-K[26] Unaudited Condensed Consolidated Financial Statements Statements of Income Condensed consolidated statements of income show decreased net sales and operating profit for Q3 and YTD July 2025, primarily due to lower net income from continuing operations and a prior year gain on business disposal Condensed Consolidated Statements of Income (in millions, except per share amounts): | Metric | 3 Months Ended Jul 31, 2025 | 3 Months Ended Jul 31, 2024 | 9 Months Ended Jul 31, 2025 | 9 Months Ended Jul 31, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $1,134.7 | $1,164.9 | $3,231.8 | $3,247.9 | | Gross profit | $257.3 | $244.9 | $711.9 | $671.2 | | Operating profit | $73.1 | $136.7 | $162.6 | $260.5 | | Net income from continuing operations | $44.7 | $84.5 | $76.8 | $207.7 | | Net income from discontinued operations | $24.7 | $9.1 | $61.5 | $12.2 | | Net income | $69.4 | $93.6 | $138.3 | $219.9 | | Diluted EPS (Class A common stock) | $1.10 | $1.50 | $2.07 | $3.44 | Balance Sheets The condensed consolidated balance sheets show an increase in total assets and total equity as of July 31, 2025, compared to October 31, 2024, driven by higher current assets, particularly cash and current assets held for sale, while long-term debt decreased Condensed Consolidated Balance Sheets (in millions): | Metric | July 31, 2025 | October 31, 2024 | | :-------------------------- | :------------ | :--------------- | | Cash and cash equivalents | $285.2 | $197.7 | | Current assets held for sale | $465.2 | $202.4 | | Total assets | $6,735.1 | $6,647.6 | | Short-term borrowings | $401.9 | $18.6 | | Long-term debt | $2,219.3 | $2,626.2 | | Total liabilities | $4,405.6 | $4,400.2 | | Total Greif, Inc. equity | $2,194.2 | $2,082.4 | Statements of Cash Flows The condensed consolidated statements of cash flows indicate a significant increase in net cash provided by operating activities for both the three and nine months ended July 31, 2025, compared to the prior year, while net cash used in financing activities also increased Condensed Consolidated Statements of Cash Flows (in millions): | Metric | 3 Months Ended Jul 31, 2025 | 3 Months Ended Jul 31, 2024 | 9 Months Ended Jul 31, 2025 | 9 Months Ended Jul 31, 2024 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $199.9 | $76.8 | $305.5 | $168.8 | | Net cash used in investing activities | $(38.5) | $(41.2) | $(70.2) | $(703.8) | | Net cash used in financing activities | $(136.8) | $(43.2) | $(190.5) | $541.7 | | Net increase (decrease) in cash | $32.5 | $(1.8) | $87.5 | $13.3 | | Cash and cash equivalents, end of period | $285.2 | $194.2 | $285.2 | $194.2 | - Cash flows from the Containerboard Business are included in the cash flow statements[33] GAAP to Non-GAAP Reconciliations Adjusted EBITDA from Discontinued Operations This section provides the reconciliation of net income from discontinued operations to Adjusted EBITDA for the Containerboard Business, showing an increase in Adjusted EBITDA for both the three and nine months ended July 31, 2025 Adjusted EBITDA from Discontinued Operations (in millions): | Metric | 3 Months Ended Jul 31, 2025 | 3 Months Ended Jul 31, 2024 | 9 Months Ended Jul 31, 2025 | 9 Months Ended Jul 31, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income - discontinued operations | $24.7 | $9.1 | $61.5 | $12.2 | | Adjusted EBITDA - discontinued operations | $60.2 | $42.4 | $167.5 | $102.3 | - Adjusted EBITDA from discontinued operations is derived specifically for the Containerboard Business[35] Combined Adjusted EBITDA The reconciliation shows that Combined Adjusted EBITDA, which includes both continuing and discontinued operations, increased significantly for both the three and nine months ended July 31, 2025, compared to the prior year Combined Adjusted EBITDA (in millions): | Metric | 3 Months Ended Jul 31, 2025 | 3 Months Ended Jul 31, 2024 | 9 Months Ended Jul 31, 2025 | 9 Months Ended Jul 31, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Adjusted EBITDA (continuing operations) | $160.7 | $157.0 | $412.4 | $403.8 | | Plus: Adjusted EBITDA - discontinued operations | $60.2 | $42.4 | $167.5 | $102.3 | | Combined Adjusted EBITDA | $220.9 | $199.4 | $579.9 | $506.1 | Financial Highlights by Segment This section provides a detailed breakdown of net sales, gross profit, operating profit, and Adjusted EBITDA for each of Greif's operating segments for the three and nine months ended July 31, 2025 and 2024 Segment Financial Highlights (in millions) - Q3 2025 vs. Q3 2024: | Segment | Net Sales (2025) | Net Sales (2024) | Gross Profit (2025) | Gross Profit (2024) | Operating Profit (2025) | Operating Profit (2024) | Adjusted EBITDA (2025) | Adjusted EBITDA (2024) | | :-------------------------- | :--------------- | :--------------- | :------------------ | :------------------ | :---------------------- | :---------------------- | :--------------------- | :--------------------- | | Customized Polymer Solutions | $339.8 | $314.7 | $70.7 | $60.6 | $8.8 | $9.6 | $39.4 | $40.5 | | Durable Metal Solutions | $399.8 | $424.1 | $86.4 | $85.7 | $37.6 | $36.2 | $47.7 | $45.6 | | Sustainable Fiber Solutions | $308.0 | $325.6 | $75.4 | $67.9 | $23.2 | $35.9 | $65.5 | $57.1 | | Integrated Solutions | $87.1 | $100.5 | $24.8 | $30.7 | $3.5 | $55.0 | $8.1 | $13.8 | | Total (Continuing Ops) | $1,134.7 | $1,164.9 | $257.3 | $244.9 | $73.1 | $136.7 | $160.7 | $157.0 | Segment Financial Highlights (in millions) - 9 Months Ended Jul 31, 2025 vs. 2024: | Segment | Net Sales (2025) | Net Sales (2024) | Gross Profit (2025) | Gross Profit (2024) | Operating Profit (2025) | Operating Profit (2024) | Adjusted EBITDA (2025) | Adjusted EBITDA (2024) | | :-------------------------- | :--------------- | :--------------- | :------------------ | :------------------ | :---------------------- | :---------------------- | :--------------------- | :--------------------- | | Customized Polymer Solutions | $964.2 | $828.3 | $208.0 | $160.3 | $28.8 | $26.9 | $112.7 | $100.5 | | Durable Metal Solutions | $1,120.9 | $1,208.3 | $232.4 | $240.8 | $95.1 | $99.8 | $122.4 | $125.0 | | Sustainable Fiber Solutions | $900.3 | $924.2 | $201.1 | $184.5 | $30.3 | $61.8 | $155.8 | $141.7 | | Integrated Solutions | $246.4 | $287.1 | $70.4 | $85.6 | $8.4 | $72.0 | $21.5 | $36.6 | | Total (Continuing Ops) | $3,231.8 | $3,247.9 | $711.9 | $671.2 | $162.6 | $260.5 | $412.4 | $403.8 | Consolidated Adjusted EBITDA This reconciliation details the calculation of Consolidated Adjusted EBITDA from net income for continuing operations, showing an increase for both the three and nine months ended July 31, 2025 Consolidated Adjusted EBITDA Reconciliation (in millions): | Metric | 3 Months Ended Jul 31, 2025 | 3 Months Ended Jul 31, 2024 | 9 Months Ended Jul 31, 2025 | 9 Months Ended Jul 31, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (continuing operations) | $44.7 | $84.5 | $76.8 | $207.7 | | Operating profit | $73.1 | $136.7 | $162.6 | $260.5 | | Adjusted EBITDA (continuing operations) | $160.7 | $157.0 | $412.4 | $403.8 | | Plus: Adjusted EBITDA - discontinued operations | $60.2 | $42.4 | $167.5 | $102.3 | | Combined Adjusted EBITDA | $220.9 | $199.4 | $579.9 | $506.1 | Segment Adjusted EBITDA This section provides a detailed reconciliation of operating profit to Adjusted EBITDA for each segment, further breaking down the adjustments applied to arrive at segment-specific Adjusted EBITDA and Combined Adjusted EBITDA Segment Adjusted EBITDA (in millions) - 3 Months Ended Jul 31, 2025: | Segment | Operating Profit | Depreciation & Amortization | Restructuring & Other Charges | Adjusted EBITDA | | :-------------------------- | :--------------- | :-------------------------- | :---------------------------- | :-------------- | | Customized Polymer Solutions | $8.8 | $23.7 | $3.3 | $39.4 | | Durable Metal Solutions | $37.6 | $7.3 | $5.2 | $47.7 | | Sustainable Fiber Solutions | $23.2 | $25.4 | $15.6 | $65.5 | | Integrated Solutions | $3.5 | $2.4 | $1.1 | $8.1 | | Consolidated | $73.1 | $58.8 | $25.2 | $160.7 | - Sustainable Fiber Solutions' Combined Adjusted EBITDA for Q3 2025 was $125.7 million, including $60.2 million from discontinued operations[43] - The reconciliation details specific adjustments like acquisition and integration related costs, non-cash asset impairment charges, and gains/losses on disposal of properties for each segment[43][44] Adjusted Free Cash Flow The reconciliation shows a substantial increase in Adjusted Free Cash Flow for both the three and nine months ended July 31, 2025, compared to the prior year, driven by higher net cash from operating activities Adjusted Free Cash Flow Reconciliation (in millions): | Metric | 3 Months Ended Jul 31, 2025 | 3 Months Ended Jul 31, 2024 | 9 Months Ended Jul 31, 2025 | 9 Months Ended Jul 31, 2024 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $199.9 | $76.8 | $305.5 | $168.8 | | Cash paid for purchases of PP&E | $(40.8) | $(44.8) | $(106.5) | $(141.4) | | Free cash flow | $159.1 | $32.0 | $199.0 | $27.4 | | Cash paid for acquisition & integration costs | $1.3 | $2.0 | $5.5 | $16.1 | | Cash paid for integration related ERP systems | $1.1 | $0.2 | $4.4 | $1.1 | | Cash paid for other nonrecurring costs | $9.2 | $0.1 | $9.5 | $0.5 | | Adjusted free cash flow | $170.7 | $34.3 | $218.4 | $45.1 | - Cash flows from the Containerboard Business are included within adjusted free cash flow[46] Net Income, Class A EPS and Tax Rate Before Adjustments This reconciliation provides a detailed breakdown of adjustments made to reported net income, Class A diluted EPS, and tax rates to arrive at figures excluding the impact of specific non-recurring items for both the three and nine months ended July 31, 2025 and 2024 Net Income, Class A EPS, and Tax Rate Before Adjustments (in millions, except per share amounts): | Metric | 3 Months Ended Jul 31, 2025 (Reported) | 3 Months Ended Jul 31, 2025 (Excl. Adjustments) | 3 Months Ended Jul 31, 2024 (Reported) | 3 Months Ended Jul 31, 2024 (Excl. Adjustments) | | :---------------------------------------- | :------------------------------------- | :---------------------------------------------- | :------------------------------------- | :---------------------------------------------- | | Net Income Attributable to Greif, Inc. | $39.3 | $60.4 | $78.0 | $54.1 | | Diluted Class A Earnings Per Share | $0.67 | $1.03 | $1.34 | $0.92 | | Tax Rate | 21.1% | 22.4% | 28.6% | 23.0% | - Key adjustments for Q3 2025 included $25.2 million for restructuring and other charges, and $3.4 million for non-cash asset impairment charges[47] - Key adjustments for Q3 2024 included a $(46.1) million gain on disposal of businesses, net[47] Net Debt This section reconciles total debt to net debt as of July 31, 2025, and July 31, 2024, showing a decrease in net debt year-over-year Net Debt Reconciliation (in millions): | Metric | July 31, 2025 | July 31, 2024 | | :---------- | :------------ | :------------ | | Total debt | $2,717.0 | $2,909.5 | | Cash and cash equivalents | $(285.2) | $(194.2) | | Net debt | $2,431.8 | $2,715.3 | Leverage Ratio The reconciliation demonstrates a reduction in Greif's leverage ratio to 3.1x as of July 31, 2025, from 3.6x in the prior year, calculated based on Credit Agreement adjusted net debt and trailing twelve-month Credit Agreement EBITDA Leverage Ratio Calculation (in millions): | Metric | Trailing Twelve Months Ended 7/31/2025 | Trailing Twelve Months Ended 7/31/2024 | | :------------------------------------ | :------------------------------------- | :------------------------------------- | | Credit Agreement EBITDA | $775.1 | $730.5 | | Adjusted net debt | $2,382.2 | $2,608.5 | | Leverage ratio | 3.1 x | 3.6 x | - Credit Agreement EBITDA includes total company consolidated results, encompassing both continuing and discontinued operations, as approved by creditors under the 2022 Credit Agreement[51] Projected 2025 Guidance Reconciliation Adjusted Free Cash Flow Guidance This section provides a reconciliation of the fiscal 2025 Adjusted Free Cash Flow guidance to forecasted net cash provided by operating activities, including both continuing and discontinued operations Fiscal 2025 Adjusted Free Cash Flow Guidance Reconciliation (in millions): | Metric | Scenario 1 | Scenario 2 | | :---------------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $430.0 | $435.0 | | Cash paid for purchases of PP&E | $(150.5) | $(139.5) | | Free cash flow | $279.5 | $295.5 | | Cash paid for acquisition & integration costs | $8.0 | $5.5 | | Cash paid for integration related ERP systems | $5.5 | $4.5 | | Cash paid for other nonrecurring costs | $12.0 | $9.5 | | Adjusted free cash flow | $305.0 | $315.0 | - The projected Adjusted Free Cash Flow guidance includes cash flows from the Containerboard Business[53]