Greif(US:GEF)2022-09-01 17:38Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $251 million and adjusted EPS of $2.35 for Q3 2022, with a record adjusted free cash flow of $175.8 million [8][22]. - The company raised its fiscal 2022 guidance, increasing the midpoint of adjusted EPS guidance by $0.40 to $8 per share and free cash flow guidance to a range of $415 million to $445 million [24][25]. Business Line Data and Key Metrics Changes - Global Industrial Packaging (GIP) saw solid demand, with plastic drums down low-single digits and Intermediate Bulk Containers (IBCs) up 10% per day compared to the previous year [10]. - Paper packaging sales rose by $131 million year-over-year due to steady volumes and higher average selling prices, with adjusted EBITDA increasing by $42 million despite higher raw material costs [15][20]. Market Data and Key Metrics Changes - In North America, demand remained stable, while LATAM outperformed with strong volumes in agricultural chemicals and food-related packaging [12][36]. - The company experienced weakening demand in APAC due to continued lockdowns in China, affecting transportation and end markets like automotive and construction [34]. Company Strategy and Development Direction - The company is focused on its "Build to Last" strategy, which aims to deliver strong performance in various economic environments [7][29]. - The company is committed to increasing shareholder value through capital allocation, including an 8.7% increase in quarterly dividends and ongoing share repurchases [26][27]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing economic uncertainty, inflation, and supply chain pressures but expressed confidence in the team's ability to deliver strong results [7][20]. - The company anticipates continued strong cash flow generation into 2023, supported by improved net working capital management [25][67]. Other Important Information - A fire incident at the Riverville Mill resulted in a loss of approximately 9,000 tons of production, which has been factored into the fourth quarter guidance [18][75]. - The company has a robust acquisition pipeline and is exploring opportunities to deploy capital opportunistically [27][57]. Q&A Session Summary Question: How are fundamentals in the PPS segment currently? - Management noted a slight weakening in demand towards the end of the quarter, but backlogs remain solid at around seven to eight weeks [33]. Question: Can you characterize the macro environment in each region? - APAC is facing demand challenges due to lockdowns in China, while EMEA is affected by the Ukraine conflict and energy prices. North America shows lesser weakness, and LATAM remains strong [34][36]. Question: What are the expectations for 2023? - Management indicated that it is too early to provide guidance for 2023 due to economic uncertainties [40]. Question: Can you provide volume trends by month in the quarter? - Volume trends showed a decline in July, with August continuing that trend, but backlogs in the paper business remain strong [42][43]. Question: How do you view the sustainability of recycled boxboard price gains? - Management emphasized that price sustainability is a supply and demand issue [54]. Question: What are the best internal reinvestment opportunities? - The company plans to invest in a new sheet feeder in Texas, IBC expansion, and automation upgrades [109].