Greif(US:GEF)2025-08-28 13:32Financial Data and Key Metrics Changes - Adjusted EBITDA increased by $4 million with EBITDA margins up by 70 basis points, driven by improved price-cost dynamics in Fiber, Polymers, and Integrated segments [15] - Free cash flow rose by almost 400% to $171 million in the quarter, demonstrating the resilience of the business model [15] Business Line Data and Key Metrics Changes - Customized polymer volumes increased by 2.2%, with low double-digit growth in small containers, while IBCs and large drums saw mid-single-digit declines [12] - Durable metals volumes declined by 5.8%, reflecting softness in North America and low single-digit declines in EMEA [13] - Sustainable fiber volumes decreased by 7.6%, with URB mills operating above 90% capacity [13] - Integrated Solutions volumes grew by 2.6%, led by strong volumes in recycled fiber [14] Market Data and Key Metrics Changes - The markets chosen for investment are resilient despite a mixed macro environment, with targeted end markets like agrochemicals, pharma, and food and beverage outperforming [12] - Customer sentiment remains cautious, and the overall macro economy is not robust, impacting volume performance [14] Company Strategy and Development Direction - The company is executing a "Build to Last" strategy, focusing on reshaping the portfolio, optimizing cost structures, and targeting markets with strong competitive advantages [22] - The divestment of the containerboard business is expected to close soon, with cash proceeds anticipated to lower the leverage ratio below 1.2 times [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2027 commitments, emphasizing that as demand recovers, operating leverage will significantly enhance results [22] - The operating environment remains soft in North America and EMEA, particularly in the chemical sector, but the company is focused on growth in polymers [52][53] Other Important Information - The company has achieved $20 million in run-rate savings towards its fiscal 2025 commitments, with a focus on cost optimization and operational efficiency [10] - The planned divestitures are part of a strategy to concentrate efforts on markets with the greatest growth potential [10] Q&A Session Summary Question: How much of the guidance raise for the year was related to containerboard? - Management indicated that there was no containerboard impact in raising guidance, which was primarily due to SG&A cost reductions [26] Question: Can you comment on price-cost trends entering fiscal fourth quarter? - Steel costs have been relatively flat, with no significant changes expected in pricing [27] Question: What is the current normalized EBITDA for containerboard? - The trailing 12-month EBITDA for containerboard was $218 million, with a current monthly figure of $25 million [32] Question: Is increasing exposure to more defensive end markets a strategic priority? - The focus remains on end markets that are growing faster than GDP, such as food and chemicals [47] Question: What is the upper leverage range comfortable for potential deals? - The target leverage ratio is between 2 to 2.5 times, with the ability to handle larger deals if they meet strategic criteria [69]