Greif, Inc. Q1 FY2025 earnings call

• At Investor Day, Greif announced new 2027 financial commitments of $1 billion EBITDA and $500 million free cash flow, with levers including known positive discrete items, volume recovery, and a $100 million cost optimization effort.
• Identified $5 million of run rate savings on SG&A related costs, reaffirming expectation to achieve at least $15 million to $25 million by end of 2025, with $13 million from mill closures but timing of closure costs still being assessed.
• Announced intention to sell the entire timber portfolio of approximately 176 acres to reduce debt, thanking Soterra colleagues for their service.
• Supply chain is resilient, able to navigate disruptions like tariffs due to local-to-local supply channels and strong supplier partnerships.

In the first quarter of 2025, Polymers was up 2.7% driven by small containers and IBC demand in ag and food sectors, particularly in EMEA. Integrated Solutions saw volume growth with both caps and closures and paints, linings and adhesives experiencing low double digit growth on a same-store basis. Fiber had slightly up volumes with operating rates in both paper grades in line with the industry. Metals continued to be impacted most by the soft industrial economy due to high exposure to bulk chemicals, petrochemicals, and lubricant markets.

• Fiscal 2025 is 11 months, low-end EBITDA guidance raised to $710 million due to $27 million positive price cost, $8 million lower transport and manufacturing costs, and $3 million from cost initiatives savings, offset by $3 million headwind from mill closures.
• Low-end free cash flow guidance raised to $245 million, partially offset by $20 million higher working capital costs and $6 million incremental tailwind in other operating costs.

• Potential tariff changes could impact P&L, though supply chain is positioned to mitigate exposure.
• Soft industrial economy continues to impact metals segment, with uncertain underlying demand in sectors like bulk chemicals, petrochemicals, and lubricants.

Q: Regarding first quarter results specific to fiber, how did it compare to expectations?

A: It came in line with expectations, with gross profit being a good proxy, though SG&A allocation based on value add caused some confusion.

Q: Can you provide more color on the timberland sale?

A: We can't comment on timing or value currently, proceeds will be used to pay down debt, and the asset is different from previous timberland sales with various factors affecting value like carbon sequestration and solar farms.

Q: How to bridge the $27 million price cost spread and what about volume cadence?

A: The $27 million price cost spread is split across containerboard, OCC, integrated products, polymers, and steel. Volume cadence is based on past two years' path with slight pickup in Q2, Q3 and slight fall off in Q4, with no clear inflection point yet.