Greif, Inc. Q2 FY2025 earnings call

• Recognized as one of Newsweek's Top 100 Most Loved Workplaces for third consecutive year and Gallup's Exceptional Workplace Award for second year in a row, with 94% participation rate in colleague engagement.
• Cost optimization efforts progressing, achieving $10 million run rate savings toward $15M-$25M full year commitment and $100M total commitment. Projects include Six Sigma practices in process efficiency and closure of LA paperboard mill removing 72,000 tons of capacity.
• Portfolio resilience with Polymer Solutions volumes up in small containers and IBC despite lower large polymer drum volumes; Fiber Solutions volumes down slightly but corrugated outperformed; Metals down 5% due to soft chemical and lubricant markets; Integrated Solutions growth led by recycled fiber.

Customized Polymer Solutions: Adjusted EBITDA increased $19 million year-over-year to $53 million, driven by volume growth, favorable product mix, and value-over-volume pricing. Polymers growth was in target end markets like agrochemicals, food and beverage, pharma, and flavors and fragrances. Durable Metal Solutions: Sales were lower year-over-year due to soft industrial end markets, but gross margins improved through value-over-volume focus. Sustainable Fiber Solutions: Adjusted EBITDA was $80 million vs $50 million prior year, margins improved to 13.3% from 8.5%. Corrugated business outperformed with high single-digit growth per day. Integrated Solutions: Continued growth led by recycled fiber, external volumes in closures, paints, linings and adhesives held steady.

• Adjusted EBITDA raised to at least $725 million from $710 million.
• Adjusted free cash flow guidance increased to $280 million from $245 million due to better price/cost performance in Q2 and revised higher price/cost expectations for the second half.
• Raise reflects impact of better price/cost in Q2 and revised higher expectations for the second half, with volume being a key variable for upside.

• Monitoring tariffs for potential demand shifts, with maximum direct cost exposure less than $10 million annually.
• Macroeconomic volatility affecting industrial end markets, particularly impacting metals and certain polymer segments.

Q: Josh Vesely asked about conversations with customers regarding end market demand and tariffs.

A: Ole Rosgaard said sentiment unchanged, with housing and auto build at lows, tariffs reoccurring themes impacting chemical customers until interest rate and housing sales improve.

Q: Michael Roxland asked about elevated SG&A.

A: Lawrence Hilsheimer said factors include incentives, entry of Ipackchem, currency impacts, with target of SG&A below 10% as revenue recovers and through cost optimization.

Q: Matt Roberts asked about volume underpinning $725M guide and tariff impact on April/May demand.

A: Lawrence Hilsheimer said no direct tariff impact on volumes, $725M guide includes $53M price/cost benefit with volume impacts in Metal, Polymer, and Fiber Solutions. Ole Rosgaard added tariffs have indirect impact on demand tied to market conditions.

Q: George Staphos asked about paperboard closures' impact on cost per ton and operations.

A: Lawrence Hilsheimer said closures will have positive $10M annual EBITDA impact, with shift of customer mix to existing mill footprint, and over 70 work streams in cost optimization including SG&A rationalization and network optimization.

Q: Gabe Hajde asked about metals business competitive standpoint and price/cost impacts.

A: Lawrence Hilsheimer said metals sales impacted by positive price development and negative volume, with volume negative mainly in North America's chemical industrial sectors. Ole Rosgaard added negative volume due to North America's chemical industrial softness.