GREIF, INC Q4 FY2024 earnings call

• Announced an operating model optimization effort to achieve at least $100 million of cost reductions by end of fiscal 2027, involving SG&A rationalization, network optimization, and operating efficiency gains. - Next week's Investor Day in New York City with executive management and strategic business unit leaders. - Corrected earnings release error where $16 million of income tax expense was incorrectly included. - Changed to reporting results based on four material solutions: customized polymer, durable metal, sustainable fiber, and integrated solutions, leveraging competitive advantages. - Q4 adjusted free cash flow was $145 million vs $136 million last year, with teams reducing working capital due to bearish demand sentiment. - 14th Net Promoter Survey score was 69, well above the manufacturing industry benchmark.

In the fourth quarter, adjusted EBITDA was $198 million compared to $202 million last year, with a $2 million headwind from Hurricane Helene. For GIP, adjusted EBITDA was up $4 million but down 70 basis points on margins. The paper business (PPS) had an adjusted EBITDA dollar decline of $8 million and margin decline of 240 basis points year-over-year, but sequential improvement of 220 basis points. EMEA was the strongest region, while North America had mixed demand. LATAM was improving and APAC was soft. GIP North America had volumes down almost 18% on a two-year basis, and PPS demand was mixed with containerboard having solid volumes and URB lagging. Revenue contribution details weren't explicitly given in absolute terms with percentages but focused on segment performance metrics.

• Fiscal 2025 low-end guidance provided on an 11-month basis. Key drivers include $83 million price cost uplift, $19 million incremental uplift from Ipackchem, $76 million organic volume uplift. Headwinds include $19 million FX headwind, $34 million SG&A headwinds, and $86 million manufacturing/transportation cost headwinds. - Fiscal 2025 will be an 11-month year ending September 30 with a 2-month fourth quarter. - Anticipate margins in sustainable Fiber Solutions to improve due to paper pricing and OCC changes.

• Prolonged industrial contraction (25 months through November) impacting demand. - Uncertainty in the macroeconomic environment affecting market sentiment. - Impact of tariffs on business, though generally net positive as local sourcing and production can benefit from price changes. - De-stocking in the ag sector impacting Ipackchem's EBITDA contribution initially.

Q: As it relates to the $100 million cost savings, is the $86 million inflationary headwinds a new inflation treadmill? And are there costs to implement the $100 million?

A: The inflationary cost increases are part of manufacturing cost considerations tied to low demand and volume impact. There will likely be discrete costs in implementing the $100 million savings, such as severance-related costs from plant consolidations or head count moves, but details will be further discussed at Investor Day.