Earnings call transcript: Greif Bros Q3 2025 beats forecasts, stock rises

Greif Bros Corporation (GEF) reported its third-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $1.03, compared to the forecasted $0.9367. The company also reported revenue of $1.13 billion, exceeding the anticipated $998.44 million. Following the announcement, Greif’s stock rose by 0.95% in regular trading and an additional 2.46% in premarket trading, reaching $67.45. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value metrics, with the company maintaining strong fundamentals including a P/E ratio of 15.1x and a market capitalization of $3.21 billion.

Key Takeaways

• Greif’s EPS of $1.03 exceeded forecasts by 9.96%.
• Revenue outperformed expectations by 13.18%.
• Stock price increased by 3.41% following the earnings report.
• EBITDA guidance for the year was revised upward.
• Free cash flow saw a substantial increase of 400%.

Company Performance

Greif Bros demonstrated robust performance in the third quarter, marked by a $4 million increase in adjusted EBITDA and a 70 basis point improvement in EBITDA margins. Free cash flow surged by 400% to $171 million, highlighting the company’s strong cash generation capabilities. InvestingPro data reveals the company’s impressive track record, including 53 consecutive years of dividend payments and a healthy 3.4% dividend yield. Despite softness in North American and EMEA markets, Greif maintained its market leadership in key segments such as fiber drums and URB business. The company’s financial health score of 2.49 (FAIR) reflects its stable market position.

Financial Highlights

• Revenue: $1.13 billion, up from the forecasted $998.44 million
• Earnings per share: $1.03, surpassing the forecast of $0.9367
• Adjusted EBITDA: Increased by $4 million
• Free cash flow: Rose 400% to $171 million

Earnings vs. Forecast

Greif Bros exceeded market expectations with a 9.96% EPS surprise and a significant 13.18% revenue surprise. This performance marks a positive deviation from previous quarters and reflects strong operational execution.

Market Reaction

Following the earnings release, Greif’s stock price increased by 0.95% during regular trading and an additional 2.46% in premarket trading, reaching $67.45. This movement contrasts with recent market trends, where many companies in the sector have faced downward pressure.

Outlook & Guidance

Greif revised its 11-month EBITDA guidance midpoint upward to $730 million and increased its free cash flow midpoint to $310 million. The company aims to achieve $1 billion in EBITDA by 2027 and is planning divestitures with expected cash proceeds of approximately €1.75 billion. With trailing twelve-month EBITDA of $755.3M and strong returns over the past three months, the company shows promising momentum. For deeper insights into Greif’s growth potential and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence. Greif also targets a leverage ratio below 1.2x, emphasizing cost optimization and organic growth opportunities.

Executive Commentary

CEO Ole Rosgaard stated, "GRIVE today is a fundamentally stronger, more focused and more resilient company than ever before." CFO Larry Hilsheimer added, "We only buy businesses that meet the criteria," highlighting the company’s disciplined approach to acquisitions.

Risks and Challenges

• Market softness in North America and EMEA
• Sluggish housing and petrochemical sectors
• Customer sentiment remains cautious
• Potential impacts from macroeconomic uncertainties
• Execution risks related to divestitures and cost optimization

Q&A

During the Q&A session, analysts inquired about the normalized EBITDA for the containerboard segment, which was reported at $218 million over the trailing 12 months. The management also addressed questions on the M&A pipeline and confirmed no significant tariff impacts.

Full transcript - Greif Bros Corp (GEF) Q3 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Greif Third Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Bill D’Onofrio. Please go ahead.

Bill D’Onofrio, Investor Relations, Greif: Good morning, everyone, and thank you for joining Greif’s fiscal third quarter twenty twenty five earnings conference call. Today, our CEO, Ole Rosgaard will provide a strategy and market update followed by our CFO, Larry Hilsheimer with a review of our financial results. Please turn to Slide two. In accordance with Regulation Fair Disclosure, please ask questions regarding topics you consider important because we are prohibited from discussing material non public information with you on an individual basis. During today’s call, we will make forward looking statements involving plans, expectations and beliefs related to future events.

Actual results could differ materially from those discussed. We will be referencing certain non GAAP financial measures and the reconciliation to the most directly comparable GAAP metrics that can be found in the appendix of today’s presentation. This quarter’s results reflect our planned containerboard business divestment within discontinued operations. Unless otherwise noted, the financials and commentary presented today will relate to our continuing operations. I’ll now hand the call over to Oli on Slide three.

Thank you, Bill,

Ole Rosgaard, CEO, Greif: and good morning, everyone. Thank you for joining us. At the outset, I want to recognize our 14,000 colleagues around the world. Their execution discipline, bias for action and commitment to our strategy make the difference. While all colleagues’ contributions are meaningful, today, I want to briefly go off script to recognize one in particular, Gary Motts, Executive Vice President, General Counsel and Secretary to Greif will be retiring later this year.

Gary is a cornerstone example of what makes Greif so special. Over his distinguished twenty plus year career at Greif, he has impacted so many lives through his work. For myself, Gary has been a constant source of certain leadership, reason, coaching and strategic vision. And I know that both I personally and Wright colleagues globally are foundationally better because of his guidance. I’m sitting in the room with him right now, and I can see from his face that even now, he prefers to be recognized only as part of the Greater Drive team.

But today, we need to recognize him as an individual too. Gary, thank you for everything you have done for us, and best wishes for your upcoming retirement. Thank you, Olin. Dennis Hoffman, Grice’s Deputy General Counsel, will assume Gary’s role effective October 1. Dennis has worked closely with Gary for the last fifteen years, and we have full confidence in his ability to carry on Gary’s legacy of legal excellence.

Thank you both for your commitment to Bryte. Now back to the quarter. We’re taking cost out and transforming the business. At times, that work can be uncomfortable, but our people know that is not that is how the company grows, moves from good to great and ultimately creates shareholder value. We continue to accelerate our portfolio transformation and cost optimization.

The divestments of our containerboard business is planned to close at the end of the month and our planned Timberland divestment set for October 1 for favorable tax planning purposes. Cash proceeds net of tax for these transactions will be approximately €1,750,000,000 which we anticipate will put our leverage ratio below 1.2 times. These divestitures sharpen our portfolio to concentrate our efforts on markets where we have the greatest ability to grow and deliver margin expansion, capital efficiency and durable shareholder returns. Additionally, as of Q3, we have achieved $20,000,000 in run rate savings towards our $15,000,000 to $25,000,000 fiscal twenty twenty five commitments, about $15,000,000 of which is SG and A and the remainder through network optimization such as the Nassau California closure, which was announced earlier in August. Another key component of our cost optimization is operating efficiency gain.

To that end, we want to highlight a smaller but equally meaningful change occurring in one of our shop floors. Recently, our colleagues in the Wellcome, North Carolina Tubing Core plant improved progress efficiency related to changeovers, which improved line efficiency by over 40%. At Investor Day, we spoke about the aggregation of marginal gains. This is a great example. The stand alone impact of this project is not material to drive as a whole, but when all facilities take the same mindset and drive from good to great, it will really move the needle.

It is regular wins like this that daily increase our conviction in outpacing our stated $100,000,000 cost reduction commitments. Please turn to Slide four. Our Q3 results once again show that the markets we’ve chosen to invest in are the most resilient even in a mixed macro environment. Customized polymer volumes were up 2.2%, led by low double digit growth in small containers, offset by mid single digit declines in IBCs and large drums. Our focused end markets, agrochemicals, pharma, flavor and fragrance and food and beverage, continue to outperform, underscoring the power of our portfolio shift.

Durable metals volumes declined 5.8%, reflecting low double digit softness in North America and low single digit declines in EMEA. Housing and petrochemicals have been sluggish all year, and bulk chemical markets trended downwards in Q3, which also drove softness in EMEA. Our strategy in this business remains value over volume and cash generation, which is evident in our improved year over year gross profit margins. Sustainable fiber volumes declined 7.6%. URB mills operated at above 90% capacity.

However, converting was mixed with tube and core down low single digits and fiber drums down high single digits due to sluggish North American industrial end markets. Integrated Solutions volumes grew 2.6% led by strong volumes in recycled fiber. So from a big picture point of view, our volume performance clearly shows our strategy is working. But for the time being, customer sentiment remains cautious, and the macro economy as a whole is not robust. We will consider that operating environment as we look to full year 2026 guidance next quarter.

Larry, please take over on Slide five.

Larry Hilsheimer, CFO, Greif: Thank you, Oleg. Hello, everyone. As a reminder, the Q3 financials are presented excluding the Containerboard divestment, except for free cash flow, which compares total operations to prior year total operation. Adjusted EBITDA dollars increased $4,000,000 while EBITDA margins increased 70 basis points driven by improved price cost in our Fiber, Polymers and Integrated segments, which more than offset volume softness across the portfolio. Free cash flow rose by almost 400% to $171,000,000 in the quarter.

This result once again demonstrates the resilience of our business model regardless of macroeconomic conditions. Please turn to Slide six. In Polymers, sales improved on volume, price and mix with growth concentrated in our target end markets. Gross profit dollars increased by over $10,000,000 and gross margins increased 150 basis points as we continue to drive structural cost improvement through, Great Business System two point zero. Metals saw lower sales from both price and volume as industrial demand softness persisted in North America and increased in EMEA.

Gross profit dollars were about flat, but gross margin was up due to value over volume discipline and Gregg Business System two point zero gains. Fiber sales were down due to the converting demand softness Ole spoke of. However, gross profit dollars were up $8,000,000 and gross margins were up three sixty basis points due to better risky published price cost dynamics. Integrated Solutions, excluding the prior year impact of the Delta divestment was about flat on both sales and gross profit with gross margin down 160 basis points due to product mix. Please turn to Slide seven to discuss guidance.

Our revised eleven month guidance midpoint of $730,000,000 of EBITDA is raised $5,000,000 from the previous low end to current midpoint and revised free cash flow midpoint of $310,000,000 is raised $30,000,000 from our previous low end to current midpoint. The increase in EBITDA is due primarily to better SG and A from cost optimization gains, while our price cost and volume assumptions are largely unchanged. The increase in free cash flow is primarily from the EBITDA increase plus lower expected CapEx spend, which is timing related to ongoing maintenance and growth projects. As the containerboard divestment is not finalized, we have not adjusted full year guidance for the impact of the divestment. Our combined adjusted EBITDA guidance includes contribution of $122,000,000 in sales and $25,000,000 of EBITDA in each August and September related to containerboard, which is driven by the prime season for our profitable triple wall business.

This is in addition to the Q3 year to date contribution of $872,000,000 of sales and $168,000,000 of EBITDA from containerboard. I’ll now turn it back to Holi for closing on Slide eight.

Bill D’Onofrio, Investor Relations, Greif: Thanks, Larry.

Ole Rosgaard, CEO, Greif: We are executing our Build to Last strategy with discipline and conviction, reshaping the portfolio, optimizing our cost structure and leaning into markets where our competitive advantages are strongest. We’re doing this at a time when demand recovery is still ahead of us, which means that as volumes return, the operating leverage in our business will be significant. This only strengthens our confidence in achieving our 2027 commitments and in our ability to consistently deliver lasting value for our customers, our colleagues and importantly, our shareholders. Operator, will you please open the lines for questions?

Conference Operator: Certainly. Our first question will be coming from George Staphos of Bank of America Securities Inc. Your line is open, George.

George Staphos, Analyst, Bank of America Securities: Thank you. Hi, everyone. Good morning. Thanks for the details. Congratulations to Gary and Dennis as well.

Nice touch, Ole. From my vantage point, had a few questions. Number one, can you tell us how much of the guidance raise for the year was related to containerboard? I know you said it was really SG and A, but was there any notable change there relative to containerboard? Second question, can you tell us about price cost trends as we’re entering the fiscal fourth quarter and really kind of the horizon into 2026 to the extent you can comment relative to metal?

And then lastly, I know you were happy with the growth in your targeted areas in polymers, but I was a little bit surprised to see some weakness in IBC. And so can you tell us how trends maybe it’s in EMEA are starting to affect the Polymers business? Thank you.

Larry Hilsheimer, CFO, Greif: George, I’ll let Ole address the Polymer stuff. But first on your guidance question, no container board impact in raising that play through as we expected. Generally, guidance raise realized that was off of our low end. So some of the detriment we’ve seen in what’s going on in metals worldwide actually probably brought us down from what we would hope for. And the raise is primarily related to SG and A cost reductions taken relative to our optimization plan.

On the metals pricing going into the year, steel costs have been relatively flat at this point. We don’t really see any inflections going on. So we don’t expect anything with significant index changes going into the calendar quarter are now new first quarter. We don’t anticipate anything significant. George, I’ll turn it over to Oli on the polymer question.

Ole Rosgaard, CEO, Greif: Yes. On the polymer, the growth markets, George, to the ones I mentioned earlier,

Ghansham Panjabi, Analyst, Baird: food and

Ole Rosgaard, CEO, Greif: beverage, agrochemical in particular, where we are the global leader, we expect that demand those demand trends that we’ve seen simply to continue. And just to comment on metal as well. The metal index has been largely stable through Q3, and we don’t see any impact expected going forward from that

Larry Hilsheimer, CFO, Greif: as well. Yes. I’ll supplement one thing, George, just and I’ve made this in my comments. We had anticipated containerboard being good in this last part of the year because this is the time of year when people are harvesting watermelons and pumpkins and buying their triple wall boxes for those things going into the grocery stores and stuff. So these months are always our most profitable in that part of the business.

George Staphos, Analyst, Bank of America Securities: Okay. Just point of clarification if I could and I’ll turn it over. One, do you have a sense of what the current normalized EBITDA would be for containerboard. I mean we can add up what you’ve reported with what is coming in quarter.

Larry Hilsheimer, CFO, Greif: I had look at trailing 12 through July, George, was $218,000,000 So it was $211 when we cut the deal in 2018. It’s 25,000,000 per month right now, but that’s the highlight deal kind of number. So that’s you know it’s always you get into like our former first quarter is always the weakest. And so that pattern I’m sure will continue for BCA to address with you.

George Staphos, Analyst, Bank of America Securities: Okay. And EMEA has not had an effect on the Polymers business so far in Industrial? You didn’t really talk about IBCs. Thanks and I’ll turn it over guys.

Ole Rosgaard, CEO, Greif: No, it’s the main segments that are down, just have a look at it. And you know that, George, the large chemical companies out there, just look at their last earnings and that’s kind of how the market is at the moment, whether it’s in EMEA or North America. But North America is the weakest.

Larry Hilsheimer, CFO, Greif: Yes. IBCs, like we said, were down offset by double digit growth in the small polymer product.

George Staphos, Analyst, Bank of America Securities: Okay. Thank you,

Conference Operator: And our next question will be coming from Michael Roxland of Truist. Your line is open, Michael.

Michael Roxland/Nico Buchino, Analyst, Truist: Yes. Hi, guys. This is Nico Buchino on for Michael Roxland. Thanks for taking my questions. I guess just first off, congrats on the strong cash flow performance thus far this year.

Just curious on how you think the business should perform from a cash generation perspective following the divestitures? And how do you weigh capital allocation opportunities at your forecasted lower leverage ratio?

Larry Hilsheimer, CFO, Greif: Yes. I mean we all of our businesses are generally fairly consistent in terms of their cash flow generation. So we don’t really anticipate anything shifting. As we’ve said consistently, our objective is to be a 50% free cash flow generator relative to our performance. So we’re on that path, obviously, north of 40% this time.

And the businesses that we’ll acquire have to meet that 50 plus percent free cash flow conversion unless there’s some other compelling if we bought a 30 plus percent margin business that was capital intensive and it was 40%, we’d be happy, okay? So we expect cash flow generation to be good. Clearly, the debt pay down for capital flush, that said, our biggest constraint on deploying capital has always been human capital to get the projects done. We did see a drop off in our CapEx for this quarter. Frankly, part of that was because in our original guidance, we had stuff for the containerboard business, which obviously some of that we cut out because it didn’t make sense for the new buyer and that kind of thing.

So that helped us redo it. And we backed up strategically and said, let’s look at our portfolio of projects and prioritize things. And then we had some delays with deliveries on equipment and that kind of thing. So we expect the proceeds of the two transactions to save us interest cost if we do no acquisitions next year, about $120,000,000 Part of that’s related just to the timing of when we can pay taxes. We mentioned that we did we’re doing this Saterra deal on October 1 for tax reasons.

That’s because by moving it one day into that year, saves us $13,000,000 of tax permanently, saves us about $4,000,000 on a timing of our payments element. And there’s actually some other tax savings in the future related to that. All that means we’re going to have lots of capital available to deploy against high return organic CapEx projects. And so we’ve been exploring a lot of those along with our acquisition pipeline. And Igor, let

Ole Rosgaard, CEO, Greif: me just lay out the allocation priorities we have. Obviously, first one is dividends, safety and maintenance of our equipments. And after that is debt pay down, but obviously, we’re in a very good place now with our leverage. And then the significant last one is organic growth. And as Larry mentioned, we have a solid pipeline of opportunities for organic growth that we’re working on.

Michael Roxland/Nico Buchino, Analyst, Truist: Got it. That was very helpful. Just following up maybe on the EBITDA guidance discussion. Can you just help me frame how that top end is hit and if that’s just better performance on the SG and A and cost out or is that maybe a volume return?

Larry Hilsheimer, CFO, Greif: You sort of broke up there. Was Glenn. Oh, sorry. Yes.

Michael Roxland/Nico Buchino, Analyst, Truist: Just on the high end of the EBITDA guidance. Yes. Is reaching that more dependent on the SG and A and cost out or

Larry Hilsheimer, CFO, Greif: No. No. It’s that’s pretty much locked. This is that range is really just dependent on volume of what happens in the month. I mean it’s a very tight range obviously and it’s just giving us a range therefore if volumes up or volumes down.

That’s really the only flex in there. There’s minor other items, but that’s the majority item.

Michael Roxland/Nico Buchino, Analyst, Truist: Got it. Thank you. I’ll turn it over.

Conference Operator: And our next question will be coming from Ghansham Panjabi of Baird. Your line is open.

Ghansham Panjabi, Analyst, Baird: Hey guys, good morning. I guess going back to the question on capital allocation. Ole, as you think about the balance sheet you have and all the many decisions you’ve made in terms of portfolio adjustments the last few months, is increasing your exposure perhaps more defensive end markets a strategic priority for you as you consider acquisitions? Or how should we think about maybe are you looking at a different vertical as it relates to the portfolio, etcetera? Just give us a bit more from a strategic standpoint, your thoughts as it relates to that.

Ole Rosgaard, CEO, Greif: I mean, as we laid out on Investor Day, we started off with the end markets. That’s where we started looking. How big are the end markets and which end markets are growing faster than GDP in general. And those are the ones I mentioned, the food and chemical, the pharma and so on. And then after that, we then look at what products are sold into those end markets that are part of our core business.

And that is our polymer based containers and caps and closures. And that’s really where our focus is. Of course, we have a legacy business in renewable metals and so on, and that’s also core business, and we maintain that. But generally, that’s, as you know, is our cash cow. And all the cash and the earnings we generate there, we invest in these growth markets.

Ghansham Panjabi, Analyst, Baird: Okay. And then as it relates to guidance, just given there’s so much going on with your divestitures and also you’re changing the number of your fiscal year, etcetera, is it as simple as seven thirty at the midpoint of guidance for EBITDA for 2025 for eleven months and then you would strip out the containerboard impact, which is 168 and then adjust obviously for twelve months. Is that how we should think about a baseline for the starting point for next year?

Larry Hilsheimer, CFO, Greif: Yes. I think generally, I mean, obviously, we’ve got our cost optimization. And we should realize $25,000,000 or so in twenty twenty six million And then we already said we’d have run rate of 50,000,000 to 60,000,000 coming out of next year. So that’s the other element that would go into it, Ghansham.

Ghansham Panjabi, Analyst, Baird: Okay, perfect. And then just finally as it relates to the operating environment, again, a lot of event driven uncertainty with tariffs, etcetera. Is there any change that you see, plus or minus as it relates to perhaps your view when you last reported as it relates to the operating environment as you jog through the various regions you’re exposed to?

Ole Rosgaard, CEO, Greif: If you mean in relation to tariffs, not really. Tariffs the impacts that we see from tariffs is still well below $10,000,000 It’s not material for us. And remember, we tend to I mean, operating in 40 countries, we source locally, we manufacture locally, we sell locally. So it’s not really something that has an impact on us.

Ghansham Panjabi, Analyst, Baird: And in terms of the demand environment for your customers as it relates to tariffs, any change there, good or bad?

Ole Rosgaard, CEO, Greif: It’s a little bit harder. We don’t really we haven’t really seen any changes yet. But obviously, some of our large chemical customers, it’s very clear that they are not doing so well, and that’s something we’re following very closely. And I can say that if you look at the regions, North America and EMEA, they have remained soft, And we haven’t really seen any significant change. The biggest change is really on polymers and especially the chosen strategy we have.

We see that that’s where the growth has been and which clearly demonstrates that our strategy is the right one.

Ghansham Panjabi, Analyst, Baird: Okay. Thanks so much. Good luck in the quarter.

Ole Rosgaard, CEO, Greif: Thanks, Dan. Thanks, Ken. Thank

Conference Operator: you. Our next question will be coming from Gabe Hodge of Wells Fargo. Gabe, your line is open.

Gabe Hodge, Analyst, Wells Fargo: Guys. Want to revisit Gabe,

Larry Hilsheimer, CFO, Greif: must be kind of golfer with the Hodge name now.

Gabe Hodge, Analyst, Wells Fargo: Appreciate it, Larry. I want to revisit the kind of starting point for 2026 and I recognize you’re not giving 2026 guidance. But I thought the $730,000,000 number, it technically includes another, I guess, 50,000,000 from August and September in there. So really we’re kind of talking about like you said a 02/18 number or $220,000,000 So $730,000,000 less $220,000,000 is a starting point and then we got to annualize it, so eleven months to twelve months, is that

Larry Hilsheimer, CFO, Greif: that’s correct. I missed that on Ghansham’s question. You’re right on that, Dave.

Gabe Hodge, Analyst, Wells Fargo: Okay. Well, there’s a lot of moving parts. So we’re just trying to keep our bearings over here. The other one a little late in the call. I think you guys had bought out, I saw in the cash flow statement a minority or non controlling interest to the tune of $40,000,000 What was that?

Larry Hilsheimer, CFO, Greif: That was on our North American IBC recycling business that we had purchased three years ago.

Ole Rosgaard, CEO, Greif: Is that right? Fall. Fall, four years Okay.

Larry Hilsheimer, CFO, Greif: So we bought out Yes, the remainder of

Ole Rosgaard, CEO, Greif: we owned 80% and we bought out the remaining 20%.

Gabe Hodge, Analyst, Wells Fargo: Perfect. And last one for me. It seemed like at the Investor Day, the pipeline was pretty full on M and A and I appreciate that these things can move around and you don’t necessarily dictate when people are ready to sell. But can you talk about maybe just broadly the market for M and A and things that you’re working on?

Ole Rosgaard, CEO, Greif: I would say the same. As we said last time, we have a very, very solid pipeline. We have talk ins. We have larger ones. And we continue to be in close dialogue with the owners of all those businesses.

We don’t dictate when things are happening. We don’t know that. But it’s important that we stay close to it. And the people we talk to and the companies we look at, they all fits our strategy. And with just to remind you is within Polymers, we are looking at businesses that at least generates 18% EBITDA margin and that has a 50% free cash flow conversion.

And they operate in these four growth segments that I mentioned earlier. That when things come up, we obviously, we’re ready to move. But at the moment, we’re very pleased with where we are with the leverage that we have created.

Gabe Hodge, Analyst, Wells Fargo: Okay. Thank you.

Conference Operator: Our next question will be coming from Matt Roberts of Raymond James. Your line is open, Matt.

Gabe Hodge, Analyst, Wells Fargo: Hey, Ole, Larry, Bill, good morning. Hi, Matt. You spent some time already talking about capital allocation, but maybe I’ll try again. Given your leverage, so after land, you’d be

Matt Roberts, Analyst, Raymond James: at 1.2 times, and that’s well below the long term two to 2.5 range. So what is an upper leverage range you would be comfortable with following any potential deal? And as you look at those target markets, whether that’s pharma or other ones, how do asking multiples compare to prior deals you’ve done? And given where volumes are currently and the commitment to $1,000,000,000 in EBITDA in ’27, does that $1.2 leverage figure allow for greater immediacy or appetite for a more transformative deal?

Larry Hilsheimer, CFO, Greif: Yes. So Ole obviously already gone through the target markets that we’re involved within the M and A pipeline. And so

Ole Rosgaard, CEO, Greif: that’s

Larry Hilsheimer, CFO, Greif: we’re focused on that. We’re not aware of any transformational deals on the market right now. So I mean, don’t see anything that’s a $3,000,000,000 deal or anything kind of thing. In terms of our leverage ratio, we like to target in that two to 2.5 times. But as we’ve shown previously, if we can find the right strategic fit in businesses that have the free cash flow generation that we look for, that allows us to pay down debt pretty rapidly.

As you’ve seen, our debt ratio has come from 3.6 to 3.1% in the three quarters this year. So we address that leverage ratio pretty rapidly. So we’d be looking at we could do $1,000,000,000 deal now and still be within our target ratio range. You do a $2,000,000,000 $3,000,000,000 deal and still be back in it very rapidly if we have businesses that meet the criteria we’re looking at. And we’re only going to buy businesses that meet the criteria.

So it’s really just going to be dependent on when things come to market, are they good strategic fit. We’ve said this before, but we’ve been down the aisle of marriage on deals a couple of times now. And at the end, we ran away from the church because we as much as it looked attractive going in, we figured out the bride was pretty ugly at the end. So we’ll keep looking for the pretty bride.

Matt Roberts, Analyst, Raymond James: Very good, Larry. I appreciate the color there.

Larry Hilsheimer, CFO, Greif: I like the analogy. Great analogy. Switching

Matt Roberts, Analyst, Raymond James: gears, if you could stay on the same analogy, that would be great. Fiber, you’ve seen a lot of moving pieces there, containerboard coming out, land out, drums are now in this segment since you’ve re segmented. So with the $218,000,000 coming out from containerboard in eleven months, I mean, how should we think about what’s remaining in that fiber business in 2026 in terms of margin or driving cost out of that business, recognizing there’s still some price to flow through? Just any color you could give there on that fiber for Yes. ’20

Larry Hilsheimer, CFO, Greif: I mean, I’ll make a comment and then Oleg can add on. I mean, one of the key tenants of our strategy that we’ve talked about before, but we haven’t talked about today is we want to be number one or two in the market. And we are number one in fiber drums in The U. S. And we’re number two in our URB business.

So we like those positions because it means you’re a market leader on what’s going on and not the back end of the tail of the dog like maybe we were in containerboard. So we like the dynamics of the business. Right now, the demand on the fiber drum part is weak because of industrial. But anyway, that’s a high level thing

Ole Rosgaard, CEO, Greif: on Yes. I can’t come up with an analogy like Larry. But if you look at I mean, our URB business, we are clearly one of the leaders in that business, and we like that business. And that’s primarily tube and core, but then we have our fiber drums as well. So our URB capacity right now is around six thirty tonnes.

We have some CRB capacity, 65 tons, but that’s a swing mill that we can swing to URB. So our focus is really on URB, where we are well integrated into our converting assets.

Matt Roberts, Analyst, Raymond James: Okay. That’s all very helpful. And maybe if I could squeeze maybe just one more in here. On the Integrated Solutions, that margin came in lower in 3Q, volumes are still up. So what drove the variance in margin quarter over quarter within that segment?

And what is expected on a go forward basis to get that back above 20%? And in that Integrated Solutions, I mean, you discussed potential investments in closures as well. How do you think about maybe longer term external sales impacting the longer term growth rate in that Integrated Solutions business, if material at all? Thanks again for taking all the questions.

Larry Hilsheimer, CFO, Greif: Yes. OCC was the big driver of the margin squeeze. As the paper industry has picked up a bit, obviously, our recycled fiber business has been selling more, but we all know where OCC pricing cost is. And the big value to us of that business is having a secure supply chain of OCC, which you’ll remember a number it seems like ancient history now, but there are a number of years ago everybody was struggling to find OCC. So you want to make sure you have that to support the primary business.

And with respect to margins, one of the reasons that we really like Caps and Closures is it’s one of our better margin businesses. And every target that we’re looking at in Caps and Closures would significantly exceed the target levels that we talk about in our M and A strategy.

Matt Roberts, Analyst, Raymond James: Very helpful. Thank you again.

Conference Operator: And I would now like to turn the conference back to Ole Roskard for closing remarks.

Ole Rosgaard, CEO, Greif: Thank you, operator, and thank you again for all your thoughtful questions today. I want to leave you with this. GRIVE today is a fundamentally stronger, more focused and more resilient company than ever before. We are simplifying our portfolio. We’re strengthening our balance sheet and unlocking significant efficiencies that will create durable shareholder returns.

We’re not waiting for the macroeconomic environment to improve. We are creating our own path forward with execution discipline, a bias for action and a clear build to land strategy. As demand recovers, our sharpened portfolio and operating leverage will amplify results. We have line of sight to our 2027 commitments, and I’m confident that the actions we are taking now will position Grive to deliver outsized value for years to come. To put it simply, GRIVE is a company you can invest in with confidence.

Thank you.

Conference Operator: And this concludes today’s conference call. Thank you for participating. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.