Greif (GEF) 7 Dec 232023 Q4 Earnings call transcript

Good day, and welcome to the Greif Fourth Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this call may be recorded. I would like to turn the call over to Matt Leahy.

You may begin.

Thanks, and good morning, everyone. apologize technical me side. on let first, for difficulties the our And were in. We dialed some audio, And troubleshooting we reason, for lost last minutes. for and several the been we've We your truly patience. appreciate call. quarter XXXX fourth Greif's to earnings Welcome conference fiscal and call. This is Matt Executive Greif's and questions Greif's Officer.We Vice Officer; Rosgaard, the and joined Ole of and Greif's at Investor Chief will Corporate by Financial President I'm President Relations, of Leahy, Development today's Chief Larry end Hilsheimer, take please Disclosure, material ask regarding in you accordance Fair And we're to discussing Regulation consider you from on turn because nonpublic questions important X. basis.Please with issues with Slide an prohibited individual information

As and differ from we'll call, beliefs those materially plans, related a to and during expectations could involving future today's results make discussed. forward-looking reminder, events, statements actual

referencing I'd non-GAAP the Ole over turn found in to and reconciliation be comparable metrics presentation.And we'll today's like X. on that, of Slide measures certain now can to GAAP financial with to the be directly most presentation Additionally, the appendix

Thanks, apologize difficulties morning. for this let we had Matt, the me also everyone. good technical and And morning,

our that our year as XXXX. commitment in X.Xx.At by dividends Greif on Ipackchem across despite of XXXX organic the improved macroeconomic billion flow talk EBITDA year all complex basis, our and I execute digits to in cash ongoing excellence adjusted cash headwinds. acquisitions over in capital and EBITDA $XXX history focus only our GIP, adjusted to the an in teams the the doing environment. investing share double Looking our M&A. on sales even year our our precision ratio in excellence of in program on Greif. about range testament in primary while value-over-volume to by say on and conversion, X.X% a our completing challenges, humbled million while resulted the for often both fiscal second projects earlier face managing demand a long-term leverage to returning hard made declined Greif's future. both on exceptional growth a target in Last operational share best and this Year-over-year, commitment a We new year work the capital PPS flow operating businesses, and of maintained back the Greif, margins buyback second to exceptionally. we our And year. strategy, fifth the the our in announced product from increasing both free our true proud free shareholders we performance for within surpassed an am and teams completed per the did X our Xx of the progress to was aggregate us and health year challenged of of presence team all and We in XXXX, philosophy.Fiscal banner has global Build fiscal maintaining of This extraordinary to with launched continued We're we I'm $X by creating

for what can guidance present I'm pressure, managing mistake, business our is be close hard, pressure we make when But we time, proud under out business XXXX.[Technical controlling has some to fiscal going. and no of business XXXX, are we the headwinds, we fiscal handle are our under accomplished been assumptions As near-term especially Larry where which and have and our for Difficulty] control. cover Difficulty] and impacts are we continuing low-end built exonerous as by XXXX, proven [Technical modeling we will can what to with to face

will Larry? review storm value to the full of our global share Larry and Last. strong, I will a Greif After weather on with and confidence and in you we a update future this Build for quarter, about team. remain strategy our growth mission I Our our creation provides have execution the broader fourth will

Thanks, Please per and $XXX of X. complex free In fourth of turn share nearly cash $XXX to of million earnings million $X.XX Slide our adjusted despite adjusted environment. generated Ole. flow quarter, the operating adjusted EBITDA, we

at Our XXXX, and full fiscal team's December since September we of XX% plant saw now, reminder time more in QX negatively we our than of and steel along the challenges the the hard early will steep Reliance exceptional are performance stack acquisitions XXXX. consumed of is will that a presentation, execution this past the the levels. no colleagues same to specialty expand sector Existing through been volumes large our More plastic the include the staggeringly IBCs XX% where volumes GIP. extraordinary, investors and Build focused the the demand X times. globally M&A, take ColePak A with in Therefore, operations have truly On quarters, to corporate initiatives functions the XX%. fiber have us historic to results from Last to small have XXXX in recovered.While the over in our occurred an we related pride for like by I period recent QX Ole are U.S. chemicals provide segment invest 'XX, Global substrates which, up starting contribution XXXX. mid-teens. difficult data, GIP home for Recession, to X. to around industrial quarter Compared results lowest for businesses, on sector. and both and to during comparable delivering now results with quickly down sales period, a remind straight in coming results extremely Those XX on X-year our managing this the these to volumes Later their is down of commentary nearly [ in of The unprecedented delivered. all Slide drums year in GIP were drum year.Let's in in I year-over-year. for in sovereign basic a benefit results, not low and at our below basis, and investors are weak industrial trending the would increased in demand have tracking did tracking including up floor Only with drums of fourth since globally costs turn strategically we fourth tracking effectively. X%, Ipackchem to in since faced future This truly work while Great saw plastics was these global an drop thank quarter. level that but and will ] commitment continue PMIs the enabled

prior fourth and with continued the QX environment compared less Containerboard better low XX,XXX economy URB excited recovers.Please growing about are Paper GIP to EBITDA and year. to We costs will pressures. what in cost volumes dollar last margin the to quarter overall, XX,XXX Difficulty] our than to converting, our We segment quarter of the fourth Packaging's lower tons with results fared total sales when X. in combined led volume of during the due rising the year. $XX and economic Slide but took OCC the deliver better system compared turn approximately declined million quarter and mill to price volumes [Technical primarily compression both of they across year-over-year, industrial in downtime downtime

team continues did I'll close extraordinary PPS to the well where low-end XXXX working Slide capital on job an guidance managing to and controllables Our assumptions. the year.Please out turn to control X, discuss

GIP price truly we at and headwind headwinds serve cost well, As will do challenging full remarks, a to across turn sitting Ole believe RISI PPS we businesses are now Greif's because we don't material when. and a volume year for as time mentioned guidance covered we the in historic demand with rising markets end published with positively, in just I've his in give and lower know OCC time prices. a environment opening moment prolonged

continuation these of to levels. multiple near-term we in and and guidance to through presents fiscal of cash of Given million decision start trends XXXX EBITDA guidance at both and flow. for This recovery, $XXX sustained low demand, in made simple. methodology visibility to a a the is headwinds million present low-end $XXX price 'XX cost a free current the fiscal It duration businesses

above guidance from is Ipackchem, impact this this containerboard, our recognized which include don't announced expect until recently excludes increases guidance. we end in that also results not in include price up close addition, fiscal any guidance QX.Our it which actual low-end we sometime hope does by significantly calendar In 'XX will will RISI. And in our

that stated we guide always we've do hope. based on However, not

price no PPS view in in downside inflections cost driven is XXXX. by volume Our current and

the and recovery that gap us is would add identified We shoots, no if recovery increase a trends recovered have XXXX XX% would volumes $XX million. of some that million compelling our green conviction volumes, seen XXX% Note approximately emerging. a EBITDA yet to to give approximately $XXX but

weather designed Our to business short-term is cycles.

to delight customers. continue We our

We I'd are the are all business. The controlling and to making and time stronger, what know cylinders and laying more out plans. We're our we to Ole like are strategy come, growth the we proud will our other and side firing continue this of teams, difficult we control. execute on a come that can through to and on the to it foundation investments breakout performance for Ole? cover hand we to Build back about years in under to long-term Last better

Larry. Thanks,

on Build X. an is values. about basis. turn But more please that. it's quality could you to than annual leading If It's producing results Slide also Last through our about to

service, been delivering to world. most like all satisfaction on the which set to better our throughout aligns success.The the up of each success would service I colleagues future vision a customer in legendary how and in customer the to our being missions our world. for vision best long company achievements and Our XXXX reliable and missions performing few of measures us customer And briefly highlight purpose, customers of goal our one directly reflect they our serve has in index of

XXXX, aspirational are average our target is was and XX%, we proud XX%. score in that Our

customers, score the results, XX, devoted and of the a with our being we world. surveyed macroeconomic companies result in completed We annual Consider to results XXth an serving quartile receiving are Net customers we and communities, of clearly tough, know within the our with manufacturing the and Gallup leading XX% of the engagement, record it.On particularly are top recently X,XXX of creating again colleague for improvement driving firmly new Greif Score the Promoter when are rewarded industry. a placing completed showed also across all year survey within we times excellence, these context our nearly participation, them a survey this over us manufacturing sixth

long-term this with report our circularity, of more our and our of We sustainability leadership commitment DE&I. new element Future. visit our the to industry also Slide I chain under website highly And to targets to success, supply turn year, XXth Sustainability climate, Our we encourage to and initiatives.Please is show Protecting our page annual mission XXXX our waste, This our through sustainability our the foundational around investors X. read about published

Now under that internal Last a strategic initiatives strategy, years value want broader long-term all we of believe update the Build on provide some creation pillars that driving stakeholders. ongoing the we have to to are X we for

supply benefits we you functions the XXXX centralizing operations, One IT chain and the shared under with from throughout banner. First, our Greif global

We serve out advantage. footprint of future scale functions these businesses are the building in expectation of larger a with a growing the to

and and Second, in an structure America decision-making growth. practice Greif from XXXX in to capital resulted was and level are and piloted in around geography-based One shift mentality, better improved operations GIP This substrate-based executing in investments operations. sharing plants we operating North efficiencies, best alignment our regional with organizational

years, our beginning and year September to better by change prepare fiscal the will will investment to more it community. industry and We use implementation calendar a requested increase closer This with the XXXX.Additionally, picture investors you to for has and fiscal for exposure we to beginning plan to year-end we and complete our this to XX, change as standard been of align fiscal our year to believe year us full we targeted get update in plan XXXX. analysts the

services SG&A They We circularity second a the which of Build be our position short-term but acquisition, following at better strong and these to the Enacting lead the we leader driving very value a to is unique sustainability to pursuing Container, strategy aligned areas, by changes and are acquisitions our close alliance better converting these in to the in XXXX, inflation sector, of priorities a make done, this the we Products fiscal firmly all addition about in see and in the product growing X us downstream small coming we XXXX Lee great strategy technically profile. more time plastic markets creation. margin an the our successful recent look Greif year, product and will the and the fiscal increase takes enter reconditioning small from $X.X our markets. to to in resin-based of global to to future.In and that Day the summary, XX. turn equity we elevated which through acquisition work end growth in I'm our characteristics in being most markets, to packaging will initiatives and anticipate we inception improving in of internal plastics of share offering growth service this Slide At offerings in positions accelerated M&A. verticals past they will these outlined have all enjoy transparency high-performance in targeted Last market and Greif's our and been year These the attractive Ipackchem our capability, of some Importantly, largest, changes effort, the one results, sophisticated Please paper, bolster billion, the quarter.In will a excited Reliance have acquisition roll-up Slide to over part opportunity XX. result become technical world.Please our Investor the attributes. jerrycan with same also in we believe expectations turn hold addressable cost acquisition markets. scale as end growing jerrycans customers With

Another are objective trends agricultural greater perspective. specialty growth plastic pharmaceuticals extraordinarily an diagnostics. transactions and path about grow small organic portfolio us end secular of the market as balance our chemicals newer from and markets. give to Greif and excited product with The versatile fiscal in The in is medical our build customers serve exposure exposure to and teams line in growth potential and for is to in and well substrate jerrycan markets acquisition announced we follow-on XXXX these as in our greater as

final Additionally, XXXX resin-based, of and can in fiscal most products reused of completed recycled you note profile raw materials improving our and XX% overall acquisitions. A or turn as will less notice nearly require on were acquisitions sustainability to the manufacture.Please to XX. these announced that be energy and Slide

the great are this are and our mix sustainability we in These our market over acquiring plus continuously characteristics margin path, drive legacy XX% every business will are businesses. benefits, and flow day end conversion. well Greif time, than are our improved performance to cash margins the to long-term addition In work of business. along towards M&A EBITDA with doing and pipeline those we have and cash base also materially teams our XX% our goals our Over buying are companies companies accretive better free free the improve

a and combination EBITDA growth. strong our through leverage actively continue while our balance going debt to sheet of utilize disciplined will remain forward We on lowering acquisitions and paydown

Build of and remind XX, for we Our remain reasons at through Greif this of business the to our so our closing, strategy positioned historically have will Slide excited control balanced, demand excel and you strength well prospects let financial successful in to and control why strategy. can weather for capital the remain on we long-term me the come.In of growth pricing full soft and years what the confidence ensuring execution environments. ability growth to to allocation I'm I Last

complex to X and We the strategy that the over environments. have we years perform have in proven operating past team

the future. business while the tightly also managed have We for investing

as defensible we for and will and positions our thank success questions? robust, and growth in operations line growth our The And growth-orientated of projects. strategy. the a believe keeping you impacts We growth business long-term we M&A and more for result We your the cumulative our regarding for cycle model, please a you lastly, organic And efforts Greif which business lens interest open strong in normalizes. earnings Greif. operator, are have high-impact will accelerated through efficient,

our Panjabi from And Instructions] of first [Operator question Ghansham comes Baird.

reconcile the Larry, million the is in the million of more the fiscal first bridge, sure $XXX year guess, us non-volume you relative XQ. making generated just terms on color $XXX Just step Can I 'XX. which off, down give million, $XXX EBITDA pretty working. audio to to in down variances? would I'm in significant just be you trying your EBITDA to a almost generated in

against year-over-year Yes, I bucket sure million. have we of question, obvious dollar a thing. the it, impact through currencies strengthening Got some about of if right? So of walk our because $XX

of a had, also series year, items. onetime one-off the of sort We throughout

fire refunds million we about example, another recoveries, tax. that where recovery, in some insurance were ] the $X initiatives We related governmental had was same 'XX. a utility EMEA actually down of legal tax because fire $X had recovery high of For an had about of before to that had and cost. was we recovery thing then a we costs It in the of type operating [ issued Brazil million some

flowed lumps. they in to those, of big million. they all $XX year. weren't throughout up the like So They totaled But

anticipate don't to reoccur. we those So

X roughly So have $XX you to paper now. in We items, million right between where we almost pricing cost year-over-year price are then those in just element million. have is $XXX PPS squeeze the

And announced, account year-over-year. about will is on timing segments not take And that, million that we a just for price going on forward. going will does then some believe to drag from bit of a mentioned lot be a of just of GIP, $X we into investments the different got concentrated then generate $XX benefits us we cost us segment increase focus have Ole forecast about that January structure, we in, on which that again, Now cost little a our we index X. million implementing

IT future it's the digitization anticipate the lot to we a it we've We benefits an net it. of as also expense in are investing, strong us efforts benefits. view as But that more capitals require our about talked that investment. of We

So And about we'll then there's to to turn we matters. $X 'XX, start more forward. around inflationary just believe going 'XX benefit things, in kind million generation benefit year is see of this a other those That million. some will $X of and

$XXX $XXX you the should million. to get that million So from

just I Okay. like years the $XXX XXX% recovery to us, then gave volume of make is to That's Is And sure million you super relative X that of right? the that that scale the helpful. have that ago?

relative just to That's 'XX.

X went back be guess 'XX, relative of I what even the to yes, sort years we else is actually would look to normalized volume would you 'XX. recovery yes, 'XX. last So COVID, But that because on, $XXX If the everything to ago, going numbers. the 'XX, be go back we higher at of year million

low-end it. Got Okay. of is is color reflective you of there. terms then assumption? then the your more than the on Perfect. on would scaled year be comments CapEx And green that shoots, think? turns better in be if just to guidance, if out And up And lastly, that something so, that the

Yes.

green we're moment our On of the full much mostly it's containerboard better good. the started what to ready certainly, to business, or yet an are and mill last Ghansham, we system think see a backlogs is couple I our months inflection at and don't been have point, the shoots, but in trend just call it

it? what it was what that's any We talking of we're else. sorry, part haven't about. second place So the I'm really seen

CapEx guidance.

low that's could manage look, said, obviously, yes, spend but the hey, to at to just with just to we're actually we manage a with not our for guidance, more do end, going it appropriately anything We've do CapEx our more, up if CapEx investors. year we because to strength have Ghansham. for end

we ratio. but to year obviously, on we would amount have an wouldn't up impacts what sure we maintain proportional do And CapEx see there's probably be if of So CapEx, it same Obviously, that our core that point, cash our a we to do inflection generation make critical ratio. maintenance. that's every

Cashen from of Bank Keeler come America. will question of next Our

George, related. Cashen for had morning on this he a is This conflict business

your you know improvement trending containerboard, I URB. just also generally here, you're including the on just guess It's you not on just speak I some containerboard. price guidance to talked increases? rationale better then can behind to to And but relative in So

that So that just on at talk the throughout just how customers front and from trended quarter you maybe demand front the on your hearing what can you're as all well? there,

are customers up. inflationary deliver have Yes. faced I the OCC cost and prices like to raising is pressures. else mean our been we up. great we, Obviously, services because We demand has everybody

effective January So that, we've and X. be gone with out it will

Yes, that's it. essentially

just Okay. demand And containerboard? on then in

about fourth you Are talking quarter?

Yes.

mills X.X%. and and And X.X%. were CorrChoice, X.X% in down down Yes, and core, Boxboard, tube X.X%. sheets we

Yes.

significant because we've turnaround sequentially, been So running a negative.

So...

acquisitions term I of of talked of the number that done longer a you've Ole and you Okay. stuff appreciate the announced kind And to M&A on color. you've And story I Understood. pipeline. being maybe past or number here. of then this year calls, talked know kind term in immediate a to part

point, kind is coming this execute about we there how can at So the anything Or could that on potentially you that? of year? in think

here in I the haven't yet, will in. [Technical close back closed X we And we calendar given have in quarter. we We Ipackchem countries. operate at need to then volume guidance, They dive mean situation our do and the terms not in the a But moment out first deal. that the something, Difficulty] and have of to opportunistic to over good the we're a means we to available, not going aggressively miss next are to what's sort going buy. do months good opportunity remain in on we of X

share year, would all we'll we just on debt this that also within covenants we great be if and even we I well XX% put that's recovering is still I we shape as around there's And Yes. are of little we'd thing recover, low a in going hit our if mean, had this ratio. end, to think any forward. The happens be And leverage volume of right on upside. even point if this year, X% to Ipackchem, still our with significant got like a we just that. obviously,

volume, it's pricing we're margins the to up of said up XXX $XXX picked in things [ million. million. and we X paper So where happen, already years, target. say, If If $XX in we're last recapture roughly back to we the we we add million, recovered those If If we're at the $XXX $XXX our Ipackchem there, average debt ratio we out million. ]. down

turn it. over. Got I'll one then and And it Understood. just last one,

the it terms you of what fiscal change your Just quantify year. at or possible Is in inflation be incur what that? might to with related costs the all might to

fiscal Yes. for couple is thing kind The year thing element It's dollars that change of of million minor. a relatively of it.

Our next question of will Shrestha come from Aadit Stifel.

talk you needs providing support in could happen changed guidance If watching is more as you range. what just comfortable the about have fundamentals feel what business a indications would and coming to churn the to you're positive and

is, happen to needs lot involved. But if of obviously, mean, rate what interest there's reduction. we factors a see a Well, I

you very on a the Those see issues will have the around people in then will our probably well. but be That houses We the positive, world has paints the a will effect sector containerboards. an housing sector, the end drives move that be also biggest, all we probably improvements on have see and probably of huge say. some housing as from would I And segments, the we when biggest. lot the conflicts, geopolitical business

will guidance. to a everybody will we a call us came January. on first time, last our I just something, this range. I out we going second tell this were react year. gave the ago our low-end quarter, But rather with information to Yes. was business you'd at we would mean call, ask that you, the when I'll on and we back telling year also reflect quarter you thought paper get they in bounce in see see. By We customers

second off And further quarter And like, year. time further the the got chemical what's we companies first also it and reflect extending see point, to an first Recession, by last on, demand kicked I'll inflection was on out. when everybody my, started did quarter, Our Great The the we was and aggressively. saying rapid. it or were calendar Oh going

recovery see ties and to that a that start of we Ole respond. hopefully, to to well some just So things we positioned the are mentioned,

add that. And is to Aadit, Matt. just I'll This

industrial down a May period of So when XXXX trending for almost just since XX peaking were They've ISM globally contractionary PMIs you then. negatively XXXX September globally at in over look actually trending and in been production, months. since of

Our levered some those to global industrial of trends, if business is not directly.

or seeing if ISM you indicate probably look that a we're could think turn as or PMI demand I recovery a also for in well. So recovery

about in cadence kind All built pricing improves flat each it thinking Am toughest quarter, they like within about just and and right. this comp the what of volume And sort maybe your of year-over-year, correctly? segment, by the maybe both, sequentially seems XQ within like have you into of guidance. I

going look didn't throughout basis. trended got not at we We we of on and price a at the quarter-by-quarter look with year. were really in things to back we throughout we Yes. top, that more a answer cost. the the year, off I'm paper OCC year, the each. just I didn't on and Yes. mean price had up ready obviously, business the guess, I the back take half that... where I didn't But go cuts

be you'd then say X. at the of that we the would than at the got year we've price better that implementing beginning. are But announced increase end that So on January our

would that So help obviously more second the quarter the first. in than

Aadit, our business to tends first well. be the And lowest the quarter as cycle in

me. one And for just one last right. All

closed, So rollover from the and guidance that free to that? in contribution sales you've what deals already the cash assumed flow the is

XXXX. contribution running flow XX% businesses these free million roughly in can of are conversion. is $XX give I collectively to cash the you. terms at a Aadit, Generally, EBITDA

year, We that's accurate but an haven't in guided to are that, from but directionally I'm needs not the sure CapEx terms EBITDA perspective. what next

of Spitz will Roger Bank from come question America. next Our of

QX basis? percentage the increase And year plastic, First, would basis? for and what a IBCs XXXX changes volume volume percentage on full you was on fiber IBC's fiscal have fiscal steel, a

can give you Roger, I that.

contraction The on X.X% in was first IBCs. of a QX one

Okay. I said thought up. you

my don't And year for have saying to what fault. you you're X. all Okay, full the hand is

contraction year is of X.X%. Full a

fragmented producers more large than large Okay. market only higher has have packaging X and businesses it maybe plastic Is Why global your does margins maybe XX% packaging legacy plastic share. with packaging. really small packaging small

less fragmented So a business?

the On it up It's buckets. plastic sophisticated consolidated to of lot one, produce. Number is of small a Yes. it players. across in business a split and kind product also less kind, a globe. X could you other more There's the

a have then market that where things have bit And we have and the little operate, you you you You really commodity a markets, premium. have where middle, a like premium specialty is bit barrier commodity little you science which the thing. have technologies, sort then of

answering basis IBCs answer was because without acquisition. impact on of to Ole the One Ole's Centurion a thing on supplement same-store

So our IBCs up on up 'XX, Centurion, expect year-over-year. volumes Centurion for on we XX% be with were And would to them X%. in,

[Operator Our next comes question of from Wells Hajde Instructions] Fargo. Gabe

called you've I'm Gabe, sure been worse.

past, to seen you can probably just curious confirm to one not I the recently little points a imported something that's grades recycle could that and are if, about here I'm seen think, all which if for something the in be in you've just that of that's justified in been that in imported, of have uncoated there grade board historically But I publications a or been speaking, bit imported. other it's higher paper ask us the wanted reasons, been a variety really paper that is marketplace. you price are be fact,

Now I'll stop there.

We've more, Yes, but Gabe, is overall it's bit in really market. minor not substantial. it little the a seen

think, any be weren't giving mean to Larry negative but the question, But out, advance. a yourselves revisit to of included, what would assuming bridge what economic laid And Okay. imply least the I the million necessarily mill which is side. this lot of you're $XXX in the I by experiencing what that sounds full containerboard even get the would I factors system. I the containerboard positives apologize that guidance at is guess in And at to of it for and/or in point, system taking sort you credit you're today like the account into downtime on no the

for today. Is that correct. just right your that the your number tons based that what all XX if some plus assuming system, I to sort throughout want XXX,XXX acquisitions, don't math comes of additive I those think seaboard in of I back, So the downtime on say economic was it it? exact are be have to know about will about way assumptions of

Partially. have containerboard from like in it's in But million now. in I year. minor the $XX some relatively mean, built we growth

also We Clara are our down mill. closing Santa

being out. you're little mean low in bit low-end end. relatively that low it's right. end take But will guidance. that I We're yes, conservative So a because it's

Okay. Santa Clara, remind me, that is CRB?

yes. Yes,

No it's containerboard.

Matt. [indiscernible]

Let me check.

We'll get to back you.

no would Matt I questions. remarks. now hand closing further showing the call Leahy to I'm like to for back And

all have wonderful for thank you, holiday. again, hope the your beginning today our challenges call. Well, right. at patience the a you and All everyone, of We

today's concludes for participating. This Thank conference. you

You disconnect. may now