GREIF, INC Q3 FY2024 earnings call

• Ole visited many plants worldwide, emphasized team commitment to safety, quality, and customer service. - Operating model change nearing completion, organizing operations and commercial functions by material solution. - Ipackchem integration in line with business case expectations. - Divested Delta Petroleum Company for debt paydown. - Q3 adjusted EBITDA $194M, free cash flow $34M, adjusted EPS $1.03. - GIP demand improved in all regions, EBITDA margins strong sequentially but down year-over-year due to cost inflation. - PPS had volume improvement but margins lagged due to input cost and price dynamics. - Investor Day on Dec 11 to detail operating model change and portfolio shift to polymers.

In Q3, GIP saw demand improvement in all regions totaling nearly 5% globally year-over-year. EMEA, the largest GIP market at ~45% of GIP sales, had a third straight quarter of sequential improvements. PPS (Paper business) experienced conflicting dynamics: continued volume and demand improvement but partially unrealized paper price increases, leading to margins lagging prior year.

• Maintained guidance range consistent with Q3 call. - Slight headwind from volume improvement pace less than anticipated. - Tailwinds from better paper pricing and value-based pricing in GIP. - EBITDA potential to over $900M with volume recovery, considering recent paper price increases. - Focus on operational excellence and customer relationships for value capture.

Q: Matt Roberts asked about margin contribution from mix shift and incremental margins on poly-based products.

A: Ole noted M&A selection criteria include EBITDA margin accretive to current margins, looking at companies with 18%+ margins and free cash flow >50%, with long-term trend towards 18% margins.

Q: Matt Roberts followed up on price/cost range tracking.

A: Larry said the quarter benefited from better-than-anticipated price increases and value-based pricing in GIP, with paper pricing guidance still expecting more in 2025, volumes slightly below expectations, and miscellaneous cost improvements offset by Delta tailwind removal.

Q: Ghansham Panjabi asked about GIP outperformance and reorganization by substrate.

A: Ole attributed outperformance to customer service focus, reorganization to serve customers better, with sales force to be more generalist and product management by material solution. GIP sales to multinationals cross-border not specified.

Q: Mike Roxland asked about portfolio transformation headcount and GIP outperformance.

A: Ole said reorganization not designed to reduce headcount, GIP outperformance due to long-term customer service focus.

Q: Gabe Hajde asked about Delta impact and one-time items.

A: Ole discussed Delta EBITDA and URB/containerboard price increases' impact, with details on quarterly and annual flows.

Q: Brian Butler asked about normalized volume and operating model timeline.

A: Larry said significant volume recovery needed, operating model change cost ~$6-7M, rolling out in Nov with details at Investor Day.

Q: George Staphos asked about Europe outperformance and exit trends.

A: Ole said Europe can continue to outperform due to value over volume and growth in high-margin segments, CorrChoice sequentially up, exit trends choppy.