Greif Q1 2025 Earnings Report

Greif EPS Results

• Actual EPS: $0.39
• Consensus EPS: $0.72
• Beat/Miss: Missed by -$0.33
• One Year Ago EPS: N/A

Greif Revenue Results

• Actual Revenue: $1.27 billion
• Expected Revenue: $1.26 billion
• Beat/Miss: Beat by +$2.34 million
• YoY Revenue Growth: N/A

Greif Announcement Details

• Quarter: Q1 2025
• Date: 2/26/2025
• Time: After Market Closes
• Conference Call Date: Thursday, February 27, 2025
• Conference Call Time: 8:30AM ET

Greif (NYSE:GEF) is a global leader in industrial packaging products and services, with a history dating back to its founding in 1877. Headquartered in Cleveland, Ohio, the company has evolved from a regional barrel and drum manufacturer into a diversified packaging provider serving a wide range of end markets. Greif’s longstanding heritage in container solutions has positioned it as a trusted partner for customers seeking reliable, high-quality packaging options.

The company’s core business revolves around the design, manufacture and sale of industrial packaging products, including steel, plastic and fiber drums; intermediate bulk containers (IBCs); safety closures; rigid, flexible and reconditioned packaging; containerboard and protective packaging. Greif also offers services such as reconditioning of industrial containers, pack planning and supply chain management solutions. Its product portfolio caters to sectors including chemicals, food and beverage, pharmaceutical, agriculture and specialty products.

Greif operates in approximately 40 countries with more than 300 manufacturing and distribution sites across North America, Europe, Asia, Latin America and Africa. This extensive global footprint enables the company to serve multinational customers while adapting to regional requirements and regulations. Under the leadership of Chairman and Chief Executive Officer Michael F. Haws, Greif continues to pursue growth through operational excellence, innovation in sustainable packaging solutions and strategic acquisitions aimed at enhancing its product offerings and geographic reach.

Greif Q1 2025 Earnings Call Transcript

Key Takeaways

• Greif reaffirmed its 2027 financial targets of $1 billion EBITDA and $500 million free cash flow, driven by indexed paper pricing, volume recovery, and a $100 million cost optimization program.
• The company has identified $13 million in cost savings to date—including $5 million of run-rate SG&A reductions—and maintains its goal of $15–$25 million of run-rate savings by fiscal year-end 2025.
• Greif raised its fiscal 2025 low-end guidance to a $710 million EBITDA (up $35 million) and $245 million free cash flow (up $20 million), factoring in recent price increases and lower OCC costs.
• Greif plans to sell its ~176-acre timberland portfolio to reduce debt, signaling a strategic shift and capital reallocation toward core business areas.
• The company will close two mills—reducing total capacity by ~190,000 tons—which will incur a $3 million EBITDA headwind in fiscal 2025 but is expected to yield an $8 million benefit by 2027.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Greif First 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 To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising that your hand is raised.

[Operator]

To withdraw your question, please press 11 again. 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 of Investor Relations and Corporate Development. Please go ahead.

[Bill D’Onofrio, Vice President of Investor Relations & Corporate Development at Greif]

Thank you, and good day, everyone. Welcome to Grieg's first quarter twenty twenty five earnings conference call. During the call today, our Chief Executive Officer, Oli Rosgaard, will provide a recap of our recent Investor Day and an update on our announced optimization initiative. He will then discuss an additional key strategic announcement before providing an overview of current markets within our new reporting segments. Afterward, our Chief Financial Officer, Larry Hilsheimer will provide an overview of our first quarter financial results as well as 2025 guidance.

[Bill D’Onofrio, Vice President of Investor Relations & Corporate Development at Greif]

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. Additionally, 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.

[Bill D’Onofrio, Vice President of Investor Relations & Corporate Development at Greif]

I'll now turn the presentation over to Ole on Slide three.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Thank you, Bill, and hello, everyone. I was pleased to meet so many of you at our Investor Day last December. As a reminder, at that event, we announced our new 2027 financial commitments of 1,000,000,000 EBITDA and $500,000,000 free cash flow. Our bridge to $1,000,000,000 is very simple. First, over $100,000,000 of known positive discrete items, which will impact EBITDA in 2025 and beyond.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Notably, the run rate impact of index paper pricing as of December 2024. Second, volume recovery, which as discussed at Investor Day will be accelerated by our enhanced business model once the industrial economy begins to recover. And finally, we announced a $100,000,000 cost optimization effort we are undertaking, which I will touch on in just a moment. We have high conviction in these three levers and we are confident in meeting or exceeding the commitments we laid out. Please turn to Slide four.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

At Investor Day, we demonstrated how we lead with our packaging solutions in essential industries and how we are well positioned to grow through capitalizing on our new business model, leveraging our deep competitive advantages and continuously improving our business through the Greif Business Systems two point zero and our $100,000,000 cost optimization program. We combine this earning growth with responsible capital allocation designed to maximize return on invested capital and drive profitability towards our long term targets of 18% plus EBITDA margin and 50% plus free cash flow conversion. While current industrial economics provide some uncertainty on near term volume growth, we demonstrated in 2023 and again in 2024 that we can produce solid financial results regardless of the negative macroeconomic cycle. Today, I'd like to highlight the strength of our business in the context of a timely topic making headlines, tariffs. As you know, our supply channels are generally local to local.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Additionally, thanks to our restructured business model, we have embedded flexibility and adaptability into our global supply chain, allowing us to seamlessly navigate disruptions without any material impacts. At Greif, we view our key suppliers as critical partners. And by fostering strong collaborative partnerships, we respond swiftly and effectively to volatility. Our supply chain team has conducted a thorough impact assessment across multiple tariff scenarios and developed a robust action plan to effectively mitigate any P and L exposure. Regardless of potential tariff changes, our global scale, operational agility and supplier relationships ensure we continue delivering legendary customer service while driving sustainable profitable growth.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Please turn to Slide five. At our Investor Day, only two months ago, by the way, with the holiday season in between, Larry announced our commitments of at least $15,000,000 to $25,000,000 of run rate savings identified by the end of fiscal twenty twenty five. Today, I'm pleased to update you that we have already identified $5,000,000 of savings on a run rate basis and reaffirm our expectation to achieve at least $15,000,000 to $25,000,000 on a run rate basis by the end of this year. These savings, which are primarily SG and A related, will fully benefit full year 2026 results and will also provide an incremental impact to the remainder of this year, which Larry will touch on in guidance. You may also have noticed we referenced $13,000,000 achieved within our press release.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

That incremental $8,000,000 is related to our recently announced mill closures. However, we did not want to include that in our full year 2026 run rate yet, as we are still assessing the timing of closure costs, which may offset that benefit in short term. Larry will touch on that in a moment. We favor bias by action and so expect to continue making good progress, while also planning for near term accelerated growth. As we refine our roadmap to realize the full $100,000,000 we will continue to provide you with updates.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Let's now turn to Slide six to discuss another recent decision. The organizational realignment we executed in 2024, resulting in our new seven SBUs provided us the opportunity to step back and visualize how each piece of our portfolio fits into the greater Thrive enterprise and how that translates into meeting our aspirational growth objectives. This work also expands beyond our SBUs and focuses on what is core to the long term growth of Greif, including our capital deployment strategy. As such, while we have a long history with our landholding business, Sotera, it has also become clear to us that this is better suited on the new ownership. As such, we are announcing today our intention to sell the entire timber portfolio of approximately 176 acres and use the proceeds to reduce debt.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

We sincerely thank our Sotera colleagues for their years of dedicated service and for their world class execution mindsets. We are fully committed to supporting the business and our colleagues during these transitionary periods. We will provide updates when available on this process. Let's now turn to Slide seven to discuss current quarter trends. In our first quarter of twenty twenty five, we continue to see changing demand trends in every product and region.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

However, as with the past twenty four months, the products we are investing in continue to outperform our legacy business. Polymers was up 2.7% driven by small containers and IBC demand in the Ag and Food sectors, particularly in EMEA. Integrated Solutions likewise saw volume growth with both of our key product groups, caps and closures and paints, linings and adhesives, experiencing low double digit growth. A reminder that these volume figures are presented on a same store basis. In other words, agnostic of recent acquisitions.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Fiber was the next stronger solution with volumes slightly up and operating rates in both paper grades in line with the industry. Metals continue to be impacted most by the soft industrial economy due to the high exposure to bulk chemicals, petrochemicals and lubricant markets. As you may have seen in some of our key customers' earnings reports earlier this February, those customers continue to suffer from this extended industrial contraction. It was encouraging to see January PMI bump slightly above 50. However, we still feel the underlying demands in those sectors is uncertain.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

While we greatly appreciate our relationships with these important customers, it's important for us to balance out the cyclical nature of their needs by continuing our focus on growing in pharma, flavors and frequencies, foods and agrochemical segments. Although we are shifting towards discussing our business on a solutions basis as opposed to regional basis, I know a regional view is helpful to our investors. And so I will offer some brief comments. EMEA continues to demonstrate the highest level of resilience, followed by APAC. LATAM has started to trend slightly downwards, which is something we are monitoring.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

But the clear outlier remains North America, where demand sentiment continues to be the most bearish. With that, I will turn things over to Larry to discuss our first quarter results on Slide eight.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Thank you, Oli. Following up on Oli's comments on taking strategic actions towards our long term goals, I'd first like to briefly touch on another strategic announcement. In late January, we announced the plant closure of our A1 paperboard machine in Austell, Georgia, as well as our containerboard and URB Flex machine in Pittsburgh, Massachusetts. At Investor Day, our Chief Operations Officer, Kim Kellerman, talked about our Quadrant Analysis to assess plants as either invest to grow, protect the core, transform or fix and divest or close. Despite the continued excellent work by our colleagues, at the end of the day, these two facilities fell into the lower quadrant and did not achieve the level of earnings necessary to support continued operations.

[Larry Hilsheimer, Chief Financial Officer at Greif]

The two closures will reduce our containerboard mill capacity by 100,000 tons and our URB capacity by 90,000 tons. In the short term, this action will be an EBITDA headwind of $3,000,000 in fiscal twenty twenty five versus our prior guidance due to one time closure costs and the timing of shifting tons to other facilities. We expect this closure to be EBITDA positive of $8,000,000 by 2027 due to the increased efficiency of those tons being redeployed into our remaining mill vessel. As we are still working through the closure and not certain of the exact timing of the benefits, we have not yet included it in the run rate cost optimization achievement that Ole touched on earlier. While building for the future, we have also remained resilient in our day to day execution.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Adjusted EBITDA for the quarter was $145,000,000 an improvement of $7,000,000 over the prior year quarter and in line with our expectations for Q1. Adjusted EPS for the quarter was $0.39 which was lower than prior year due primarily to the non reoccurrence of a one time tax benefit of $48,000,000 as well as $14,000,000 of higher interest expense this year due to higher debt from recent acquisitions. Working capital management was solid in the quarter. However, our adjusted free cash flow was a net use of $62,000,000 slightly higher of a use than prior year due primarily to the higher interest expense. Please turn to Slide nine, where I'll provide some additional context to our performance at a segment level.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Gross profit margins in three of our four segments increased year over year due to effective cost management and GBS two point zero gains despite the stagnant demand environment that Ole touched on earlier. Integrated Solutions gross profit margins were down year over year primarily due to product mix. Note also that Q1 results for our now divested Delta Filling business are presented in Integrated Solutions prior year results and was an EBITDA contributor of $2,800,000 While the overall gross profit improvement did drive $7,000,000 of positive EBITDA year over year, EBITDA margins were also impacted by higher year over year SG and A costs. As we discussed throughout 2024, we anticipated short term SG and A cost inflation as we reallocate and invest resources to areas of maximum long term value creation. Right now, we are at the peak of that curve.

[Larry Hilsheimer, Chief Financial Officer at Greif]

We have completed our business reorganization in 2024. Our new structure and SBUs are in place and now is when we will start aggressively pursuing streamlining of those processes. This short term divergence between gross profit and EBITDA margin percentage is mostly due to higher SG and A costs, which is one of the key opportunities listed in our $100,000,000 cost optimization initiative, which only discussed earlier. Please turn to Slide 10 to discuss 2025 guidance. As a reminder, this fiscal year is only eleven months and will conclude on September 30 following a two month fourth quarter.

[Larry Hilsheimer, Chief Financial Officer at Greif]

In Q4, we presented a low end only view of guidance which incorporates only known upsides year over year, but all downsides of which we have visibility. Given the lack of any compelling demand inflections, we concluded that low end guidance continues to be appropriate. However, we also feel it is warranted to raise the low end for specific known upsides. First, an additional $27,000,000 of positive price cost, which reflects the $40 per ton containerboard price increase announced by RISD last Friday, as well as our lower full year OCC assumption of $85 per ton. It additionally factors in better price cost in our polymers and metals business, which is trending better than our original low end guidance assumed.

[Larry Hilsheimer, Chief Financial Officer at Greif]

As I mentioned during our Q4 call, we anticipated a short term headwind in Q1 related to the flow through of high priced steel in our balance sheet. Our supply chain team did a good job of neutralizing that impact. Additionally, our metals team has had great success with value over volume discipline in the quarter. Those two factors drove the metals price cost tailwind in the quarter. Second, dollars eight million of lower transport and manufacturing costs, which are actualizing lower than assumed in our original low end guidance due to continued solid day to day management by our GBS group.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Lastly, we are including $3,000,000 which reflects the portion of run rate impact of the cost initiative savings Oli touched on earlier which will be beneficial to fiscal twenty twenty five. However, that is offset by the $3,000,000 headwind from the recent mill closures I discussed earlier. This net change results in a new low end EBITDA guidance of $710,000,000 for fiscal twenty twenty five. Our low end free cash flow guidance is also raised by $20,000,000 to $245,000,000 for the full year. Partially offsetting our EBITDA increase of $35,000,000 is an assumption of $20,000,000 higher working capital cost, which reflects the working capital impact of improving paper price costs, but additionally being low end guidance, we have contemplated some downside for further cost inflation without the benefit of offsetting mitigating actions.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Separately, we assume a small $6,000,000 incremental tailwind in other operating costs, which balances to the $20,000,000 free cash flow guidance increase. This is a low end view and so our expectations is not that the business will end the year at this performance, but is the only data point which we have conviction in sharing at this point. In subsequent quarters, we will reassess returning to a range guidance for our usual approach. With that, let me turn it over to Ole to close on Slide 11.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Thanks, Larry. As demonstrated at our recent Investor Day, we continue optimizing and fine tuning our business. We are transitioning from good to great. We are a market leader in our chosen markets.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

We have strong track records and are very disciplined in the way we execute our strategy. In other words, we are well positioned for growth. We are helping ourselves to grow in a very depressed market. And when that market just returns even the slightest, we are in an ideal situation to take off. Thank you for taking the time to listen in today. Operator, please open the lines for questions.

[Operator]

Certainly. And one moment for our first question, which will be coming from Ghansham Panjabi. Your line is I'm sorry, Averig, your line is open.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Yes, thanks operator. Good morning everybody. I just want to go back to the first quarter results specific to fiber. Just your view as it relates to whether that came in on an operating profit basis or EBITDA, whichever way you want to look at it, in line with your plan, because it was quite a bit below our expectation in context of your price increases, etcetera? Thank you.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Yes, got you. Thanks for the question. Let me go to that. It came in line with our expectations actually a little bit slightly better. Here's the issue that's confusing the matter.

[Larry Hilsheimer, Chief Financial Officer at Greif]

We have a protocol for allocating SG and A across the businesses. And we'd ask all of your patients as we've transitioned to this new business model, because it's having impacts. And the way that we allocate our SG and A is based on value add, which is just our price versus less raw material. But I would tell you that gross profit is a really good proxy. So what happens is as margins are expanding in the fiber business, it gets allocated a bigger portion of our SG and A.

[Larry Hilsheimer, Chief Financial Officer at Greif]

And somebody might say, well, why do you do that? Well, if you talk to virtually any CFO or controller and you talk about getting into allocations among your internal businesses, it is a rabbit hole you'd go down forever. I mean people argue about how you allocate. So we have a basic protocol for how we've done it. And it's in our former operating model, you really didn't see it because it go across geographies and you had all of the different segments going into those geographies.

[Larry Hilsheimer, Chief Financial Officer at Greif]

So again, I ask you to bear your patience, but yes, fiber was good for us. It's picked up a higher allocation of SG and A and then SG and A was higher than what most of you build in your models. We thought we had done a good job of articulating the fact that we were going to have SG and A costs, for example, for MyFAC chem in this first quarter since we didn't have it last year. We thought we'd explained we'd made some investments that we're going to turn around. Obviously, we didn't explain it enough.

[Larry Hilsheimer, Chief Financial Officer at Greif]

And so that one falls on us. We weren't doing as well as we'd hoped relative to all of you as our customersinvestors.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Okay. That's very helpful, Larry. Thank you for that. And then, Oli, your comments on the global businesses, EMEA being the most resilient and North America maybe at the other extreme in terms of being the weakest. Is it a difference in terms of end market exposure that would explain the two because that's certainly counterintuitive relative to the macroeconomic strength between the two regions?

[Ghansham Panjabi, Senior Research Analyst at Baird]

And then related to that, what is your expectation in terms of volume assumptions as it relates to your guidance?

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Well, thanks, Gotcha. Well, first of all, as we we laid out even in 2022 and then at our recent Investor Day, which end segments and end markets we are targeting for growth. And all of those are GDP plus growth markets. One of those is the agrochemical markets. And that's really where you have seen significant growth here recently coming out of both EMEA, but also North America for starters.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

And we continue to focusing on those markets. And just to remind you, it's food and beverage, it's pharma and medical and it's flavor and fragrance in addition to agrochemicals. As to your second question, just remind me again, Gansshem.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Yes, embedded volume assumptions, as you kind of think about the portfolio for fiscal year twenty twenty five?

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Yes. So we have seen obviously in some of these markets I just mentioned, especially in the polymer markets, we have seen some sequential improvements. But I would say I would caution being too optimistic. Generally, we don't see any difference from the previous quarter sequentially.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

So I haven't seen any inflection point yet. We'll keep looking at green shoots. Yes, you could call this green shoots, but it's too early to say anything on that. So I'm cautiously optimistic about the future.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Got it. Thanks so much.

[Operator]

And our next question will be coming from Matt Roberts of Raymond James. Matt, your line is open.

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

Hey, good morning, everybody. Thank you for taking the questions. Maybe Larry, to that point on the SG and A that some of us might have missed in there, could you just help us frame the margin expectation going into 2Q and maybe how that progresses through the year and any lingering impacts we should expect into next quarter? I just want to be caught off guard on my own internal model there.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Yes. Good question, Matt. Thanks. So if you look just to give some perspective and a little more color back on some of this element, when we look at SG and A sort of year over year, in IPEC chem is like $11,000,000 which $5,000,000 was amortization related to purchase price allocations on purchasable items, goodwill, that kind of stuff, intangibles. You've got another element that's a little bit less clear, but when we went to this new structure, relooking at all of our enabling functions and where cost resided, we ended up moving some people out of what were manufacturing channels into enabling functions like in the Kim Kellerman's group or into supply chain out of factors.

[Larry Hilsheimer, Chief Financial Officer at Greif]

That ended up us just doing a shift of 3,000,000 of cost of goods sold into SG and A levels on a full year basis is like $10,000,000 So I'm just talking about quarter right now. And so you've got those two items. As we go through the year, obviously, once we get to when we bought IPAC Chem, you're going to have not that year over year increment. And just generally, our EBITDA margins are going to steadily improve through the year, which is typical for us. You get volume lifts, which leverages our fixed cost leverage and those kind of things.

[Larry Hilsheimer, Chief Financial Officer at Greif]

So steady increase to margins through the remainder of the year and then that year over year comparison matching on iPAC hemp.

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

Very helpful. Appreciate all the detail there, Larry. And then secondly, maybe if I could ask on the Timberland sale, just give any additional color? I know it's early in the process, but any additional color on this asset and how may it compare to the Timberland that was sold in 2021? I believe Sotero was $9,000,000 in EBITDA last year versus I think less than $2,000,000 of what you sold in 2021.

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

So what are any differences that we should consider when thinking about proceeds there in terms of either age or productivity of the timber there or any other business considerations of this asset that make it different? Thanks again for taking the questions.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Yes, solely here. I mean, but we can't comment on timing all value at this time and 2021 is a long time ago. And when you look at the different tracks of Timberland and so on, it's very different. You can't really compare them. We are highly confident in both interest and value.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

And in fact, we on an ongoing basis receive unselected offers for our Timberland. And we know we can get a very good price for it, but we can't comment on it at this moment in time.

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

That's certainly fair, Oli. But maybe if I could kind of a different angle on that. I believe we've talked recently about that increasing polymer mix and even getting to 30% organically. So maybe once land is gone and some of the fiber closures, can you talk about what the polymer mix will be or what the remaining gap to get to that level will be? Is it largely due to higher growth end markets from polymers or just where you see that shaping out? Thanks again.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Well, yes. But as we explained that both Investor Day in 2022 and then last year, we are shaping our portfolio and we have identified the end segment markets, like I mentioned before, ag chem, food and pharma and so on as GDP plus growth end segments. Those end segments are serviced with basically polymer solutions. And that's why we talk about so much about polymer solutions. The sale of our land is not linked to that.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

The sale of our land, the proceeds will be used to pay down debt basically. That's it. And they will take our leverage down and give us more firepower for the future. But we will continue to focus on those sand segments I mentioned and grow our customized polymer business.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Yes, Matt, I'll supplement what Ole said earlier just a little bit is, while the prior sale was so long ago, it's not indicative and all pieces of land are different. It's like buy a piece of city downtown properties different than out in the suburbs. But everything's different. That said, a lot of things have been happening in land management and our team is really good at what they do. So things like carbon sequestration, solar farms, all of those things have actually been increasing the value of timberland.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Does that mean every one of our acres is going to be worth more than the last time? We don't know. But like Oli said, we've gotten a lot of just inbound calls with broad offers. Most of the time there are higher values than what we sold before, but that doesn't guarantee anything. The other part of that is that we will have a tax haircut.

[Larry Hilsheimer, Chief Financial Officer at Greif]

We've said before we always have low tax basis. And just as a perspective of time, the last time it took us about eight months to do the transaction, whether it's eight months, ten months, six months, we don't know. But what we're going to do is maximize value. And that's the primary focus of this.

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

Larry and Elliot, thank you both again.

[Operator]

And our next question will be coming from Adit Shrestha of Stifel. Your line is open.

[Aadit Shrestha, Equity Research Associate at Stifel Financial]

Hi, good morning. Thanks for taking my questions. Just going back to the guide, maybe could you help us also bridge sort of that $27,000,000 price cost spread? How much of that is actually within fiber versus power and metals? And just so that I'm understanding is clear, the $15,000,000 to $25,000,000 run rate savings, that's actually not built into the guidance.

[Aadit Shrestha, Equity Research Associate at Stifel Financial]

So that creates some sort of upside. I think you've captured $3,000,000 of that. Is that correct?

[Larry Hilsheimer, Chief Financial Officer at Greif]

Yes, that's correct. So just a bridge, so you're going from the $675,000,000 guide, the price cost element of it is about $27,000,000 We have roughly 800,000,000 tons of containerboard, $40 that'd be $32,000,000 a year, half a year sixteen million dollars pick up another $3,000,000 on our OCC cost assumption going down for the full year, averaged $87,000,000 to $82,000,000 gets you $3,000,000 so that's $19,000,000 of that $27,000,000 The other is split across the remaining substrates, little bit actually price increase in integrated products and benefit in both polymers and steel at relatively small levels.

[Aadit Shrestha, Equity Research Associate at Stifel Financial]

Okay, great. Thank you. And in terms of volume, so that we get it right, how should we think about the cadence for going to 2Q and into sort of the second half and for the full year, how should we think about volume year over year based on the outlook?

[Larry Hilsheimer, Chief Financial Officer at Greif]

Yes, I think the way to look at it, I mean, first of all, you got to build in iPECM because we acquired it last April. So that impacts things for the next month and a half, February, March and part in April. You then have, I would say, we don't have a clear picture of what we think is going to happen on volumes. If we did, we'd have a range. I mean, that's the whole constraint here.

[Larry Hilsheimer, Chief Financial Officer at Greif]

We don't know when the inflection is going to come. But I would say the best guide to use is just look at the same path that we've had for the past two years. I mean, that's what we've got built in our guidance and that's what I'd say you should utilize in yours. So slight pickup in Q2, Q3 and slight fall off in Q4. Generally, that's the high level stuff.

[Aadit Shrestha, Equity Research Associate at Stifel Financial]

All right. Thank you.

[Operator]

One moment for our next question. And our next question will be coming from Michael Roxlin of Truist. Your line is open.

[Niccolo Piccini, Equity Research Associate at Truist Securities]

Yes. Hi, guys. This is Niko Pacini on for Mike. Thanks for taking my questions.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Hey, Niko.

[Niccolo Piccini, Equity Research Associate at Truist Securities]

As first off, can you maybe elaborate on some of the demand trends in Boxboard, specifically as your closure announcement for Ostell, I think you include some commentary that specific subsegments of demand were declining. And then maybe an early read on trends you're seeing right now in boxboard and CantonBoard?

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Hi, Niko, it's Ole here. So total boxboard is basically flat year on year. And when you look at the URB business, then the edge protection is softest, But the tube and cohes themselves like spiral bound products, they're actually up year on year. Until we see a paper market inflection, we don't really see a big drive of demand. And the biggest product we have is actually core for paper.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

So we're selling that to paper mills. So when we see a demand inflection there, then that business will take off as well.

[Niccolo Piccini, Equity Research Associate at Truist Securities]

Got it. Thank you. And then I guess covering all your strategic actions and in the framework of that, the Quadrant analysis you laid out at the Investor Day. I mean, are there if you can answer a more mills that fall into that kind of correction or invest to grow, divest to close buckets or how much we're going to

[Larry Hilsheimer, Chief Financial Officer at Greif]

Yes, we can't Nico, we couldn't comment on that right now. We're looking at all of our footprint. Obviously, that impacts human beings and jobs. So, I'm not going to talk about what's on a list at this point in time. But everything we have is under review as part of this cost optimization.

[Niccolo Piccini, Equity Research Associate at Truist Securities]

No, completely understand. Thank you very much for the color.

[Operator]

One moment for our next question. Our next question will be coming from Richard Carlson of Wells Fargo. Your line is open, Richard.

[Richard Carlson, Financial Advisor at Wells Fargo Advisors]

Good morning, guys. So just wanted to revisit the Timberland sale and wonder if that is an indication that you have a full pipeline and some capital that you can redeploy there. And then secondly, I also wanted to ask about the competitive landscape specifically to polymers and metals. Just wondering if you're seeing any signs of stress in some of your smaller competitors.

[Larry Hilsheimer, Chief Financial Officer at Greif]

I'll address the first part. Oli said it before, we're selling the timberland because we looked at our portfolio, we had to use the incoming calls, we think it's the decision that it's a better asset for somebody else than us and we're going to use the proceeds to pay down debt. As Zoli has also said before, our M and A pipeline always is robust, but that doesn't mean you're going to spend it tomorrow either. It means we're analyzing a lot of things and looking at a lot of things. Our first priority right now is always paying down debt.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

And with that, Richard, we continue to work on our pipeline and as Larry said, it's solid. I spent a lot of time with targets on all that. And we're not going to let off on that, but we don't always decide the timing of these things. And with regard to competition, basically, we focus on value over volume and that served us well. In times like this when you have more macroeconomic parameters in the market, then that competition tends to be more hungry for volume.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

And if we can't get a fair price for what we do and the service we provide, we walk away. Those customers now tends to come back to us because our service and our product quality is very, very high compared to a local player who wants some volume. So we don't see that as an issue and you will probably ask, have we lost market shares? And my answer to that is a big no, we haven't. So in other words, we're confident in our ability to maintain our market position due to our differentiated value proposition.

[Richard Carlson, Financial Advisor at Wells Fargo Advisors]

Very helpful. Thank you very much.

[Operator]

Our next question will be coming from Daniel Herriman of Sidoti and Company. Daniel, your line is open.

[Daniel Harriman, Analyst at Sidoti & Company]

Thank you. Hey, guys. Good morning. Thank you for taking my questions. Kind of following up from an earlier question with kind of shift in focus now towards end markets over geographies and all the announcements from the Investor Day.

[Daniel Harriman, Analyst at Sidoti & Company]

I was hoping maybe you could talk a little bit about the end markets in which you're most excited about and have the greatest level of confidence as we go out through 2025? And then on the flip side, where you have the most concerns? And then with your ability to continue to execute and operate in a difficult environment and the increase in the low end of the guide, I would just be curious to hear your thoughts about where you are, how you feel about your current net leverage ratio?

[Ole Rosgaard, President and Chief Executive Officer at Greif]

I'll take the first question and then I'll hand you over to Larry. So just talking about the end markets, the one we are most excited about is agrochemical. That's the one we went into agrochemical in a big way when we acquired Reliancely and iPachem and basically became the global leader in the in that market, providing very special solutions to the customers. Another one that we have grown in is Food and Beverage, where we have some very large global customers as well we provide solutions to. The end market that excites us as well, where but which takes a fair amount of time to get into is the farmer space.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

We do have some solutions that we provide to some pharma customers, but the runway there is very, very long and it takes time. But obviously that end market excites us as well.

[Larry Hilsheimer, Chief Financial Officer at Greif]

And Daniel, relative to our leverage ratio, first of all, I mean, obviously, we were thrilled that our Board was wholeheartedly supportive of us moving forward on selling our land business. Although it's hard to part ways with our colleagues who are so wonderful and great down there, but it's the right thing for us. Obviously, those net proceeds are going to help us lower our debt ratio quite significantly. That said, even if we weren't, I have not been at a discomfort level at all because we're operating well in a very difficult environment. And as we've said before, if we recover to just normal volume levels out of this industrial recession whenever this happens.

[Larry Hilsheimer, Chief Financial Officer at Greif]

I mean, we're looking at $150,000,000 of EBITDA lift from just that. And that doesn't even take into impact our cost optimization efforts. And even that $1,000,000,000 bridge we showed at Investor Day didn't include the most recent price increase. So we've got lots of factors here that are driving EBITDA. So that debt leverage ratio is going to come down very rapidly as the industrial economy improves.

[Daniel Harriman, Analyst at Sidoti & Company]

That's really helpful. I really appreciate it guys and best of luck in the quarter.

[Larry Hilsheimer, Chief Financial Officer at Greif]

Thank you, Daniel. Thanks.

[Operator]

Thank you. And I'm showing no further questions at this time. I would now like to turn the call back to Ole Rosgaard for closing remarks.

[Ole Rosgaard, President and Chief Executive Officer at Greif]

Thank you. And I would like to thank our analysts and our investors for your time today and for your continued interest and investment in life. We remain committed to delivering exceptional results and are focused on accelerating our performance towards our 2027 commitments of $1,000,000,000 EBITDA and $500,000,000 in free cash flow. We are confident that our relentless pursuit of operational excellence and our customer centric growth will create enduring value for all our stakeholders. Thank you.

[Operator]

And this concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Bill D’Onofrio, Vice President of Investor Relations & Corporate Development
• Ole Rosgaard, President and Chief Executive Officer
• Larry Hilsheimer, Chief Financial Officer

Analysts

• Ghansham Panjabi, Senior Research Analyst at Baird
• Matthew Roberts, Equity Research Analyst at Raymond James Financial
• Aadit Shrestha, Equity Research Associate at Stifel Financial
• Niccolo Piccini, Equity Research Associate at Truist Securities
• Richard Carlson, Financial Advisor at Wells Fargo Advisors
• Daniel Harriman, Analyst at Sidoti & Company