Greif Q2 2025 Earnings Report

Greif EPS Results

• Actual EPS: $1.19
• Consensus EPS: $1.08
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: $0.82

Greif Revenue Results

• Actual Revenue: $1.39 billion
• Expected Revenue: $1.43 billion
• Beat/Miss: Missed by -$41.70 million
• YoY Revenue Growth: +1.10%

Greif Announcement Details

• Quarter: Q2 2025
• Date: 6/4/2025
• Time: After Market Closes
• Conference Call Date: Thursday, June 5, 2025
• Conference Call Time: 8:30AM ET

Greif (NYSE:GEF) engages in the production and sale of industrial packaging products and services worldwide. The company operates through Global Industrial Packaging; Paper Packaging & Services; and Land Management segments. The Global Industrial Packaging segment produces and sells industrial packaging products, including steel, fiber, and plastic drums; rigid and flexible intermediate bulk containers; closure systems for industrial packaging products; transit protection products; water bottles, and remanufactured and reconditioned industrial containers; and various services, such as container life cycle management, filling, logistics, warehousing, and other packaging services to chemicals, paints and pigments, food and beverage, petroleum, industrial coatings, agriculture, pharmaceuticals, mineral product, and other industries. The Paper Packaging & Services segment produces and sells containerboards, corrugated sheets and containers, and other corrugated and specialty products to customers in the packaging, automotive, food, and building products markets; and produces and sells coated and uncoated recycled paperboard, and recycled fiber. This segment's corrugated container products are used to ship various products, such as home appliances, small machinery, grocery products, automotive components, books, and furniture, as well as various other applications. The Land Management segment engages in harvesting and regeneration of timber properties; and sale of timberland and special use properties. As of October 31, 2023, this segment owned approximately 175,000 acres of timber properties in the southeastern United States. The company was formerly known as Greif Bros. Corporation and changed its name to Greif, Inc. in 2001. Greif, Inc. was founded in 1877 and is headquartered in Delaware, Ohio.

Greif Q2 2025 Earnings Call Transcript

Key Takeaways

• Raised full-year guidance to at least $725 million adjusted EBITDA and $280 million free cash flow on stronger price/cost performance.
• Delivered $214 million adjusted EBITDA in Q2, up $44 million year-over-year, with adjusted free cash flow of $110 million and EPS of $1.19 versus $0.83.
• Achieved $10 million in run-rate savings toward its $15–25 million 2025 cost-optimization goal and decided to close the LA paperboard mill, driving a net $10 million annual EBITDA benefit.
• Polymer Solutions volumes grew in target end markets (agrochemicals, food & beverage, pharma), corrugated fiber outperformed peers, but Metals volumes fell 5% amid industrial softness.
• Reaffirmed long-term target of $1 billion EBITDA and $500 million free cash flow by 2027, supported by its “Build to Last” strategy and focus on resilient, high-margin markets.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Greif's Second 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.

[Operator]

I would now like to hand the call over to your speaker today, Bill D'Onofrio, VP of Investor Relations and Corporate Development. Please begin.

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

Thank you, and good day, everyone. Welcome to Greif's fiscal second quarter twenty twenty five earnings conference call. Today, our CEO, Ole Rosgaard, will begin with an update on our colleague and customer engagement as well as progress on our cost optimization commitment. He will then discuss key global market trends. Our CFO, Larry Hilsheimer, will walk through second quarter financial results and 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 hand the call over to Oli on slide three.

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

Thank you, Bill, and good morning, everyone. I want to start by recognizing our more than 14,000 colleagues across the world. Their discipline, focus and execution continue to drive strong performance. In Q2, we made further progress on our Build to Last strategy. Despite ongoing macroeconomic volatility, our resilient business model and emphasis on controlling what we can control give us confidence in the road ahead.

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

That confidence is reflected in our decision to raise full year guidance, which Larry will walk through shortly. Our culture remains a core competitive advantage. I'm proud to report that we have once again been named one of Newsweek's top 100 most loved workplaces in the world. This marks our third consecutive year on the list. In addition, we received Gallup's Exceptional Workplace Award for the second year in a row.

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

Our colleague engagement score places us in the eighty sixth percentile of all manufacturing companies globally, with a remarkable 94% participation rate. These recognitions speak to the pride our teams take in their work and the environments we built where people feel empowered, valued and connected to our purpose. That engagement drives legendary customer service. Our fiber team was recently honored with the Supplier Innovation Award from the U. S.

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

Postal Service. USPS joined us in 2024 and is now a key customer for our Dallas sheet feeder facility. This award is a strong validation of the long term value and customer loyalty we create. Sustainability also sets us apart. While we view it as the right thing to do, it is also a clear business advantage.

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

This marks our sixteenth consecutive year publishing sustainability report, a rare track record in our industry. Our sustainability strategy is central to strengthening customer relationships and pursuing durable high margin growth. Please turn to slide four. Our cost optimization efforts are progressing rapidly, thanks to our team's focus and willingness to embrace change. As of quarter end, we have achieved $10,000,000 in run rate savings toward our full year commitment of $15,000,000 to $25,000,000 and $100,000,000 total commitments compared to our 2024 baseline.

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

A few highlights of projects on the way. A thank you to our colleagues in Warminster, Alsip, Welkom and OSCOSS. Our operations and engineering teams are embracing chains and utilizing Six Sigma practices to advance scalable and structural chains in process efficiency and scrap production across our metal and fiber production plants. Second, we made a strategic decision to close our L. A.

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

Paperboard mill, removing 72,000 tons of capacity. While difficult, this step streamlines our network and improves long term performance across our fiber operations. These are just two of many projects underway. Each day, our conviction grows in our ability to achieve or exceed both our 2025 and 2027 commitments. Across the board, our strategy is working.

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

We are sharpening our competitive edge, optimizing operations and expanding in high return markets that positions us well when demand accelerates. Please turn to slide five. Our portfolio continues to show resilience with especially strong performance in the areas we are investing. Polymer Solutions volumes improved year over year with small containers and IBC both up. That impact was partially offset by lower large polymer drawn volumes due to softer industrial demands.

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

Our polymers growth was driven by our target growth in markets of agrochemicals, food and beverage, pharma and flavors and fragrances, which all showed year over year growth. This contrasts with metals, which was down 5% year over year due to exposure to chemical and lubricant markets, which continues to be softer. Fiber solution volumes were down slightly compared to last year, but improved each month throughout the quarter. Our corrugated business outperformed and was up high single digits per day versus an industry decline of 2%. This differentiation was driven by strong independent demand.

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

Integrated Solutions saw continued growth led by recycled fiber, while external volumes in closures, paints, linings and adhesives helped steadily as we managed our own internal needs versus external demands. It is interesting to note that last year was a leap year, giving one additional day of business as well. Demand remained stable across all regions outside North America. In North America, softness persisted due to greater exposure to industrial end markets.

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

The key takeaway across the previous four slides is clear.

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

Our strategy is working. We are investing in resilient high growth markets, reinforcing our competitive strengths and optimizing our cost base simultaneously. This all prepares us to capture even further upside when demand meaningfully rebounds. Please turn to Slide six. In closing, I want to briefly touch on a topic which demonstrates the resilience of our business model.

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

On tariffs, we are staying ahead of potential disruption. Year to date, we have not seen major demand shifts tied directly to tariffs, but we continue to monitor demand patterns and talk closely with customers to identify any potential impacts on our end markets. Our network of more than two fifty facilities in over 40 countries allows us to buy, produce and sell locally. This flexibility minimizes disruption, serves our customers' needs more flexibly than competition and allows us to obtain a fair price for the additional exceptional service and adaptability we provide our customers. Our global sourcing team continues to assess risk, and we reaffirm that our maximum direct cost exposure is less than $10,000,000 annually, although that figure at present is even lower due to mitigation actions and tariffs currently in effect versus worst case scenario.

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

Meanwhile, we are capturing more value through network flexibility and pricing. We are also benefiting from pass through mechanisms in our metals business as steel producers respond to raw material inflation. With that, I'll turn it over to Larry to walk through our Q2 financial performance on Slide seven.

[Larry Hilsheimer, EVP & CFO at Greif]

Thank you, Ole, and good morning, everyone. For the second quarter of fiscal twenty twenty five, adjusted EBITDA increased $44,000,000 year over year to $214,000,000 and adjusted EBITDA margin was up 300 basis points to 15.4%. These results are a testament to our disciplined cost management, resilient business model and our team's unwavering commitment to value creation. We generated $110,000,000 of adjusted free cash flow, up from $59,000,000 in Q2 of twenty twenty four and adjusted EPS of $1.19 versus $0.83 in Q2 of twenty twenty four. The sale of our land management business, Saterra, is on pace and we are excited about the level and the quality of interest we've received.

[Larry Hilsheimer, EVP & CFO at Greif]

The proceeds from the Saterra divestment combined with our accelerating cash flow generation will be used to reduce debt following our capital allocation framework as outlined at Investor Day. Our decision to close our LA paper bill paperboard mill, while extremely difficult due to the impact on our colleagues, is a prime example of the next stage of optimization for Gray. At our December Investor Day, we discussed how we've executed on the vast majority of opportunities in the lowest quartile of our quadrant analysis. We are now focused on moving from good operators to great operators across our global footprint of two fifty plus facilities. We are digging deeper to identify untapped opportunities to increase our return on invested capital within facilities in each quadrant.

[Larry Hilsheimer, EVP & CFO at Greif]

This may lead to strategic investment or closure as was the case of LA, but our actions will remain focused on deriving the highest long term return on capital. Please turn to Slide eight for a segment overview. In our Customized Polymer Solutions segment, adjusted EBITDA increased $19,000,000 year over year to $53,000,000 driven by a combination of volume growth, favorable product mix and continued discipline on value over volume pricing. Our Polymer segment is performing well given the demand environment as our target growth end markets continue to be more resilient than other areas of our business. Durable metal solutions sales were lower year over year due to the softness of the industrial end markets Ole mentioned earlier.

[Larry Hilsheimer, EVP & CFO at Greif]

A core focus for us is capitalizing on operating leverage in metals when industrial end markets recover. Encouraging gross margins were up year over year through value over volume focus. Sustainable Fiber Solutions posted $80,000,000 of adjusted EBITDA relative to $50,000,000 in the prior year. EBITDA margins also improved to 13.3% from 8.5% in the prior year. As a reminder, in February, RISI recognized $40 a ton of containerboard price increase, which contributed to this quarter's results.

[Larry Hilsheimer, EVP & CFO at Greif]

While we are certainly pleased with the improvement in price cost in our fiber business, we consider the market to be out of balance. The $30 a ton URB price increase recently recognized by RISI will continue to improve margins, but we have conviction that the demand we are seeing warrants recognition of the full $50 to $70 a ton we announced in March. Those price increases will continue to push our fiber business towards normalized margins near 20% and get us closer to achieving our objective of greater than 18% margins for the enterprise. Integrated Solutions delivered $17,000,000 in adjusted EBITDA, up slightly from prior year. While volumes were strong in Q2, the overall product mix was incrementally heavier on recycled fiber, which led to lower sales mix resulting in modest growth year over year.

[Larry Hilsheimer, EVP & CFO at Greif]

Sales were still up year over year in closures as we continue to grow that business. However, paints, linings and adhesives had lower external volumes in the quarter. Please turn to Slide nine to discuss guidance. We are raising low end fiscal twenty twenty five guidance. Adjusted EBITDA is now expected to be at least $725,000,000 up from $710,000,000 and adjusted free cash flow guidance is increased to $280,000,000 from $245,000,000 due to the increased EBITDA and improving operating working capital management.

[Larry Hilsheimer, EVP & CFO at Greif]

This raise increases this raise reflects the impact of better price cost performance in Q2 and revised higher price cost expectations for the second half. Given this is how is low end guidance, we reduced that impact with a more bearish volume assumption than in our previous guidance as well as for the negative EBITDA impact of higher incentives due to our improved performance. The largest variable, which could provide upside to this low end guidance is volume. We are not yet providing a range due to the continuously evolving trading dynamics, but have high conviction in our raised low end. This increase is not based on optimism, it is grounded in our demonstrated ability to execute.

[Larry Hilsheimer, EVP & CFO at Greif]

We've proven that Gribe can deliver performance even in a challenging industrial economy. Price cost performance, especially in fiber is improving. Polymers continue to grow and our disciplined cost structure is enabling margin expansion. We're raising guidance because our actions are driving results and we're confident in our ability to sustain this performance through the balance of the year. With that, I'll turn it back to Oli on Slide 10.

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

Thanks, Larry. Let me close by underscoring what this quarter confirms. Our strategy is working. We are expanding margins, growing EBITDA and generating strong free cash flow even in a challenging macro environment. We set ambitious cost optimization commitments at our Investor Day, and we are delivering exactly as planned.

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

Our commitment to achieving $1,000,000,000 in EBITDA and $500,000,000 in free cash flow by 2027 is unwavering. As we have consistently done with every commitment we have given in the past, we are also delivering on these commitments. We remain focused on what we can control, The culture we have built centered on high engagements, agility and disciplined execution continues to be a powerful competitive advantage to us. I have never been more confident in our team or more optimistic about Bryte's future. We are building a stronger company and doing it the right way for our customers, for our colleagues and for our shareholders.

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

Thank you for joining us today. Operator, will you please open the line for questions?

[Operator]

And our first question will be coming from Panjabi of Baird. Your line is open.

[Josh Vesely, Equity Research Analyst at Baird]

Hey, everyone. This is actually Josh Vesley on for Ghansham. Thanks for taking my questions. Olli, you provided some good commentary on tariffs. And it seems like demand fluctuation is relatively minimal.

[Josh Vesely, Equity Research Analyst at Baird]

But I'm just curious what those conversations with customers look like as it relates to kind of what they're seeing in end market demand and how they're thinking about that on a go forward basis?

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

Yes. So I mean, generally, the sentiment is really unchanged. If you look at housing, for instance, housing sales of existing housing is at its lowest since 1995. And auto builds at its lowest in three years. And the tariffs that we keep talking about, they're just reoccurring themes. And all this really has an impact, especially on our chemical customers. And until we see an improvement of existing house sales, which is linked to the interest rates, we don't really believe and our customers don't really believe they'll see any demand improvement either. That your Yes.

[Josh Vesely, Equity Research Analyst at Baird]

That's great color. Thank you. And then maybe just for my follow-up, I just wanted to clarify on some of the raw material inflation that you're talking about that was tariff related. Just any more color on what you guys are seeing there and what the near term impact on EBITDA margins might be for the year?

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

As I said, we the maximum the worst case impact for us is around $10,000,000 but we're not even close to that. We have been our team have done a great job in minimizing that impact and we are much, much lower than that at the moment. So it's really not material. Yes.

[Larry Hilsheimer, EVP & CFO at Greif]

And Josh, the other element of that obviously is we've already seen steel producers in The U. S. Push up cost or price. That then implies against our lower base inventory and provide some lift in margin that while temporary until things catch up, will provide additional spreads. So this increase in tariffs to the 50% level would probably end up being helpful above our low end guidance. And it could actually end up

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

being a tailwind for us, Joss. And then again, I just want to remind that we operate two fifty facilities in over 40 countries. So most of our business is done locally. We source raw materials locally. We manufacture locally.

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

We sell locally, which obviously means that tariffs doesn't come into play.

[Josh Vesely, Equity Research Analyst at Baird]

Okay, great. Thanks guys. I'll turn it over.

[Operator]

One moment for our next question. And our next question will be coming from Michael Roxanne of Truist Securities. Your line is open, Mike.

[Michael Roxland, MD - Equity Research at Truist Securities]

Yes. Thank you, Ole, Larry, Bill and Dan for taking my questions and congrats on all the progress.

[Michael Roxland, MD - Equity Research at Truist Securities]

The first question I have is on SG and A, which we believe remains elevated. I think there was a slight decline sequentially in SG and A as a percentage of revenue, but still above the average for last year. So I'm just curious as to what's driving the elevated SG and A? And what level of SG and A as a percent of sales are you targeting and over what time?

[Larry Hilsheimer, EVP & CFO at Greif]

Yes. So you've got a couple of factors going in. I mentioned in my commentary somewhat of an increase in incentives because your team's performing well. So that's have a has a little bit of impact. You've got the entry of the sort of full quarter of IPAC Chem and then you've got currency impacts, which on the bottom line are actually a whip, but on SG and A it's increasing it.

[Larry Hilsheimer, EVP & CFO at Greif]

But yes, we agree with you. Our SG and A is higher than what we view it to need to or should be over a long period of time. And as part of our cost optimization efforts, we would like to see as the volume recovers and our revenue goes back, we expect our SG and A, to be below 10%. Now it gets somewhat inflated when you're doing acquisitions because you end up with depreciation related to intangibles that flows in there, but that is a general rule is what our target is longer term, Michael.

[Michael Roxland, MD - Equity Research at Truist Securities]

Very helpful. So just to put a bow on that is you really it's largely there are some factors in terms of incentive comp and IPAC chem and be a little less fast, but really you're expecting accelerating revenue to bring down that ratio. So it's more market related in terms of driving that ratio.

[Larry Hilsheimer, EVP & CFO at Greif]

No, it's a combination. But yes, I mean, ultimately we do obviously there'd be an impact to the ratio related to the recovery of volumes. And our cost optimization is like one of our key focuses obviously. And so we announced $100,000,000 cost optimization. I'd call it business optimization over our entire platform.

[Larry Hilsheimer, EVP & CFO at Greif]

Some of that relates into business operations, some of it's SG and A, but it's over our 24 levels. So, yes, it's a combination, but I just was trying to give you the long term impact. We try to get down below that 10%, which would be a combination of some revenue recovery, but a lot of it is still cost out.

[Michael Roxland, MD - Equity Research at Truist Securities]

Got it. I appreciate all the color. Then just my second question, while you mentioned strong URB demand, which you believe should warrant the full price increase of $50 to $70 a ton. So if you get that incremental 20 to $40 a ton of URB pricing, all else equal, what type of incremental EBITDA should we expect you generate? What type of margin would you have in sustainable fiber as a result of that?

[Michael Roxland, MD - Equity Research at Truist Securities]

And then quickly, just lastly, just do you see the potential for further rationalization in CRB and maybe just becoming solely focused on URB and containerboard? Thanks very much.

[Larry Hilsheimer, EVP & CFO at Greif]

Let me answer the last piece first and then come back to the incremental impact on pricing. So the remaining CRB machine we have is actually a swing machine. So we can swing between URB and CRB depending on the market demand. And right now, we're a niche little player in our space. We're happy with the operations there and we don't really have any plan to make it full time URB or we're just taking advantage of whatever we can get in the market.

[Larry Hilsheimer, EVP & CFO at Greif]

Relative to the impact of pricing, about a $10 ton change in URB pricing is about $530,000 a month for us. So hopefully that gives you something to work with.

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

And Mike, just an added comment to what Larry said. So on the CRB, we will continue to optimize paper grades by highest return. And if we swing a machine to URB from CRB, that's what we will do if that's what it provides us.

[Michael Roxland, MD - Equity Research at Truist Securities]

Got it. Thank you very much again.

[Operator]

One moment for our next question. Our next question will be coming from Matt Roberts of Raymond James. Your line is open, Matt.

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

Hey, Larry, good morning. First question on the volume, I believe you said not giving a range, but maybe could you just help me understand what underpins the $725,000,000 guide? And related to tariff impacts on volumes, I know you noted no demand shifts, but in light of Liberation Day in early April, can you provide some incremental color into demand in April, whether there was any front running ahead of that or how trends have progressed in April and May? Seems like more recently there's a window open in the tariffs. So wondering if you've seen any spike more recently there.

[Larry Hilsheimer, EVP & CFO at Greif]

Yes, we Oleg can supplement what I say, but we haven't seen really any trends specifically tied to tariffs, even in indications with customers. It really, particularly in The U. S, has a whole lot more to do with interest rates in homebuilding and the demand impact that's having on the chemicals industry and even auto production being down, which perhaps that's indirectly tied to tariffs. So what we saw is, if I go from our prior low end guidance of 07/10 to 07/25, we got about 53,000,000 roughly price cost benefit in that, which metal solutions is up 17,000,000, polymer solutions is up 17,000,000, fiber solutions is up 26,000,000 and integrated with the OCC cost coming down is down $8,000,000 And then if you go on the volume side, we're down about $5,000,000 in Metal Solutions, about $5,000,000

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

in Polymer Solutions and down $30,000,000 in Fiber Solutions just relative to just an overall impact relative to where we were previously. Hey, Matt, just on tariffs, so directly impact, that's something we can control. And so there is no direct impact on us. But one thing we cannot control, that's the indirect impact. When tariffs affect the overall demand in the markets, that obviously has an effect on all of us, which is something we can't control.

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

But we do have the flexibility to adapt production for customers, and we will price for it. And then all ranges of these outcomes, they are considered in Hilarious revised guidance.

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

Thank you very much for the incremental color there. For my follow-up, in Polymer, you noted business wins and market driven growth in target end markets. Maybe if you elaborate on what you're expecting in those target end markets for the rest of the year? And more specifically, on those new business wins, what areas were they in? And what do you attribute those to?

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

Is it greater scale? Or are you starting to realize cost saving benefits following acquisitions? The customer service tools providing a benefit as Right plus is rolled out further? Just any incremental color there on those new market wins. Thanks again for taking the questions.

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

Well, let me just zoom out and then go back to we often reference at Investor Day, but that's where we presented our whole strategy. We have our growth strategy hinges around the following end segments, and it's agrochemical, food and beverage, flavor and fragrances, and pharma. Those end segments, they grow faster than GDP. That's why we have picked them to really focus on them. The products that services those segments, they are polymer products.

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

That's why we are focusing on polymer in our strategy. And what we have seen here in the quarter is exactly that, that those end segments have proven to be more resilient than other end markets exactly as we planned and expected. And also, we have grown year over year in those end segments. So the overall growth in our polymer has been 1.5% year over year. But then our legacy polymer business, which is large polymer drums, especially in North America, that market serves the chemical industry, industrial side of it, and that market is down.

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

But even with that, we still have seen overall growth in the polymer markets.

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

Good to see. Thank you, Oleg.

[Operator]

And one moment for our next question. Our next question will be coming from George Staphos of Bank of America Securities. Your line is open, George.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Thanks so much. Hi, everyone. Good morning. Hope you can hear me okay.

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

Thanks for

[George Staphos, Managing Director at Bank of America Merrill Lynch]

are you? My questions to start, I know we have two questions here, is on paperboard broadly. So when we consider the LA closure and also AUSTL, What will that do ultimately to your blended cost per ton and or margin as you see it normalized for the business? And given the closures, will it adjust require you to adjust operations or inventory management since you'll have fewer facilities to produce from, and therefore, you might need to keep more buffer stock or do other things from an operating standpoint? So cost per ton given the closures and then operating adjustment that you might need given the closures? And then I had a follow on.

[Larry Hilsheimer, EVP & CFO at Greif]

Yes. George, I don't have the answer for you on what the cost per ton impact is. What I can tell you is that with the closures of Pittsburgh and LA and Austell, after we get through the transitionary costs that sort of offset that stuff, that'll be an annual bottom line EBITDA cost impact of a positive $10,000,000 a year to the bottom line. We said on each of those facilities, the end customer mix, we shifted what made sense to being served out of our existing mill footprint. And so obviously that all factors in to drive a lower average cost per ton and higher margin that drives to that bottom line $10,000,000 impact for that.

[Larry Hilsheimer, EVP & CFO at Greif]

But yes, I haven't looked at what the average cost per ton impact is unfortunately.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

And just on the operations, aside from sort of optimizing your production relative to your target end markets, anything else that you would relate to us that we'll be able to discern, watch, monitor in your financials?

[Larry Hilsheimer, EVP & CFO at Greif]

Yes. I mean, it's yes, obviously, it's all part of, as you noted, our cost out program. And I would just add to that $10,000,000 on the bottom line for fiscal twenty twenty six and forward. Okay.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

I was that's fine, Larry. I was getting more into sort of how you run the business, but I'll leave it there. I guess, the cost out program and the progress you're making towards the goal of on the high end, 25,000,000 this year and the $10,000,000 I think you've got through 2Q. Are the categories of benefit the same throughout the year? Do they evolve?

[George Staphos, Managing Director at Bank of America Merrill Lynch]

And if they do evolve over the course of the next couple of quarters, what does that mean in terms of the business and margin, both the rest of the year and into 2026?

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

And I'll turn it over there, I'll turn it back

[Larry Hilsheimer, EVP & CFO at Greif]

Oleg may add some color too, but the basically, what we've got so far is a combination of operational cost outs and some SG and A cost reductions. And to reemphasize, the $10,000,000 is what it would be run rate, what we know will be run rate this year, 5,000,000 is what we'll actually realize this year. And then the $10,000,000 I mentioned from those three mill closures does not impact this year. So it was effectively locked up against our long term objective already 20,000,000 of the 100 kind of thing. So this whole program goes against the broad cost structure and revenue opportunities of our business, so whether it's manufacturing cost or SG and A.

[Larry Hilsheimer, EVP & CFO at Greif]

But we're very pleased with the progress to date. We've even enhanced our confidence of getting to our $1,000,000,000 plus commitment for coming going into 2028 with every month that we go further.

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

Josh, just to give you some color. You'll remember that last year, we reorganized the business, which was really the precursor the planned precursor for doing the business optimization. And the business optimization, we have more than 70 work streams in motion at the moment. And they are SG and A rationalization, network optimization, operating efficiency gains and so on. So in terms of the millions we talk about, we're playing on the whole piano, and we will continue to do that.

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

And there's things that's in flight that we can't talk about on the earnings call. But I can just mention again that we have over 70 work streams in flights.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Very good. I'll turn it over. I'll have one more question when we come back in queue if we get there. Thanks.

[Operator]

Our next question will be coming from Gabe Hajde of Wells Fargo. Gabe, your line is open.

[Gabe Hajde, Analyst at Wells Fargo]

Holy, Larry, Bill, good morning.

[Larry Hilsheimer, EVP & CFO at Greif]

Hey, I

[Gabe Hajde, Analyst at Wells Fargo]

wanted to ask about Slide eight. You referenced some price and volume impacts in the metals business. I'm just curious if you're specifically calling anything out from a competitive standpoint or if this is in relation to steel. And then maybe revisiting the question that Matt Roberts was asking about on slide six, it seems like there's sort of two discrete items. You've got an identified up to $10,000,000 impact, and it's not clear if that's volume related or cost related, so maybe if you can clarify that.

[Gabe Hajde, Analyst at Wells Fargo]

And then I think two bullet points down you say there's a potential positive or tailwind from, I'm assuming, rising steel. If you didn't, can you quantify that for us or was that included in the $17,000,000 of favorable price cost that you called out, Larry, in response to another question?

[Larry Hilsheimer, EVP & CFO at Greif]

Yes, it is included in there, Gabe. And so what we are referencing relative to the metals business is the fact that in The U. S, index cost cost index have risen, causing our price adjustment mechanisms to kick in against lower cost inventory. Now what we haven't tried to build in because it's speculative right now is, is there going to be incremental to that because of this newly announced increase that to the 50% level on tariffs. We've built nothing in for that.

[Larry Hilsheimer, EVP & CFO at Greif]

And then your first question on page eight, can you repeat that?

[Gabe Hajde, Analyst at Wells Fargo]

Yes. I mean, it just says in the Metals segment, sales were impacted by both price and volume. And I didn't know if that was competitive price or if you're talking about the positive price impact.

[Larry Hilsheimer, EVP & CFO at Greif]

No, talking about the positive price development. Yes, the price cost mix positive, the volume was negative.

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

And the negative volume was mainly attributed to North America, which relies on the industrial sectors of chemical. Yep. Okay.

[Gabe Hajde, Analyst at Wells Fargo]

And then maybe what George was trying to get at was integration in the URB business. I mean, I think if I did my math right, you're around 650,000 tons now of URB capacity. And is the goal there to be fully integrated or are you there already? And if not, any

[Larry Hilsheimer, EVP & CFO at Greif]

additional goes back, Gabe, we've said this all along, Integration is not that important in that business because of the breadth of customers that there are out there, the numbers of them and the small number. Integration just becomes much less important in that space than it is in the containerboard space. And so, Bill, do you know what our integration level even is on URB? It's over 50%. Yes.

[Larry Hilsheimer, EVP & CFO at Greif]

Okay. So, yes. So we're happy with it. If there were really high margin opportunities to acquire integration, we do it. I mean, of like the coal pack acquisition we did.

[Larry Hilsheimer, EVP & CFO at Greif]

We've talked about, you know, that's a joint venture we have, you know, and we're thrilled with it because really nice high margin business on the beverage, divider business, but it's not something that we need to seek out because of the just general structure of that industry.

[Gabe Hajde, Analyst at Wells Fargo]

Perfect. Thank you.

[Operator]

Thank you. One moment for our next question. Our next question will be a follow-up from George Staphos of Bank of America Securities. Your line is open.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Hi, thanks for taking my question. Larry, Ole, I seem to remember in the discussion that you said on the increase in the guidance in the low end, you were still building in some, I guess, additional volume downside. That might not have been your phrasing, but nonetheless in the worst case scenario. If I got that correctly, can you tell us a little bit about where you are sort of baking in a little bit worst case on volume? Thank you very much and good luck in the quarter.

[Larry Hilsheimer, EVP & CFO at Greif]

Yes. I mean yes, we had we did have a walk and I gave the numbers on the volume element of that, that shows a volume impact of a negative 40. A lot of that within the fiber business already happened in the second quarter. Like we said, each month it got better through So I was just giving it relative to where we were in Q1. And we already talked about metals being less and also we built in some on polymers. But again, we build in sort of worst case scenario in giving our low end guidance.

[Larry Hilsheimer, EVP & CFO at Greif]

So what we provided is low end and we have extreme confidence in delivering it. And so those are the factors that I gave you, George. Current demand pretty much was expected, a little slower start to fiber in Q2, it got improved backlogs are really now about as high as they've been in two years then cautionary stuff.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

And on pricing, you mentioned ultimately that you still think $50 to $70 per ton was and again, this is my phrasing, not yours, appropriate relative to the tension in the URB market. With that, if that's correctly sort of phrased, are you still attempting to get the full price hike in the market? Or have you, at this juncture, stopped and you've taken what you've taken? Thanks again and good luck in the quarter.

[Larry Hilsheimer, EVP & CFO at Greif]

No, Dan, we're obviously still working that price increase in the market where we're not on index type contracts.

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

And just call that our backlogs are actually stronger than in two plus years at the moment.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Understood. Thank you, guys.

[Operator]

And I would now like to turn the conference back to Olli Roskar for closing remarks.

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

Thank you. I want to say thank you for your time today and also for your continued interest and investment in GRIFF. We remain committed to continue delivering exceptional results and are focused on accelerating our performance towards our 2027 target 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 customer centric growth will create enduring value for all our stakeholders. Thanks again for joining us today.

[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, EVP & CFO

Analysts

• Josh Vesely, Equity Research Analyst at Baird
• Michael Roxland, MD - Equity Research at Truist Securities
• Matthew Roberts, Equity Research Analyst at Raymond James Financial
• George Staphos, Managing Director at Bank of America Merrill Lynch
• Gabe Hajde, Analyst at Wells Fargo