Greif Q4 Earnings Call Highlights

Key Points

• Fiscal 2026 earnings improved despite weak industrial demand: Adjusted EBITDA rose nearly 12% to $625.7 million, adjusted EPS increased 75% to $4.04, and adjusted free cash flow was $279.3 million.
• Greif exceeded its annual cost-savings target a year early, reaching a $105 million run rate, and raised its goal to $150 million by the end of fiscal 2027.
• For fiscal 2027, Greif forecasts at least $645 million in adjusted EBITDA and $290 million in adjusted free cash flow, without assuming an industrial recovery; management cited volume as the biggest potential upside.

Greif NYSE: GEF reported higher fiscal 2026 earnings despite weak industrial demand and set a higher cost-savings target as it forecast further growth in adjusted EBITDA and free cash flow for fiscal 2027.

Adjusted EBITDA rose nearly 12% to $625.7 million for fiscal 2026, while adjusted earnings per Class A share increased 75% to $4.04, CEO Ole Rosgaard said on the company’s fourth-quarter earnings call. Greif generated $279.3 million in adjusted free cash flow for the year.

Rosgaard said the company had reached $105 million in annual run-rate structural cost savings, exceeding its original $100 million target a year early. Greif raised that goal to $150 million by the end of fiscal 2027.

“We are producing better results through actions we control,” Rosgaard said. “We are not depending on an industrial recovery to improve Greif.”

Fourth-quarter demand remains soft

In the fiscal fourth quarter, adjusted EBITDA fell approximately $5 million, or 3.1%, from a year earlier, CFO Larry Hilsheimer said. He noted that the prior-year period included $18.2 million of favorable incentive accrual reductions. Excluding that item, adjusted EBITDA increased $13 million, or 8.7%, and adjusted margins expanded approximately 60 basis points, he said.

Adjusted earnings per share rose 50% year over year in the quarter, helped by lower interest and tax expenses and share repurchases. Adjusted free cash flow declined $89 million, primarily because the prior-year quarter included cash flows from the since-sold containerboard business and because cash taxes were higher, Hilsheimer said.

Greif also maintained higher inventories than planned as Middle East-related supply disruptions intensified and resin costs remained elevated. Hilsheimer described the resulting pressure on free cash flow as a working-capital timing issue rather than a structural change in the company’s cash-generation ability.

Primary product volumes in Polymer and Metal each fell about 2.3% year over year, while Closures volumes declined 3.5%. Fiber volumes rose 1.3%, supported by steady converting demand. Rosgaard said intermediate bulk containers grew at a high-single-digit rate, but smaller containers were affected by customer destocking, higher resin costs and weaker agricultural demand.

During the question-and-answer session, Rosgaard said the destocking was isolated to the fourth quarter. He explained that agricultural customers delayed building seasonal inventories as resin prices rose, hoping costs would later decline.

Fiscal 2027 outlook

Greif’s low-end fiscal 2027 guidance calls for $645 million in adjusted EBITDA and $290 million in adjusted free cash flow. The outlook does not assume a broad industrial demand recovery, Hilsheimer said.

The EBITDA forecast includes $60 million in favorable price-cost effects, including $33 million from improved uncoated recycled board pricing relative to old corrugated container costs. Hilsheimer confirmed that the latter figure includes the benefit of a $60-per-ton price increase announced in June and recognized by RISI in September. Greif expects the full benefit to begin flowing through its income statement in the second quarter of fiscal 2027.

The outlook also includes $20 million in transportation and other non-raw-material cost inflation, a $10 million benefit from incremental Envaplast ownership and partial-year benefits from the Sweetwater mill closure, and a $5 million currency headwind. Greif expects low-single-digit volume declines in Metal and flat volumes in Polymer, Fiber and Closures, with customer wins offsetting continued softness.

Hilsheimer said volume offered the greatest potential upside to the company’s low-end forecast. He also said the first quarter is expected to contribute approximately 20% of full-year EBITDA guidance, reflecting seasonal patterns and the timing of the Fiber price increase.

Investment and portfolio priorities

Greif plans $185 million in capital spending in fiscal 2027, up from $160 million in fiscal 2026. Management said the increase reflects growth investments primarily in Polymer and Closures, alongside efficiency projects in Fiber and Metal. Vice President of Investor Relations and Corporate Development Bill D’Onofrio said maintenance spending would account for about $85 million, with another $5 million to $10 million for safety.

The company is exiting coated recycled board through the closure of its Sweetwater mill. Rosgaard said 120,000 tons had been removed, 60% of which was coated recycled board. Greif has moved the profitable portion of the remaining uncoated recycled board business to other mills, he said.

Greif repurchased approximately $225 million of shares in fiscal 2026, representing about 6% of shares outstanding, and ended the year with leverage of 1.2 times. Hilsheimer said the company’s long-term repurchase objective remains approximately 2% annually, while management remains committed to keeping leverage below two times.

Asked about the company’s earlier ambition of approximately $1 billion in adjusted EBITDA by fiscal 2027, Hilsheimer said a rough adjustment for portfolio sales and subsequent acquisitions would put a normalized figure at approximately $750 million. Rosgaard said Greif remains committed to its long-term earnings ambitions but is not managing to a headline number or fixed timeline.

About Greif (NYSE:GEF)

Greif, Inc is a global producer of industrial and paper packaging products and related services. The company manufactures and supplies fiber, steel and plastic drums; intermediate bulk containers; containerboard; corrugated sheets and products; and other packaging solutions for customers in a range of industries.

Greif also provides packaging lifecycle services, including container reconditioning, recycling, logistics and related customer support. Its products are used to package and transport food and beverage ingredients, chemicals, petroleum products, agricultural materials, pharmaceuticals and other industrial goods.

Founded in 1877 as a cooperage business, Greif has expanded into a multinational packaging company serving customers across North America, Europe and other international markets.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.