GEF - Earnings call transcript Q3 2018

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Operator

Good morning. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Greif Incorporated Third Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Eichmann, your Matt

Matt Eichmann

Thank Greif's conference third and good call. Welcome to morning, everyone. quarter you, Kelly, fiscal XXXX earnings

items Chief of and we Larry On Greif's available follow-up from fair to Hilsheimer, with issues are disclosure, regarding today at are In Chief Executive the consider because accordance discussing questions you basis. significant prohibited limit Please question non-public and regulation to on to end to Greif's ask questions X. queue. Pete the Please you Larry call. Officer; we encourage material, Officer. Pete Financial to individual you answer and before today's an one call are Slide the President turn yourself Watson, and returning one with

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

financial contained Slide referencing we appendix turn to is metrics now, on over And non-GAAP will the most be GAAP I presentation metrics to Additionally, in today's and presentation. Pete comparable reconciliation X. certain of the directly

Pete Watson

and financial you, our will outlook good morning everyone. quarter, providing a period. prepared conduct Larry I’ll CFO, Thank and results our remarks, summary and level our Matt, discuss expand question-and-answer of after our today's on call Hilsheimer, review will a begin and by then our we

the with takeaways. start key me Let

and continues products and led XX-month trailing be by improved flexible in customer both Our to improvement segment. and our satisfaction quarter-on-quarter index consistent and Paper significant performance year-over-year by services in Packaging score

Paper year driven overcame and fright our by was dynamics by the Packaging items, Rigid expense favorable and versus per remains trucking special by business segments. share Our respectively strong Flexible A on $X.X special headwind this quarter, to during Class headwind quarter quarter. a continues mitigated significant demand prior XX% but and financial Packaging a before impact earnings & Industrial million the Packaging operating profit and our the face XX% Services Products Transportation Paper rose a items constraints, and pricing adjustment. before

increased and range. A XXXX Class per special we Finally, fiscal share narrowed items before our guidance earnings

pleased payable and The XXXX, Board were per prior of Class material Directors of October to was returning is of quarter pays with philosophy continuation is Please that dividend year to to Class the impacted share dividend. and Stock the new our for X. three our increase capital A headwinds to also but consistent shareholders. quarterly on RIPS for $X.XX We’re $X.XX approved raw our quarter, this Stock by the turn lower announce by B versus Common per challenges. share our Common our consolidated volumes view as Slide segment third isolated an distorted

weather due extreme we First, ag Europe from conditions. in volumes lower experienced season a to weak Southern

quarter the America, RIPS due X% the Brazil, steel tailwinds mentioned. quarter Second, slightly a only, by by quarter in projects versus higher year-over-year experience market of prior the expense and quarter, trucker higher efficiencies, versus with America volume we versus I’ll sales including a to selling Eastern up gross unit and in the a operational higher stemming but and up North challenges and in depreciation $XX robust areas raw were dealt were manufacturing price demand to they And year North sales, East, roughly previously in X.X%, Southeast cost Middle continue year-over-year as prices Europe. to higher in material higher Southern strike. and impacts These prior and Asia, the in the contractual of touch second steel hypercompetitive challenge were year adjustment the in strategic were third, EMEA, volumes related significant raw offset partially XXXX. profit material inflation. up were year pricing. new of nearly X.X% was million with quarter X.X% from and North prior RIPS discrete versus freight seen Africa, Europe these increases In result per more third excluding moment, improved China. we

We continue costs expense. encountered profit year, RIPS versus decreased the gross $X.X slightly to to strong. albeit until profit with million were these four-month a versus increase FX Argentina. to our contractual by pass special arrangements lag year will The an In higher million SG&A offset North cost lag. prior continue quarter items also $X the stabilize. was a prior Full volumes by recovery roughly America along primarily operating three-month to to in headwind segment before related

increase prior steel container to were Brazil, the Third volumes drum XX%, in Europe, drums and up largest quarter. versus truckers North and drum drum Southern predominantly bulk were EMEA, bulk American volumes X% X.X%, extreme East volumes down increased Eastern of year which year. versus steel steel caused versus to in quarter increase due and Shortfall the including related agricultural strike in and year lack the customers. to weather container the in steel drum Africa robust, year conical prior plant in versus intermediate quarter volumes reduction Elsewhere double-digit prior demand prior the while drum volume steel almost was the that impacted Europe by X.X% X.X%, our in volumes in of demand with were In a grew Middle shortfall steel in Latin XX%, rain the quarter. intermediate operational by in EMEA, country. down an challenges the and our bulk

steel negatively unexpected Russia a roughly shutdowns also demand APAC, up shortfall new where year. competitive make quarter, by volume. Spain, expected to drum extent, are Steel Kaluga aligned facilities productions for both X% in our year-over-year. the and over China over two to volumes China conditions IBC maintenance. Plant in lesser fell and Drum the We of was remainder steel ramp decisions The in strategic continued third during the value customer facility quarter commenced the new experience market we was in in pricing to To impacted In

several third sales forward Southeast Asia go with million, Paper an Packaging prior over profits. margins higher quarter China months. demand in improved the sales solid $XXX turn APAC, next selling X. We PPS finalize remained with delivered year. to quarter exceptional specialty thanks of strategy the versus growth. in and expect Slide generated unit Please our prices, X.X% steel drum third higher and to Elsewhere strong increasing revenue volumes to

per Our the industry X.X%, basis year-over-year. outpaced by on basis were CorrChoice network up points shipments a day and XXX

year continue price segment increases, favorable versus by grew cost, Transportation containerboard before Third and quarter, the Flexible driven to headwind remain Please services quarter transportation products strong neutral items $XX $X.X special but year operating and improvement mostly Slide prior up a during specialty profit million, demonstrate a volume mix Greif prior with it offset was on million in turn through quarter, the elevated OCC X.X% growth, the sales basis. faced X. by a sales. unit sustainable system and efficiencies. business costs to product currency nearly the of increases versus

year. across price roughly and $X million expanded and were prior broad-based versus year. volume of the sales profit profit prior gross efficiencies X.X% versus rose before segment. improved the the manufacturing by driven sales XX% improved product management Stronger and and items segment’s Our by operating the mix Higher demand gross special

to sequentially the in I’ll Chief we quarter, timing planned to Financial trend our expect Romania FPS and to ahead, fertilizer operating over the to and Looking in fourth And the due presentation various lower the turn that, around performance Larry Hilsheimer. world. Turkey holidays Officer, seasons with

Larry Hilsheimer

review third Thank you, everyone. morning to quarter our Slide financial results. to Good Pete. Please X turn

net increases. strategic basis decisions, quarter year-over-year were a sales due contractual year-over-year price Third pricing changes, higher price currency containerboard and on neutral X.X% to

by grew stronger consolidated partially year gross Flexible Services the versus quarter, costs. performance segments, XX% & by and gross profit our transportation to profit Paper significantly higher prior Products material Packaging quarter raw Third in offset and due

our of our recorded to quarters, as studying X.X for one we the painstakingly that cost an X.X been to was related address North costs, an Speaking updated updated process to not expense the had to expense in review prior transition accrued system an in it This We matching in XXXX. discovered X.X ended in related that from up were system million and prior in accrual version built of ERP we adjustment America invoice million position. and $X.X XXXX, appropriately reduction transportation XXXX of inflation. RIPS. discovered transportation million in to that opportunities over we

and Gross XXX adjustment the primarily profit margin and strong year We due cumulative have by versus the problem basis corrected level. correct in by the a and Rigid's, prior the the in Stronger performance a across favorable increased Flexible expense raw that in core inflation, freight & expense of gets lower demand quarter, points to to material volumes, environment freight Packaging. passthrough cost one-time contractual Services offset segment. partially adjustment adjustments price Paper timing and Products

one-time year that X% increase after of due one-time The amortization recur of benefit reduced the preparation for ERP to completion discussed prior driven partially we million also center higher is the Third item not depreciation in year salary implementation. benefits buildout did and X.X%. from for misleading. our fees, salaries Latin the America’s quarter and this services SG&A versus was expense $X.X implementation. comparison quarter, increased Recall, and by is shared the to is SG&A ERP year. previously increase cost, prior Adjusting last related benefit expense that that and professional streamlining year The benefited higher a roughly tax our

analysis professional addition, M&A and activities. strategic tax growth In profit incurred related planning and market in our fees we to

better more special items rate. rose lower previously quarter, quarter earnings versus to by the special prior share prior Third before by mentioned. to operating quarter. year $XX versus profit non-GAAP year and per items roughly tax XX%, Thanks the million, A Class than before year-over-year reasons due rose the profitability I

on like Thanks Prior the currencies XX% flow, currencies Our the year-to-date, we now short given foreign than strategy tax to efforts and and topic and comment for reform at some guided and stands which comparable to time, we’ve tax XXXX long on XXX the points we tax have been previous world, the in than is squarely planning rate any better Greif I’d within hot fiscal to around referenced calls. on exchange, the transaction lately. previously period. more has discussing non-GAAP cash XX to range basis news others.

by the it for impacted EMEA to the the negatively of our and Argentinian roughly million of RIPS headwind quarter FX parts weakness was the headwind parts RIPS business, attributable Specifically, the consolidated roughly during level, Turkish for The while ruble the in offset the to headwind Russian $X.X in in America prior the moving versus with weakness overall of quarter, lira, overall faced year. in the $X largely all Latin was FX in $X business minor peso. the netting in business profit peso. headwinds RIPS RIPS were a was the the the other million a profitability impacts in FX by operating Argentinian At the currency impact of million

Finally, flow Higher free improved roughly free largely by flow, quarter million pension the third $XX profitability, for year higher capital of prior than quarter. partially higher cash was growth $XX the $XX million or million excluding related expenditures offset projects. contribution additional from year-over-year cash resulted

inflationary comparable Finally, current we to from review XX the the a I’ll our guidance. trailing XX days cash days conversion days roughly X. decreased capital decreased in. year-over-year updated turn by since cycle our basis fiscal Please in to XXXX. continues XX-month Slide XXXX and operate Working now have fiscal to on despite improve period X environment

& fiscal our against narrowing Paper in and the cost $X.XX before guidance A between items reflect per stronger are special we $X.XX performance increasing and RIPS experiencing. seen share are to Class Services adjustment and the to and Packaging per share XXXX range earnings Products netted We pressures inflation Flexible freight

Our close capital on flow expenditure assumptions. I final and unchanged. guidance few guidance are and free with a our cash key words will

breadth remain concern we markets the an FX our for an portfolio, currency financial First, the area year. results anticipate for the have given moments of us. of volatile, on will our immaterial impact but not It’s

for September, RESI and Packaging, a latest for Paper forecast. $XX cost OCC a a of ton in-line ton as to with the October $XX we relates for August, $XX Second, it assume ton

Pete reflected to fiscal the QX, but fourth increased will FPS’ in FPS Third, XXXX. when of in mentioned, lower as compared results quarter fiscal that will Please improvements still are for also represent trend a in non-controlling interest. QX than improvement mind keep significant

are trucks transportation tightness appropriate to America inventory weeks impacting companies, cases, Finally, or and is we In other in or in-transit lanes. similar even our levels. days North some waiting for

are year. to We managing free situation the proactively not the the for negatively does ensure mitigate cash flow impact to affect that

at the us provides priorities end X.X stood leverage flexibility ratios X.X but net maintain intend creation. it compelling debt-to-EBITDA financial if Slide capital exceeding low-end balance our At leverage strong of to times consider opportunity X We A the targeted quarter, turn of let’s at Now, range. times emerges. X. on temporarily to sheet to the ratio, maximize to we our the our targeted value growth

We in have sheet our future. the strengthen balance to further opportunities

For interest to in XXX X.XX example, pick market points basis refinanced up Based in on we rate of when XXX we have notes $XXX August and million basis due XXXX. conditions, we XXXX. expect current that debt points between

in-line Our capital to our core clear and and our organic M&A and disciplined, logic. in to be guided competencies. financial include shareholders. opportunities and priorities will by strategic investing risk-adjusted capital Growth inorganic will growth investments grounded and selective framework returning be on

And in sustainable of Pete for call opportunities. our will returns we'll continue I return turn the to cash enhance dividend, look his comments. and absence We to to growth our those now, the closing compelling back shareholders through to

Pete Watson

and by you, very of business. overall Slide In performance Larry, to are XX. our Thank turn we please closing, the encouraged

benefits One is our the a of variety of markets. of substrate global exposure end to portfolio

Our that for the line you stated XXXX. will and confident in for the business We this its some your fiscal appreciate challenges remain in morning, questions. helped experienced participating Thank interest segments counter Please we in very for performance Greif. open others. commitments achieve

Operator

first Please comes the go Fargo Gabriel [Operator question Hajde Securities. Instructions] from Your line ahead. Certainly. of from Wells

Gabriel Hajde

for congratulations question. Yes, gentlemen. doing the Thanks

Pete Watson

Gabe. Thanks

Gabriel Hajde

on that it you in to actually us basis, the you're any I of bit at indicators as behind is how First, month-to-month. be give second the assuming kind freight? far look sequential for relates little about to, to market, cost freight a help you wanted is high I then they in side, by cost, out and the [indiscernible] there of relief would might the appreciated? a I’m like question, which there way is the way rates the to estimate starting the talked And for, tightness least of I'm starting are components, but of kind biggest break segment, see RIPS price be and seems sense at part to level you a a in it I to you at the come down some Any the guess if on seeing, track, know there some

Pete Watson

in challenge QX been the about catch tariffs in lag the pretty cost the a of I’ll and year-over-year Gabe, U.S. it Industrial is has from time real Gabe, no steel a Packaging, anybody normalized increases driver to see quarter comment still we from sequentially as start is because in margins, now the transportation, to North seen its quarter fourth our now up on until steel more steady and shortage. on the cost and talked America the assuming increased expect from the incline. fiscal mitigate really year Yes, starting increases, primarily seeing QX. In XXXX times. of catch the and first what would costs get we It and a to Rigid rate in of area regard that to price changes We of so that in biggest that’s to those other up availability is and

challenge So, were we both I still in that’s to realm. in plans start but structurally place and other a and hope big longer-term that transportation business short-term that manage think have to companies they some we industrial and longer-term mitigating, the specific our

Larry Hilsheimer

I year China, December give pretty the basic March one to U.S. flattened that let but the XXXX June. in in mechanisms them in of went you turn price to back I would said. index adjustment if already – as calendar are with what me sort a things to seen overall, about just that most we’ve and in Europe go of was had in remind quarters perspective, it June Pete XXXX maybe a ago, XXX in than steady, it was is on of everyone end Yes, tied of up and XXX, supplement The and was thing these

We a Now, towards is quarter the like our fourth start then couple went some of July last to see in Pete the September flat. months, two down as popped end it should August. recovery and bucks and as kick-in in we it the as don't start adjustments have September. see a predominantly work first should, after to come the through we the quarter in spike or that, pricing will inventories said, but long price

Gabriel Hajde

very quarters frame in negative of next, mention have four defend can or us. market interpret That’s over I helpful. Shall the kind raw wanted look asked data pricing can for to slightly at we we're gentlemen. as this dynamics, and Larry for at positive which this the or sort Greif what seeing and as least been Okay. know that of more Thank five there, starting the is differ where just that here when turf go And I out you, the the is turned pointed their this kind us I you from movements you you did I up which domestically? of to responding context provide you about to quarter, of current China, material

Pete Watson

No, very it is insightful Gabe.

Chinese we as over the talked we’ve quarters, competitive last market, is about So, from several it know, hyper competitors. mainly local this

We in new team have place. a commercial

operating in but turf, margin. volume determine ultimately protect we’ve scenarios to our that profit out are to goals various and our are and and We between vision value our places responding modelled balance some to and create

as short-term competitive what is, and of around in terms a going decision being more looks footprint to that’s but the combat market. like market than ultimately, protecting months profile we're of months X see that have environment, to to is X the will in our our strategy which on how what turf, in Some next we we prolonged current newer

Larry Hilsheimer

the end comment so end yes, in your is just this it trending that X.XX, you’re to so of it indexes Gabe you then March in the China. it quarter relative December the of on dead China of X.XX and And way at the June on end X.XX the was it’s giving that, on at on, at the Yes. mechanisms adjustment of just pricing, end spot was

Operator

comes George Merrill from America Lynch. Your ahead. next Staphos Please Bank of question from the line go of

George Staphos

I all and prior somewhat questions CSIs little fact towards should RIPS not conclusion your versus morning. was are really I conclusions good wondering the we moving been if CSIs weak draw Pete volumes for have guess, draw any the year details. that everyone, your the from volumes, but around from Thanks Hi, trending aren’t have and we improved certainly they any goal, stagnant, should the there. bit levels, been my

You called there quarters RIPS out RIPS, think more sustained growth. number up volume is and a in in last something this quarter something has prevents the of from one-off structural it always of couple you do putting been things there that

there thoughts follow-on. I and Your then had a

Pete Watson

I No, question. appreciate the

America alignment I on but our exceptional our think between customers sense is discrete terms really within will take growth. happy sector, our There the are expect on is out was So, deliver. or demand underperforming I steel the X.X% really volumes we say importantly the more growing plants, dragging have customers, we Europe the – grew out in of you the not on scores when discrete what no, overall, discrete our we that we would Europe me is very is that we in year-over-year, business look regions issue, substantially, countries talk volumes – if our down and structural tell just take regions some which values grew you you Southern at why? are get businesses X% with North RIPS CSI fairly a high-end one performances in which CSI. a organic up And over let there services and and to isolated when If we drums. at and the our of look ag EMEA you

and situation, once X%, in in you lagging to performers issue growth and we alignment exceed pretty and teens Brazil IBCs was from trends, that about and Southeast the grow good that we take to you, had of myself – gap the in we’ve had know is and in And is tell as I’d challenge that Presidents, those I expect. and that’s the talked we’re steel growth a expect we expectations, is of your growth I’m the up world controllable there. our we’ve we Asia continue get will confident actually lot on over and in fixing, around through a our regions us very that the business very is but Brazil a China also businesses our their question have to and operationally just competitive the midst important, return high where discrete control the that levels attention standards seriously, business CSI in

thanks So, for question. that

Larry Hilsheimer

that on because almost million overall let at one quarter refund in year quarter. had me million negative third of Argentina it, of drag of tax in through from and $X.X you Yes, X Last in too, the follow RIPS on look quarter, the currency, thing XXXX year-over-year million the we an Argentina. we basis, had flowed $X.X from it

the We adjustment then on had that’s to on which drought. drums, had million this year-over-year. related the of also $X.X but $X.X these the drag conical about is we million just transport, So obviously

our actually in RIPS. pleased So, bottom pretty we’re line with performance is,

George Staphos

me situation my a called biggest answering risk factor. out by as lower-end raw follow-on question to us that material and the Pete. getting little is the if the for it it Gabe’s is and appreciate yet more the Larry ears you seem a in can and I’ll drives to freight and thank you factors better color effectively your My much the thoughts, what and question, at least like the over, in additional is bit sounds that, swing range of terms and of fourth-quarter that of thanks to you driven Okay. you turn raised guidance, reversal the give fiscal

stand and you and just me really reserve? understand So, down and I’ll are in what swing cushion what for then might help are of through factors, prudence fundamental appropriate turnover. what And building be sort

Pete Watson

George. thanks Sure,

quarterly you at year. we are of we but don't guidance, obviously quarter the last the give as know, So,

now. got fourth comments you're great, being gee, up ends I note give that’s several did effectively Well, well, it that quarterly So, that numbers. consensus. don’t some about, quarter But we we guiding below

when look able to it look can say, our to but that at we did at we very increase at it from June, at accounting I different a pleased guidance mean tied what which updated adjustment the the on So, as changed drought you experienced to I’m provided it in costs the update slightly in $X June, million. I time we’re and perspective. and transport, million we I from that as we about that guidance $X.X the then us Europe, from forecasted that look we time. worse what The anticipated than had currency at shifted

just rate of accounting able the tax to and become realized shifting range. [indiscernible] business Offsetting on improved operations in we to nothing adjustment guided, we earnings those our all despite our of and negatives, Our continues raise that. guidance because as that had we were

unexpected happen give going bullish on we our So, the business guidance. just business, time we and things around of again, and as don't we is many very said what’s them reasons manage them to on in in that and quarterly time actually one are need you

we improve other operations improved the things to unanticipated what’s and unexpected, X.X, yes, offset then allowed some the So, it that’s had us and guidance.

Operator

Please go Adam next Josephson line Your the of from question Instructions] [Operator KeyBanc. ahead. from comes

Adam Josephson

Pete Larry Thanks, good and morning.

Pete Watson

Adam. morning, Good

Adam Josephson

of is, George’s think questions, largest couple your few comments, related quarters and weather, in Pete a discrete we operating business but response you the the prepared morning, called been talked to in four talked one consistent RIPS of Good or you’ve or the there? what problem. then in happened in times Pete. each drought problems cold had has two, challenges or about hurricanes question, in about past plant, I challenges you in whatever, your Rigid Brazil, out quarters a four business, isolated last And weather weather-related the the

a like So, over in past seems what of it last of several the experienced you’ve seem weather it quarter continuation the was discrete, problem the quarters. more doesn't

on just two your appreciate issues? So, would those thoughts

Pete Watson

Yes, thanks Adam.

of efficiencies year have about to and had consolidated terms issues a then which in that, we smaller some extent that. correct, to throughput of trucker we are have cause Brazil, ago, had in the one correcting impact into operating we Brazil. all addition the we And maintenance a of in issues, an So, strike to had in midst some terms throughout in operations that

relates that. but can't in really tomato Regard ag weather, paste business, fairly just season, a our which to really to business, it serves we to that have the So, conical within it, operate tomato weather, it's we large volumes control and that. part fourth of record it years And portion over to had we've our of performance when and down third two was drums, quarter past million quarter. the X.X in three our in record

the So, we farmers the had and they less was became had that planted early really crops in so by dry rain very and it heat. crops then very, the year were and tomato decimated the severe

it RIPS business that part in X.X% severity and profile happened overall we in and a big of issue there in our drum out that the And by grew if Southern again, it you of we Europe, May. taking region. was expect but at, didn't in didn't discrete control one So, that, look demand steel

comfortable very control a feel and can't manage control I weather from we doing with we're we that. through winning in how and what demand markets. and those can't we can standpoint, just we're So, weather

And so…

Larry Hilsheimer

Yes, the in is, throughout relative been In we're anticipate Europe. out that a business obviously conical the guidance thing, obviously June, telling I just what we Adam June gave guess only and didn't things you I hear weather of the different wiping add with changed. we lot in I'd there's you

step So, the it's a explaining just just and it's change. off

Adam Josephson

in structurally largest free you about though that is And cash if quarter you such just that guiding I ever. the understand and ago company's me know, just of changing the that the quarter help XQ, change? you company flow a Larry XQ, biggest And in on seems there. I Sure. wrong cash the believe to history cash I'm you're free It that flow second in so, there generating your evermore my something fourth question. free quarter in can in correct the had for me year as if flow flow Is cash the

Larry Hilsheimer

to in talking dug to it's those impacted just else that but back has has out business and conical half. despite know primarily to the as the lot increase of what find go question was anyway, a and but shifting. forecast in have be, over obviously what's shift projected got off before, nature big increased flow flowing conical the look We business with more were ag second had being obviously, that, significantly a didn't our year. space, said in and the do this and it's the in years price to this have a paper paper cash of year being a that's in ag what exactly actually. yesterday that's actually we going offset well, CapEx, nice going to had and in, at time, this Sure, our drag it, that's we big two that's business the in have that from over subtle an something have in shifting it nice it's to and try confidence by We'll things a solid your number about cost Europe, we been the business, half core second despite not we this on time. we've that segment increases we ago, which for business, a year had still the were year, thing than we ag fact the it, yes, year. had you've And We lift OCC We but been but off the but

Operator

question of Company. next the Gabelli Bergner form comes from Your & ahead. Please go Justin line

Justin Bergner

good morning Hi, Larry. good Pete, morning

Pete Watson

Hi, Justin.

Justin Bergner

of clarifying I just a questions. couple had

negative mix, increase volumes, I you know there cost in interpret global that Rigid, the improvement business gross indicated your light of First, a across Rigid because being in that in I that was recovery was profit an still in should lagging headwind?

Larry Hilsheimer

Yes, through for mix, is it Justin, America higher more our mean also profitable but volume Pete some price space a nice had we combination is have and all but as volumes – in taken increases, I of areas. a things. us do some North of driven and we've went nice

we're optimistic about curve up quarter shows cost on what America. Now, we on trying next so first to year are obviously, catch for that North steel, still

Justin Bergner

Okay, helpful. was

on there? want sure headwind you million, I prepared headwind you about the headwind. going something netting but just FX $X what is sort of you mean How of mentioned of just In clarify I the much ongoing? make to then understood Could said FX versus you FX. remarks, what $X.X was to million with Secondly, one-time

Larry Hilsheimer

that is an the The Argentina X.X is and for alone, million consolidated, for in Greif economic On Justin the is overall of segment RIPS quarter. challenges. of alone, X it basis because their million X

with FPS, costs have us the business with labor some in the us we units primarily they lira, obviously ends So, translated favoring selling euro because the – of it on the offset, market. up other into and

operational So, with that their improvements. nice business in tailwind along

way it's I against very year being drag negative impact terms one-time a are of which us it as But I call. and minor. our currency to are markets some half this going. mean, be difficult we said item. a to to we We the of line right as now know, working line are You in for year, about all impact mean, actually of that's the very hedges sort slight, currency hedged bottom bottom designed as for and the expect of currencies. risk a

Operator

Chercover line ahead. D.A. of comes Steve question from next Please the Your Davidson. go from

Steve Chercover

Thanks, any good from my pricing benefit was spring first. yet be residual hike? everyone. That the there to realized morning Is containerboard

Pete Watson

been price system. throughout all realized has fully increase No, our the

Steve Chercover

I'm with then, start by but impact Okay, if much just like did was in wondering, actually of some the good so want to I terrific. it there the and because they of quarter rip much? the on performance Europe, of things on, sounds how facilities And expenses don't actually RIPS going

Pete Watson

year-over-year way delays because and elsewhere blow those delivery molders projects, built keep reconsolidated from Not side things was volumes of to not to, another primary what quickly we say all, has a I'd that is. in back is, us facilities we've some just in that, this significant. has us challenge behind plans on the pleased impacting to our and more I production at volumes, and earning is which operational as go only which impacted with our had cost and that's and put our way on thought because why and molders Steve then year there again which into we're Czechoslovakia we and and overcome, put on them as those Europe supplier delays nothing RIPS The would guidance blow we to in our had receiving business and nothing really, to been than us relative mind very where original us getting behind, that up in of as their

Operator

go line ahead. Dan Jacome the & Company. Please next question from from Your Sidoti of comes

DanJacome

Good hear morning, you me. can

Pete Watson

can Yes. Dan. We

Dan Jacome

you. Oh, terrific. Thank

second guys if – update provide missed sheet of get Just us any build end I and Sorry mitigate two give the an levers know guess, an update you longer-term you can several the if the tax in then can my on at that, room network feeder on XXXX? for potential complete an place be Day to XXXX Thanks said question I projecting line it. by improvement you couple did update you next in capacity still years? was you that of taxes, I Analyst think a And see tax, are on to I lot. just you questions, you your you're the discussed fiscal in on just

Pete Watson

late changes I tax, corrugator Larry Pennsylvania but we've at and so is Northeast track last corrugator, Dan, told the handle the quarter. Yes, exactly for can Mid-Atlantic on answer everybody XXXX, no how will

on pace. So, we're

Larry Hilsheimer

deferring and for taxes tax in the there cash of lot company. more us And will doing and that means our a with respect rate work be to couldn't that tax year for taxes really this they're we're Dan, the that's and like XX% driving great pleased out non-GAAP. I running with done things be They've our group probably

down, that sort we and I a of got tax think now this I country and we've on is one state points it to reduce so down As over to to with liabilities be we're at local But anticipate pension about is, we to concerned underwater local to range, in can of would federal tax get to XX% and complicated, do I they be planning the all taxes. things leeway non-GAAP might they they're somehow, you future, XXX that basis move environments for of that the XX%, state lot need a a find going pay lot to taxes raise them expect have of will that able of and time. couple states

just So, be something about. cautious to I think it's

DanJacome

Okay, market network, Mid-Atlantic fair it enough, what speed be that or helps. And are the then, what's long-term game you so you had? Can to feeder going to value-added just to customized just your that's mean is products? versus on on on your current I more be remind containerboard us going maybe asset us improve and and looking end new I to base, that remind all again

Pete Watson

Packaging So, especially corrugator. of it makes there consistent strategy serve existing put but network to it where it strategic have the aligned our are region core because that strengthens sheets, customers have that regional in litho-laminated in a asitrade is to it that and strategic is us. our our committed choice and also also network, to products Paper chose insulation our in we value-added customers both We which high-speed has with wide it'll

enable us, build to new prayer, to us with grow that plants, committed successful. helps our So, not hope strategic our a view is, customers and with be customers a that and but are we

and of those be as that's will philosophy. expand will in we any So, expand. grow the businesses on And Greif continue to why our earmarks in we our

Operator

go from Merrill Your of Lynch. Instructions] question ahead. next [Operator Bank line of America Staphos comes George Please from the

George Staphos

yourselves out you point, versus to ultimately be versus to on follow-ons. at return two, be months versus XX where number can't you releases kind months the shareholders just pipeline XX%. in will months for to come But the whenever keep My obviously a I and back. study just rate I two, thanks value it and and ahead know cash Larry, evaluating out. how Hi, mentioned earlier might that of question talked too ago? growth for taking but Pete, that opportunity one. six a all That's flow, X get question very kind around of opportunities And the growth those you think have question, subject next you, basis looking not you companies. that this I’ll closely about now far you relative as to do press would GAAP can How answering this of cash number compelling taking long then rate? Thank been, the of my maybe taxes, the you think differential do juncture you

Pete Watson

Thanks George.

I'll to first answer one second. and the Larry So, allow answer

I a tell good have So, the we we're opportunities six you, now, months process very following. ago versus

active pipeline. a very have We

where are months six multiples to the similar they think ago. I were

and disciplined how it margins going ago growth to very I think our Again, a our execute at going we be available was six what be is it improve sake, look for in months and gross to what not profits. improve we we're cash becomes differentiates we will today. strategy what what do on flow to to our how be and and

deliver it's said, have margin So, between us. cash and we it's other have opportunities of what versus feel about a growth value in But balance front to like we flow back good for our you we shareholders. to

Larry Hilsheimer

asked it tax to I And where would to we build cash out would be not rate, that have now. the respect to the think right George, with team

is, things One don't level you, and detailed out. a high part answer, couple you really we have out. out of but is manage strategies working further liabilities that for I tax reduce So, figure trying on to continuously a to a just point tax liabilities. answer do great our push to how are And

really of assets write-off in amount the allow it you is, would provisions business, bumpy tax on Second – a law new can to because the bought the if that the of entire say some front, now. M&A the be in provisions let's we

of provisions. a repatriation cashes. And also, having up at lumpy transition as tax of end elimination that look the could really you have XX-year have a for then you pay part the So, tax reform to finally, you

answer a perfect lot a for there's takes, not and you. So, it's of give

the active particularly, place. at all look over we'll like this M&A could go into the looking be be for process there's but the going next believe that into we'll try impact flow, market, it always looking will to we what you're does if our we look it As caution obviously then cash year future, in budgeting that both at and what for next and be year

George Staphos

Thank you.

Operator

go ahead. Your line Josephson from of next comes question from the Adam Please KeyBanc.

Adam Josephson

and it. Thanks Larry, Pete I appreciate

Just me. from two more

why you Paper as industry these that. your on you're growing to growing, on soon, the last over of you extremely response And a you've as the market to healthy well kudos in many there why rate announcements point year, at the one need not? add well which conditions. you or Obviously, know anticipate given capacity At to and business. and presumably ahead some been Just been have do capacity

Larry Hilsheimer

So, draw you're right, attractive capital markets always investments.

think on over-integrated X Our to higher the with downstream a margins is environment And think grow focused business I that's in years see continue strategy today, and industry our becoming of we real as you're an idea in over-integrated. products when to X to advantage. specialty converting next the we it

building any structure, So, capital, significant in focus, do but will do maintenance we capital how drive won't reduction, today. how that's our be energy around how it cost drive predominantly cost we as mill improvements, of do our lower our our sit be mill throughput capacity we about we systems

Adam Josephson

not I Pete. and to a in come just increase context believe Thanks other of announced help the me magnitude return helpful? equates be expense about timing at million annual some the but would timing Thanks. with dividend, and that capital a it Forgive any at you for me remembering – typically announce the Did dividend around increases, $X the on of dividend. just the of why the it the end And impact just when it, quarter? one third

Pete Watson

comment. make Larry I'll let and one comment

That's So, and felt we're our just does priorities, expense all. profile. our the we come cash but I will any one growth tell a opportunity you of at at highest in flow comfortable that earnings not this of

do term. to had And thought some near in to we not the have prudent shareholders cash was a back. dividend return our it to We

Larry Hilsheimer

as transformation, steady and more become our we about been people Yes, returning through Adam. shareholders. consistently of work We've with our to been time we because focus is the to our generator. one confident capital that ability for about a talking cash more Board we've be telling some key And this

million going only of make extra M&A we're spent paid very remaining X we just So, but XX, in active an XX, $XX the to because pension called to pursuits. were obviously we anyway. we And actually We payment.

low to prepared our extremely special up do because weren’t just high felt position, to have our in our it shareholders. to flow return was of repurchases large stock we confidence we we live our leverage the dividends, or and So, appropriate to but generation to commitment capital any cash more

and increased we the agreed so, and recurring And Board the dividend approved it.

Operator

comes & Please Company. Your next of go ahead. Gabelli question Justin Bergner from the from line

Justin Bergner

I'm hope tailwinds it being in FX almost side, was $X.X not there Oh, headwind entirely, horse, was tune $X.X saying [indiscernible]? that million we the was again. I the offset of in thanks just or to a how essentially dead Is but Rigid the you're on segment, Flexible million from which the that segment.

Larry Hilsheimer

Yes. essentially That's it.

Justin Bergner

transactional which mainly revenue sort ran million headwinds of negative of it the the you're versus cost associated Was P&L? through just related changed Okay, was base and items, sheet base is? balance to with X.X any where

Pete Watson

and or not P&L, not transactional, sheet. predominantly income it's statement balance Yes,

Justin Bergner

great. Thanks. Okay,

Operator

next from line Wells Gabriel Securities. Hajde Fargo question of Your Please from ahead. comes go the

Gabriel Hajde

you, Thank gentlemen.

out quarter the down, world, of volume would some facility, parsed would seeing the I the Latin kind But the should market outside guess, and any fact, XX is XX%. specifically weakness one. be what last Just this then simple you're in one work approach weakness down Brazil, XX versus mean kind quick in you're guess very The be in over of strike-related in from an days only mid-teens. down you and days suggest consolidated there I I way that America also you're

So, markets. provide in and terms around Can to what you're I pretty color a that actually probably – of any market items? other of bit little well in growing it just growth me you're one-time saying seems

Pete Watson

on bigger had, we the Yes, the challenges sure. Well, miss Gabe, on that so operational was so volumes the lesser strike.

totally within As you modest as and market days, and XX we it perform but had some control growth. we're I that the America did characterize are not we addressing in those. well issues Latin was our cautious said, would only that

and a Argentina some have seems theme to financial their You've with Brazil. you certainly be tightening and currency which common in got political uncertainty,

well we you promise it's five Brazil we but and regard and I being our Brazil. improvement you months, start it in to what ability operate would to should three on and it's how I not do addressed, did more cautious, more in to say So, in that's and us next operate effectively in the seeing

Gabriel Hajde

Thank you.

Pete Watson

Thank you.

Operator

question America today Please from go Staphos last Merrill of comes George Your ahead. Lynch. from Bank

George Staphos

when trend. last are effective we'll good and months, the maybe the lowering about cost guys, few of capacity give mechanical quarter. Do reduced robust. and we at here, a call. has China a number in reduction do on rules is of we're or costs? Hi follow-on. the guys, second last capacity, costs little a and third in in some and productive in as Question into less Greif see in you'll it Or diminution out where months. become question more down certainly that Should is, pricing, you're costs next one, where markets two, we the point, initiative? details we but you one. a we and few you'll years. few reduce look price to actual appreciate of for maybe of been flow And read to especially of look price ability story at quarter, if quarter Two again, a you the volume to the is the heat versus commercial anticipate the do you, think aspects, you look hear starting number pricing however very But as than up anything maybe some and there mechanical just you your therefore Gabe's and might map your year-on-year will, you anticipate will at that thanks for terms us that over good FX, in more about you pricing chart, it through had format you luck the you'll trying Thank to – That's already and were your it what bit just raise was obviously catch purely things take

Pete Watson

George. Thanks

regions well, and they're the peaks – you it's all always have and try costs, So, one-time raw becoming more additional the smaller did cost it and that are increases I mechanisms, other openers reflective material we of answered try are that because levels will as also driven get certain of in and think by flat, increases to price-adjusted valleys, different you inflationary within have that. we first our mitigating agreements but to Gabe do can question,

our the markets question most where always advantageous first profit second look Your China, that is are profit that at work pools attractive capacities best the where to pools. initiative to are look around in then you're those And regions, and have us. you at operating

first margin then is, can to business that. we our secure align better our value-added So, operating more price, capacities and item

all sell we certain first the options could well looking but priority capacities to reduce now, is, China. we we're in business, is better And solution but frankly, quite other Our we every in more regions believe very those look And best would It operating the to the best grow. to at is what prefer same on make market in really our way. depends profits we country. that chance right

George Staphos

Okay. Pete, thank you.

Pete Watson

sir. Yes, you. Thank

Operator

no time. the And there to this will call Mr. I at now over closing remarks. turn further back for are Eichmann questions

Matt Eichmann

our weekend much, long hope have thanks a very a Great, call And joining for conference today. you great We Kelly. lot ahead. thanks

Operator

concludes This today's conference call.

disconnect. now may You

Greif (GEF) 30 Aug 182018 Q3 Earnings call transcript