Greif (GEF) 6 Jun 192019 Q2 Earnings call transcript

Company Profile

Participants

Pete Watson	President, Chief Executive Officer
Larry Hilsheimer	Chief Financial Officer
Matt Eichmann	Vice President, Investor Relations & Corporate Communications
Gabe Hajde	Wells Fargo
Adam Josephson	Key Banc
Ghansham Panjabi	Baird
George Staphos	Bank of American Merril Lynch
Justin Bergner	G. Research
Kurt Yinger	Davidson
Dan Jacome	Sidoti

Call transcript

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Operator

Good day. My name is Jack and I will be your conference operator today. At this time I would like to welcome everyone to the Greif's Second Quarter 2019 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

Matthew Eichmann

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

President the Officer. Pete Joining Pete Larry are and call the answer and today's Hilsheimer, and questions call. to Greif's at Larry Financial us Officer; of Chief Chief today Greif's available Executive end on Watson, are

non-public we consider In accordance from items that ask you material questions individual limit we to you basis. discussing with queue. follow-up the question yourself with significant returning encourage Regulation an on to regarding you to the Fair and prohibited because Disclosure, before are Please issues one one

two. Please slide turn to

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

referencing Additionally contained metrics GAAP non-GAAP we directly and of presentation. financial is most the reconciliation today's be certain will to comparable in appendix the measures

presentation I slide now on turn the over to Pete And three.

Peter Watson

morning discuss I'll outlook. today's our results business Thank you, review Larry and everyone. our our fiscal begin and providing financial Matt, will call Hilsheimer quarterly segment. CFO, of Then a highlights our good XXXX and by

we'll period. Following a the conduct remarks question-and-answer

strategic continue best Industrial our summary, with quarter toward becoming make performing Packaging. of we second progress solid our customer Starting service in vision the to company

since customer introduced the score company second top time index the satisfaction first we Our quarter metric. wide XX% in for the

best performers XX, ever We also in of complete space. with NPS our manufacturing score Xth our is registered the in and which survey line top

and great being financial of our and vision to a capital achieving made. part allocating our is significant both are We progress human

trade XX% X% a rigid was earnings prior versus adjusted per respectively from environment quarter tensions. EBITDA by Class year second and quarter. share grew demand challenged uncertainty A roughly and and Our A weak business the adjusted

quarter. during Packaging we business results addition weaker our demand Caraustar, the in significantly but of Benelux, market experienced plan with improved softness despite Our the Paper the financial flexible performed the and

We is the the not XX We’ve process. acquisition and integration in impressed completed on of the contemplated previously by identifying diligence synergies Industries due energy team way. February under highly well our of during Caraustar been new

Please Packaging nearly demand global challenged steel by by certain XX%. Industrial markets. quarter Rigid was IBC drum the by slide turn while & second roughly the weak in volumes in prior Global persistent versus to volumes X% year quarter, four. grew declined Services

Steel U.S. to West regions more the were but volume import Middle and trade North due Southern higher challenge Europe, China. in particularly strong and Gulf East, and Coast Africa reduced from uncertainty of both Eastern and in the and chemical Central volumes APAC Europe, demand

quarter our the year, the strategic roughly second volume with million $XX $X year Global versus the a on were IBC roughly Greif’s from however decisions, by as to America, by continue Greif’s prices double currency volumes due million EMEA prior are North versus versus softness. initiative, prior higher lower selling neutral grew to offset basis prior partially pricing sales and strong the to we APAC. digit advance volume pivot portfolio in across growth entire year plastic sales

lower roughly Greif’s impacted negatively down was partially roughly quarter due year was by million second by offset X% bad EBITDA sourcing $X in to segment be EBITDA also million FX expense. to sales headwinds, ’XX. adjusted a opportunistic this than of prior Adjusted versus favorable million SG&A roughly lower and expect by customer recovered to a off $X bankruptcy we $X.X QX and which debt write less tied year,

five. please I’ll ask slide turn you to to

downtime $XXX Paper’s improved Caraustar February the acquisition completed during results took due by second to sales to we container the subsequent XX we board and roughly financial of market of mentioned softer nearly conditions quarter. business in previously by Industries contribution, the and versus the Paper As Caraustar’s date. year, economic offset results included where million on prior our largely Packaging XX,XXX that partially quarter tons

due year, contribution, quarter but million prior $XX pricing also to Caraustar’s versus due roughly rose adjusted-EBITDA cost by mix. Second largely to improved

we for $XX every ton fiscal in million a year balance EBITDA the ton $XX the Looking OCC $X.X ahead, and to as OCC a of of per change month. movement assume equates roughly prices reminder, in a

team announced of acquisition synergies drive on deal our rate at business. I’d to annual ask EBITDA recall our the within that you million greater XX in be we We months synergies work close. slide uncover We want $XX least expand efficiencies that to December Caraustar’s run great to six. I of and please will announced turn XXth. will in captured to highlight integration doing that is

last at synergies least Over freight rate the synergy be The uncovered next the opportunities we will to and bulk we've months run $XX greater revenue not additional of synergies incremental the anticipated months. expect and diligence. lane several over the relates contemplated XX due than during savings million now initially

adjusted Europe. solid Western X%. in beneficial sales lower roughly quarter quarter labor impact million ongoing year. offset helps lower efficiencies despite the FX to excluding by delivered it by tailwind lower FX, prior second but to generate year improved These sales, Please versus and only with prior market SG&A together the to network. fell profit EBITDA slightly roughly fell seven. by X% lower the turn partially and results versus flexible FPS Segment of year, prior manufacturing than higher of Gross due across a were $X slide softness X%

over Officer, turn now Larry our to Hilsheimer. presentation to Chief the Financial like I'd

Larry Hilsheimer

turn you, Good morning slide everyone; eight. please Thank Pete. to

XX% versus the in softness to Second sales excluding were due year partially business. Packaging prior XX% respectfully foreign the primarily quarter, contribution, legacy profit Paper offset gross our and impact by Caraustar quarter net exchange RIPS of the and than and more higher

than versus his more EBITDA that due and Pete RIPS primarily disturbed quarter the prior business year Second Caraustar’s by in rose XX% Adjusted again offset partially by quarter, the remarks. contributions to headwind

prior roughly operating second by roughly interest year. to Below expense while $XX flat line, profit other the quarter rose expense million was

quarter to share. per tax adjusted-EBITDA per stronger and adjusted second our share A Second, expense $X.XX drove earnings lower Class

the during rate XX.X%. was tax adjusted quarter second Our

the continue are to we will to a in may rates and a tax XX% application that rate required As reminder, FINXX and effective for XXXX. from fluctuations range XX% fiscal time, expect quarterly cause that reporting our between time adjusted

amortization on to initial discussions estimated, our inventory Our words call and too price a guidance that low. previously as quarterly The incremental as to estimates be and higher well proved QX earnings. adjustments earnings: we purchase in were our of additional have impacted costs, value depreciation accounting for than Few determined which charges resulted assets acquired

in a year results. million our now to earnings by anticipated quarter $X one-time Second $X which were QX our is full inventory of incremental and step-up is reflected charge, reduced acquisition million guidance

quarter discussion companies, other one to time first and of some call this not our Similar adjusted unlike earnings. out acquisitive on we have item

amortization The increased intangible incremental the as captured impact discuss also current revised impact depreciation $X.X a We these XXXX of I'll and lives that and the quarter our fixed than fiscal result of of full incremental originally encountered depreciable guidance during in shorter million asset valuation and contemplated. are valuation asset shortly. year, step-ups estimates adjustments year

Second quarter $XX adjusted roughly year free cash prior flow improved quarter. the million by versus

stronger $X flow in improved quarter related prior million Caraustar by in working business. versus and capital driven cash Greif’s is was the higher legacy Second profitability performance our primarily year. free to Improvement CapEx roughly

I’ll nine slide our to guidance and XXXX turn modeling key and fiscal assumptions. review Please

We Class share in adjusted and XXXX. A earnings now per expect to in generate between $X $X.XX

by of incorporates purchase XXXX recently updated accounting synergies discussed the guidance OCC It our fiscal Our just mentioned, that adjustments also price offset and forecasted drag I previously a fiscal associated in board interest May, remainder various a reflects the ton announced decrease the with of lower $XX container Caraustar's expense. for assumption XXXX. updated price

Final improve back RIPS experienced forecasts. current in of container chemical slightly expectations year. in and RIPS the Ag the softness half based guidance the board won't downtime year will economic this incorporates with on and recoup that demand that assume line We our we customers’ we

in improvements in We robust also remaining prior demand less the with than contemplate though PPS year. sequential

also tightened million poor fiscal reduced $XXX of been $XXX which CapEx weather an We’ve of anticipated range as several $XXX million. cash projects. and CapEx free a CapEx and delays between $XXX slightly related includes and of flow result million, million our vendor between guidance our impacting has

of XX: our following opportunities in aggressive Our growth and as Turning our deleveraging appropriate is what our projects plan. maintenance priorities priority, capital to completion organic Investing remains acquisition. priorities through top Caraustar on to businesses that slide find will the us capital existing were updated allow

have We X%. which roughly alter our to existing today dividend no yield compelling plans pays of a

within our Given return times target free the expect recent despite to experienced. to months leverage anticipated XX of cash our softness have ratio X.Xx we to generation, Xx we

to comments his With for Q&A. I'll our Pete the turn call before that, back closing

Peter Watson

to Thank and XX. you, please turn Larry, slide

acquisition the commenced a really busy even Caraustar integration, it’s quarter. new identified the compelling. up, we that on wrapping We synergies make So closed with business more acquisition, second

performance. teams delivering This forward market have our June. at more environment to exciting the responded to future well look in about and solid we is Day really challenging a at plans time are Our sharing Investor the upcoming Greif and a

Day this we Greif. Details participating morning interesting Thanks can your and website; Investor we to be on attend. for encourage found you about in our appreciate

could for questions. open please you if Jack, the lines

Operator

Instructions] of Your line Wells Certainly. [Operator question first Gabe the Hajde with comes Fargo. from

open. is line Your

Gabe Hajde

and gentlemen, thanks for the questions. taking morning, Good

Pete Watson

Hi Gabe.

Gabe Hajde

like. to ask of give how insight and Can synergies. perspective? volume to just Maybe the from Caraustar business sort environment you operational and outside about the was an what I some about looks of discovered performing newly sort wanted as talk the commercial of us

Pete Watson

we with the Caraustar owned very pleased in first are and Gabe, it. months response Yes three we've that the

engagement about As very is going excellent. integration, The the of very, it’s well. teams we’ve talked the

U.S. system our own of an – we what XX the they weaker I’ll our market, tad X.X%. March. If we was quarter you are market excuse the to calendar the than that year of we X.X% overall pretty references at April, look overall partly calendar have we the – is owned we at fiscal Because and end January Partly them through didn’t, representative about entire and talked quarter, look the didn't in a me, just down you first the and from when about February them

but CRB we're rates are pleased with three So very, we of the in the months. we I operating very and and URB see the both pleased say with will what overall strength first not different, much in

Gabe Hajde

seeing some there thanks wanted sort the detail of for me at Pete. little peculiar of volumes European RIPS bit its bit, just Alright, into It looking volumes. a little then I drill over to you And some a planning up strikes just the at contingency us any industrial there? we insight about around look extreme little production folks that there. some there Brexit. a I've give holding Is read onto can data as inventory reports down

Pete Watson

sign so market Europe predominantly EMEA. for and Yeah, I'll The has weak but look first been our at steel, because quarters also customers past Europe, Western export in EMEAs and largest weighted challenge an we’ve one Germany two Europe, steel Central big product talk you noted in Benelux is talked RIPS, and line, typically RIP our and a heavily when read. about as more around about for and the and you've it. lot That's had particularly very was everything weak you've that impact of as is in

included we to season, that and the – really supporting Europe, up [inaudible] especially XX% very Arabia up really, up in demand in markets in and tomato Middle around that and our saw really Saudi joint Eastern strength good I upcoming the and Middle in Europe, The Ag is good they had in we think X%. testament Russia particular this X% around joint where that's are was East improved Southern that Jubail, are the But was venture have we operation we Saudi East is region. a good Arabia

IBC that So was We other IBC had the Europe double bullish really in the part and in of that terms region certainly offer digit critical we're entire to strategy our has of portfolio and existing diverse how offer customers. growth. our again growth and a world customers piece large comment the on positive products of and of of and wider it’s IBCs we our we how our growth global that's range to a in really

Operator

Key Josephson Your next the with of Adam line Banc. from comes question

Your is open. line

Adam Josephson

morning, thanks good my taking and Pete Larry, question. for and

Pete Watson

are Hey you Adam, how doing?

Adam Josephson

you. for for Hey, Hope goes Pete, thanks fine the I’m asking. same

Just to question about Caraustar. Gabe's one follow-up

you said XQ XX in calendar think I and more quarter. fiscal something was that Caraustar’s your in So volume down than

but would rates it So rates. be �� business? would down us with in that pleased with them, in of own operating the with I what so? Were more operating the quarter little think higher the was you rates X% you operating than than volumes a I help in in just were that Can they excess mean XX% are XX% it assume for or sub- much be down I X% which – hard to you

Pete Watson

and CRB URB, I’ll Yes, rates that's the take because so the systems. in and substrate mill operator the about prominent

and there believe seen So quoting XX% ran CRB URB I’m is very statistics, good recent RISI rates, strong. most at and was XX%. that over operating the I've and capacities we about I it's

rates second the as system we’re industry those X% referenced down. strong I that remain Box-Board a So and quarter when was

than So slightly it in calendar was QX worse Adam.

Adam Josephson

beginning, Okay, obviously a to that the downtime, was market was of side, container Thanks time you so did took of it XX,XXX you quarter And two board evenly much latter throughout. When quarters thanks the it then downtime or on why the the the you are the tons economic in Pete. board or in Pete. take why economic And the end just downtime. had last year, take the assuming When anymore not? spread you was downtime in container business?

Pete Watson

ever In this XX most really wasn't out spread heavily to is years end throughout regard economic of the was we've taken. weighted the it beginning. quarter, downtime here the been quarter; So I've toward it the the during and

in our the machine of in and our back our second liner in we And then the in only and took that machine. days our machine, it Riverville was downtime half, convening technology on seven May are our end in our really days was board regard downtime to forecast, in operation upgrade semi projecting XX scheduled we on maintenance the regularly automate

board quarter also economic today have maintenance but our mill scheduled regular forecasted projected fourth downtime downtime or than other there container downtime. is will at another in at We time, that maintenance board no system container

Operator

Panjabi comes with line of Baird. question Your Ghansham from next a

open. is line Your

Ghansham Panjabi

good Hey morning. guys,

Pete Watson

morning Good Ghansham.

Ghansham Panjabi

guess about of first sure back to China ’XX? you reasons buy-in’s both In U.S., volumes of tariffs these now the the two been think due rest off plans, RIPS the of some obviously events have for RIPS, tariffs. I'm possibly not I How dynamics impacted you half the various tariffs recent for customer's extent your I Thanks. they incremental Mexico. but we especially updated should to have year. assumptions in we relative So sort on the are other are your to have words, how for the shaped know with mentioned, across following of sequence how on and

Pete Watson

add and Larry some a Ghansham, it. comments make I'll to few let color

customers, in export So as a a you so the in been market for our of said, Coast over hampered U.S. us. that's drum is steel our U.S. Gulf really production big little that's the XX% and our –

also export And around the the world, and customers to European market steel Benelux is also close for XX% of our a is that large demand.

damage there, impact big well regard. China then So and obviously has in collateral as had that

second our experienced half, in So our around season Ag in the from we from regard the only what is volumes, Europe. QX to change in

very demand little that to by projecting higher expect as a We and X% create be drum bit forward. that to going going is overall steel we’re favorable

and Eastern mentioned, do I and southern Saudi as to Europe Arabia Again well. Europe continue

to forward. be in So did aside from we're going we similar to what markets going Ag are the saying even Europe, basically we or

optimistic of the chemical depends make? customers comments of our I that going half any second lot side Larry, will trade forward. in how think in and are calendar progresses far other like I you you’d a to some the tell on much more

Larry Hilsheimer

only add thing is – Pete this the supplementing would and is Yeah, just what said. I

to markets. just be Saudi in Eastern You are about really Ag what's expecting on second from in going we Europe things really the solid Pete in continue EMEA know and as on mentioned, what also learned we've But in strong half a particular. based

Ag. other Some good are even European of supplemented southern the and markets by

be weakness is our into U.S. offsetting So volumes exclusively really further Coast standard, chemical almost what strong we're customers. Gulf in the second the EMEA expecting which in hearing the we're tied very from the and to around is half,

for then cushion the some that part and guidance the our our in forecast of took our the we what built falls half we range case out of remainder the the we softness the built we additional and in. lower things so chemical when that of second end in built recover for don't year think we year, of in so our company, team range And guidance

well. continued operations leadership with the doing our plant are Latin APAC, have so year-over-year with drop in that the Ningbo improvement we’ve shutdown America are relatively the relates show to to we new And we're there, down there. seeing really they that of pleased we the

So markets up projecting there hearing the year the Ag volumes we're of in in were South good slightly in also half second the as news America.

Ghansham Panjabi

and Okay, a follow specific just know I guess and to again. as up, RIPS once you

as year-over-year of lower, flat RIPS. You year. bridge EBITDA or know to basis, margins with cost, give much. even with in volumes Thanks basis, weak being raw profit operating basically specific on mix? on us material quarter cost sort a being XQ Can color some the that last Was driven freight to you by second just were so the of

Larry Hilsheimer

Yes, driven aggregate on you than Sure. basis there but that taken an moving we’ve it’s on primarily materials. lot other of pricing parts, actions by a know are raw things the

that recall we did some on the in some driving in a price create margin first going squeeze had to transport increases might steep that rolled have on a and success index that was spot manage us did December though against the some call in a helped benefits. little squeeze we on drop have that help bit in that, mentioned cold a steel supplemental You that quarter the I U.S., margin

managing overall an it just on really basis cost on So, the sort squeeze. was hand-to-hand of price combat

the elements our Your it our of steel and of forecasts really other we pricing managing quarter, customers. our relatively was discussions cost just all with going are consistent into the with

Matthew Eichmann

actions of that are that quarter costs of there. Ghansham are variable out take taking right, so some last we and we down some And clearly talked we about the doing

play through that as are So I think of well you some seeing too.

Pete Watson

Matt. Yeah, thanks

Operator

Lynch. Bank from Your George of the Staphos next of comes Merril with line American question

is Your open. line

George Staphos

to and good volumes to RIPS just the back the morning. details. clarification. question Guys wanted just Thanks for everyone, on point I of come Hi

we you be were about be And if what America RIPS it, on. if North take up. be I would I So you back expect in your a said and and down America guidance quick Latin of think a down, follow have you and EMEA APAC to that commenting directionally to I to if be just you to I for know that, up, but expect don’t half, for your had the on view volumes confirmation in what aggregate

Pete Watson

about up, year an on low you X% George, in that the we of high is we to you X% know expect Yeah, the be Plastic half and up expect IBC to to overall volumes unit basis steel be wise. will second single know X.X% double up digits.

George Staphos

fair Larry, And the interesting, can to you synergy, that, Where synergies revenue Caraustar performance most the synergy. incremental on least if I did congratulations from the to if Okay, you correctly back advantage I go heard ethereal you far. that’s that enough. congratulations guess at are difficult though where and on the you so you find on to and of capture, know be the point, finding an tend revenue so revenue confidence

part can this in question, you us what took And then of Caraustar costs were? earnings one-off that comment that the quarter in also your you two if you. could remind Thank

Larry Hilsheimer

Yeah, date. simple, at that the mark-up $X one the address valuation that’s million, because an off that’s let me cost, quickly, inventory

market we we value. as so So it’s assets, inventory bought bought if accreted of the

we sure nice that on part. get come wanted first Pete million lot just of those have you been it things. next and always nice you comment been So But quarter. can in felt it that year like other to will a because we'll and it know run that flips get the criticized to through, was, for back in we criticized that companies exclude have through Maybe then earning. and it’s but adjust would didn't, pop $X A back, the would

Pete Watson

internally. are synergies Yeah, revenue really the

So revenues. get it's we not to expect external that

corrugated internal Paper that it So for Carolina either business it's Rigid Caraustar Packaging can internally to in our Packaging are we things buying that we tons supply. can their North through in or that supply supply Example, trade or or the plant business, corrugated business within buys we Packing Flexible ourselves.

Things like to consumer sheets offset business. in our going trade, group top products

to our tube plants supply adhesive drum We part and there adhesives plants. our business as our and plant that an to of core is have corrugated opportunity fiber

enhanced of experimenting of one drum We is of are business. our with it some Caraustar liner fiber that mills the out supplying, the in

those all So teams internally it's positive make opportunities happen. about the well the confident are to and feel based. working together try We and very very to sure

Larry Hilsheimer

consider that weren't these in that closed, Yeah, holidays remember, things deal are limited we a issues. when we there and the to diligence since when short you are anti-trust any due and yeah might we pretty particularly period, you when period just you had announced from really when

bet have not it's teams to So these that all great entire discovering opportunities of doing we didn't time and the been because the Paper enterprise revenue them, have a really across really our job business. just

Operator

Bergner of G. Your from next Instructions] [Operator line question Justin comes the with Research.

line Your is open.

Justin Bergner

Pete, good my for Good morning taking Larry. morning questions. Thanks

Pete Watson

Hi Justin.

Justin Bergner

I sort sort think have questions. synergies associated them? we a that On clarification revenue couple of so cost prospectively; of should that up of will inter-segment how really those those show sales synergies, about Just are internally sourcing as with is

Larry Hilsheimer

it at These that into now look can companies you selling guess were I things ourselves. selling are other that are to either way us Well, we Justin.

I you it can either at side So of on that guess equation. look

Justin Bergner

and all adjusted restructuring associated of EBITDA, with acquisition incumbent associated legacy then backs costs your on business. the them Paper to Packaging were were or Okay, with Paper associated any helpful with related Packaging those Caraustar charges I guess for and the add or that's

Pete Watson

out of we to transaction. that related were All those the adjusted

in but Now know some existence ties back was the we you or that debt everything bond of the know instrument debt Caraustar debt acquisition. know you related that off, extinguishment our lines, to paid costs to you other

Justin Bergner

mean that both the if high rates operating the on XXs, look they you rates, Caraustar of And in know parts XX% they business. year were were if quarter that with helpful. were a back XX% to, down and X% operating systems Caraustar that's this the for shut the we Okay, does the

Larry Hilsheimer

year rates are the for XXXX correct, operating so operating correct. the from XX% parts to Justin, you XXX% you're rates probably Yeah quoted last of I were and were RISI

Operator

line Davidson. Kurt next Yinger Your of a comes from with question

Your open. line is

Kurt Yinger

and Matt. Larry Pete, morning Good Thanks.

Pete Watson

Hi Kurt.

Kurt Yinger

maybe lot under to but of portfolio Maybe forward, the the a more step due about overall thinking moving you you of how of do approximate plastics a obviously and maybe looking sort steel. lagging are well-advertised versus there's at back towards RIPS, And growth growth. much as it plastic? indexing relates your volumes, taking going there the how is market challenges to better Just think sort

Pete Watson

that, Yeah, portfolio really lot as that's the that its an bit product know And a to a little products good one XX% a you and and customers businesses, cash point important know our steel have a is offering and important be as that’s share RIPS for you slow growth our player a a and major in it’s to of very market more broad total offering a offering of in it generates to we number region. strong us and

that double growth Day, focus we Day pivot on to June. talked we is more but on our to cost customers, we’ll executed IBC about are efficiency plastic in on growth. there our we've do our to very But I talk we system? Investor and well growing How to continue optimize been how drive We've do the that Investor in out the that serve digit about strategies; think drive

XX% in to continue to and capacity important so are industrial it's Right to we in and now on that strategy part global packaging, adding certain portfolio footprint broader of executing roughly we're It's aligned our broaden. products to also improving to. XX% markets We’re very have us a our of plastics. the largest for offer a of some important footprint, technologies customers

that in Our revenue RIPS is business.

a our a drive RIPS to again, more is ultimate have goal So that balanced and higher portfolio. level to

what try the rates in we're is Globally so in digits really greater plastic, that Investor to forward single looking explaining So and exactly June. our are in growth in and digit. and in strategy IBC mid to single plastics that's low detail Day

Larry Hilsheimer

you’ve tariffs, of of the last in or sold. into years plants. Yeah shuddered the revenue. we or I one Maybe the but of million just had with you’ve plus that, majority $XXX because will the rest we’ve XX lot had this supplement shifted walked get that at had the things steel the a I’ll so also, we of years volatility couple vast from. obviously or more $XXX last It of drum and and impacts are away Day, in of the million shuffle into lost The steel Investor that's gotten do and plants of think in had over prices but it operations of other with operations we to it Kurt, that four

walked of from business profitable. also was We away not contractual that lot a

So of that you haven’t know profitable all there's very business,’ grown point we've this a You but valid I replaced that, business. more ‘Gee! think there's – with

we’ll that, we've been So on clean spend more portfolio. to up also time to plastic trying but we've while been shifting the

Kurt Yinger

kind related housekeeping and of helpful $XX thanks. acquisition, the to that into looking to And million the the looking okay just adjusted incorporated Right, costs the in for No, year. you've flow should forward about this XXXX on secondly compared cash color. that's front, how we think the the or guidance cash

Larry Hilsheimer

I'm costs with Kurt, mean associated one-time we had I following not your question. the transaction.

opportunity working that. out focus that's you the know know of of think a business because capital, terms well some amortization you heighten very accounting, although pocket we've cash, on focus non-cash use we from actual to have depreciation in but We increases, really we are legacy of Caraustar that have costs got didn't costs and will and managing capital some big working on on

originally our costs we his than had so than that And annual know job on locking in expected lower be rates you interest then you interest fixed treasury forecast. did expense actually do in team a less we at our of cash and know what great David cost will

that? what is that? How David, difference was much the on

Pete Watson

million. original $XX its model From the

Larry Hilsheimer

annually. million $XX Yeah,

of some as off that we the adjusted goes remember might will process You XX we this that up well. a have that of where cashing bonds bit into double year of little out fall and

Operator

the next Your Jacome the question Dan line from with of Sidoti. comes

Your line is open.

Dan Jacome

good morning. Hi,

Pete Watson

Dan. Hey

Dan Jacome

So RIPS, sorry just on missed it. staying if I

just steel On drum. – on the headwind sort see you some you call worsen problem saw some direction least substitution that shaping and of I’m you moving quarter-to-quarter. – to last at if call it you out I'm talked container Did a a about that, the the or because of bulk assuming to it. saw the this or threat temporarily figure trying quarter? of bulk industry increase

Pete Watson

Yeah, export country I a been by more it's trade bulk Gulf U.S. which product, shipping, we to it’s the ship efficient about impacted cars, in which coast and or in whatever. think and to rail that has move the is market the phenomenally where tankers big in sometimes talked

it's about the same. see same to continue we say the trend. getting Dan, I less it’s worse wouldn't So any or

Dan Jacome

how that same. the given the is that a something this think temporary Could flows big this one continue you trade the or know just substitution do more in change off or is entrance, for this global you Well, like now is? of kind year. sustainable you About think do it

Pete Watson

customers and go depending that would and if but more change, lot tariffs say which ship specialty a its products where what the opens prefer bulk certainly drums are trade cost because in relative alleviates up on in more utilized. to the would size need their fraction markets then and and I’d effective, sector drums customers is small

the big driver U.S. Gulf I U.S. a think the So coast and drum will to the our steel basis the buying in trade big in

Larry Hilsheimer

Dan, Yeah I’ll supplement. just

year a from with about the yes of some trade we’re a we reading second assumptions China companies of ends hearing as reset. views the what agreement the said, which guidance and lot of and being half lot of on our into ties chemical up assumes know You a their

but know question on I we long the this, that us have think a of sort is, is, for range chains that of advantage what supply what places ship to that are sell and end implications they significant as some up other China. broader from the result into and We're restructured maybe growth of out predominately nice know that our was from. operation Asia Saudi you been you built the is buying seeing of means

the volumes that importing decrease and demand I you you that around drop dramatic if in big driver and on of know know China the steal. see So think in we do impact rebound production hopefully into chemicals and turns is auto a country a in the in the has

Operator

Daniel with of Gardener Bearings line Your next [ph]. question comes from the

is line Your open.

Q -Unidentified Analyst

morning. good guys, Hey

Pete Watson

Good morning.

Q -Unidentified Analyst

you successful Just made consisted was looks a one us quarter. just like what detail quick you in very cost of. a cost little variable could you reductions, the in wondering bit reductions more moves of on whether SG&A some I me; for know give that terms it

Larry Hilsheimer

focused been as continued some costs so our we've seen implementation we've of on as out on plants office mean improvements our managing consolidation some economic system. we've the we’ve we’ve you back on rolled quite ERP time and for of know I Yeah, weakness journey and done

and and know as cost take That's of our said, PPS Caraustar provides way streamline further historically. us the the of it higher addition our out is to opportunities business out has piece group SG&A you than been

get a after operations. few office particularly the a won't Caraustar specifically yes, to opportunities as to system get implemented we actions streamlining that levels took model business, we continue we there. to is back consolidating ERP question, your business, there's believe we and to more the we in But do be but streamline able Now to in different and were that that specific on

Q -Unidentified Analyst

Okay, from that That’s me. helpful. was quite all

Operator

next line question Josephson comes Key Your Banc. Adam of the with from

open. Your line is

Adam Josephson

for questions. thanks Matt, Larry and again my taking Hey,

OCC your on assumption, one Larry. Just

So your months. of for for assuming the six XX year, the the say remainder last

would know – was obviously it May. what You in you

again June, quite would you've as average built XX if still but as the price don’t the look a at in as I OCC so national to If price to it of I seem is. far now, down compares how bit is cushion average, your national

OCC that are did for the it expecting to the if know the what go or and you year you And to me down of just would yesterday, what be if not, hoping XX up number don't balance you with I you're help so for then that. you actually compared mark-to-market OCC then the for by was went assuming. in what May it could

Larry Hilsheimer

Yes, thanks question it. so good Adam, for

down So to about guidance the In XX first XX. talked for quarter portfolio quarter. year. just some on were the our the to second rest May experienced We color, XX the across assuming give we average in we of in

plant – national of stuff. average our get kind commissions to and all you paid all and that does that it premiums know include the You little your to

helpful. based for if that $X.XXX you $X.XX of not ours know, another $X.XX the So That’s that’s that into year. Hopefully $X to of out, -- sort on range, incorporate would yesterday's we is you guidance our so – built range. be our not XX rest that did the play decrease into

Adam Josephson

of what us other Perfect! then at it couple you at expected pro a to the quarter can give you Larry; year ones and leverage forma Just end, by that down be end?

Larry Hilsheimer

Yeah, is? quarter. – the it's didn't – look it Dave, was you know end forma XXX pro of the at what I

Pete Watson

drive it – ball to to X.X. the hoping on We expect

Larry Hilsheimer

Xx X.Xx said are hard confident months. XX confident. how emphasize I we below like and we Very extremely extremely the – are we X.X our Adam, within to to in be will that Yeah,

Adam Josephson

guidance you And the earnings by the down I Larry interest bridge, just came the basically raised same. expense on so by bridge, $X.XX, know

help So of within stuff. positive, a accounting $X.XX prices, were Can was lower that's the other you positives; changes, operationally lower board was guidance just $X.XX operational acquisition called a us was but with OCC containerboard etcetera. that how obviously that that $X.XX synergies much by volume, that Caraustar change, didn't $X.XX each offset of container

Larry Hilsheimer

bridge and if $X you worst $X.XX our at off rolled page, out through put go to your on QX the walk expenses end, on just the me know with case, both volumes Let low take to of $X.XX RIPS on that for top case $X.XX you so we the and and is $X.XX the interest best on at you ends.

have And the that's we maybe that's the across you to top it because a $X.XX our conservatism in for so already synergy high I $X.XX know sense, just PPS, end I and board. you on on the to end. put done captor, know put you know the PPS, deal downtime economic $X.XX. on – on the the the on it, that range a a on it occurred, myself low we $X.XX $X.XX little on

we the across then and your reflect OCC about just that's the entire million. know businesses price on to the year. PPS, million, you a that that’s for then volume impacts the X so about the And we in some so our $X.XX million $XX $XX of we – in from have we put portfolio $X.XX But took and the reflected $XX $X.XX, about declines, just what seeing then or shy we've been

because $X.XX end, the increase, the that you $X.XX So and we the a was the $X.XX again QX decrease, high a then on up a end at increase, QX. estimated to on know from was up inventory low step $X.XX

all So with to to put $X that all you through things can all you in you any those detail, takes together more if it, and later you but the you together. if Matt it $X.XX but you of missed those put now walk

Operator

Your of from of Lynch. question George Bank Merril a next comes line with Staphos American

Your open. line is

George Staphos

Thanks quarters know this last now. are very we'll Day. you much I for the about the we’ve in I guys. Relative taking four I question first the you picture and Paper six to what Business the you know know the seen bigger and guess know then follow-on to and a at had across hear lot across these Investor industrial,

more businesses doing managing the Larry say and prior Are have you of acutely case and are focus those ’XX. or end particularly or that currently? business would more with early have Pete, or you're the how been than there ‘XX case perhaps the differently you been know anything would two across

Larry Hilsheimer

the managing say any I business we're differently. so wouldn’t Yes,

the and managing add and their have the because that there is in in the scheduling the complexities business, between Caraustar acquisition paper involves to of mills. legacy mills the planning integration correlation You

other than the normally I the do. we're integration, we So managing think business as

focus lead and pricing system Greif excellence, commercial metric the discipline. heavily management, driven business performance in very business, fundamentals drive very and ‘s excellence in how very on We operational strong

We at to our look how portfolio continue network. efficiency more we at our can to opportunities in and create look

Packaging a differences. Caraustar lot business, creating So other than in of our not there's opportunities Paper

rapidly. opportunities, that's otherwise. issue to how impact real we Paper will our portfolio happy have to that could debt we plastic opportunities more in drive Packaging strategy only trying so say on mills. with continue with down done to and But we we is what I we some are to any has Caraustar don't our It long with move RIPS bigger would initiatives how our The system integration we term is create did opportunities our pay focus do think may miss our diversify and

Larry Hilsheimer

can. top focus heightened about to we've to really on cost, in going the be economy, eight something is I GBS on we so our you our our Yeah, as been industrial manufacturing George I system six well supplement there's months and finance that costs the managing our we with and obviously business of cost. a talking to leaders managing need as only past know through on thing for the costs would our mean SG&A our

George Staphos

across doing that's to tighter – tighter imagine where terms just business. the and for because volume was even you working going Yeah, even question. know be be the be costs, not outlook, even seems in happening will I you'd capital, I with a very you'd on would of what's something obviously, you on uneven undersea been, rest the but tighter

anything take else have I it. you If to would add there

million on And roughly between I you the plant and you that keep divestitures long said it's to model RIPS of and/or I if most term of Larry profitability. the then think $XXX relatedly, been shutdowns revenue, back able you, you've look know been but

change else Thanks off, and reporting in the back between million and to $XXX the couple weeks. IBC? mix luck fairly you in been when if the why what When XXXX, improves XXXX going there's of in your current to and the of forward of and helpful? EBITDA you dollars profit that a the in guys roughly see have you How bottoms evolving plant quarter RIPS business? in know shift much just out rate. much divestiture at XXXX, is here I losing any of are effect good look the drop it and Are shut steel program? we’ll sizeable from the in is you you and that here going that be hopefully would Anything How

Pete Watson

haven't lot XXX to I'll XXX back to or time I fix we've say I it's looked you, looking in XXX you I got thing what more tell done profit operating in numbers mean ’XX. the the is and announced to this higher. the be we’ve to back. the XXXX just to to XXXX since our last you since and will trying in know from is gone spend relate to back you that transformation George I been to and quoted here we and Yeah, you frank, whatever To I years year, know go four and going XXX be a know

out So on as done I'll profit, to answer good us, related about what we that since some to make shattered that. reminders I the stuff starting comment and serve trying you but we’ll to I'll transformation feel point darn to going our that then. are get back didn't been Day, what My and try get question lot figure to Investor go Matt done. was answers to get of we've pretty We've we've into go a

confidence you're I my told is You your your buffalo our question, I we've is ever, to yet add-on ain't report the to know ‘you meeting to numbers indexes GDP ready looking clear.’ Springfield there's teams unemployment encouraging hey, relative all down and prior at our absolutely is up what so we said, got production where board it levers the something have know I sinking, industrial song said, consumer mean we is week know to this pull. I and it rates exactly quoted PMI our good, – lowest right. are You for what know and I you happening you old wrote know, board are here,

be that and that places markets make legs just organization that smart a well? got the right of cut it in decisions doing business in the in to segments certain the out I But they're way to out the trying recession. and then not geographies we already so across of our try others, park mean a we're to and meat the cleaver you're its a is of we the like nimble react in some in knocking play are and that would

the should, the where to. can we weaknesses the have So opportunities we're trying advantage fundamentals think the through and manage to take way you that we just and we managed ofX

Operator

with from question comes line a of Justin next Research. Your Bergner G.

Your line open. is

Justin Bergner

for Thanks ups. follow the

somewhat out the First box. is question of

You the any de-risk buy so way know your participant, you to down acquisition. party allow know OCC, could sensitivity find these on is debt there counter given business you be a Caraustar OCC the and dramatic to basis, as the to to decline OCC prices that in market from of pay forward you a

Pete Watson

we the you interesting part as also. that an of Justin mean the although bought I business systems. it’s we thought, know are Yeah, Caraustar remember OCC in

where right you that through scenario. landfills, So got now are mean which can pricing greatest is is know manage situation stuff of on I having you've low into the bunch you a not OCC a the so that. we dumped

a So storage, advantage for all, about futures big bulk, Thanks but don't you we don't probably more. see it isn't eat it, yeah store interesting, it's – it. so away think first market be of stuff in thought. There this – your really is so for the you’d you're we’ll

Justin Bergner

to Okay, up great. then was was second to $X.XX, capture prior of the fast. guide And follow regards just in Caraustar the extent. to things bridge; not $X.XX that The in two any at synergy came bit a the me

Pete Watson

anything put we the into hadn't that bridge, wasn’t, probably on it No, part. our miss just

Justin Bergner

mentioned bridge? Okay, the part the was was statement, your $X.XX PPS end that declines downtime tail a volume for and bridge of you the or of that of at different economic the then

Larry Hilsheimer

the you you my in when months, XX we in we recapturing Let know add because prior million didn’t me the didn't We we talked third. recall on in. deal put in, $XX might any announced second months, XX million supplement synergies in the million comment first why the about $XX $XX

thing, fast quickly, some it know things, management of of uncertain have synergies of would on we get the knew just dis-synergy those could any and for While kind roles, people that changes are very we comp things we many be was internally know you would we that some who various how also there offsets executive departures taking in.

going they obviously a lot gained our As pleased. about got more very confidence teams we're aggressively year this and deliver we've can what

about it, a my was do not it decision a statement very conscious team So not to so be my insulted. would appropriate; was miss

of XX,XXX share economic PPS volume add. the what impact tons of at $X.XX that XXX a The done X% our is deal our our you and that was obviously the second. choice the that and for across Justin, – Caraustar about piece Caraustar we talked time in lines know, second had per for the our that occurred was from the is on the value we I system that system, new ton in downtime owned impact you So like along core know

the had and year to into we built across expect what for million of projecting sort the of the be the estimate of rest relative get board quarter. end box network rest guidance out our $XX that the to choice year what down first core at for we our the the Just and of we to

Operator

line comes Sidoti. Jacome Dan next with of Your a from question

Your line open. is

Dan Jacome

of quick the of products. when a Thanks the growth talked or trends I'm down for I further the portfolio. the drill December, some into for one in trajectories to know follow-up; about some volume you little you on a Caraustar. assumed the just trying transaction announce

you much growth Thanks. and liberty any for think for folding to assume I at are you but know what are it you core, if give color, tube then if more protected us didn’t some perhaps carton. and assuming packaging

Pete Watson

So talking downstream Caraustar? in about you're operations converting

Dan Jacome

Yes, yes.

Pete Watson

well. a get And In cores QX Group packaging. projecting CRB some we so folding in businesses, as protective fiscal similar and two the Industrial tubes predominantly at and similar that really is saw Packaging rate and calendar carton and business our we are QX is you which forecast

for site QX talked mill are rates on so same forecasting similar the is we path, about So and the we really as QX.

Larry Hilsheimer

a in box the assumption. recall might quarter, down production was X% we that’s rate know overall business you second you Dan our said for and Yes, so board

Dan Jacome

similar… the What packing carton down folding They was the and quarter. are protected in like

Pete Watson

get Yeah, into all that. we don’t

Dan Jacome

you growth any us a blended you was giving Was all? Where rate. are in at rate. there giving blended the Yeah, Yeah, it? are a us portfolio

Pete Watson

not line. go competitive product we're for to the Dan reasons going Just down into

Operator

final We for question. one have time

Your Banc. of Key final line question Adam with from Josephson a comes

open. line is Your

Adam Josephson

my thanks Pete, for so follow-up. much taking

Just last one Caraustar.

Caraustar volume quarter. in wise X% So the down was about

any the X%. than just Would core it's or benefits also say guess and is I understand you was the of economically with and economically diversification if along sensitive. more volume container help sensitive Caraustar drums. less less steel again not, board any Your portfolio owning Caraustar down legacy me

Pete Watson

business largest just talk about tubes because let’s it’s downstream. the core Yes, and the

customer lines in mills very down, segmentation very hurt core publications. that supply and products business construction. it obviously certainly it particularly a core paper they that tube have one paper segments is and you've are mill know your Two of why a as the two is reasons diverse or segmentation Those the cores the discussed diverse. it talked about and we are industries we So

with products construction at downstream industry you we uncoated I U.S. They has and substrates. markets niche rationale been The the which look really has add business choice two why that when products you that are recycled very and that it's different we wet little have to parallel just board the is lower. reasons we our slowed. are key system board Caraustar Those box strong and integrated container But in then got weather think value model. core and coated an dynamics feel in integrated can different of

Larry Hilsheimer

skews do have, said of you diversified Matt, Caraustar so remember it spread in very, XX,XXX we supplementing I know many broad. more portfolio. different its mean our had in you consumer, that, markets; Adam that serves markets And end I different and how many plethora mean whole across is way the end – that, how general industrial, a that did its skews than very

Adam Josephson

appreciate I it. Thanks Larry.

Operator

period. back Q&A the now for remarks. concludes to it This Matt would I to closing like turn over Eichmann

Matt Eichmann

later have weekend We and a forward and thanks for can be the website lot at Jack. Day June. Greif.com. Details in look Investor a seeing time great Thanks at event on found our appreciate ahead! everybody's today everybody Well, to www.

Operator

call. thank concludes second your for This XXXX We quarter Greif’s you conference the earnings participation.

You may now disconnect.

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