GEF - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Greif Second Quarter 2020 Earnings Conference Call. At this time, all participants are a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today Matt Eichmann. Thank you. sir. ahead, go Please

Matt Eichmann

[ph] fiscal morning XXXX Tucan Greif’s Welcome second quarter earnings and you, everyone. good to Thank conference call.

individual today and encourage Chief In accordance call Chief you at the Larry to prohibited basis. issues the are the you slide Regulation limit today’s before you consider from Greif’s questions are discussing Watson, On call. regarding of we President will Executive with follow-up take Officer; Officer. significant Fair questions two. Larry one ask on Financial queue. to Greif’s because an Please with end yourself Hilsheimer, Pete and one Pete to and question information Disclosure, we non-public material Please and turn to returning

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

financial be I Pete in directly three. can GAAP referencing metrics certain we’ll on today’s Additionally, And and of non-GAAP most the over reconciliation to comparable the presentation appendix presentation. found to be slide measures the turn now,

Pete Watson

by pandemic proud continue performance communicating. global And to that we perseverance latest during our of and new we've crisis. you really we've to their and best evolving COVID-XX everyone. the to and thank us responders express admiration to really and for remains healthcare and and the Matt inspired been ways brave our crisis. good recognize workers We you thanks have who families their like first to by enduring also at in colleagues On situation impacted COVID-XX as morning, and I'd pandemic of the thoughts behalf appreciate spirit of the and XX,XXX the today. monitor you of global of team and updates. I'd and Hey, all health been our an Greif Greif, offer joining wishes the working and delivered our for the like efforts I'm adapting frontlines

of and Our ensure pandemic continuity customers. colleagues serve our our of multiple are weekly valued the taskforce regional to and meeting times the our to chain global health we safeguard supply

to Our protect goods the Greif our facilities as than communities the package safely all world. Greif has purpose as materials at given And an around that of production needs been we more position, of is all critical business greater essential our to continue identified XX countries. in serve operate and

and components. all supported alternate global is Our is fulfilling our and uniquely chain extensive portfolio customer worldwide, critical and products with capable for place in well supply of needs sourcing backups

could you of to for four turn overview slide If please an the quarter.

We continue strong really make priorities. of progress all strategic to across our

cash quarter improved both adjusted EBITDA prior especially segment. free year performance in Packaging and quarter, second our Our global flow, with Industrial Rigid adjusted versus strong

Gallup in third completed addition annual performance, improve our the In companies. financial we percentile engagement to scoring of XXth all manufacturing survey colleague

We service fourth score. satisfaction performance. between improve also record our customer to engaged quarter excellence and index linkage financial customer there's believe We colleagues best a ever trailing firmly

a build to our and business published progress our overall circular reflects more environmental the We annual also which chain our XXth of we've report, made reduce part supply as sustainability footprint strategy.

several completed our we Lastly, optimization to strategy. moves aligned portfolio advancing

and the future. which in a in IBC ownership an an capability Container, stake full First, we to is North in we path minority acquired reconditioning expanding optional America, Centurion have

to Group Second, optimize Graphic and our adjustments, to industrial million we for closing on our of enabling debt. us completed sale Packaging capital customer paydown to subject Packaging the $XX franchise, expenditures refocus the Consumer

our the closure yesterday Alabama as initiatives. Mobile, of mill Uncoated announced Recycled cost part of optimization Board we our network Third, ongoing

performance to Coast other our of the examine States five. by portfolio could in like please business. one if slide operations, West Brazil segment, We and to review the in and ongoing that also performance business our turn as I'd consolidate two Rigid United Industrial you the Packaging and we now

demand Industrial delivered generated and XX% investments higher America X.X% IBC with solid grew of year in global the quarter, in XX to quarter. Russia. versus basis IBC quarter record in flat in the versus by strong due drum is points. year. steel volumes largest first business increased the Texas, region, APAC roughly two new to Steel production partly an recondition roughly Tholu, stocking plants, customer growth. Our points prior EMEA, quarter. North volumes and which Packaging thanks the new which our new We other by Europe in XX second volumes and the drum IBC in primarily customer IBC a steel Global our increased Houston, Rigid prior by Steel our is basis prior half declined fueled by year one drum Kaluga, And drum versus

better sales sourcing mix, segment contractual by certain prior the Latin prior costs offset the volumes impact weak the offset expenses, RIPS including due as rose lower on fell a quarter favorable to high benefits versus quarter million $X as well a volumes While corresponding of raw currency partially material EBITDA million due partially SG&A and pricing loss margin due in $X for America lubricants, nearly declines by roughly by quarter adjustments, strategic to RIPS which year lower down year of was price neutral second lower volume customer. XX% versus were adjusted roughly opportunistic to demand the roughly low all in product million pricing basis sales. quarter in regions. $XX Second actions of raw and material

to customer slide six. by EBITDA was previously comparative you our impacted XXXX disclosed. $X.X I'd RIPS turn to in For now that purpose of debt second have like was quarter million write-off bankruptcy bad adjusted negatively

want spend seeing Given we find time moment what to we ourselves I in, discuss to extraordinary in the a currently the market. are

demand strengths in additional lubricants for Greif and and experienced segment. overly and of our pharmaceuticals, customer Broadly on the and buying sanitizers economic quarter is partly not the softness coatings market our slowed. One to anyone paints business as or is broad during pandemic activity end disinfectants, exposure dependent the we anyone speaking, due

If currently reopened, will remain we strong end that markets anticipate you ahead, seven. those as Looking turn of way. I'd slide several to improving ask to these and economies

& products the roughly basis. second year on quarter prior currency flexible X% quarter Services sales neutral versus Our a segment fell

corresponding adjustments declines, raw Soft main were price demand, contractual drivers. the and pricing material

fiscal Our EBITDA by second lost to Those third estimate quarter ask quarter. in at sales, FPS capacity adjusted and expense. slowly turn you EBITDA anticipate capacity fell government to lower We due our I'd being by million segment roughly prior mandated QX $X reductions aimed are slide year we lifted offset at full operated -- the SG&A preventing to $XXX,XXX fiscal the due please in of Turkey region. that is roughly that adjusted in COVID-XX during to restrictions in spread partially versus eight. which operating lower

Volumes prior estimate second containerboard Our QX to only of million by expense $X sales X% an year prices. and and lower SG&A Caraustar second non-essential due for quarter. recycle fell adjusted during taken offset that more by lower contribution impacted EBITDA lower tons incremental adjusted by year. assets segment days the partially the versus We primarily EBITDA also the quarter Packaging Paper this downtime by headwind sales experienced roughly sell $XX from XX EBITDA PPS customer adjusted by were roughly as closures. in quarter quarter, economic Packaging XX,XXX of published Paper versus negatively year million prior were second the containerboard roughly

Packaging comparison the $X in that For was million previously XXXX, Paper sake, impacted inventory negatively charge second disclosed. by EBITDA quarter adjusted step-up a was

paper board of implement. coated all continuing efficiency. During of recycled includes and accomplished announced of through of increase to that we was number price Packaging committed We cost like Alabama a tons, to markets. thank supporting mill this activities, effective to colleagues with what of The closure seeing a total XX our review capacity we were May transition. Yesterday we're as to URB for a little this our our you the nine. Similar announced shutdown in on more Packaging hard in one provide was their for want of ongoing bit the and XXXX. uncoated work, grades slide our XXXX, I we're XXX,XXX deployment mill quarter, mills $XX Paper and all to optimization end further I of turn October then ton the in capital commentary shipments beginning Mobile enhance a our our which which of to Mobile, part Rigid them network ask in machine

box Our plants. a CorrChoice corrugated that sheet corrugated east six independent state-of-the-art facilities feeder of network river of consists integrated mix and of Mississippi the service

the our negatively business mix quarter Rigid goods We sales that results. our markets result crisis as Core XX in Similar Tube us to non-essential own end of the were business, QX, and customers softer demand, customers XX% slowing health as customer to networks. to independent of lower and diverse in our the automobile volumes on Industrial Core all of which a Tube our manufacturing previously some impacted they the labeled a top Sales markets. and the were during Packaging businesses estimate activity economic by to serves of integrated closures. internalized outsourced their durable dragged as roughly were During

I'd over Financial was carpet presentation XX. particularly improve now Larry volume and the segments, impacted the protective for yarn expect we year. moderately cloth, the growth prior are by Chief board demand the core Officer, slide over remainder solid We demand and our Hilsheimer products and film year to turn on to and weak construction to versus of like

Larry Hilsheimer

colleagues Thank during all and XX Greif of thanks solid want our impacted very you, Pete. Overall, very Pete's really dedication performance. Good these and quarterly generated for to challenging by financial comments professionalism reiterate results. of to express times. our everyone. their Slide my those I highlights to COVID-XX each morning,

roughly net Second exchange foreign the excluding impact year-over-year. quarter X% of fell sales

strongly but billion rose and That all to in by segments $X However, RIPS, modest rose and the line, improvement decreased was reductions corporate a operating by compared A $X adjusted XX%. results in recorded per expense year the company prior interest driven to million center quarter year. versus to SG&A EBITDA profit expense. Currency largely $X.XX our the share total earnings prior roughly headwind Below share. line bottom per adjusted Class XX% roughly was

the That tax has we we allocate a recorded of XX% the was our $XX were divestiture, to required that transaction. benefit, portion more During roughly goodwill to of associated loss the $XX million why is million CPG no million rate segment's GAAP than PPS during tax the related the $XX charge non-cash which quarter. to to relates a quarter, that

rate non-GAAP rate that and and second was XXXX. fiscal we XX% tax to continue XX.X% quarter expect to range between Our for XX%

roughly second cash XX. slide to million EBIDTA adjusted the source Finally, year improved and quarter to flow due Please of $XX to versus turn quarter a increased $XX million by CapEx. free prior lower

cash free flow we continued Class as projected very adjusted the by estimate are A uncertainty performance it XXXX caused is earnings guidance fiscal to business adjusted Given near-term our with share per difficult precision. COVID-XX, withdrawing and

are We assumptions. providing the fiscal XXXX key

on XX You modeling. assist see listed to slide with

saw down sheets terms and were improved while volumes per Tubes PPS, May In softer single day bit versus in digits as a our in CorrChoice roughly what May per Core on customers a volumes down up were volumes and Demand a steel slightly Tube XX% than on and versus were Cores while RIPS, April XXXX, In corrugated were X% we May, of per over that. in year. of between business destocks this basis and XXXX day May day. basis IBCs for

quarter we're that this volume our before fiscal as later our positive businesses So, a quarter will be see currently reopened. believe year. we're demand overall hopeful third We weakest trend beginning to

by be working the an and open to cost back have to ultimate for reduction prepare XX. think variable to control our companies Please positions steps customers. second capital will reductions be office how spending our or this out talk our I most pandemic differ weakest. about and last impact said, actions, in turn downturn this capital being global a long at many requirements. from That quarter delays quarter it's plans identifying what will We as obviously or weakest, taken portfolio their we that determining third will hiring slide quarters potential our optimizing their point economic determine can't to important point

also a million over benefit remainder weather replacing optimized was assets, business million closing low EBITDA business our In degenerate penetrated activities, in such slowdown million over newer We've is today over less actions like fiscal of prolonged of fact, we've believe roughly growth already downturn. to of of than business, $XX decision-making, XXXX. economic XX. our which during EBITDA the significantly higher and slide implemented critical is to markets, cyclical better We've XXXX. agriculture. or of the since IBC turn Please margin XXXX. a food, underperforming We $XXX from while in better ERP of new $XXX as away by and it and and implemented via XX% securing walking pharma higher organic business resulting the to a We've majority non-core margin portfolio XX single platform expanded fiscal packaging growth substrates faster divesting over or across margin positioned and enabling and our into

solid million on and sheet profile. is undrawn of of liquidity access structured a $XXX debt balance with equivalents. Our million well revolver to maturity and have our cash We another currently liquidity and $XX available substantial

only near-term principal leverage below at senior debt quarter-end, X.XX. maturity At our our notes of Our stated XXXX euro. compliance covenant through ratio a XXX midway our million X.X, due stood with well

million and of non-critical roughly including CapEx various $XX be market capital or and growth the current now Roughly investments. further CapEx million our expenses, in Given of is $XXX forecasted reduced XXXX, fiscal reducing CPG. sale million earmarked for are spending of uncertainty to postponing We anticipate prudent, could projects $XXX on between XX% if needed. the remaining CapEx to relates be we reduction

contributions pension the our which to currently Lastly, years, next from continue four largest three contributions. resides no standpoint although required is for intend fully making the an we funded U.S. in ERISA with to program

to sheet, CapEx, maintaining and dividends predictable While turn sheet are containerboard slide priorities -- allocation, balance We've to our and of needs options will that in IBCs. needed. quarters our financial and believe are balance steady is delevering of creation. organic critical our as to firm. the is our integration, capital is priorities position this growth Please -- allocation pursuing IBC numbers continue our reconditioning strong, point we and strategic to consistent They funding our slide evaluate liquidity and we reinforce a for point number used capital and XX. value

going I'll Pete So is closing you're to the to what call before for that, turn what his our you Q&A. comments With here get. back see

Pete Watson

closing, could turn to global and our I slide XX,XXX thank to thank please of In XX. Hey, to commitment their you, Larry. our Greif for again if And all everyone customers. want colleagues to

these a lot extremely to will ahead and While more That in their is ability communities be navigate us, uncertain Greif's confident said, as uncertainty reopened times. economies. behind there I'm countries

our on service leading We have our to to customer a highly variety product portfolio well-positioned service We're differentiated engaged focusing serve and motivated to end our team industry a providing through of customers. and commitment markets excellence.

priorities you is forward and strategic Thank questions. morning, for we Greif. our and participating advancing successfully interest sheet appreciate are in this we We our your your balance strong. And look to taking

Operator

Staphos first [Operator George Instructions] question America. of of Your line comes Bank the from of

is line Your open.

George Staphos

guys. Hi, morning. you. Thank Good

Pete Watson

Good morning, George.

George Staphos

of just second taking Thank May, SG&A May about on can seeing Pete, to? questions, be congratulations trend was little COVID and and you for better in you the on might was trend a terms bit parenthetical I here. question, the referring for sure kind The April my that about between reduction. you're what and My of comment and doing two There wasn't talk getting cost on all questions. the trends. you first quarter. geographic a volume Thanks

a great there. did job You

generally? down Thank How of do much costs I think Was year-on-year million. there the And one-off course additional can over number reduction you about do the you. maybe these roughly that is any of think of talked dissipates was sustainable that going the of that $XX efforts, year? some from kind what you you forward?

Pete Watson

April on Yeah. and talk then SG&A. ask about of trends to the May George, question, Larry some I'll volume let me the your from for comment

to the you look overall, health months So, think global the look at over first I last have volumes when you crisis. four in

battle-tested demonstrating. really done and resilient we've chain. excellent job really a I supply in We've think, a

had customer we done supply security design all, challenging and at very can we've an intimacy. value been sourcing materials and disruptions And at no footprint both times our we've are and and in our talked And stable. have job we've diversified as excellent regional of think demonstrating we've that very I operational dependable. reliable about customers is our talked And by So, very about. our propositions, deliver is always

on you So, year talk days. there's per two less because volumes look April to was But been May compared May day ago, I'll about challenges. some to if it from a transition, a our at basis,

are global large the with to volume COVID-XX steel cases. and In So, in X%. just around they're is to basis evolution to that Rigid slightly RIPS walk on is if in business, through really on the I And day, our April about could economies drum world me globally that transitions recovering are then our because steel aligned drums, volumes from let per different business how -- down about consistent paper talk May. large geographies a the

to was China, volume X% a drum in day compared three X% April. at and day APAC in significant on PMI And months. for example, double-digits. EMEA, basis or last America compared volume steel look steel is EMEA's So, per if change was April large drums two a the was which the the you XX%, down basis in up large down on on May, above North And to in a per were

that's reopened versus with this And breakneck as across again, crisis. prior two stronger QX, high XX% that In IBC transgressing as up Now but we we're it's less reconditioning, year. economies reflective a still that's pace It's and had basis. and in as are days. the not businesses really health much

transition May So, IBC in growth around in steel world, April talking our May. to we while that's see we And again, are a to and challenged IBC April reconditioning. drums still positive the about

see comments our outlook more for in range through As double-digit XX%-plus third growth we're our in volumes In quarter, is quarter. earlier which prepared we have in in to in we think third July. May steel our still I about remarks, challenge that talked going expect IBCs, of to

those Packaging, Paper slightly at trends are look you different. If

Packaging, a had in converting. little we Paper volumes more So, particularly challenging

very improving mill our May in X% very -- versus expect May a Sweetwater, our are or up X% into Iowa in June, be compared at April June in URB we steady on early be mill Tame, Georgia May per per up backlog. is volume and look a in of per our it's particular to weeks day in our system, to you steady basis. to system day four May on volumes on our If basis backlogs to April, and continues volumes day CRB backlogs facilities. five And a with basis. the compared

take Coast really to disclosure, full did That's reflection, the in an market did containerboard For only. a market. downtime a not demand West we take on we in economic tons orders X,XXX ag delay of just that

If strong starting you up volumes is X%. CorrChoice. at our businesses, versus hours. volume to think durable system, And needs. such really reopen reflective less basis as converting of on and really in tied supply plants And And this again, as the in to eight at April of our, I in paper containerboard April of May we up last into in CorrChoice, visibility look what day you our backlogs days a than May chain the per has that's and operations which we're saw that a is know, automotive manufacturing the XX fill their business May

improved Tube businesses exposure basis. May third without can open day that some crisis overall, as in we're we cautiously And on but think Cores, again, a into past expect we business. to health tomorrow, April quarter In have our from visibility improvement May in that have and May on business a our that gradual our much That Again, the versus of to April. to per paper I day optimistic. again, Paper per positive gradually So, our And more we signs non-essential flat basis that tremendous sequentially volumes were our out Packaging, to volumes high see end the starting the through are don't in through recovers, and QX, in May July. continue business disruption. are June improvement from there's we

So, Larry SG&A. comment to I'll ask pause and on then

Larry Hilsheimer

fees $XX.X break million. the be $X.X. down our when year-over-year, up and about the other the about Depreciation were million kind travel down $X.X entertainment. with $X.X down salary Pete. it board, Great. of you depreciation LN bad of really SG&A, local to benefit things second you system Professional miscellaneous And Thank you, those reductions and we're IT actually debt, $X.X about quarter George, and million had in about taxes, caused of across things, respect

focused time, look So, about overall it, below you get you at down for our XXXX. is XX% sustainable, reducing know, some SG&A on by committing million. $%XX When been costs as that to we've

levels We, So of obviously, to in some adjust just a the the are incentives of second did actions, quarter, mentioned reductions reduce part the in I put that costs. effort. of have up if do to bit. We I continue a substantially the chase, as lot number year. which will our we cut to pumped at lower run SG&A that -- But last expect the than

George Staphos

much. very you Thank

Pete Watson

George. Thanks,

Operator

of Your next line Adam the comes from of KeyBanc. Josephson

Your line is open.

Adam Josephson

good morning. hope well. your and Larry, you and are families Pete I

Pete Watson

Yeah. Thanks, Adam.

Adam Josephson

with Obviously, questions, had you one quarter. margins. two I rigid if on, My start Peter, may phenomenal margin a

You reductions. have many the Obviously, mentioned SG&A things. you

talked also about sourcing. opportunistic You

quarter? normalizing margins timing rigid terms thereafter. that You your And what talk And in benefit. of exactly margin are opportunistic segment of much expectations How that falling and drove et up, you had in exactly raws cetera? timing much how were not the then was? what What a catching benefits Can prices sourcing? in just about was that

Pete Watson

into to But months -- we and cost global a ago business, from continue leading nine comments continued expect a can structure, Yeah. more and margin longer really our were we lower impacts RIPS footprint, a of trans a to push term Larry into pleased of those I products. higher he's categories, that, efficient and get organization Rosgaard a Ole And few each manufacturing growing and a benefits also you transformation we leads to really a organizational get when Adam. will consolidate performance. specific with make that at the the financial that yeah, look

and two sourcing, as growth the We talked results. that So, the details higher raw really materials raw about improvement advantageous IBC we had product had lower in had in and bridge Brazil let mix, a really one and Larry meaning Larry and walk and about, talked cost reconditioning aggressive each talked about lot favorable in organizational did activities. we one price meant products. about discretionary consolidate SG&A of and those -- reduction and through reductions. spending material costs, categories. really We of U.S. margin the The -- we cost what I'll good plants, we those And trend had in feel We business. a we reductions, the we dollars

Larry Hilsheimer

Thanks, Pete.

percentage, So, Adam, XX% from on value in a went add we to RIPS. XX.X%

prices, there About So, work X% opportunities to those that sourcing what was see some a to in, of you really need going nice dislocated like buy not index a the be able opportunities find improvement. opportunities if the you have sourcing is to them often. and most we're currently at surface would for companies market market you're and in if more group can

job And material a of prices. of about sourcing our so, team relative $X great to did raw million costs benefits index

non-raw timing was around materials. really for that's pricing or ongoing this last the sourcing about just been was X.X% about activities was timing, over actually part that X%. to that on in two. us. how lost benefit, a talked that drag so the that recent us translates -- offset our the about about a It timing for then year We've how And terms then been We bit X%. managing currencies talking got the also was dollars. of in PAM adjustments quarter, other being of U.S. The in a Some good of of by around for we turned but benefit years

are flow to down look that of adjusted EBITDA to in SG&A. quarter. pickup you others overall started go through And If the the our some those, through and I in

change was a are a allocations, business our Some things offsetting actually few that and of as ERP our They the other And drag PPS that negative things. EBITDA in share increase is bigger getting get get to system just in Depreciation obviously which us allocations a margin. X.X% relative just that corporate because implement bigger. there's shift. we other the

Adam Josephson

and I think rollercoaster And expectations think both year everyone's it's situation, the just way now I the a down. ride and on really the this appreciate on on obviously, I up been OCC way defied, that.

up So price -- June tomorrow. coming prices are

I how a to think most is people decline. The decline. expecting question of big are

OCC about talk you're June can increase considering So, think how I an drop, tied as well, been which really and is appears and you your to be the demand OCC, expecting at price thinking has influencing increase XX how bucks challenging? about a in URB drop ton. to perhaps least So, that to by that's of thereafter a about much URB the

can you there your your for expectations thinking of So, much. very walk balance us through the fiscal Thanks OCC year? the in

Pete Watson

Yeah. $XX wait group. and opinions. our people our ton markets based to exposure on OCC a see Adam, we're fiber have expecting decline different But recovered tomorrow. and definitively I know

price inflation was it really our Regarding well increase, market as on cost demand. predicated as

be going steady were volumes four to As backlogs steady boxboard our to in our X% indicated, continue And I up over our five May volumes April with versus into year. weeks. May, mills versus prior again, in

February in squeeze. $XXX cost there's though cost January on that ton ton look inflation URB you from and a a when OCC, to which a So, pricing present $XX price at in a decline at CRB, in created $XX products, boxboard increase occurred

moving that's and from acceptable forward our and maintain to mid-May the our position. in shareholders increase need -- we for are we pricing So, on margins

Adam Josephson

Pete. Thanks,

Pete Watson

Yeah. Thank you, Adam.

Operator

the of Your next Panjabi line Please question comes Baird. go from Ghansham of ahead.

is line open. Your

Ghansham Panjabi

Good guys. morning. are you? Hey, How

Pete Watson

Hi, you doing? are Ghansham. How

Ghansham Panjabi

actually on spectrum in have Yeah. outlined details companies chemical of us and six? guess, I the verticals some in that you give the have volumes in more Obviously, RIPS during end EMEA region were A slide declines can Pete, from you pie are market Good. the on of chart up North lot about the in you the that industrial Thank you. month a for America talked and XX%-plus in bulk April. your downstream world and the the was shutdown quarter.

did help well? -- were you outperformance? part reconcile that gains us can play that those as So, share of What

Pete Watson

Yeah.

And nots our really our it's business. can on the have imagine, in strong sequentially of question. market end March quarter. global you good a saw a exposures and in haves a really it's So, we case RIPS And as

of really the half had my of very we on in May. March the So, strong of the April, disinfectants. manufacturing care, alcohol to capabilities February at of I off if where fairly customers George's and some very, was saw as started based you consistent. indicated their we end volumes, in basis was end to volumes where But it a strong strong. April and personal pharma questions fairly second And markets look at in exposures and tailing lot saw transitioned a to global we comments

you quarter. in lubricants, offset April. As and lower mid-March lubricant early restocking businesses. has that can as industrial by the in non-essential coatings. manufacturing And March, imagine, was amount well demand activities of I as traffic, continued through the early in impacted strong April, the lower paints The their vehicle middle of as and indicated when business negatively we And reduced commercial had of it really into some in shutdown

and that's just of IBC and more market they're in were end the our bulk steel I flat and business and overstocking in chemicals. April. benefited year-over-year, lubricants But some of commodity I much stronger in reconditioning while geared think So, because exposures from more commodity and to positive, the bulk growth. we're having -- those reflected think we March to our products were that more drum And

We quarter. drum plastic And had the delayed again, chem seasons. of large ag labor bit little because to in demand, business exposure, X.X% access to Our care. personal was pharma some was and that and mainly a up lower

in we demand reconditioning, of IBC also markets. and doing the a and quarter. U.S. that detergents in in the were We new addition well us really But again, we exposure capacity w an beneficial little that bit added in because and food, disinfectants -- the we're to had

is strength. destocking the normalized. some destocking expect quarter markets clear into end occurring maintain our their expect at it's is through May. of third we And that very those that of We April to But

Larry Hilsheimer

but world, away in we've your attributed feel To on some your we and other part of share America, of volume in parts gained Pete And walked same know we very feel places we're a time, margin, pickup, that that customer and low share his from margin business our question, in Ghansham, new net-net, from we we're Latin and the high targeting. on comments, walked At we've the of low other directly market share business. focus also wallet very to gaining a in comfortable other away another service. the customer customer mentioned confident we

Pete Watson

And I important think … really what’s

Ghansham Panjabi

-- Okay. in ahead, ahead. And go of for then -- Go my Pete. terms question second sorry

Pete Watson

was comment are initiatives growth really of growth in continues outside but -- and strategic initiatives, very go Arabia, also exposures Jubail, East. Middle we IBCs, their other well Saudi The our that the business to

investments we're some made, starting in show real we've our the growth pleased assumptions. So, they're profit to and and of with up

Ghansham Panjabi

component you've the And in for then XQ, is benefited there as And that as a continue for assume the then second there's in to we the well terms XQ your Okay. sourcing should for my structure opportunistic for -- of positive question, terms quarter will well? paths in basket RIPS, base be the the cost just same of raw extent? in material to favorable third

Larry Hilsheimer

-- -- opportunistic. Ghansham, those be would things I tend to I Yeah.

count I think it's model them hard to those your build into recurring. on and

some far achieve not say of team in our it spread. thus charge achieving in I We of those. some QX, do be there'll we index them be do we benefit the at would to would a mentioned, level to But think sourcing in QX. I As budget

Ghansham Panjabi

Okay. much and so safe. Perfect. stay Thanks

Pete Watson

Yeah. Thanks, Ghansham.

Operator

of of comes of Mark Wilde question the from next Montreal. line Your Bank

line is open. Your

Mark Wilde

Larry. Thank morning, Pete. Good Good you. morning,

Pete Watson

Mark. Hey,

Mark Wilde

is what I like as where you around in wondered based possible will sense your second to might going then back And can estimate June a in seeing look cost quarter? OCC the May Adam's just in up quarter? now you of and you're on best the to question OCC, it what end third get

Larry Hilsheimer

Mark, if Yeah. saw in May. XXX it a ton to about go April, bucks -- back, rose XX We and you OCC in up we basically

steep jump really up. So,

out things is challenge will if trend, creates country paper source in the this of severe think to trades And trying dramatically. strong and are another continue to entire things, then view hospitalizations space. we and opening we thing the is is the of project restaurant really because but OCC up withdrew in we -- with the the shutdown back much reasons clearly spike who you Our drawdown one that -- guidance the knows and where impacted combine of goes, this demand retail one

spike, side a thing. bucks those trend businesses think think just of demand you that our We have a because down view at XX tomorrow. to So, is into and don't it coming be and -- weaker, that source going And run do we we least have should if is if that that we at export up probably little opening on. particularly should kind you the be look

up So, reduction the -- tomorrow, forecast haven't next down, where Mark. exactly tried that beyond we but to we think there's we path a ends really think

Mark Wilde

it the of a happened -- you kind for the to from us a ballpark sense that inventories. what how the this a quarter. during have we you have any give And number hard second kind you your can Larry, rolls So, quarter? through do was know this averaged quite little outside during of might know And

Larry Hilsheimer

Do Yeah. the what average was, number remember Matt? you

Matt Eichmann

Yeah.

So an April, April. roughly we average February, in quarter. XX that of just the let's March, bucks numbers; in in March cost XX say and those When February, -- ran XX

Larry Hilsheimer

Matt. Thanks,

Mark Wilde

just -- That's mentioned Okay. the is wondered the second the And West Pete really the that in on taken amount you Coast mentioned? XX,XXX X,XXX in helpful. only quarter, on then downtime, all I that May you've in containerboard

Larry Hilsheimer

It was a pattern wasn't our containerboard Yeah. really specific orders. And of Mark, isolated, system. it really in seeing the some in reflective demand we're delay customer to

Mark Wilde

Yeah.

is of one last for kind The Okay. to related me that. just

in walking pricing about of from some if just month last they seeing sheet both One when can give market. general competitors flag volume I your some you're color that what more business us bigger in wondered away reported. and sheet you

Pete Watson

Yeah.

markets two automotive plants. durable most, them sell percentage in our worlds. or predominantly not we exposure CorrChoice know, also you exposure and the put independent in to It's box is, our really integrated but makers, As going challenge Most our the a of with exposures and plan because down is business, a really sell large volumes. to box we our

little So, anytime on experience I market up. with volume it what very It throughout you with others. of ours, the think sheet market have and back that And depends the quarter. When can a there's chippy. that the consistent gets, get sensitive, market is me -- let

their You a and strong. plants than feeder. will different be a might have the because true get term decide, a box their that sheet methodology market sheet some volumes be They really might integrated in short for will not

of product to we turnover what and try But do, complexity, to stay which quantities, chippiness. attributes fairly to approach. that low orders, is try -- we order value the high So MSF, to low real high core take a

environment. is is this of chippiness, pretty common that there in but So, type

So, new view. it's in Mark, or nothing our unusual,

Mark Wilde

quarter. Okay. That's for Pete. the Good helpful. luck Thanks,

Pete Watson

Thank you, Mark.

Operator

of the comes Chercover of Your question Davidson. from next line Steve

open. is line Your

Steve Chercover

Good Thank everyone. you. morning,

Pete Watson

Steve. Hi,

Steve Chercover

about transfer there Packaging Paper And is rate? in in $X run RIPS overhead million from to just was So, the clarify, a to the quarter? of terms that

Larry Hilsheimer

Steve. about That's Yeah. it,

Steve Chercover

looking many that Okay. then, That's well. fair. And a half I demand was much will weakest from session second the kind Pete over growth very of late and has been be fiscal as said QX story. the back in years standpoint

that's So, just I'm the wondering still case. if

Pete Watson

demand RIPS destocking would the economies it uncertain, on our and is chains Yeah. we reopen, of disrupted a standpoint, pulled business. velocity our as that From is, in of be is today are supply pace our reason best but guess the guidance how dictated volume the

that on related, our that believe business be West that are determine volumes. U.S. fiber optimistic drum will ag that Coast a in that be us position. know in RIPS we and for positive business. of is that in our so, volume We the how we in We season, our will And which that steel will conical evolve positive QX do the business

been season ag and delayed. has Latin juice Our America season

just paper with in we little some too optimistic. I'll that's are more tell So see RIPS upside. potential what we business. you uncertain in a the But it's

you that I because in talked April exposure economies be have reopening, I that all QX a QX. of controlled in sequential supply converting -- think about an don't you don't our QX, of because the was see have and we wave see any real squeeze, and And business disruption the you'll significance our OCC in of trough the a you paper our the durables in as economies -- second business. said, volume business, without reopening severe are will margin toward if the May end QX we've evolution trough in think improving and to our but COVID in if in a cases, improvement

Larry Hilsheimer

said. of I I have Steve what supplement be to Pete tend doing to what profession. my pessimistic Yeah. mean, hat to leaders normal and people. Pete put -- Generally, I'd sometimes when through our I to we when go all can they CFO pretty be Steve, are -- tried everything by optimistic on to our customers. forecasting business process, our unit you're talk But to

predictions GDP in showing tied Well, type happens, but industrial weekly them that's And on be we to May days. trail quarter or but lot. diving results, hear more able much should to aren't to of seem impact be most destocking, of of and be then that XX a tends a down we just fine. negative the Pete mean, as pessimistic, the think XX%-plus every going customers Our our they time what bit business, the Obviously, to to get have a XX we the down. tend And calendar year business. I of a you're that a all mentioned, economist. the production of we out second still tell down than

and we're us feeling it's And telling we and things are see optimistic point all so, a economists what I seeing pull is have those we disparities to us Pete some between measured guidance. about to we just against Armageddon, the need be things how going the where at decided of

Steve Chercover

Yeah. second benefits that half the the Did had initiatives? year the you say, million you EBITDA in cost from Larry, of $XX in

Larry Hilsheimer

kinds some initiatives items, of which to those down of also yes, the Some low? there's second SG&A the do George continue some those $XX year. cost things, of -- the seeing for about, answer items, question able that the we'll we plays Actions but -- we've believe taken, million revenue to from half there into be

Steve Chercover

That's good. All right.

towards be volume could -- quarter push second or I'll the So, -- the in leave it volume the an despite just bit worst obviously the sorry a because in or standpoint still half, just -- from earning QX from skewed a there. even -- the was

ball odd I've question, other been TV. One Okay. too because watching much

an that know seen Is like Just talking it you Are you exactly for management Do Bagster from carried flexibles. pounds. looks those? familiar what recently with I've that opportunity? bags waste one you I'm your And of know, these about? ads X,XXX

Pete Watson

that. opportunity But Hari not. But if will to if response you I TV, that's he'll I see to I I Steve, could promise talk tomorrow. me haven't I a about Kumar watching you have been that would ask an or much be intelligently by but lying I of and pictures

Larry Hilsheimer

enthusiasm. your for Thanks

Steve Chercover

Dumped? it It's It's a flexible is. what dumpster.

Stay safe. Thanks, guys. Okay.

Larry Hilsheimer

waste call I'll management.

Pete Watson

Thanks, Steve.

Operator

Your next Justin question Gamco of comes the Research. line Bergner of from

is line Your open.

Justin Bergner

morning, Good Hi. Larry. Good Pete. morning,

Larry Hilsheimer

Justin. Hey,

Pete Watson

you? Hey, Justin. How are

Justin Bergner

are guys well. you Hope Thanks. Good.

the addition, quarter. of second In million we characterize look sourcing the were some with If you to quarter guess I the prior third in back $X in start to benefit that benefit benefits quarter, over run the carry second the or the material quarter in was with it quarter, was sort sourcing have second levels de of type sort to to the minimis of to at what quarter? prior

Larry Hilsheimer

away about the And first have markets went the things of suppliers ago, that. sourcing slightly and further being you those virtually when at was year-over-year XXXX transcripts said, strategic we and up a industries get end down, are quarter, disheveled And But and they go businesses talking less benefits. Justin. And have -- like to none. would and you were and if we I are years having shutting if to apply They customers It where to you you almost about couple our look that dislocated opportunities. faded talk regularly nowhere number comparisons back you actually, than in don't we and XXXX place. of years, had back a in

doing good out groups sourcing you're If a job.

Justin Bergner

Great. That's helpful.

like So, I trading -- sort when it's it's of presents itself, a like guess. the of type sort mean, profit, I a opportunity

So.

Larry Hilsheimer

right. That's

Justin Bergner

or expense And came on if should read the move you're million interest expect of from a guide, number that, that into similar I $X not expense sort to while that the from one is cash might might withdrawing free …? the so, be I the noticed too guide, a because mainly $X I'll to million, is interest your proceeds which sort it prior second or one sale? harbinger flow you're a as of expect dissimilar question, down of

Larry Hilsheimer

Yeah.

Justin …

Justin Bergner

Great. Okay.

Larry Hilsheimer

than be our actually answer answering and articulate question, accurate here Treasurer and right he's but it, I Lloyd, have sitting because he'll your I'll much me. feel comfortable David more

David Lloyd

Yeah.

expense couple of interest the decline So, is really off a of things. driven

by at quarter, had which rates a obviously, was pace of CPG we of fairly part repayment were variable at significant during So, proceeds lows. interest from least debt driven Obviously, divestiture. heavy the the

And as some so significantly drive in costs And things we some interest well. we've done portfolio well from benefited the then as also. that to lower

Larry Hilsheimer

Then on continuing.

David Lloyd

Yeah.

the going -- whole think forecasted we change lot from not the an a I rate have to So what of in heck a past is interest standpoint.

So, -- at yeah. And point. are this rates most of our fixed

Justin Bergner

changing part interest of that And then, that much flow sort question, to pulled to the based sort I of second mean, there's view? it expect expense be on too the for to while the no not too guess, of cash I reason -- is it the assume is dissimilar presumptuous free from prior

Larry Hilsheimer

guidance, obviously obviously, cash of mean pulling driver true. is flow I us the providing I back expense, that's mean, main of interest from mean, operations. the Yeah. on impact with I

that's remainder and our not we year either, working for Justin. business do very about But so cash managing treasury is feel of our how cash why focusing how doing, groups free And well on confident we the are the world capital. flow well the giving around guidance

that. guidance cash be any flow range what to give our about all too for this many year there right very said But there's just out now we to as be. to of obviously, So, good will variables going we it's us feel relative And results. kind for around

Justin Bergner

answering Thank you All the Okay. best. that for question.

Pete Watson

Thank you, Justin.

Operator

line Fargo the comes Your next Securities. Hajde of question Wells Gabe of from

open. is line Your

Gabe Hajde

I you Larry, Pete, Good families doing and are morning, well. your hope Matt.

Pete Watson

Thank you, Gabe.

Larry Hilsheimer

you, Same Gabe. for

Gabe Hajde

again you. your the just tie volume guidance Can guess, about trajectory. a I'm to at I I'll expect QX, stab is to if volume environment Pete question, at the basis to -- guess, the comments from you trying take I in, maybe sequential Thank as directionally, plays what a out of on -- any be hearing? would down fiscal EBITDA sense that you that try

Pete Watson

lower hard to our predict in much Well, we expect But in business rigid again, it's volumes QX. I our be that. mean, to

evolution chains within recover determines disruptions supply how QX. into weather caveats and that the Some is quarter fast of the

could impact you we're negative think be today, QX May think June better the you have could side July, tougher in a we But a what slowly they're could a a variable QX, month crisis. events in And to the is, recovery? and we in lot also case know volume in on have it a that of in just that unknowns medical as do any -- worse that in the going Paper. improvements, and economies I RIPS it. view improve depends or hamper, think at are look I that recovering disruptions rate health from

improving scenario volumes. think I to see in you're an going

to for mentioned, open. market the how as But manufacturing in again, give demand was on our health Although, crisis across RIPS best fast the during the how I a products fast to lower the of you there plants the trying Is our view disruption really variables both a Gabe. volume opens, consumers? scenarios challenging point of the predict. What's and durable April. automobile is paper, converted We're April

Larry Hilsheimer

And Street -- Yeah. May, end today consumer they a Gabe, Journal of about articles auto, and like of as earlier CorrChoice Wall some and the you back nice has big the impact explained in But online. demand. think volumes about our up the it, peaked auto Pete on had, toward came

so of of enough chain but not challenges some vehicles, kinds have is is complex. the you then other dealers supply because the and have on And they inventory F-XXX having their

or are get struggles, can't some because parts so And having Mexico they from them of whatever.

where hard really think give you it we solid really, it going? to that are answer just So makes -- do a things

Gabe Hajde

will fixed But be be I'm this redistributed machine one's can and guess -- Alabama, that the a assuming, that easier. something above I of at -- kind look you talked closing this And is million residual or the hopefully All us like? might that other is or second beyond, sense Maybe I'm problem. Mobile about right. a $XX that what part separate? assuming give understand that not you to of business -- I With one will of the is savings costs facilities.

Larry Hilsheimer

And recall million ever in before about on just being June of to an there's in got into just you put been $X about closure. year of industrial Gabe, the related that's we'd we for last recession. COVID, since million context, shy And $X.X -- there's talking Yeah, remainder this to a that annual basis. the

So, Pete we mentioned. plants of the single two off one RIPS of a kicked led last our all genesis -- that across process of It's of a plants businesses our closures and facilities. the through fall was all has not that going reviewing every the just and that And that of other will business this one, we also the you're just shifted plan. It shift closure the to We unfortunately. all wasn't operation, right. business efficient cost to already an effective

Pete Watson

little a all just XX% Core transition, of customer consumed that Gabe, own facilities. us, and over easier a for were with internally customers our facility And our Tube from because in it's

Gabe Hajde

Interesting.

outside I -- wheel. Okay. the a materials, made -- RIPS And of XX% sold goods I comment so maybe alternative question within of is of last think products the I guess, you alternate cost maybe Larry think sourcing had of of which or

or a on number that put way So us. for sounds quantify to sustainable that it's like benefit, a any go-forward

Larry Hilsheimer

wasn't. maybe something It maybe Yeah. misstated I -- I'm I there. --

margin We have comment -- if actions it value other you're that was add and that to added pricing to. the that's relating of

put just us than You as areas, might in renewals, our other openers standard for for on we about talking contracts other price we remember raws. the reinitiated

you and we margin. go our think see business. that in the yeah, So, that, you will a what but is in those we obviously of things do But think continue through sustainable lot expect that do our as year-over-year, because be won't should

Gabe Hajde

Good guys. you, luck. Thank Understood.

Pete Watson

Gabe. Thanks

Operator

the And of Adam your line from KeyBanc. last of comes Josephson question

Your line is open.

Adam Josephson

taking what terms getting going back at, of in was follow-up the questions. to much Pete and for EBITDA. timing Larry, so two my thanks of One Gabe is, just just

you half. XQ and EBITDA the So, the when you thinking went be that year, second first be half would higher the than would high into were point

obviously, Now, was pre-COVID. that

way since then. that? to you no savings have What no better that, you know. a great of there's out knowing -- one that -- no much really that do deal still feel assume or So changed would window and way visibility really the probably it be and you than XH Is so has has about reasonable XH to just

Larry Hilsheimer

think I all, to I didn't a -- family of well, I and doing your have first say, Adam, are well. hope you chance

Adam Josephson

it. appreciate I

Larry Hilsheimer

the in again, not negative it. quarter going us. where is be having what quarter to third is Pete that. keep impact normally are right and painfully I the like clearly see I But about if economist obvious to optimism calendar Second, is, we it said June. And second That's about should

then our would So, start about over trying to not be. be. more to think predict thought going fourth I the lot, What through it's just we what ever to expect strong how a always place. recovery is going place and July be think life in be. it we to could listened my to that's see than quarter. and We the all the listened that where I and it mean, we'll do have do in range to economist is over we XQ But I all calls I

real guidance. to just a couldn't get feel to true give it So, you on handle we confident

Adam Josephson

No, And Yeah. just volume. on understood. one paper one last

And terms down a even May, bit extent containerboard Tube and economically the And about that. URBs volumes U.S. which are than technically digits which a said than in and of and months May? CorrChoice Cores year-on-year looked recessions, a Cores CorrChoice down precise in X% Could were the volumes in more usually that were think, down they've more you was at little and Pete, more to in I averaged in Tube recession. So, little sensitive broadly, in the past we've be containerboard. the then just in you more about down single were

likely be will a balance year economic think conditions knows or more containerboard of basis? the who you URB based down you, and/or up But on on to for last. just do long are So, the how this recession the volumes year-over-year

Pete Watson

Yeah.

my let Tube reiterate mentioned comments what May, from so about wasn't just about So, Core quarter our were I what me and April and volume. referencing CorrChoice transitions I've to volumes,

are from less May ago. May, on year basis, two May you a then April a we in day up working -- X%. And So, per in if they have to CorrChoice remember days

of evolvement So sequential I'm why that's referencing corrugated.

CorrChoice shutdown as to and May days that starting their and in of and to needs. during And -- has automotive. supply April exposure were from incredibly up non-essential to been to starting and included has chain up the volume lot CorrChoice fill up that that business X% the fill up deemed strong. at durable open durables And a manufacturing eight So, businesses closed referenced They're the I automotive. last

So, that XX backlog have was and any my days. April comment May don't transition. really We on on

dart today, businesses they And a In volumes those chain have non-essential regard we do throwing trajectory know know and In flat. -- relative Tube is our there maybe be a your in again, to at because trying second their dartboard, volume sequentially, forward, to would think right beyond going positive what to I May our what you reopening or and uncertainty predict we telling boxboard on to a project it's the exposure, based business will what is two try than their high question other dictate what demand a in what come I supply first how whether of are going and there's that gradually I'd not we business So up, on that. April Core, beyond to hypothetical they're in QX. just trying volumes that go in to containerboard, have and now. today. that's question disruptions

Adam Josephson

Yeah.

on core one, … digits year-over-year, Just you Pete, -- down cores, single down year did tubes and right, I the in again, -- hear single in and CorrChoice correctly,

Pete Watson

Yeah.

QX QX about were year and volumes versus volumes year down in and Core you're year CorrChoice our flat if versus this our volume, prior is talking Tube QX X%. prior So QX

Adam Josephson

May ahead, and then QX Larry. I'm in in was go sorry, That --

Sorry.

Larry Hilsheimer

that. high more the -- is and slightly single CorrChoice -- May, In than Cores I Tube in X said Yeah. down digits that

Adam Josephson

it. Got

Okay.

Pete Watson

And two that's because working in May, there's days. less

it's just quarter it out. not per comparison, a equal. comp a But -- why May-to-May it's I on equals the May. That's day over a referenced tough to basis on So April a

Adam Josephson

So it's not per total. day, on a X% the down is

Pete Watson

one Adam, is high and were It -- as well, double-digits. single low Tube Core is well. one so as a on CorrChoice digits, year-over-year and down, basis. It But yeah,

Adam Josephson

much. Larry. and the best Got in of And it. Pete Thanks so quarter, luck

Pete Watson

Adam. Thanks,

Operator

George There's Bank of of question Staphos from another America.

open. is line Your

George Staphos

I'm that. about Hey, guys. sorry

queue. dropped Somehow the I from got

Thanks -- nice on in you're the there. was can guys. you CSI I saw RIPS, of that curious, comments Just you just Good seconds XX improvement luck if scores put some the in seeing quarter.

Pete Watson

across and at are Yeah. Thanks, now George. portfolio. Yeah, the we are increased XX% America APAC scores level. whole seeing North CSI And

pleased EMEA the low improvement really So, that. A range. is part with big EMEA. XX% of though, is driving toward that

think wallet with So, as new very of customer I is one again, think earlier, Larry with having we're Rigid mentioned singular significant making customers opportunities a driving I the some of global And impact. seeing organization a Packaging some base. in expanded share or our focus that's

question. the for So, thanks

George Staphos

the a We'll you. rest Have offline. day. take Thank great Yeah.

Pete Watson

Yeah.

Operator

question last Bergner comes Gamco your Research. And from of of Justin line the

Your open. line is

Justin Bergner

follow-up. the for Thanks

to Just of of targeting are just the year. look actions benefit versus fiscal for second of the that $XX the second million cost that half, then quickly there in the the how quarter. was And sort million none as of temporary beyond you half second the a structural much verify is $XX of

Larry Hilsheimer

Yeah.

majority it budget year. was variable structural. process structural our stuff and not the vast the built into is of The and for already Justin,

So, had we by counting it because our focus we're already getting down that, towards below XXXX. XX% not planned

Justin Bergner

Great. Thank you.

Larry Hilsheimer

you. Thank

Operator

turn to presenters. I time. this call at back over the questions the further no are There

Matt Eichmann

Tucan, much a ahead. interest joining much you hope today. care. very Take and We in appreciate nice your and Greif weekend for very Thanks us have that thank you

Operator

for conference concludes this Ladies call. and gentlemen, today's you Thank participating.

now may You disconnect.

Greif (GEF) 4 Jun 202020 Q2 Earnings call transcript