GEF - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Greif Q3 2020 Earnings 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] Please be advised that today's conference is being recorded. [Operator Instructions] Thank you. to Matt conference Relations Eichmann, Communications. like speaker to and now today, for Vice would hand over the your Corporate I President Investor go Please ahead.

Matt Eichmann

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

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

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

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

Peter Watson

you morning, Matt and you Thank joining today. thank everyone. us Hey, for good

materials situation. greater our and around protecting world. and pandemic debt. generated unprecedented As team, in free and through health third packing the they customers expected, we turmoil goods The pride is solid extraordinary and evolving control all thanks and team and and possible, This have quarter, an commitment cost to down dedication global only to global that strong we the by we our communities caused cash delivered Through the pandemic, faced that focus, Greif our during needs the business results our remains but economic their the responded of solid the discipline. Greif paid safely operational COVID-XX of flow serve critical the

of of the colleagues are enhanced to and safeguard focused health protocols continuity health our to customers. serve executing safety our supply the our We on chain ensure and

cash Satisfaction soft During which while a industrial time strengthens we to standing all year our Customer score Index achieved X. quarter And in we flat business, roughly four have million free the reduced paper and packaging further the cost by more $XXX quarter prior customers. lower remained net to flow an demand turn versus Please year and prior profits were squeeze price significant Slide due to debt high trailing our than quarter. the with

steel quarter significant rose industrial Rigid volumes decreases Our global Industrial third year business declined in strongest in by quarter XX% the due versus the solid economy. activity. delivered drub Global volume results the to where despite improving demand economic weak China, volumes demand Packing to thanks was and X% prior

business million XX% Americas segment versus weak cost EBITDA opportunistic you roughly resulted and production conditions Middle control currency lower in third the Africa RIPS to lower drum strong industrial versus pricing year low grew by X% demand in the quarter and that X% on as of manufacturing down by and in move double-digits $X single-digits a declined by west versus our EMEA decline and low prior fell to region million while a the North only As quarter steel sales demand of the neutral and East and steel the benefit we drum growth by Western material year-over-year to weaker, third due lower European to volumes primarily basis was our $X expenses quarter volumes delivered the prior region sourcing weak faced adjusted and material raw cost Despite fell year Central and due prior declines and prior chemical With experienced volumes U.S. quarter weakest to specialty $XX adjustments. fell weaker sales, lubricant almost roughly steel This demand year from IBC with and Global customers. result the demand. corresponding by versus chemicals chemical roughly due lubricants. price a year. was attributable bulk region G&A paints, raw the contractual for million expense. Mediterranean

The progression what year slide basis the to Products RIPS quarter neutral ask highlights currently despite versus demand, drums. a is raw sales like a the RIPS X% well speaking, we delivering experience but XXXX is soft quarter for EBITDA. to And trailing steel material roughly manufacturing discuss Finally, business continue continues demand improved Rigid to please that is coatings, price we softness quarter X. for pricing market. adjustments. our but and second There On weak had to flavors The us than our in during comparisons after commitment continue prior in in in during due I'd turn what This on pace the the substrates and demonstrate the you considerable bottoming a positive moment ask anticipated is external currency challenges in to Slide communicated our improving larger is fiscal is seeing paints, steel May. the fragrances I to you drum chemicals That returning, are in already four we Packing quarter as to for of spend segment improved corresponding to said, auto market contractual the and industrial we slower volume worst somewhat see Slide we turn range. the X. behind believe basis, and call, I'd profits fell quarter, quarter. anticipated which declines, throughout quarter the volumes Industrial within improvement please major end broadly QX year-over-year demand were QX. Flexible food, to as lubricants. third the

in and durables in the the were seeing recovery markets. year supply corrugated in and down PPS you but give our in was solid improved adjusted progressive primarily third ask on fell prior despite lower quarter due lower July. feeder sales, color the segment down year to SG&A fiscal control quarter versus have third cost X year some by turn and you slower cost Slide roughly X. prior Packaging's versus published quarter, Paper prices quarter. strong strong could the boxboard resulting million expense to to headwind lower versus and you sheet auto e-commerce to Third due to to containerboard SG&A demonstrated downtime core X% in mix EBITDA of expense. prior management third showed in through sales the versus in QX, roughly prior by divestiture At our fell early flat adjusted growth. year. Group. the but versus We thanks the for Slide roughly of the in Volumes a I'd significant CorrChoice manufacturing XX% If thus also to the some Volume $XX ask chain quarter strengthened quarter to I the improving EBITDA cost Packaging's The and economic $XX largely offset since XX,XXX X% squeeze. and and year, turn in May control business prior to due tube team improvement Consumer was million the please not July product Paper our in far network volumes million progressively what took we're or and demand quarter August. and Packaging prior containerboard tons $XX year, price of the by

Larry demand pronounced Officer, market our non-containerboard demand textile construction to remain and mill presentation now We segments. Hilsheimer. over continue like to positive. and to in continues Financial most Film Chief see paper some market segments weaknesses to the I'd end turn

Larry Hilsheimer

Thank team distractions their you, Pete and during start quarterly good I'll global our given highlights performance. by appreciate this their Greif for continued dedication external been morning remarkable comments we The COVID-XX greatly professionalism Slide Pete's crisis. reiterating financial and the the efforts. of everyone. team's thank all and X has

very expected. third Our quarter was as challenging

flow we debt solid paid and However, promised. free generated down cash as

achieved business roughly Below EBITDA XX% excluding in driven line, to sales the Adjusted year-over-year due operating described. EBITDA Group. fell by exchange in bulk reductions of of fell detriment expense. roughly paper SG&A the the and the prices, interest foreign with our Pete million. of the $X roughly the net quarter impact All Consumer fell by selling that Packaging lower by segments reduction volumes, expense the profit divestiture lower Third XX%

rate our non-GAAP was tax quarter XX%. during the while rate was tax roughly roughly GAAP XX% Our

rate non-GAAP between XX% our to expect range XX% We and for XXXX. fiscal

to to announced at Our fell bottom-line share roughly A We of non-cash $X.XX earnings of share. Mobile $XX quarter per million million the adjusted in charges of which the per Mill the closure QX. $XX recorded Class impairment roughly relates

increased RIPS $XX planned multiemployer positive plan pension We a to obligations million within exit exit it million result plant consolidation development view restructuring a in a business. to as $X roughly future. prevents exposure roughly probable We in also including the of expense, as this as our recorded

at of lower flow Finally, flat quarter the and million million $XXX adjusted XX. to versus quarter, despite year held free lower prior third Slide $X performance. profits, thanks capital cash to roughly Please working turn stronger CapEx

earnings and cash we this XXXX, our our operating are only Class reintroducing Given sight in fiscal and year. customer demand into share remaining free line of for two solid adjusted per better and months adjusted flow performance A guidance

XX assumptions to XXXX on listed providing modeling. key Slide are the We assist see you with also fiscal

the fourth business from non-GAAP per in to higher forecast, QX. quarter roughly We incentive to sales implies sequentially less U.S. releases expect the anticipated fourth opportunistic SG&A to which fiscal Profits in per cost higher $X softer business quarter. fiscal due to sourcing seasonality, high that we to share margin due third our generate are share in the the quarter, third $X.XX for sequentially do in lower the a and benefited rate and not tax between which normal benefits $X.XX XXXX, fiscal be filling

OCC ton We QX. of $XXa in also assume cost

we line and cash expect XXXX. in $XX $XXX for capital million financial and taxes deliver importantly, with million of for flow $XXX million. source to $XX range to adjusted $XXX our be More between and We free in cash working million cash assume million CapEx priorities, between a to and fiscal between for range million and $XXX to

to again year end but emphasize, a we Slide visibility let no of the habit to reevaluate regular our align will me guidance ordering guidance. plans move of turn at XX. patterns, We providing the to have to our to to Please fiscal practices quarterly and customer

strategic and and priorities slide. IBC this reconditioning allocation are on our outlined IBCs, balance containerboard growth steady in priorities delevering maintaining our sheet, dividends, organic pursuing are capital unchanged CapEx, and are They integration. Our funding

sheet solid million is including balance of available with of extremely cash. million roughly liquidity, $XX $XXX Our

XXXX only impact euro. Our to turn the I'll of that, to debt. closing times, roughly our well for With success in below debt comments due senior call at ratio maturities Q&A. with despite end, notes X.XX his negative covenant X.X our term through $XXX million EBITDA, before leverage recession COVID paying to our are back principal down compliance our due Pete substantial a stood debt quarter midway near At

Peter Watson

in customers. our Turning to I to again commitment to want Slide closing for to XX, Greif just their thank XX,XXX our and colleagues

engaged by great customers. the businesses the in is please despite reopened. sharp diverse is line to operating headwinds around you Jack, Greif control Our considerable service cash questions. and this differentiated open external as sheet participating serve on business industry-leading the our symptoms and could highly are Greif. attractive generating and you positioned your solid With interest product are for flow shape. we providing to appreciate in discipline, of is Thank world well our we morning portfolio global variety cost for given our if balance we and markets a Through focus team

Operator

line Staphos George Instructions] your is Certainly. with Bank open. of America, [Operator

George Staphos

everyone, to question. good dig flow I the well. in into for Hope Hey Hi details. cash little doing wanted in first bit a Thanks you're morning. my all

forgetting couple left it, wide So are fairly put fiscal unprecedented is it why Again, you as about then given year the is to you drivers quarter, in And free I go? recognizing for what XQ the by the pleased an flow I be down outcome? could is what months that down terms that particularly million. free was only key versus year-over-year swing you'd this of XQ a that flow fourth factors range CapEx wondering wide is why with in us, $XX guidance the might is $XX XQ last cash are here cash the if I million. there, remind think be yet guide time of

Larry Hilsheimer

Yes, George. thank you,

clearly range in I job let generating one of of last an mean, terms XX good done flow, So the last have months. in the first. cash cash the do extremely me we of

$XXX If million trailing you flow. look the produced at we've cash months, XX free of

this cash activities management So the year generate parts of know there working in began in through you We of those we of third enhanced capital benefits more the of that early had less performance of couple if year's as the quarter much the going into there's evened really a this QX. last production again just it have we of performance year. saw become quarter of some range a phenomenal at has but quarter, things ago We've time fourth lot our out the But to so of those year the and in every last is quarter, But consistent when last year. George. that, in look we the it because last I period in fallout generally in the for bit more. just of

it we are us things. that's number we've but of until obviously the don’t expecting complete frankly for it. those having to of And run suppliers to kind get projects, We in get difficulties CapEx we pay into have equipment ordered,

that where the And range to working up capital going quarter. fourth that. flexibility we end So for is, there in are other some during just the on is

built two. we for range relatively wide So those basically and

other a substantially A to number exams fluctuate we’ve of The tax that third those rate have thing tax the lower a us bit ongoing. in of can up number is helping a that are what got quarter. ended closures is

close, make to end of or not. payments needing Some up could you those could

working And that tax George. reason capital payments three the for wider in so fourth guidance on the factors range quarter those and the Volatility, CapEx, are volatility, the timing the

George Staphos

seeing order at talk what you're your over. of it question, little be that's all qualitative in of gave great? you. what CorrChoice. Larry, terms how the of I'll commentary very containerboard very, you And great, August, Can you're far book I'll a seeing markets, Can of my you you, color stretching, terms clear. corrugated any in other out is kind turn markets, turn of Thank it about bit would us over.

Peter Watson

Sure Pete. Thanks questions. George, the is this for

in backlog in virtually prior double-digit is versus know sheet days, our was XX year. so is I you demand visibility August So feeder, the will very you tell strong business but as corrugated CorrChoice in our growth

demand similar to evolution we system it our predict will is saw very and very happen the containerboard the future, good is appears and in solid. but solid So to July in and I can't what very

who predominantly are durables, because the Our also independent - customers customer strong markets some in e-commerce. demand exposure their serve to end around very and makers we we is have box exposure

very beginning pandemic struggled and we while that has in at corrugated of health is responded this the point. business containerboard strong point, this at COVID at business well the our and so, And the healthy very system

George Staphos

Thank you, Pete.

Peter Watson

you, Yes, thank George.

Operator

Wells Gabe Hajde with Fargo, your line is open.

Gabe Hajde

Larry, Pete, guys doing you Hope Good morning, Matt. are all well.

Peter Watson

Gabe. thanks, Yes,

Gabe Hajde

trying that perhaps I'm the I help is containerboard you possible Pete, end maybe about comments there? chain, acceleration understand function about in supply somewhat of and some or where specifically you customer appreciate maybe of if in any are like set and an different, am automotive where things seeing I see your you're and I demand coatings, feel your and that some and lubes, segments it are more making on visibility can but is talked in we thinking the weakness? just similar thoughts Larry could to it's markets Now the RIPS of from across you are a chemicals,

Peter Watson

so markets Yes, RIPS again predominantly different entirely durables. and our really between corrugated our business CorrChoice are end and our it's business,

X in the exposure strength supply and it. We two CorrChoice Pennsylvania, also, who so our auto Tier e-commerce, feeder then new helps is that X, supply. And sheet we CorrChoice related really some to of those some to parts serves in but have businesses X, that food, customers in so industry

streams business RIPS or into inside manufacturing a down supplies parts car. customers go product component products one Our whose two

the context impact chain resulting are a and come auto earlier slightly the little supply would points RIPS segment the the then that for again, comes touch So And later. to different. and

Larry Hilsheimer

Gabe. Yes,

of me of use is Let down of big add because a is a is is, business couple away. things. commutings lot for lube One A and automotive us. mileage that going

But down flying. vacations you is the are as drive Now and mileage particularly U.S. up instead to people some seeing pick in of net-net

the your you need I'd if In machines other July And at XX%, production When industrial point just out utilization and lubricants. we on was XX in some at the statistics. through April look May XX%, XX%. U.S. passed thing from [ph] The at Federal capacity running XX% XX%. XX in production is, aren’t June they average and Reserve were utilization, don’t

demand. not there as running is yet. create thought lubricants to recovery back is but to need coming it back talked It it not We the So seeing but is and think as stuff, rapidly we we I Pete might machines is when need coming. We're in it QX. coming gradually,

Gabe Hajde

the put side, provide I of I'm slide PPS you, kind normally that can energy I see there? still And commentary if the assuming on utilization. Thank guys. but didn’t that's track, on then about you guess in any you

Larry Hilsheimer

just, but Yes, at down we in volume some slightly were Gabe. time I we oriented. still are of is if million it it, mean, looking are still them slightly, point down only because $XX

You a as know we will that capacity the those back utilization up, track. believe by comes the still down, $XX URB, down little number, but million on bit well business economy and down, go are being but so in CRB back and over that

Gabe Hajde

Thank you.

Operator

Baird, with Panjabi open. line is Ghansham your

Ghansham Panjabi

Hey good morning. guys,

nicely as same in shaking the you're and how Europe, do X% quarter that also China that I'm how this recovered obviously, dislocation. of the Can and were Larry seeing kind Pete talking slower I in being comments prepared and of us bit by RIPS that more region, color a just You you that about think little you mentioned pace from initial just U.S.? in curious improvement on just the they've out to as know, well. trajectory give because you see was up your you just

Peter Watson

Thanks, Ghansham.

the and year, COVID-XX China digits global improvements they're similar EMEA overall, very on of prior our FPS, geographic strongest COVID there, So improving to we're in RIPS to single some regions. but related are and quite region. health, meaning similar and a our demand obviously volumes still scenario We the high is conditions that's and see because in mixed tracking it frankly we recovered our faster see first has more business path the down complex a improvement

East again but and in volume weaker demand, which improvement moderate Europe of but Europe, is that of weakest through lubricant the So, in we being chemical the highest transition we it is the global sector America geographic Central and the the and as components health portfolio strong, see American demand And then because still North quarter. pandemic. mirrors that Middle volumes seeing during are were the very South And are conditions weakest our and QX. predominantly Western the

normalizes Just to is July, quarter global versus give August double-digit growth versus we're steel prior digit had color we volumes a you we're in year. in normalizing, our versus prior they're single little lower normal, but kind than improving And of drum a still our mid on the so little are IBC path August, which declines improvements year. showing

Ghansham Panjabi

up just price great. expect Thanks at much. that reasonable rental modeling standpoint? a volume cuts so as from XQ it saw follow you And a for to Okay, And for a then [ph], headwind you is similar PPS, XQ looking what to also XQ? are as specifically, in in

Peter Watson

So forecast crossed volumes portfolio. of our our really all to the

what highlighted QX are, And talk regard July, volumes what to slightly to Larry where and QX. were I'll from As the in expect we deck. price through in we volumes squeeze, improved see just the July bridge we see we cost versus in the the let

Larry Hilsheimer

Yes, Ghansham.

had in and of sector as well shutdown unprecedented of in the unprecedented terms QX lot sector U.S., a restaurant cause, in as spike we industrial. clearly in the of the retail spike, that You know to because OCC

side as demand up because was the So was side stuffings. supply the Well, know of the squeezed. pantry you

XX proud year felt costs unwarranted EBITDA basically on the price the to of an by don't $XX of we're OCC, I to quite million frank. economic missing actually, comments of which that third back the quite Larry's to of in year I'm quarter the roughly is OCC million $X we $XX so the OCC was in a four squeeze. over improvement down you cost team of shot a million receipt created and the and about quarter we XXXX fourth cost set quarter. and that quarter, last on sequential step year year-over-year know, from the increases predicting we million add was be $XX ago $XX this, a were year the so were you relative squeeze from But, on year-over-year fourth we lift up, in where non-recognition with the look over that squeeze, year-over-year $XX situation think million bucks Gosh, third if with in we're our our see like same by price quarter price price there, what [ph] just ton. And Naturally, at

the headwind. XX this fourth you So the expecting a of quarter be will know, to relative we're that year certainly in that

Ghansham Panjabi

Okay, great. so much. Thanks

Peter Watson

Yes.

Larry Hilsheimer

Thanks Ghansham.

Operator

[Operator Montreal, is Wilde line Bank with Instructions] open. of Mark your

Mark Wilde

really kind Thanks. start. crisp of Good I Pete, the that morning good morning appreciated Larry. walkthrough at

what question, down down this today, fallout on kind kind you've that on Gulf there. my about of land For about but address your hurricane of business, in potential you of could can first wondered down sort if just thinking from hurricanes talk the seen if fallout hitting past there, RIPS the also any mainly holdings Coast I you potential with

Peter Watson

Mark. thanks Yes,

manufacturing that in you perspective, Coast. that some of to XX region give million Coast operations revenue in generate we have Gulf the just So Gulf $XXX roughly

impacts But of our the this are is paper certainly of be biggest those will have in so thoughts that and thoughts a that, bypassed. clarity the X:XX yet, operations We petrochemical variety their in which of impact. operations have and an as but are thankfully are and forward but region cores supply products we large concern them. RIPS safe healthy. I our that in don't to and our all of that And certainly supply products they're of prayers area, some too. with companies and think operations, again, families that As of customers too, are hope lot the There's majority don't we our that the of extent a our with viewed colleagues are there damage and region, in the storm secure on those morning really mills safe going metro all the Houston we

We supply the a And always a chain really expect impacts we of suppliers damage idea also on be our have Not -- no in disruption but located are short they're see It that that will what extent all who resin are today. certainly -- the for of some suppliers there. and supply our we'll in term. transportation region, short them some disruption of term.

holdings, obviously spared, it's very regarding land and at Houston what were time. at that that do So of point operations customers undetermined our but management we we're to this cluster that have impact the some again holdings this But our what to is of in think early fortunate in had. determine I Louisiana too does our majority

Larry Hilsheimer

just as just I'd X a in X range, aside a early, guidance but to put stuff, from that estimate obviously prior potential experiences. set the looking on basically only based and thing is that's to our we to cents and it supplement And just a share, at trying a very prior Yes best -- out back impact. storms was

Mark Wilde

That's for. I what looking excellent was that's Okay Larry. exactly

is wondered what add they As think basis Kentucky my just CorrChoice? into a the cumulative in those year-over-year us packaging not some on of of and so then in what I'm ramp ago, how I curious both put about plant ups you are in long bulk to Pete, going can guys Pennsylvania? then follow And on on the the give if you sheet feeder CorrChoice, I startup sense just impact

Peter Watson

is customers, and direct to Yes, than quite independent base Palmyra been some progressing our uptick to that of up probably you see from facility. so the box of look We you'll bulk the is through think there When in systems. markets, while. sheet July, e-commerce the COVID, business addition well, some it's of responding growth at the I the Ag just lift business, And very, little added well due has is for up a triple some that slower a remainder Ag in and ramping wall capacity to but the in customers, come well. that very have August, Palmyra. and business and doing The we plant double-digit Louisville anticipated is X%, volume, serving industrial feeder the integrated

So with progressing. and we're that market good path that for customers that's It's from pleased good again real be getting response in will at business. how a

Mark Wilde

Okay, very good. I'll turn it over.

Peter Watson

you. thank Yes,

Operator

with KeyBanc, your open. Adam line is Josephson

Adam Josephson

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

Peter Watson

Adam. Hey,

Larry Hilsheimer

Thanks, Adam.

Adam Josephson

XQ Larry, bit just for just to your a -- dig your in I wanted commentary. to thanks it. on

So higher you mentioned sequentially. SG&A

what the think back, has I if and $XXX from you're expecting just and the incentive to that you do down about benefits think I'm just comes XQ, how more are but I in of not sourcing million and you the that level declines terms of you get you'll said then of in you of in as thinking at XQ, in know wondering number you and degree benefits given in XQ? quarter more fiscal SG&A Q the RIPS in I gone million XQ forget year-to-date costs had fourth benefit expecting opportunistic the was mentioned what a then sourcing XQ. million think and business? $XXX And sustainable in of $X are year the in it's think quarterly year-over-year you I exactly what opportunistic comp the start possible sustainability SG&A X you

Larry Hilsheimer

Sure.

Let million $X it first the $X.X -- sourcing the all million $XX million XQ more? XQ, we in in get we the just do QX. We forecast. roughly and in in mean, could it Certainly. $XX our the put it we in million teams had time. was I me sourcing challenge Adam. And Yes, take don't

our thing. share SG&A, So, that at $X.X remainder combination million completed kind looking $X.XX by the knew of of not putting when of about we we In it year, it quarter, for into numbers, impact the is incentives. on the the it's a fourth the a forecast

the quarter hit degree. made fourth the the in we incentive a adjustments if we third that so, of -- in And we've a won't because obviously, in made great repeat quarter, this to bunch forecast, adjustments our already

We open down. delayed. try costs that. ERP much. up. some it's We're It to required is, slow starting to get we things has had want catch can't that those So travel up and non-capitalizable COVID to We to that quite as were done. also us

and So savings can that leverage we into insights.

will is going going we some with that both transactions other some some we've there's deferred. then think were regulations relate other of the that. in we're fees fees, And other future benefit just So and been the that on, us professional things to tax and professional that costs along actually that in have issued doing, that some planning that related some to got

and Some of not travel had those off. are pushed been also that happen related could things

we're fourth told, just to SG&A quarter, a hurricane, $XX.X that. share. well swing there. that's that X $X.XX kind I a a about I expecting to the me as quarter all quarter the third let basically through of higher about walk Say just our roughly, share Since on from that $X.XX to in since X might mentioned third million so, do at going So drop be quarter and we're there. fourth

also We have is about the is SG&A $X.XX, $X.XX. about sourcing

equates years various reserves positions what and up that the per we a $X.XX a Then through pick lot up because we freeing a tax really is the the share Going about quarter. a lot ended settlement that QX share hashing and positions looking ended the of OCC up the about QX. other differential about at the $X.XX -- settling had tax set up over exams, $X.XX over roughly way last up between and for we the to of X%,

it little related least pick good QX results, good up. bit tax this that, at to the was for of a thought we So quarterly

a system, mentioned ran What bit more paper tied profit intercompany profit but we holding that success obviously for We needs. that's July inventories The is held other with out, hard Pete drove in CorrChoice. it they're have has through item The gets there's in down. Oftentimes inventory When gets mill have production little to up happens complex, do the and into that they in then sold recognized. system. tied up the is sell mill CorrChoice that. CorrChoice CorrChoice it a as in the inventory

have so, tied is up. an generally And you that profit intercompany

fourth CorrChoice squeezing combination $X.X third of actually in in end we where up with usually more to is quarter about would about squeeze. tied million of in up tied will freed reverse. million $X.X The squeezed. profit we some are other of and quarter been reduced inventories up Well that maybe think that than In that thing probably margin We'll ending that got now. up free the causes margins inventory. The have inventory of the profit up margin

basically million have $X.XX. $X.X between is you for So which in about that swing the item, quarters profitability

take If together, you $X.XX, XX. to take about all those it's it it would items down

or XX% how just on the the Our so and because that then range of side quarter-over-quarter quickly uncertainty be industrial is, XX is XX recover midpoint things could around the guidance on things. it XX, of what, in plus just of operations, improvement in will the

helpful hopefully So that's clarity.

Adam Josephson

America. you among thank North seen to whatever divergences considerably and that extent diverged lower North drums or if I'm what geographic they Cores then, businesses you. in Can and your moment expect it appreciate the are can at have, you the have And fiscal I me and correct you specifically steel America, trends really and wrong, the CorrChoice demand you Yes, standout but and why you've North reason? Tubes Larry, Rigid, levels just reverse in operating just like the specifically question, specifically one talk demand those for then continue than CorrChoice and sounds think year-to-date America to about and if is

Peter Watson

demand box market, whose their to customers exposure access market integrated and lot have aligned so supply for of have we're depends have end exposure said, the a three market as of those very also and I it They e-commerce customers end to in on And in is durables, and CorrChoice, as broader influence each business businesses. we better. heavy gets really we a independent Yes, some strong.

exposures in corrugated you bulk is are Core CorrChoice and challenged North So RIPS, or our are very, you big you look Tube exposure lubricants, very look Tube look struggling. American end RIPS now. no influence the market business, entirely at And chemicals, and industrial when little where They're tied and are their exposure bit the that and segments specialty in more different. at we again to and Core, some the at and and paints coatings have in different. weak a When

and considerably a they're been are non-containerboard heavy they've pace mill this at reopened, COVID. and we segments sell I paper still pretty the mills past. end textile had hurt weak, As said, weaker paper related but then to cores and we exposure by the the cores, They've

So approaches, and times segments. totally see you might their of reflects the than CorrChoice go-to-market different different again, end lot totally end segments a it so weaker a little being others market and really

in we single see digit July is North this a and excuse fourth RIPS incremental weak we our and through digit of Core be down me again see expect July our improvement to And point, we it's growth, quarter. a down, in America we growth very low business Tube forward, Core. less from at in while what expect than low can still and and Tube single decline Going

Adam Josephson

so much, Pete. Thanks

Peter Watson

thank you. Yes,

Operator

Steven with is open. D.A. your Chercover Davidson, line

Steven Chercover

bracket it Thanks, little basis. looking I the wanted just morning. with from morning. try little good slow the quarter but segments good a and one for was today, to a more start and EBITDA at I fourth an

sequentially. you'll million side million paper, least looks or RIPS, you've it to about in $XX OCC. corrugated less million headwind $XX the consolidated So a that non-repeat. $XX then $X on at tailwind got like And from and downtime down million you've And in be got

then are recognize RIPS be should America anticipated is just things than really paper and weaker North So weak? I be Pete up and said will where

Larry Hilsheimer

basis. of intercompany well, obviously going SG&A, the that On relative million corporate Yes, QX impact $X.X you have from the anticipate costs, sourcing we mentioned a we've the that half got being is as of -- it do got in paper And that there. QX. decrement so million you'll about that comes profit yes, $X.X side so the then that But in and is swing to challenge. on on out segment Steve, the a I Rigid half

So and then you've got the OCC benefit, PPS. though in

So trend in those that's helpful. are of the I elements hope the EBITDA.

Steven Chercover

kind right, to will next I'm if off, you intend paper your over XXXX that of of at And RIPS is EBITDA commitments. close with gap the pull that about levers million so helps the in $XXX bit. line Pete you that wee the made years? help the indicating couple then, rate are the a $XXX that point million is run already a of Yes, what And narrows gap to

Larry Hilsheimer

segments biggest look last mean, anything are a the lot think thing impact Steve the worse impacted clearly, the the that end unprecedented is, economic an timeframe is declines, XX yes, I that XX, than of when they're economic years. Yes, of I mean, in at since dramatically you by, I recovery. is GDP our great depression.

off. average of seems the I of years earlier, is, it a to mentioned statistics way. and think ago were, Obviously, was I hope are the even that Day And stage get I but U.S. time in Investor this can rearview before, we economy that quite statistics it recover if and the industrial of everybody's we said, stood of the hope the an is our we last to even way back in and that's had So, And in XXXX, the I production mirror the lukewarm I I like we in recession. industrial dramatically sort mean, XX by long we're up and industrial that on time year XXXX, a by below now, our production. the February mean, quoted

about get we So, if commitments. no our concerns have back that, we to hitting

assumptions, our underlying you on but already all it OCC obviously, somewhat, we'd the it in it RIPS the we benefit the paper have their at portfolio update time, is but is down this companies hitting talked look we the about targets. in about will had you we're December, where If of expect right all and pricing business this assumptions,

We identified we paper expect full them be the of business. expect to better realization the we've in synergies that and

getting you it's down back very extremely paying we X into the our tell a stretch. to don't and of we confident times I'll confident X.X and that hitting of range are think commitments, So those we're debt and

Steven Chercover

be Okay, long-term get and and of OCC on more I'll $XX trying and the presentation for and made ask those at your back good think bit you Investor that to range? you OCC $XX a a guys one kind the go to Do to going pig really Day. XXXX of is a of -- kind price

Larry Hilsheimer

is I I think where saying about relatively think the it range is that been to gave we our XX on Day the in range term Investor pretty think And spot side We commitments. up. picking the I we've consistent to that's we up. Steve XX next up. was we I sweet don't, now. we that think risk is actually longer is supply way that into feel it mean, year. don't Obviously, projecting is go think China back that at

good think Some -- forecast what one. thought is we that then go we elsewhere, of a but that demand remains that going to of is

Steven Chercover

Okay, thanks, safe. Stay guys.

Peter Watson

thanks Yes, Steve.

Operator

of Bank with Staphos George America.

Your open. line is

George Staphos

maybe unfair you some Larry an but must Pete, have this. everyone. Hi, question, on view

come you back kind fiscal there? of should EBIT approximation things assume plays less Do take what that more out and the to you what a what created see or or that relatively you of do back out will and in you any swag room wiggle hold of EBITDA have of of years, normal, you a couple if here, expect, but similar fiscal or sort you So took think little are are as XXXX? we say again, of I plan step quarter say, fourth the let's your kind of in next a COVID bit XXXX over

Larry Hilsheimer

the George bucks. in forecast, we identified our $XX on again I yes, Based million was mean, quarter third

costs, XX million lost about business of Okay? various that from of million and $X Is subsidies, kind all and travel tailwind thing. lower

Looking to on be number. impact cost OCC It where OCC be of be, that's where this overall rough might that. we're I basis, another a going million We forecasting a the everything COVID by and couple top got think you've and on an But would we'd for and to we relative little $XX less then quarter a thought that. than be at for of million year the things. say year, for to roughly the had for us impact about that's the year squeeze price $XX the price

with ending price million we'd we built in, we'd So now million but the less at up year. thought would where have beginning less than be. roughly some of we What $XXX end of predicted the cost $XXX maybe that squeeze roughly we up where than

George Staphos

you whenever Analyst appreciate Day, more question I do for is next the a that. All this of Larry, And, right, probably that.

you Thanks, the businesses the what stressful a learned what's learned last through the maybe the you here, now about and things into quarter. been to can guys, you interrelationship portfolio now know, have and up are, your less over perhaps not sense you at as about they're in the very would quarter, keep How sense finish the and good makes luck more look through year? expected fourth brief or having you have quarters portfolio three do period. how So but comments the complimentary this you've it COVID? and complimentary And gone heading as whether

Peter Watson

that chain we I resilient supply regional on very supply. or think found dependent we have centered global a George, Yes,

ability normal I it's of times it balanced think we've to in done a our So is well globally that's played what future. it for the I demonstrated challenge, serve a portfolio, variety helps customers in and the three in portfolio and it’s has our it's substrates COVID. years good while short-term us over that supporting I in our past the think balanced us And think

Larry Hilsheimer

market couple customers alignment Rigid terms George the we of in and our Yes, One, business segment think, between in more I serve. of seen things. a and more flexible our we've end

it focus. refined really wasted. good mill the let and leverage controlling. that more part to then It's cost and to a acquisition. The we time us we sets It's take for adage relative paying And and to caused leverage crisis this really have. mean, of that that of of crisis us. utilizing made the us the end modify view. resolve entire to our that is working benefits sort Caraustar can team control acquisition. our skill good of more a getting back can't the has don't the about through demands, continue nothing but strengthen a of management stronger and This is caused of our us that what the are really We and lot get to to things off the organization, portfolio footprint other It's doing we but was of leverage market we're I economy we're across our assets out we control

very very, this we're point. comfortable portfolio So at with the

George Staphos

guys. care, Take thoughts. the appreciate I

Peter Watson

too. You

Operator

Fargo, Hajde your Wells Gabe line with is open.

Gabe Hajde

than mill downtime of characterize you more individual your I'm Thanks for taking supply more up. kind perhaps URB today as of curious, And any and where follow particularly sits kind in particular the your taking you position would any other system, or it guys are how inventory precedent quarter? the is? demand

Peter Watson

box So the run we we've it's very had recycle mills, thoughts before. to similar demand for what and to

little is a slower And lower that in Core again, and Core and capital non-Tube Tube business, with demand position our we business. While our that our manage have we inventory and volume from our try offset way working not we inventories capital just very and the to tend best the demand operate, to times, very, we demand working and don't to, inventories, think that's run in stringently, upper because we very manage our run effectively.

Gabe Hajde

some, this then fiscal us as maybe an the like tell And what capital could working It's basis normal gone right in aggregate look sizable expecting reversal of side. Larry, cash can that XXXX, a through on year? benefit I appreciate vulnerable price on to of the year? some there's you you're there's flow perhaps assuming next be what to you now. Thank could, increases kind have And industrial you, it. maybe, resins markets sort Pete. But if pretty And, fairly

Larry Hilsheimer

we to be tend but nominal well, fully a XXXX manage to capital able $XX over year-over-year. decrease I a bit and mean, roughly or Yes, the benefit yes either working anticipate We'll be in million first our again a little the that, year, capital of of that quarter anticipate the, thanks, to is benefit should in $XX it then increase We should up Gabe. working year-over-year, working of of million range we in year-over-year. capital run

allow again had some we opportunities to drive us also believe believe dramatically. numbers, not of even but could flexible EMEA are operations, what in areas further. our RIPS, there's believe business Caraustar our there we there's year, in do have particularly our opportunities there certain and next we're our that we in more improved business in but business than improve we even talking there that Although still working huge The and of has room to improvement in this year. capital We room

Gabe Hajde

that. luck. for Thanks Good

Operator

of Bank is line Mark with your Wilde open. Montreal,

Mark Wilde

three got I've just Alright, ones. real quick

wondered, deck, back exactly and driver of drop the the you're there's a in XX.X% the I Pete, of in the What drop the in First looking revenues what big products? those kind quarter. was slide product in non-primary non-primary calling

Peter Watson

small a small water part plastics, portfolio. predominantly small That's bottles, of our

Mark Wilde

Okay.

graphic as is, fall us one for can the just the over CRB sense contracts time? will second away strategy transition the of give general some The sort the you about business

Peter Watson

for the we an years years, five divestiture, transition is CRB the in for other really agreement community. about, is about two for Graphic talked so mills ours have very half mill the independent going an on very so folding well. Yes, to one two products. good paper and only a of and We as but other as feel carton independent position of a the good supplier customer not our we

So we decision. made the right happy. We're really

with the products and the puts mills real in market I point. this partner consumer the think CRB our hands position that it how business of our we're at more we're strategic and operating pleased in

Mark Wilde

here, You but contracts, lose the not just kind did they step off time? did of they over far to just drop weeds did into or not down get too

Peter Watson

years off. a divestiture. a two when dropped on five basis two on volume similar are is the off One mills stepped years They we half and and from

Larry Hilsheimer

obligated with a different contractual say maybe and now what does is the would to. only I and We're, actual the they're the question. has that’s is is Yes, relationship so beyond obligation and our business thing Graphic increased, when Mark when

a it's relationship. good So

Peter Watson

of lot other products. a beyond them synergies the many, paper, serve There's we just many

Mark Wilde

I'm just there wondering That’s Greif for to writing to for one, and all The of look and new owners, of a with I'm ending you're of paper writing curious, opportunity Okay, now? lot products, just printing structure, and of those right on a of better whether imagine. looking new are cost mills off at be up what point any not mix paper hard mills kind coming a last right. versus reconfigured awful taking potentially might product maybe product mill and quality, lower at a are one or operating that, there some printing maybe

Peter Watson

to more our we're is on going Yes, situations, system stream value operations converting not in on we're creating converting new and mills do on as mill we most key whole position we or capacity but come we this, capacity. hypothetical a further as in of comment how that's we containerboard output. in the have between and our ratio where the think one-to-one have never to We're mill the interested in focus interested future drive tons integrate so to existing focus and a getting

Mark Wilde

Okay, fair luck enough. in Good the quarter. fourth

Peter Watson

you. Thank

Larry Hilsheimer

Thanks.

Operator

comes today's line And last question KeyBanc. from the with Adam of Josephson

open. Your line is

Adam Josephson

wondering and Tubes that taking One you the in business on given think your you pressure think just ups. textile there Just a that's paper declining trends we and secular guys I'm are just what run Cores, Thanks, demand declines slowly for in market? business? I business? of the run I'm what are follow the flat demand mean long know, two wondering demand long-term, long do what view on is.

Peter Watson

business. plus GDP a it's think we Yes,

solutions. segments, some of got but the negatively impacted how that's very different market product use market. different development unprecedented creative broader who of opportunities to an provide on a that innovative on, looking it's end focused a we're group product we've seen we've a think I And provide are so sales lot much

through but our that a really a that a So And it's system can we business in digit it's lot and it's now growth boxboard single integrated group. talented business. challenged, right recycle value drive low margin of think

Adam Josephson

Larry, one question thanks just Right, on Pete and guidance.

in industrial of and this an You Analyst about XXXX mentioned year is you talked at that your course, recession Day COVID.

year economic control no Obviously, you over what idea We have no bring. will next said conditions. you have

revise of which giving as short-term what are guidance as a control long-term those end but that, doing just can thought lines, guidance, wondering longer do those up about conditions, the have think giving you you along you of fact conditions result economic of short is benefits light and versus both guidance economic So over to guidance, pull or you, your you term both no in said, perhaps and having it? depending on what not what the

Larry Hilsheimer

opt question. just fair to always I to a to that. a mean, obviously, opted give it's And do give period go guidance. think accountable, generally annual try don't any you to people where We've could try I guidance some some be you Yes, know. Is ourselves hold when and level I confidence to presuming getting we that's we would anticipate happen? at have transparent that's, I don't where can to you as are to, back that December. that get of us to as a things where and going to point

We will then. to it have assess

be and yes, of a the think, of all you influence cool of a as I there's all a that see occurs, probably could And gets off. wave bets dispensed more that If thing. quickly when and it prospect second that be if developed sort the temperatures there's could vaccine kind things. widely path will to

very, very back get moving think behind feel But to hard be. will the pandemic it guidance. So we'd to I where we over time I comfortable predict again think annual us,

Adam Josephson

much, of so best luck. Thanks and Larry

Larry Hilsheimer

Thanks.

Operator

remarks. the back I will for Matt Eichmann now over to call turn final

Matt Eichmann

a Greif. remainder great thank have for you, and a weekend interest the lot, joining your good ahead. Thank this you of us Thanks We We in week Jack. And everybody you. a appreciate morning. hope

Operator

This for concludes you today's call. participation. We thank your

disconnect. now You may

Greif (GEF) 27 Aug 202020 Q3 Earnings call transcript