Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Greif First Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Leahy. conference like speaker to now Matt today, would hand over the your I ahead, go Please sir.

Matt Leahy

Matt President good Chief Hilsheimer, Greif's Relations, President earnings is and first and and Financial fiscal Greif's Thanks, morning, Ole Officer; XXXX Officer. conference everyone. I'm joined Chief call. Rosgaard, and Executive Corporate Greif's Development of Welcome by to Leahy, Investor Vice Greif's This Larry and

ask Regulation questions the end issues of call. Fair We Disclosure, because take before with please information with important, from questions at consider individual you will prohibited on to yourself returning one discussing regarding XQuestion limit non-public In you follow-up today's the are to an accordance we Please and basis. material queue.

Please turn Slide to X.

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

be Additionally, GAAP non-GAAP to comparable and measures directly appendix we’ll today's most the be referencing the certain in of can reconciliation metrics financial found presentation.

turn I’ll to X. the over now, And Slide Ole, on presentation

Ole Rosgaard

good Thanks, everyone. Matt morning, and

capital reconditioning be that higher Container, our of for Centurion mills, achieving reinvesting our significant joint our integrating into goals announced another and took new in steps and Build we around majority XXXX venture. and rapidly with circularity. sustainability advancing our roadmap Lee growth cost new a CRB our We will in announced several climate, divested Last one proudly acquisition mid-December, Greif first strategy. quarter growth reduction, towards to Container completed IBC a targets, We ownership waste today, are important Greif. the During We business this XXXX, platform that of science-aligned our into

made ownership few X% the our to so year come. ownership to far with and the to look this XXXX, progress proud forward from foundation building years. next are in XX% I new of path to the on in am increasing in We approximately a I full

quarter first results. our onto Now,

which to several of the the quarter. softness Actual cost felt quarter businesses both headwinds specifically was price impacts the low impact GIP their cautioned our EBITDA first businesses quarter was fourth we the in global best quarter came headwinds XXXX though as contribution impact Greif’s call, in sold. trends expectations, we as In the XXXX, start result business, QX FPS and margins. second full first it first highlighting our in XXX-year challenging subsequently original to below fiscal quarter a Our to volume and well fiscal from was quarter steel included clearly net XXXX the weaker year, Also relative the noting, seeing, history. in a were first in the volume against

While footprints, uncertain, managing working our the actions, tightly rationalizing demand match and remains demand, and cost-out acted with swiftly production optimizing to teams our capital. working environment on

disciplined to execution and costs our remain adapt enough of while aggressively customers We and respond Slide to and of period turn our ability to to focusing and proud manage actions right-size of when commitments to taking during changing demand our this agile our on costs, improves. Please environments, to the will Build still strategy. our I'm Last growth volume softness, to demand X. continue yet to team's will support

conditions ownership stake an Container subject and Tuesday increase closing On we agreement acquisition to XX%, clearances. to regulatory signed our customer to in Centurion

margin close benefits our markets acquisition diversification at core strategy, As of and targets industrial I most our mentioned product offerings a few accretive. to are our business months are attractive or ago regarding in end packaging,

our of about was businesses with and the a grow both to resin-based than investment XXXX. strong Container Centurion Centurion sustainability want in future I more products, accelerate that The also have sustainable reconditioned DA excited partnership business through grown of of and Since our when margins April joint even has partnership I'm venture in with nearly almost by and meets business, helps and new the eightfold scalable model criteria, to all and this Greif the component. offering years growth I'm excited a XXXX, We those made both initial the three about its inception with ago part strong top look organic the growth continued in potential exceptional IBCs. EBIT colleagues Greif welcoming conversion. after formally of line cashflow and of growth inorganic forward transaction. we Centurion conclude a as I

X our to Slide Let's results quarterly now please. turn back on

price market and low margin double was in steel basis. The first earlier, quarter, experienced markets. due were American our the weakest, on digits mentioned dual from North end Steel, within and industrial our to headwinds lower business demands compression volumes fiscal plastic year-over-year chemical a largely IBC packaging and demands global temporary As deflation. rapid decelerating down and coating each global

path were but challenges, XXXX on that global Our LATAM QX. February remained demand flats and volumes commend in the to may I that strong hope essentially continued on some patterns In our improvements gives our maintaining price discipline. all region GIP for against managing weak team in of quarter, the strong most and taken in the decisive recovery EMEA face some demand actions we costs isolated through the ag their us solid, sequential be chem in of these the APAC and QX food markets. the saw from

normalization the sequential combined along actions, steel that in in next impact result improvements of margin Our with quarter. our should team's prices, GIP is in expectation

the tailwinds. Slide first declined lower and Paper to by year-on-year the million quarter approximately of quarter, to in mill sales converting turn volumes throughout $XX X. packaging's quarter pricing due Please despite

slow of tons system, in container quarter, took downtime the XX,XXX in Sheet film the core, CorrChoice approximately QX low per protective across and XXXX. digits our Core down rest in Tube First CIB. XX,XXX tons tons in to particularly double quarter the volumes core and in and very mill economic markets. the were and volumes Greif approximately with taken XX,XXX boards, In suffered demand URB, Tube compared from day our strong and system, Feeder system paper, Core in

PPS labor furloughs, plans. focused on temporary consolidation changes capitalize margins teams GIP improve to across the we to our expect and capital is with team working costs In advancing footprint’s quickly responding and our opportunities demand, reductions, As in business, actions cost taking coming in management, shifts on the network, our and in cashflow on quarters. both remain incremental to businesses, the later in

I guidance. will Hilsheimer, XXXX turn our on to CFO, QX X, our over discuss as Larry now well it financial as to our review, Larry? Slide

Larry Hilsheimer

you, morning, everyone. Ole. Thank Good

as first quarter environment. teams faced commend in for demand As we face tougher a challenging headwinds, our we more want anticipated cost Ole to swiftly guidance several our to mentioned, I acting too provided when than fiscal December. we manage

the million contribution sales both headwinds. the down declined April. quarter prior $XXX.X FPS the best quarter, primarily ever, steel with due in increase cost our in performance Adjusted abate the to to EBITDA factoring QX prior though second ‘XX, QX have which previously line economic approximately down to primarily second first to in improvement point Greif’s first $XX.X today as attributable was $XX were XX. the business, Net of first contribution quarter $XXX.X sales XXXX April $XX.X of when $XX strong business, million mentioned million driven we margins the down attributed the expect million for record by of in was million, our FPS, stabilized. GIP trends came which declines The versus EBITDA year our impact of million $XX volume included of our the in only in by million versus proud XX.X%, profit year headwinds start half, which CapEx bested EBITDA sold consolidated slight at was Gross of the by FPSs, impacts we million lower of fiscal price our XXXX. a last the the year in given only XXXX. I of which with $XX.X am quarter, a quarter, XX-basis volumes net plan the price of and divested and year-over-year, will

our becomes times plans available. to execute it constrict the growth projects are machinery and new finding more as easier organic Our and intact, capital staff engineering remain on teams on wait

improved execution we generating our on which especially seen, reducing cash Ole we've cash. and As prior capital working free over given notable, flow volume of mentioned, weaknesses and teams our solid the the pronounced is year, highlights

still to are working chain. supply on initiatives, We improves. further believe demand our if capital drive throughout we even our reduction We challenging additional efficiencies teams capture can

$XXX to given let's macro In turn challenge. X flow, in million guidance. demand cash wide Slide $XXX range, guidance to QX our a $XXX difficult guidance free and discuss uncertainty EBITDA, of million Now, provided caution XXXX great to $XXX Setting to a a environment. in the particularly in deal in million in with admittedly we the has million range of a call, posed

- that January on the on based and We to were we also level for through December and we you based out with frame would seeing expected into in improve November weaknesses QX would customers. trends tried volume discussions we

However, not has Volumes other our that through than in that finished into happen. both in worse weakness stabilizing our continued in businesses and America, January, regions. North expectations while did February

two we and contemplated experienced guidance the the remainder an we in we to we markets, normal of demand As have including have for which end past the determined quarters agriculture data expect year, inflection in trends the in drivers seasonal construction. beyond insufficient point

been provide end-only that to we is end guidance, and could guidance the low provide consequently than no determination, determine a we some guidance guidance that of on better either for to have that high none. guidance drivers. seasonal experiencing based with cannot the We adjustments choose As establish a or we trends assuming result, provide chose concluding

in industry could the if pricing that believe also pattern We paper continues, deterioration emerge. the further in demands

midpoint reflected guidance in low million On of business, the of an $XX results. our to the business, in relative million PPS our inclusive we've XQ of our overall in prior GIP and $XX basis, volume range end guidance impact

a addition, the million. pricing in business $XX we have In included of paper impact

breakdown by be grade. the paper We will not providing

reframe our may approach I this we've in prior compared record XXXX, and things and to at history the results While highlight do guidance, business look model our to in made a especially the our improvements to when want broader power. seem with earnings draconian

recession results, excluding and we seeing Day to those worse materially guide a outlook back than than and at our cash $XXX that million $XXX present FPS, million better. again, $XXX last are and fiscal at our above Looking of is scenarios, presented million cash XXXX to worse low are trending earnings year. currently This EBITDA, The trends yet Investor of of end our million volume during significantly $XXX case volumes is we're flow our flow. downside and free year,

in using right-size have pricing marketplace, We action and sheet discipline the performance costs XXX, our hopeful maintaining saying, in view I'll to demand of the volume are business. by simply balance bar line subside recovery in to by our pressures taking that we with by second raised close at in Greif to and December. the by the see our our we current the and strict grow continue half

end our some even aggressive capital We $XX due to low generation as guidance EBITDA add environment, in Centurion, well And closed, to in ahead. in the years have if million negative find balance flow goals exciting strength as M&A cash additional we in our growth and realized capital depending that, of $XX including XXXX. on business pipeline, and timing, if continue is working in an comfort to place, the of fund million to could our sheet targets the economic our provide to

to capital on I'd closing guidance, strategy Slide share thought on like allocation that again our X. With

and our are be funding available. a opportunistic balance flow the and maintenance of pipeline. objectives, that look confident, and target and our strategic We ratio Ole’s our M&A excited slower sheet and critical I strength Greif thus even remarks, executing in our continue the towards with given range. the million about grow our shares, generation, businesses in strategic plan. repurchase in our while the I'm still in mentioned growth acquisition be plan of opportunities captured attractive CapEx, low continue on opening and will to we end to far list invest attractive our to to Container, when XXXX cash of dividend am able simultaneously growing become $XXX first leverage strategic to quarter, targets As long-term Lee

and discipline our acquisitions, breadth and culture will Greif of capital and strict around the portfolio. only that positioning elevate maintain our the highest the continue competitive quality We and to allocation and businesses pursue fit strategy

XX. things on With Ole Slide back turn that, I'll to

Ole Rosgaard

global company about Larry's To best a is to business year start post our in Last we also Larry. off to capital Thanks, to XXXX discipline, financial continue service comments, regardless final means objectives. our in without strategic it Greif and in cycle, our be are but fueling and of are full world. to the happen That confident slow vision doesn't team growth to Build continued and where in XXXX, executing with comments, well results investments. strong and the the long-term growth business thoughtful we customer Despite the build execute

for We your year continue results will investment work the company. our are to in and to produce worthy excited ahead, of

We can in you Greif. open the to thank interest questions. Michelle, you for your line

Operator

Instructions] [Operator W. first the comes Panjabi of with Our you. Thank Ghansham from Robert Baird. line question

go Your line is Please ahead. open.

Ghansham Panjabi

everybody. you as destocking, comments to to do starting clearly it I morning, reopen. is off February, And a that process? to your on Good you. as Thank are sense just guess China where on relates have we in then your comments building

just economic early it see the positive starting that pretty of early pickup, Europe, specific is too cetera. including it Some to relates in as this regions, to at et you data point? Are points seem or

Ole Rosgaard

Ghansham, do LATAM early, any can especially in APAC northwestern worse, it's but strong, improvement, not fairly improvements. remains not but I some It's really in see too where is we bit that a probably getting either. see is what getting North America better Europe. we don't say and Yes, but

Ghansham Panjabi

And destocking, you where you. the on on that? Got think are we then do

Larry Hilsheimer

an any to it we're there's trends in I certainly what shifted we've discussions through yes, extremely been that Ghansham. and clarity February, our with yet. and customer through it's is but not impact anything been us difficult that indication relative there has it's I to seen volume yet. get clear that, mean, destocking, Yes, to to whether in no clear it on has given December January, mean,

Ghansham Panjabi

then what's since joint second question, growth to outsized And EBITDA Centurion, that was my asset margin just of on venture formed? a XX% underlies unique just us about for sense so give you it. as the the and profile can the Got the

Ole Rosgaard

or service when our them it's plastic recondition container cage containers used old either Essentially, new a into to a we new manufacture steel we customers, where we and them put business we then the or from when the we products. use recondition collect

And a circular solid a because it's high with EBITDA And comes products, plays our growth. it's into it very well. business, as sustainable. So, it of service strategy margin margins

Ghansham Panjabi

it. so Got much. Thanks Okay.

Operator

you. instructions]. Thank [Operator

question the Gabe Fargo. Our with comes of Wells Hajde next from line

go is open. line ahead. Your Please

Gabe Hajde

I working could you your that as - what wanted I morning. I specific good Yes, in bit. I'm about - PPS, you’re out referencing. just you cost remarks, little well to opportunities, as curious Larry, take prepared it think was talked a improve capital. to on think, I'm if to expand

You talking that's talk know footprint consolidation. about did just some don't I us but about, if part of there. you're help what

Ole Rosgaard

I that. here. Ole talk a it's bit Gabe, little Hey, can about

for to until we we that then production when when so moment. consolidations, know shifts We but in consolidating out, and them don't And sides, we’re can at notice. have shifts our furloughed up at - structure some have are speeding the take we been converting planning and furloughs maximize running. them have further how we’re We the looking executing bills. they're shift and rooftop And to flight also them, we some primarily on long,

Larry Hilsheimer

thing way the that built that part is, lot into our cost. in addressing Gabe, and that take that work. comes of structural been shift there's And a overtime of structural with of to we've revamping been industry, that out overtime they of structure, some other this Yes, workers the

Gabe Hajde

Yep, understood.

Okay.

properly. up it on that we The maybe second other guide, hearing question, low end we're the I correctly frame of is, just sure make guess, so or one or everything

we're extrapolating the GIP, from sort And then it assumption. at PPS, teens out you constant kind double then gave of digits holding You're us price low and DOCC in of today. in guess call low and down I where

is when recast guys that? you did or be could there? of that scenario rebudget confirm lower drivers A, could in you guess, I your B at maybe And can the there come that? kind look a than So, that then, you And what

Larry Hilsheimer

first well, get Yes. specific Well, we numbers. to some let believe of - me all, your that of

you're on clarify, to Just GIP side. maybe right the

boys been our year-over-year. are the - On mean, we've I you're PPS actually bill XX% down low light. side,

So, last strong in in QX particularly now, year. that's - over some performance

laid guess still roll Could guess forwards So, can I worse? yes, painful. they on any to are have it's worse things indication worse. to we than don't better. have - going going indications I it that us we've always volume We are are. think where be any be have what pretty it'd be that out, get just We that get you significant to don't going to

that's so, that volume believe prepared remarks. we And where to be did are. I in paper continues said this restate if also some there in trend - we've inevitable where landed price something my But how that this, will I pressure. it's We like want

prior to our of erosion And million the our price guidance where our relative in of further about midpoint from so, we in, we assumptions build midpoint. $XX were of guide, impact did in

Gabe Hajde

the yes. Okay. And last then one -

Matt Leahy

you Gabe, this the trending just or the clarify is to view on first. currently? Matt. Were paper were year for want your question I volumes asking they full where

Gabe Hajde

I offer embedded I that sort consistent with in you clarify Well, XXX you more up, would reported make the guess be sounds to great, but what's it was to like down in just which number, understood QX. what if fiscal of sure is it that

Matt Leahy

Yes.

I was it’s much think is, the year, in the not the as - full so as for QX. it down comment down

Larry Hilsheimer

are there pickups. because seasonal Yes,

Matt Leahy

And the get in half. the back comps easier

to that's in back that the easier and is to more strong the then QX referring a clear just pretty there, down be what in we're get volumes that I are So, we half. comps want comp, off saw

year. So, kind things throughout of normalize the

the full same through year. every percentage not the decline it's as So, quarter

Larry Hilsheimer

about we XQ pretty the significant then XQ bad. in last My point drag was, we beginning, Yes. call, was and as saw on - in talked

X%. had down you fiscal overall for volumes almost you as So, remember, about ‘XX,

further the add it's rest of down. then even you if now So, year, this

Gabe Hajde

Understood.

has confirm guess Okay. like but changed, sounds that. trends, just the it February to And not much I

Larry Hilsheimer

Yes. That’s correct.

Gabe Hajde

know, on timing, authorization. looks left that million it, I like ask. share get last - tough macro. just a maybe call on exact don't until guess more Okay. one, - I the on clarity we would to it be exact little there's, Not $XX it Is And the the but asking repo question pause

Larry Hilsheimer

repurchase. our position. comfortable our balance sheet very on We're stock with moving No. forward We're

Gabe Hajde

Okay. Thank you.

Operator

you. Thank for our And question. one next moment

Our next with Aadit question Shrestha Stifel. comes from the of line

Your line Please go ahead. is open.

Aadit Shrestha

Hi. questions. taking Thank for you my

about first question just my Centurion. is So,

We about. actually million line in you be to profile? annual $XX gave are were of IBC when So, kind million, to expected sort of, pretty already? timeline. is of close, uncertain and with sort EBITDA do Greif’s the expect I margins you the know but $XX what they to And business the that

Larry Hilsheimer

So, the just we've timeline through get got to standard regulatory process.

expect We just to alone. term. million pipeline if was our $XX near-term And That Centurion it in close that to materialize. Centurion near XX $XX XX clarify, million to other was they and some to M&A opportunities not

annual looking it's So, And what profile in is on our together. of basis does the as slide of Centurion at job the laying and - the that the a out deck all good of it. margin it

Aadit Shrestha

so sales, on Can is of that. look actually the we free sort take that much being Thank get cash? EBITDA, on you. I'll lost color of much a the of divestment? volume And divestment sort how at how and CRB mill,

Larry Hilsheimer

was Yes. a exact don't the built that trends the it for That it this seen. EBITDA than was we a us. make into more a We nice would multiple to go multiple. year, EBITDA really that high to a that in realization that had it - very year given cost for us. sold mill, very, numbers no on to them but had purchaser attractive I very at valuable we've on full current that The that for want was volume was

Matt Leahy

by our being the number. in the guidance way, was too, It that in prior not

Aadit Shrestha

you. Thank Okay.

Operator

[Operator instructions].

comes of Our Gabelli. with line Bergner from next question the Justin

open. is go line Please ahead. Your

Justin Bergner

Ole. Lawrence, morning, morning, Good Good Larry.

recessionary perform allowing wasn't that to in the than you a guide your you business is $XXX business EBITDA help experiencing of least the million that regards of Can to $XXX Investor million and tracking help handicap Investor at volume of $XXX what the for at Day I sort better sort despite to downside mean, First this Can long year? to question handicap ago. the above end new low XXX Day, being $XXX million you million conditions, the scenario just is that. -

Larry Hilsheimer

Yes.

combination a things it's in but Justin, it’s efficiency. like whole of you operating mentioned, improved We've supply things chain.

mentioned, things, better and activities just managing volume We on some execution have on stronger one we're Ole our of our biggest whole team. that strategy, combination doing it's but probably - our footprint these good shift pricing over a consolidation really and the value is structures. and strength discipline It’s done among even

Justin Bergner

Great. That's helpful.

midpoint the to, Second question to EBITDA I prior relates the guide think, of from the bridge XXX. range the

paper impact. GIP $XX and XXX. Is I million said just in leave else? in containment sort think million me of to or to a you positive get That volume, cost would the that actions, million $XX million volumes, that packaging is pricing $XX $XX something delta

Larry Hilsheimer

that. that. Yes, to actions going other we've We've are offset the you're then about items stuff like we $XX got cost got got that mix, mix over - of margin, related mentioned, million that million yes, on of way that, the just that elements improvement inflationary right and product and items just some $XX of

Justin Bergner

Got And parties, it. was you sort that that transaction, first given JV did of against to Centurion a Thanks I structure, the the refusal? you then for bid of right other have actually filling lastly, did have or it picture. mean,

Larry Hilsheimer

initial we is the mechanism on. - set piece, forth trailing multiple entered into in a acquire a ended deal EBITDA, was to when the buyout which up had what on the that paying is - provided based It we we that,

Justin Bergner

okay. Oh,

into when So, it like of provision sort was call entered JV from the a was put

Larry Hilsheimer

put, yes. a of but More

Justin Bergner

you. Thank Okay.

Matt Leahy

(part) it Yes, was not process. the of

Justin Bergner

Thank Okay. Got you. luck. you. Best of

Operator

next for Thank one you. And our moment question.

follow-up Our with question next a Gabe from Wells Hajde question Fargo. is

is line ahead. go Your Please open.

Gabe Hajde

business slide kind is know, I want something it X. - for just modeling to don't say bit we own that. Wanted or purposes our that safe is and give detail just to Is calibrate let's in I assumption a say, close, like might here to things guess likely one may here, throw on but since base so you, this don't on Thank to it for then of of been are part all your seeing trends actually has kind to And need investment, of the and that that is thing initial is it that you when adjust experiencing of with sort similar makes may XXXX, synergy network you'd been this what EBITDA a sounds like aid your in sort from conventional to of refurbished water I guys or terms just make you that? how of expect secondly, ask overlap business, you April Centurion, because little properly, we just able us business of did made Greif, of on kind the if magic guys. when sense.

synergy meaning EBITDA on that there So, of already XX% the that number in million is XX baked or margin. sort

Ole Rosgaard

terms in are Well, network, obviously, and the the we footprints in business. of our our base leveraging customer

will has continue and helped, that. that So, to do we

can't on, the that markets. really In terms line comment their on see in I macro safe that deteriorations in - it volume, assume the we is with to of can't but or of it's rest we comment the

Gabe Hajde

you, Thank Ole.

Larry Hilsheimer

supplying assume assuming us The XX% the which of we will, date. having bottles that not ownership, their to which one this then add with we needs, be thing is been has the case closes, there I - to now it all will would for

some for is there. us pickup there synergy So,

Ole Rosgaard

able be our service directly, rather service that separately. we'll them And full provide to all to receive than customers a

Gabe Hajde

Got it.

Operator

like Leahy would back any now Thank to turn for to you. closing conference the I remarks. Matt

Matt Leahy

today a Thank you joining good. nice have Very and day. for everyone

Operator

for you Thank call. conference today's concludes participating. This

You may disconnect. now

Greif (GEF) 2 Mar 232023 Q1 Earnings call transcript