Greif Q4 2026 Earnings Call Transcript

Greif (NYSE:GEF) reported fourth-quarter financial results on Wednesday. The transcript from the company’s fourth-quarter earnings call has been provided below.

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Summary

Greif achieved $105 million in annual run-rate cost savings, surpassing the $100 million target a year early, and expanded adjusted EBITDA margins by approximately 160 basis points.

The company reduced leverage from 3.5 times to 1.2 times and returned capital to shareholders through a 15% dividend increase and $225 million in share repurchases.

Fiscal 2026 adjusted EBITDA reached $625.7 million, up nearly 12% year-over-year, with adjusted earnings per Class A share rising 75% to $4.04.

The company exited coated recycled board production by closing the Sweetwater mill, aligning with its strategy to sharpen its portfolio.

Fiscal 2027 guidance includes $645 million of adjusted EBITDA with a focus on high-return investments in polymers and closures, and a capital expenditure of $185 million.

Despite weak industrial demand, Greif is focusing on customer service, efficiency, and strategic investments, with plans to achieve $150 million in structural cost savings by the end of fiscal 2027.

Full Transcript

OPERATOR

Good day and thank you for standing by. Welcome to the Greif fourth quarter 2026 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your first speaker, Bill D’Onofrio, Vice President of Investor Relations and Corporate Development. Please go ahead.

Bill D’Onofrio (Chief Transformation Officer)

Good morning and thank you for joining Greif’s fiscal fourth quarter 2026 earnings conference call. Today our CEO, Oli Rosgaard, will provide a strategy and market update followed by our CFO, Larry Hillsheimer, with a review of our financial results and fiscal 2027 guidance. Please turn to slide 2. In accordance with Regulation Fair Disclosure, please ask questions regarding topics you consider important because we are prohibited from discussing material non-public information with you on an individual basis. During today’s call we will make forward-looking statements involving plans, expectations, and beliefs related to future events. Actual results could differ materially from those discussed. Additionally, we will be referencing certain non-GAAP financial measures and the reconciliation to the most directly comparable GAAP metrics that can be found in the appendix of today’s presentation.

I’ll now turn the call over to Oli on slide 3.

Ole Rosgaard (President & CEO)

Thank you, Bill, and good morning everyone. Before we discuss the fourth quarter, I want to start with a bigger picture: how Greif has changed over the past two years and what that means for our shareholders. Two years ago we set out to build a simpler, stronger, more profitable growth. We introduced our solutions-based operating model, brought our global commercial teams together and committed to Taking $100 million of structural cost out of the business. Today those actions are delivering. We have achieved $105 million in annual run-rate cost savings and expanded adjusted EBITDA margins by approximately 160 basis points. We sharpened our portfolio through the Containerboard and Timberlands divestitures. We reduced leverage from three and a half times to 1.2 times at year end and we have returned capital to shareholders, raising the dividend by nearly 15% over two years and repurchasing approximately $225 million of shares in fiscal ’26.

This is meaningful progress in a short time. Greif has greater earnings power, a stronger balance sheet and more room to invest in growth. Our shareholders have participated in that progress with total shareholder returns of more than 35% over the past two years and we are not finished. Our priorities are straightforward: win new customers, grow our share of business with existing customers, invest in high-return opportunities in polymers and closures, and keep taking structural costs out of the business. We will remain disciplined with capital including targeted acquisitions and shareholder returns while keeping leverage below two times. These results belong to our thousands of colleagues around the world. They have driven this change while continuing to serve our customers.

I want to thank them for their commitments and execution. Please turn to slide 4. Now look at what this means for our fiscal 2026. Adjusted EBITDA reached $625.7 million, up nearly 12% from last year despite another year of weak industrial demand. Adjusted earnings per Class A share rose to $4.04, an improvement of 75% from a year ago. Our year-end leverage ratio was 1.2 times. We repurchased $225 million of shares during the year. These are clear signs of stronger earnings and financial flexibility. We also announced our exit from coated recycled board through the closure of our Sweetwater mill.

While it may be a difficult decision for those affected, it’s the right one for the long-term health of our fiber business. It sharpens our portfolio and supports a more efficient network. The key point is this: we are producing better results through actions we control. We are not depending on an industrial recovery to improve growth. Please turn to slide 5. Cost improvements are one of the clearest examples of that approach. At the end of fiscal ’25 we had delivered $50 million of annual run-rate savings. At the end of fiscal ’26 that number reached $105 million. We met our original $100 million commitment a year early. We’re now raising the target to $150 million by the end of fiscal ’27. That is 50% above our original commitment and another $45 million of annual run-rate savings beyond what we have already delivered.

The work is practical: improve operating efficiency, simplify our network, and reduce overhead. These savings are structural. They’re designed to make Greif more competitive and support margin expansion through the cycle. We have earned confidence by delivering. Now we need to deliver the next $45 million. Please turn to Slide 6 for our fourth quarter results. Turning to demand, the industrial backdrop remains difficult. We have not seen convincing signs of a broad recovery in the fourth quarter. Primary product volumes in polymers and metals each declined about 2.3% from a year ago. Closures declined 3.5%. Fiber was the exception with volumes up 1.3%. Within polymers, intermediate bulk containers grew at a high single-digit rate while smaller containers faced customer destocking, higher resin costs and weaker agricultural demand.

Metals continued to reflect soft industrial activity across regions. Fiber benefited from steady converting demand. Closures experienced lower volumes, but we remain confident in its long-term growth opportunities. We’re being realistic about the markets. We do not control when demand recovers. We do control how well we serve our customers, how quickly we win new business, how efficiently we run our operations, and where we invest. That is where our teams are focused. We are strengthening our commercial execution, pursuing growth in attractive end markets, and continuing to improve our cost base.

With that, I will turn the call over to Larry to review the quarter, our financial performance and our outlook. Thank you.

Larry Hilsheimer (Chief Financial Officer)

Thank you. Adjusted EBITDA declined approximately $5 million, or 3.1%, year over year in Q4. However, the prior-year quarter included $18.2 million of favorable incentive accrual reductions without regard to the sale of Containerboard. Excluding this prior-year item, adjusted EBITDA increased $13 million, or 8.7%, and margins expanded approximately 60 basis points year over year, reflecting disciplined price-cost management and structural cost optimization.

Adjusted EPS increased 50% year over year in Q4 driven by lower interest expense from our strengthened balance sheet, lower tax expense and the impact of stock repurchases. Adjusted free cash flow declined $89 million year over year in Q4 primarily due to the inclusion of Containerboard cash flows in Q4 ’25 and higher cash taxes, partially offset by better working capital on a year-over-year basis. This brings full-year adjusted free cash flow to $279.3 million.

As we discussed in Q3, the Middle East conflict created significant disruption in raw material markets, particularly resin. At the time, we expected conditions would allow us to normalize inventory levels during the quarter. However, as supply disruptions intensified and raw material costs remained elevated, we made the decision to maintain higher inventory levels to ensure continuity of supply for our customers. These elevated inventory balances combined with higher resin costs increased our investment in working capital and negatively impacted free cash flow relative to our prior guidance.

While this created a near-term cash flow headwind, the decision ensured continuity of supply for our customers. Importantly, this is a working capital timing impact rather than a structural change in our cash generation capabilities. Please turn to Slide 8 for our segment results. In Polymer Solutions, sales increased due to favorable pricing partially offset by lower volumes. Gross profit percent declined due to product mix and the flow-through of higher resin costs. In Metal Solutions, gross profit dollars and percent improved year over year due to favorable price-cost, partially offset by lower volumes.

In Fiber Solutions, net sales benefited from higher volumes and the flow-through of our previously announced April $60 per ton price increase, while gross profit dollars and percent, $11 million and 230 basis points respectively, both remain below the prior year due in part to the delayed recognition of our June-announced $60 per ton price increase. That increase was recognized by RISI in September and we expect the full benefit to begin flowing through the P&L in the second quarter of fiscal ’27.

In Closures, favorable price/mix and variable cost management drove approximately 40% year-over-year gross profit dollar growth and a 490 basis point gross margin expansion. This segment continues to benefit from technologically advanced products, new-logo growth and strategic investment. Please turn to slide 9 for our capital allocation update. Our capital allocation framework remains unchanged as we enter fiscal ’27 with a continued focus on maintaining a strong balance sheet, returning capital to shareholders and investing in high-return growth opportunities. Our top investment priority remains organic growth. Our fiscal ’27 capex guidance is $185 million, up from $160 million in fiscal ’26, reflecting increased investment in high-return growth opportunities primarily in polymers and closures serving our target end markets, as well as investments to drive operational efficiency gains in fiber and metals.

Returning capital to shareholders remains an important priority. In fiscal ’26 we repurchased $225 million of our shares, representing approximately 6% of the shares outstanding. While our long-term objective remains approximately 2% annually, we took advantage of attractive opportunities to repurchase shares during the year. We will continue allocating capital with discipline while maintaining our commitment to leverage below 2x. Please turn to Slide 10 for our fiscal ’27 guidance. Our fiscal ’27 guidance reflects our consistent methodology of incorporating potential headwinds while recognizing tailwinds only when they are known and highly likely to occur. Our adjusted EBITDA guidance of $645 million assumes $60 million of favorable price-cost, including $33 million from improved URB pricing relative to OCC cost. The remaining benefit reflects favorable price-cost in polymers and metals based on current raw material trends and continued pricing discipline.

This is partially offset by $20 million of transportation and other non-raw material cost inflation. We also assume a $10 million tailwind from incremental Empoplast ownership and partial-year benefits from the Sweetwater closure, partially offset by a $5 million currency headwind. Our volume assumptions represent an $11 million headwind driven by low single-digit declines in metals. We assume flat volumes in polymers, fiber and closures, with new customer wins offsetting continued industrial demand softness.

Finally, SG&A represents an $11 million net headwind as approximately $15 million of structural cost savings are more than offset by $30 million of inflation and strategic investments. Turning to free cash flow, our low-end guidance of $290 million begins with $645 million of adjusted EBITDA and assumes $185 million of capex, $50 million of cash interest, $80 million of cash taxes and $40 million largely related to restructuring and pension costs. We also assume flat working capital. While we expect inventory levels to normalize during fiscal ’27, our low-end guidance assumes those benefits are offset by inflationary pressures on working capital.

As in prior years, our low-end guidance reflects a conservative view of performance without assuming a broader recovery in industrial demand. Due to our usual Q1 seasonality and the delayed impact of our most recent fiber price increase, which will not fully benefit the P&L until January of ’27, our guidance assumes Q1 will again be our lowest EBITDA dollar and margin contributor of the year at approximately 20% of our total EBITDA guidance and flat EBITDA margins in Q1 of ’26.

I’ll now hand it back to Oli on slide 11.

Ole Rosgaard (President & CEO)

Thanks, Larry. Before I close, I want to reinforce the financial progress we made. As this slide illustrates, we are delivering meaningful improvements in profitability, shareholder returns and balance sheet strength. These results reflect the actions we’ve taken to fundamentally strengthen growth and provide a solid foundation for continued value creation. I’m proud of what our team has accomplished and confident in the direction we are taking. Greif, please turn to Slide 12.

The progress we made over the past two years reinforces our confidence in Greif’s long-term investment thesis. We have a strong foundation, clear priorities for organic growth and margin expansion, and the financial flexibility to invest in our future while returning capital to shareholders. Thank you for your continued trust and support. Operator, please open the line for questions.

OPERATOR

Sure. As a reminder, to ask a question, please press star-1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star-1-1 again. Please stand by while we compile our Q&A roster. Our first question will come from the line of Mike Rockland of Truist Securities. Your line is open.

Michael

Yeah. Thank you, Ole, Larry, Bill and Dan, for taking my questions. Larry, first question: just in terms of the 645 million of adjusted EBITDA guidance for ’27, you mentioned 60 million of price-cost benefit includes 33 million from improved URB pricing versus OCC. Does that 33 million incorporate the $60 per ton September price increase that you mentioned goes into effect in your books in January? So that fully bakes in the full—the 60 for the—okay, got it. Perfect. Thank you. Second question. Just back in late 2024 at your Investor Day, you guided to about 1 billion of adjusted EBITDA by fiscal ’27. Obviously, you know, Ole highlighted, you know, the containerboard, containerland sales. You’ve also rationalized other assets. Can you help us think about what a normalized EBITDA number would mean today given all those moves?

Larry Hilsheimer (Chief Financial Officer)

Yeah, essentially, you know, obviously with containerboard gone, I think the simplest thing to think about is if you just backed off the 220 million of containerboard plus the 5 to 10 of Soterra and then added back in the M&A stuff we’ve done since then. So, you know, I would say, Michael, roughly 750 million kind of thing would be sort of normalized, just using that kind of rough math, and that sort of reconciles. If you think about how we talk about if we ever got back to normalized volumes, I mean we would be above that number.

But we have inflationary costs that have eaten the other way. So that’s how I would think through it.

Ole Rosgaard (President & CEO)

And Mike, just to add, we remain committed to the long-term earnings ambitions that we outlined at Investor Day that you’re referring to. But we’re also being clear that we’re not managing the business to a headline number or a fixed timeline. Our focus is building a much stronger Greif.

Michael

Very clear. One last question and I’ll turn it over. How should we think about your portfolio and any further moves? Obviously, you recently announced the closure of Sweetwater by the end of this calendar year. As you focus your resources on businesses and assets with leading market positions, so just realizing that you’re always evaluating your assets and performance from a portfolio perspective, what do you think is left to be done? Thanks, and good luck in the quarter.

Ole Rosgaard (President & CEO)

We are very happy with the portfolio we have right now. We have leading positions in all our portfolio companies and we also have long runways of growth opportunities, particularly in polymer and enclosures. When you’re number one or you’re the leader of the world, in particular like in metals, it’s difficult to grow. So as we’ve outlined, that’s where we are focused on really optimizing the business. But we’re very, very happy with the portfolio we have now.

It’s sharp, it’s leading edge.

OPERATOR

And our next question will come from the line of Ghansham Panjabi, Baird. Your line is open.

Josh Vesely (Analyst at Robert W. Baird)

Hey, guys. Good morning, this is Josh Vesely on for Ghansham. Thanks for taking my questions. Maybe if I could just start off with a broad volume question. Just looking at your guidance, obviously flat to low single or down low single digits depending on the category. I’m just curious what you guys think the market is going to do this year, or what your customers are saying about volumes, just in context of what you guys have been talking about in terms of gaining share via your commercial actions.

Ole Rosgaard (President & CEO)

Hi, Josh, Ole here. So overall demand was consistent with our expectations. First of all, as we outlined, we don’t have a crystal ball to give a comment on the whole year. We have assumed basically flat demand like we have experienced here now. But I would say in terms of our organic growth engine, in the year we won more than 4,000 new logos and we’re seeing business from them starting to come through. So as we said, we’re helping ourselves and I’m confident that we will grow the business.

Just to give you an example of this new logo growth, we have a customer that we have dealt with for many years, but this is relating to the data center markets. Through the good work of our commercial organization, we won a very large chunk of this customer’s business. And this is a global chemical producer serving the water treatment markets. And through the focus that we now have, we actually won a significant new contract. And this customer is now up 200% compared to the same period last year.

And another example is another global customer in the high-end perfume markets. We’ve served this customer for many years with a part of our portfolio. But again, through the intensive work of our new commercial organization, we managed to secure this customer’s order business. In fact, the Chief Procurement Officer named us an official strategic partner. And the result of all that is that our volume of this customer is up 40% compared to the same period last year.

Larry Hilsheimer (Chief Financial Officer)

Josh, the thing I would supplement what Ole said is I just remind this is low-end guidance. So we’re taking the most sort of pessimistic view. We’re seeing the trend lines continue where the industrial economy just continues to suffer. If you’re not tied into that data center business, everything else is off, and a little even worse in Europe with what’s going on there. So, you know, we’re really excited about the commercial efforts and obviously our expectation is we exceed this low-end guidance.

Josh Vesely (Analyst at Robert W. Baird)

Great, thanks for that. And then maybe just for my second question, just curious if you could provide some more specifics on the destocking that you saw on the small plastic volumes. Just more color there on maybe the timing of that and whether or not that’s contained in the fourth quarter. Or if you expect that to kind of linger into 2027. Thanks.

Ole Rosgaard (President & CEO)

Yeah, really, it’s twofold. The increasing cost in resin caused customers to destock, hoping that resin will come down again. And that’s a big element of that. The other one is the agricultural season, which was very weak so far due to weather events and diesel costs, for that matter.

Josh Vesely (Analyst at Robert W. Baird)

And is that supposed to continue into 1Q or is it going to linger, or is it kind of contained into 4Q?

Ole Rosgaard (President & CEO)

It’s isolated to Q4.

Josh Vesely (Analyst at Robert W. Baird)

Okay, awesome. Thank you, guys.

OPERATOR

And our next question will be coming from the line of Matt Roberts of Raymond James. Your line is open.

Matt Roberts (Analyst at Raymond James)

Hi, Ole, Larry, Bill, Dan, good morning. First question on fiber. The volumes seem to be a bright area and you recently took some actions on Sweetwater. You’re assuming flat fiber volumes in ’27. Are there any offsets within that from the exited tons from Sweetwater? If so, how much and how do you think about the margin in that business? You spelled out the price-cost benefit in ’27, but any other considerations from exiting lower margin businesses or potential productivity gains from that Sweetwater announcement?

Ole Rosgaard (President & CEO)

I mean, on Sweetwater, the effect there is 120,000 tons that’s been removed and 60% of that was CRB. The remaining was URB. We have moved that URB—the profitable part of that—to our mills. I can’t give you a percentage how much that is, but certainly it’s a business we like and we still see very solid demand in that business. In fact, that’s the business that’s grown this year.

Larry Hilsheimer (Chief Financial Officer)

Yeah. The other part, Matt, is just—you asked about other elements of the margin in that business. That one is particularly impacted by the diesel cost and transportation cost increases because there’s shipping raw material into the plant and out of the plant at higher levels than maybe in some of our other businesses.

Matt Roberts (Analyst at Raymond James)

Right, right. That makes sense. And then maybe relatedly on the cost side, but the $15 million in SG&A in the ’27 bridge—I might have missed this on the call—but was that net of the incremental 30 million in savings, or how much inflation is absorbed from the prior cost-outs? And given the announcements, basically, is it fair to say that incremental $30 million is largely in fiber, or how would you split that?

Larry Hilsheimer (Chief Financial Officer)

It’s pretty much spread across the businesses. So we’ve got incremental cost saves that are hitting SG&A—about 15 million. The remaining increases will be in our cost of operations. That’s offset by $30 million of SG&A cost increases—labor inflation, medical is just going crazy. So, you know, those are the inflationary costs that we are working hard to overcome with the cost-out actions.

Matt Roberts (Analyst at Raymond James)

All right, thank you all for taking the questions.

OPERATOR

And our next question will be coming from the line of George Staphos of Bank of America. Your line is open.

George Staphos (Analyst at Bank of America)

Hi, good morning. Thanks for the details. I wanted to cover a bit the waterfall chart, Larry and Ole, on slide 10. And, you know, we’re familiar obviously with your approach now to basically giving us the most pessimistic view that you can have in terms of your guidance of those waterfall bars, if you will, based on what you know, in terms of initiatives you have underway, dialogues you have with customers, with employees, within the supply chain.

Which of those bars would have the most potential upside? Would there be a way to dimensionalize that at this juncture, recognizing that you really want to give us more of the low-end guidance? Second question: in terms of the capital spending this year, the 185—you might have mentioned it, and if you did, I missed it—what is embedded in that number for organic growth high-return projects?

Larry Hilsheimer (Chief Financial Officer)

Yeah. So as to your first question, George, on those walks, the one with the most upside is volume. You know, to the extent our commercial activities drive success, you know, that one’s got the most upside in it. Yeah, most of the others—the transportation—if somebody could tell us when the Russia-Ukraine and Middle East conflicts are done, we might see some upside there. But I don’t think anybody’s got high bets on that. So that’s the biggest one—clearly the volume.

On the capex, you know, we’ve basically got our safety investments, we’ve got our maintenance capex—those are fairly consistent. What’s the number on that—on maintenance? It’s around 85 million a year. Then we’ll spend another 5 to 10 on safety. So then the balance of that is toward high organic growth projects, George. Now most of those aren’t going to deliver any results in this year because we’re spending the money now for the future. But we’re very excited about the number of projects the teams are bringing to us and our ability to execute because of our balance sheet.

George Staphos (Analyst at Bank of America)

Thanks, Larry. That makes sense. I don’t want to overdo the point, but I just want to come back to the volume trend in polymers. Were you surprised with the performance relative to what your expectation was going into the quarter? And on the destocking—recognizing it’s behind you from what your remarks pointed to—normally, wouldn’t you see destocking when raw material prices are going down as opposed to going up? It sounded like your customers destocked because resin prices were going up.

So it’s, you know, maybe it’s the same two sides of the same coin, but just wanted to probe that.

Ole Rosgaard (President & CEO)

On expectations—so it’s very difficult to have expectations to the weather and, you know, what’s going on in the Middle East in terms of diesel costs and all that. But what happened here, George, is it’s a seasonal business, and customers are building up stock in advance of the season because once the season starts, you simply can’t do it to order. But what they did, because resin costs were increasing, they delayed the stocking exercise, getting ready for the season, because there was some speculation that the resin cost would go down and then the PAMs would kick in and then they would get it cheaper instead of sitting with, you know, high stocks at a high cost. So it’s kind of the reverse of what you alluded to.

George Staphos (Analyst at Bank of America)

Yeah, look, I get it. It all depends on the context. But over time, people stock up when costs are heading higher because they’re worried about further price hikes. But we got it. Was it related to any particular customer or not? All right, thank you very much. I’ll turn it over.

OPERATOR

And I would now like to turn the call back to Ole Rosgaard for closing remarks.

Ole Rosgaard (President & CEO)

Thank you. And thank you for your questions today and your continued interest in Greif. We remain focused on disciplined execution and building a fundamentally stronger company, and we’re confident in our ability to continue that progress in fiscal 27th. Thank you for your time.

OPERATOR

This concludes today’s program. Thank you for participating. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.