Q3 2023 Greif Inc Earnings Call

August 31, 2023

Okay.

Good day and thank you for standing by welcome to the third quarter 2023 earnings Conference call.

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After the speaker's presentation, there will be a question and answer session.

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Good day and thank you for standing by welcome to the third quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode.

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Please be advised that today's conference is being recorded and I would now like to hand, the conference over to your speaker today, Mr. Matt Leahy.

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Thanks, and good morning, everyone welcome to <unk> third quarter fiscal 2023 earnings Conference call. This is Matt Leahy, Greg <unk>, Vice President of corporate development, and Investor Relations and I'm joined by only <unk>, <unk>, President and Chief Executive Officer, and Larry Hill, Shimer Gripes, Chief Financial Officer, We will take questions at the end of.

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Today's conference is being recorded and I would now like to hand, the conference over to your speaker today, Mr. Matt Leahy Mr. Leahy. Please go ahead.

Thanks, and good morning, everyone welcome to <unk> third quarter fiscal 2023 earnings Conference call. This is Matt <unk>, Vice President of corporate development, and Investor Relations and I'm joined by <unk>, President and Chief Executive Officer, and Larry Hill, Shimer Gripes, Chief Financial Officer, We will take questions at the end of today.

Today's call in accordance with regulation fair disclosure. Please ask questions regarding issues you consider important because we are prohibited from discussing material nonpublic information with you on an individual basis. Please.

Please turn to slide two.

As a reminder, 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 reconciliation to the most directly comparable GAAP metric.

<unk> call in accordance with regulation fair disclosure. Please ask questions regarding issues you consider important because we are prohibited from discussing material nonpublic information with you on an individual basis.

Please turn to slide two.

Fixed can the appendix in today's presentation.

I'll now turn the presentation over to Olivier on slide three thanks, Matt and good morning, everyone.

Our global team executed very well in our fiscal third quarter and posted strong performance. Despite the continuation of historic volume headwinds.

Can the appendix of today's presentation and now turn the presentation over to OLED on slide three thanks, Matt and good morning, everyone.

Our teams are leaning on our build to last strategy to drive results in this difficult environment and I could not be proud of the work we are doing to manage and improve the business and better serve customers.

Our global REIT team executed very well in our fiscal third quarter and posted a strong performance. Despite the continuation of historic volume headwinds.

Our performance in the first nine months of 2023 with strong EBITDA performance and margins and free cash flow conversion well above our targeted 50% is a testament to the growing resilience of our business model and our commitment to both manage the presence.

Our teams are leaning on our build to last strategy to drive results in this difficult environment.

I could not be prouder of the work, we are doing to manage and improve the business and better serve customers.

While building the future.

Before further covering our results I want to share an exciting updates on two of our key missions and our build for that strategy.

Thriving communities and submission devoted to cultivating a culture of appreciation inclusion and recognition for all of our internal colleagues and external stakeholders in the third quarter, we launched our colleague stock purchase plan.

While building the future.

Before covering our results I want to share an exciting update on two of our key missions and our built for that strategy.

Creating thriving communities.

Program that enables colleagues from corporate down through production to acquire <unk> class Acs at a discount to market prices.

Mission devoted to cultivating a culture of appreciation inclusion and recognition for all of our internal colleagues and external stakeholders.

We believe in the power of ownership to drive greater accountability and commitment to excellence across the organization and this program will provide the means for our colleagues to participate in the economic benefits of value creation.

Third quarter, we launched our colleague stock purchase plan a program that enables colleagues from corporate down through production to acquire <unk> class Acs at a discount to market prices.

Operator: Good day, and thank you for standing by.

Operator: Welcome to the Greif's 3rd quarter, 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press Star 1-1 on your phone. You will then hear an automated message advising your hands is raised. To withdraw your questions, please press Star 1-1 again.

I am proud to welcome our colleagues to the table as fellow owners of our company and look forward to expanding this program in the months and years to come.

We believe in the power of ownership.

<unk> greater accountability and commitment to excellence across the organization and this program will provide the means for our colleagues to participate in the economic benefits and value creation.

On our mission to deliver legendary customer service each quarter represent latest results of our customer satisfaction index and mechanism. We use to formally receive regular feedback from customers on overall satisfaction with grief in terms of product quality.

I am proud to welcome our colleagues to the table as fellow owners of our company and look forward to expanding this program in the months and years to come.

Operator: Please be advised that today's conference is being recorded.

Matt Leahy: And I would now like to hand the conference over to your speaker today, Mr. Matt Leahy. Mr. Leahy, please go ahead. Thanks and good morning everyone.

On our mission to deliver legendary customer service each quarter represent latest results of our customer satisfaction index and mechanism. We used to formally receive regular feedback from customers on overall satisfaction with life in terms of product quality.

Customer service and our ability to deliver value.

Matt Leahy: Welcome to Greif's 3rd quarter, fiscal 2023 earnings conference call. This is Matt Leahy, Greif's vice president of corporate development and investor relations. And I'm joined by Ole Rosgaard, Greif's president and chief executive officer, and Larry Hill Shimer, Greif's chief financial officer. We will take questions at the end of today's call. In accordance with regulation fair disclosure, please ask questions regarding issues you consider important because we are prohibited from discussing material non-public information with you on an individual basis.

Our aspirational benchmark of success is a score of 95 out of one hundreds.

This quarter, our global consolidated score was $94 to just shy of that gold and an exceptional result, given the challenges our customers are facing in the markets.

Customer service and our ability to deliver value.

Our aspirational benchmark of success is a score of 95 out of one hundreds.

Gripes steadfast commitments to our customers is evidence.

We will provide you and support you and build on our existing relationships in good times and in bad and you can count on us to deliver with quality and service Excellence every day.

This quarter, our global consolidated score was $94 to just shy of that gold and an exceptional result, given the challenges our customers are facing in the markets.

Matt Leahy: Please turn to slide two. As a reminder 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-gap financial measures and reconciliation to the most directly comparable gap metrics to the appendix of today's presentation.

Graphs steadfast commitments to our customers is evidence.

Our dedication and relentless focus on customer service is core to who we are as knock on a station and our excellent CSI score. This challenging period as a reminder of the value we provide.

We will provide you and support you and builds on our existing relationships in good times and in bad and you can count on us to deliver with quality and service Excellence every day.

Ole Rosgaard: And now turn the presentation over to Ole on slide three. Thanks, Matt, and good morning everyone. Our global drive team executed very well in our fiscal 3rd quarter and posted strong performance despite the continuation of historic volume headwinds. Our teams are leaning on our built-to-last strategy to drive results in this difficult environment.

Now I'd like to shift focus back to financial results on slide four where I'll turn it over to Larry to kick things off.

Our dedication and relentless focus on customer service is core to who we are it's not going to station and our excellent CSI score.

Thanks, Joe and good morning, everyone.

Given Greg overall financial performance relative to the operating environment. We have been in this year. We went to briefly step back from our single quarter results in just take stock of where the company is now relative to our initial view in fiscal 'twenty three guidance provided in December of 2022.

This challenging period as a reminder of the value we provide.

Now I'd like to shift focus back to financial results on slide four where I'll turn it over to Larry to kick things off.

Ole Rosgaard: And I could not be proud of the work we are doing to manage and improve the business and better serve customers. Our performance in the first nine months of 2023 with strong EBITDA performance and margins and free cash flow conversion well above our targeted 50% is a testament to the growing resilience of our business model and our commitments to both manage the present while building the future.

Thanks, Joe and good morning, everyone.

At that time, we had started to see demand start softness in many of our end markets and I discussed on our Q4 'twenty two earnings call, how given our level of uncertainty we had run a robust scenario analysis to arrive at the wide guidance range for 2023 of 802.

At that time, we have started to see demand start softness in many of our end markets and I discussed on our Q4 'twenty two earnings call, how given our level of uncertainty we had run a robust scenario analysis to arrive at the wide guidance range for 2023 of 802.

8% to $906 million in EBITDA, and $410 million to $460 million in free cash flow.

Ole Rosgaard: Before further covering our results, I want to share an exciting update on two of our key missions in our built-to-last strategy. Creating thriving communities is a mission devoted to cultivating a culture of appreciation, inclusion, and recognition for all our internal colleagues and exterms stakeholders. In the third quarter, we launched our colleague stock purchase plan, a program that enables colleagues from corporates down through production to acquire growth classes at a discount to market prices. We believe in the power of to drive greater accountability and commitment to excellence across the organization. And this program will provide the means for our colleagues to participate in the economic benefits of value creation.

I'll be Frank with everyone. While we considered at the time the possibility of an extended slow demand cycle, we did not wait that heavily.

Doing so would imply we felt that we were headed into another industrial recession.

8% to $906 million in EBITDA, and $410 million to $460 million in free cash flow.

Clearly that initial assumption in December was wrong and while we may not be in a broad economic recession global manufacturing PMI remained below 50 for the 11 11 months in a row and our year to date volumes across GIC in PPS are both tracking down mid to high teens year to date.

I'll be Frank with everyone. While we considered at the time the possibility of an extended slow demand cycle, we did not wait that heavily.

Ole Rosgaard: I'm proud to welcome our colleagues to the table as fellow owners of our company and look forward to expanding this program in the month and years to come.

Doing so would imply we felt that we were headed into another industrial recession.

Clearly that initial assumption in December was wrong and while we may not be in a broad economic recession global manufacturing PMI remained below 50 for the 11 month, 11th month in a row and our year to date volumes across GIC in PPS are both tracking down mid to high teens year to date.

That's not indicative of an industrial recession and I'm not sure what is.

Another relevant comparison is the recessionary scenarios slide we outlined at our Investor day in June of last year, showing downside risk to $600 million to $700 million of EBITDA and $260 million to $320 million in free cash flow.

That's not indicative of an industrial recession and I'm not sure what is.

A few points comparing that scenario against our current environment.

Another relevant comparison is the recessionary scenarios slide we outlined at our Investor day in June of last year, showing downside risks to $600 million to $700 million of EBITDA and $260 million to $320 million in free cash flow.

Number one recession scaled drum volumes assumed 5% down versus actual Q3 are down over 10%.

Ole Rosgaard: On our mission to deliver legendary customer service, each quarter we present latest results of our customer satisfaction index and mechanism we use to formally receive regular feedback from customers on overall satisfaction with Greif in terms of product quality, customer service and our ability to deliver value. Our aspirational benchmark of success is a score of 95 out of 100s. This quarter our global consolidated score was 94.2 just shy of that gold and an exceptional result given the challenges our customers are facing in the markets.

Recession, Phil index prices assumed down 20% versus the actual down 15 through July .

A few points comparing that scenario against our current environment.

Assertion mill volumes assumed 5% down versus an actual down over 20% in Q3.

Number one recession scale drum volumes assumed 5% down versus actual Q3 are down over 10%.

Recession, containerboard prices assumed 10% versus the actual Q3 down about 8%.

Recession, <unk> index prices assumed down 20% versus the actual down 15 through July .

To summarize current steel drum volumes are tracking down double the downside scenario no volumes are down quadruple the downside scenario and overall pricing declined nearly match, our downside scenario and yet our current guidance midpoint contemplates EBITDA and free cash flow that is over $100 million.

Recession mill volumes assumed 5% down versus the national down over 20% in Q3.

The recession containerboard prices assumed 10% versus the actual Q3 down about 8%.

To summarize current steel drum volumes are tracking down double the downside scenario mill volumes are down quadruple the downside scenario and overall pricing declined nearly match our downside scenario.

Ole Rosgaard: Greif's steadfast commitment to our customers is evidence. We will provide you and support you and build on our existing relationships in good times and in bads and you can count on us to deliver with quality and service excellence every day. Our dedication and relentless focus on customer service is core to who we are as an organization and our excellent CSI score during this challenging period is a reminder of the value we provide.

Above the level, we provided for a recession scenario with only a partial lift from M&A.

Illustrate these points to try to hammer home, how well our teams are executing and I also want to share my heartfelt. Thanks to all of our greif colleagues for their commitment and dedication this year.

And yet our current guidance midpoint contemplates EBITDA and free cash flow that is over $100 million above the level, we provided for a recession scenario with only a partial lift from M&A I illustrate these points to try to hammer home, how well our teams are executing.

Okay. Thanks for letting me take the time to boast about our team's performance, but it is really commendable, how well, we're doing and I would like our investors to keep that in mind as they consider our detailed results. Thanks, Larry and we also have.

I also want to share my heartfelt thanks to all of our greif colleagues for their commitment and dedication this year.

As Larry just mentioned, we again reported strong adjusted EBITDA of 226, and a half million dollars only 2 million shy of our previous quarter and less than 25 million short of the very strong 2022 comparative periods.

Larry Hilsheimer: Now I'd like to shift focus back to financial results on slide 4. We are turning over to Larry to kick things off. Thanks a lot. Good morning everyone. Given Greif's overall financial performance relative to the operating environment we have been in this year, we want to briefly step back from our single quarter results and just take stock of where the company is now relative to our initial view in fiscal 23 guidance provided in December of 2022.

Our free cash generation was also extra ordinary reported at $167 1 million nearly equal to the very strong Q3 of 2022.

As Larry just mentioned, we again reported strong adjusted EBITDA of 226, and a half million only 2 million shy of our previous quarter and less than 25 million short of the very strong 2022 comparative periods.

But on volumes, which were more or less 15% lower.

Larry Hilsheimer: At that time we had started to see demand soft softness in many of our end markets and I discussed on our 2422 earnings call how given our level of uncertainty, we had run a robust scenario analysis to arrive at the wide guidance range for 2023 of 820 to 960 million in EBITDA and 410 to 460 million in free cash flow. I'll be frank with everyone. While we considered at the time the possibility of an extended slow demand cycle, we did not wait that heavily as doing so would imply we felt that we were headed into another industrial recession.

As mentioned in my opening remarks that free cash flow figure represents a conversion rate of over 70%, which is well ahead of our long term targets more than 50%.

Our free cash generation was also extra ordinary reported at $167 1 million nearly equal to the very strong Q3 of 2022.

Our disciplined approach to managing cost and working capital are driving this performance as we are truly playing with the entire piano spanning from operational and commercial excellence initiatives to supply chain and sourcing and automation efforts to drive improvements improvements.

On volumes, which were more or less 15% lower as mentioned in my opening remarks that free cash flow figure represents a conversion rate of over 70%, which is well ahead of our long term target more than 50%.

Larry Hilsheimer: Clearly that initial assumption in November was wrong and while we may not be in a broad economic recession, global manufacturing PMI's remained below 50 for the 11th month in a row and our year-to-date volumes across GIP and PPS are both tracking down mid to high teens year-to-date. If that's not indicative of an industrial recession then I'm not sure what is. Another relevant comparison is the recessionary scenario slide we outlined at our investor day in June of last year showing downside risk to 600 to 700 million of EBITDA and 260 to 320 million in free cash flow.

Our disciplined approach to managing cost and working capital are driving this performance as we are truly play with the entire P&L spanning from operational and commercial excellence initiatives to supply chain and sourcing and automation efforts.

Across our business.

We also announced and not a step up in our annual reoccurring dividends with our total quarterly dividend now at 52.

And 78.

For class, a and B shares respectively.

To drive improvements improvements across our business.

The strength of our balance sheet and growing free cash flow generation has widened our available capital allocation opportunities and we are excited to continue to deliver cash to our shareholders.

We also announced another step up in our annual reoccurring dividends.

Our total quarterly dividend now at 52 and 78 four.

Lastly, I'm excited to announce and not in addition to the <unk> portfolio.

For class eight and Bcf respectively.

The strength of our balance sheet and growing free cash flow generation has widened our available capital allocation opportunities and we are excited to continue to deliver cash to our shareholders.

This past week, we signed an agreement to acquire 51% ownership in co pack, which I'd like to discuss more on the following slides.

Slide five please.

Larry Hilsheimer: A few points comparing that scenario against our current environment. Number one, recessions still drum volumes assumed 5% down versus actual Q3 of down over 10%. Recession still index prices assumed down 20% versus the actual down of 15 through July. Recession mill volumes assumed 5% down versus an actual down over 20% in Q3. Recession container board prices assumed 10% versus the actual Q3 down is about 8%. To summarize, current steel drum volumes are tracking down double the downside scenario.

Co pack is a truly special paper converting business as the number two supplier of bulk and speciality petitions in North America.

Lastly, I'm excited to announce and not in addition to the <unk> portfolio as this past week, we signed an agreement to acquire 51% ownership in co pack, which I would like to discuss more on the following slides.

For those unfamiliar competition is a device included commonly in corrugated boxes as a method of separating franchise content such as glass bottles.

Slide five please.

Co pack is a truly special paper converting business as the number two supplier of bulk and speciality petitions in North America.

Kolpak manufacturers a wide range of petitions from both <unk> and containerboard and predominantly serves the stable and growing food and beverage markets. They have two facilities in our banner, Ohio and in Fairfield, California sites, which is.

Those unfamiliar competition is a divider included commonly in corrugated boxes as the <unk>.

<unk> of separating franchise concepts such as glass bottles co.

Kolpak manufacturers a wide range of petitions from both <unk> and containerboard and predominantly serves the stable and growing food and beverage markets. They have two facilities in a ban on Ohio and in Fairfield, California sites, which is.

Larry Hilsheimer: Mill volumes are down quadruple the downside scenario. And overall pricing declines nearly match our downside scenario. And yet our current guidance midpoint contemplates EBITDA and free cash flow that is over $100 million above the level we provided for a recession scenario with only a partial lift from M&A. I illustrate these points to try to hammer home how well our teams are executing. And I also want to share my heartfelt thanks to all of our Greif colleagues for their commitment and dedication this year.

Italy located to serve the high end wine bottling business and Napa Valley.

This business is immediately mark margin accretive to the global growth portfolio and is expected to contribute to EBITDA before synergies of $15 million to $20 million per year.

Italy located to serve the high end widened bottling business and that's about it.

While the business is small relative to our global portfolio, several organic and inorganic growth opportunities remain to quickly grow and further scale this niche business.

This business is immediately mark margin accretive to the global great portfolio and is expected to contribute to EBITDA before synergies of $15 million to $20 million per year.

Larry Hilsheimer: Only thanks for letting me take the time to boast about our team's performance, but it's really commendable how well we are doing and I'd like our investors to keep in that in mind as they consider our detailed results. Thanks Larry. And we'll see if. As Larry just mentioned, we again reported strong adjusted EBITDA of 226.5 million. Only 2 million shy of our previous quarter and less than 25 million short of the very strong 2022 comparative periods.

On top of the favorable Standalone financials, Kopecks converting network consumes approximately 25000 tons of paper per year.

While the business is small.

Relative to our global portfolio, several organic and inorganic growth opportunities remain to quickly grow and further scale. This business.

Adding incremental downstream integration into our PPS network.

Last but certainly not least co packs management team is an excellent cultural fit to drive we have known and done business with a cold family for years and share a set of values on how to take care of colleagues and serve customers.

On top of the favorable Standalone financials, Kopecks converting network consumes approximately 25000 tons of paper per year, adding incremental downstream integration into our PPS network.

Larry Hilsheimer: Our free cash generation was also extraordinary reported at 167.1 nearly equal to the very strong Q3 of 2022, but on volumes which were more or less 15% lower. As mentioned in my opening remarks, that free cash flow figure represents a conversion rate of over 70%, which is well ahead of our long-term target of more than 50%. Our disciplines approach to managing costs and working capital are driving this performance. As we are truly playing with the entire piano, spanning from operational and commercial excellence in these tips to supply chain and sourcing and automation efforts, all to drive improvements improvements across our business.

We are excited to partner with co pack and this new venture and grow the business together.

Yes.

Certainly not least co packs management team is an excellent cultural fit with <unk>, we have known and done business with a cold family for years and share a set of values on how to take care of colleagues and serve customers. We are excited to partner with co pack and this new venture and growth.

I'll conclude by saying that even after the pro forma impact of this acquisition our balance sheet remains in great shape, and we sit below the midpoint of our targets leverage ratio range. Our M&A pipeline remains robust and we intend to continue deploying capital towards more.

Business together.

I'll conclude by saying that even after the pro forma impact of this acquisition our balance sheet remains in great shape, and we sit below the midpoint of our target leverage ratio range. Our M&A pipeline remains robust and we intend to continue deploying capital towards.

Value accretive targets in the future.

Now I'd like to shift gears and take a deeper dive into our segment results. So please turn to slide six.

Our Gi business produced excellent results with flat year over year gross profits despite volume headwinds of nearly 20% in the Americas and nearly 10% in EMEA and APAC.

More value accretive targets in the future.

Now I'd like to shift gears and take a deeper dive into our segment results. So please turn to slide six.

Larry Hilsheimer: We also announced another step up in our annual reoccurring dividends with our total quarterly dividend now at 52 cents and 78 cents for class A and VCR's respectively. The strength of our balance sheet and growing free cash flow generation has widened our available capital allocation opportunities and we are excited to continue to deliver cash to our shareholders.

Once again the <unk>.

Bricks adherence to our value over volume philosophy in the markets.

Our VIP business produced excellent results with flat year over year gross profit despite volume headwinds of nearly 20% in the Americas and nearly 10% in EMEA and APAC.

The benefits of our cost out actions taken earlier this year and lower year over year input cost led to an adjusted EBITDA lift of nearly $10 million year over year, despite substantially lower revenues.

Once again the <unk>.

Strict adherence to our value over volume philosophy in the markets.

Larry Hilsheimer: Lastly, I'm excited to announce another addition to the GRIF portfolio.

On the volume sites, all G IP products and geographies showed softness compared to the prior year with global steel and resin based products, both down mid double digits on a per day basis sequentially, our third quarter closely mirrored our second quarter with demand flat in EMEA and APAC.

Larry Hilsheimer: At this past week, we signed an agreement to acquire 51% ownership in Kohlpack, which I like to discuss more on the following slides. Slide 5, please. Kohlpack is a truly special paper converting business as the number two supplier of bulk and specialty petitions in North America. For those unfamiliar, a petition is a divider included commonly in corrugated boxes as a method of separating fragile content such as glass balls. Colpac Manufacturers, a wide range of petitions from both URP and Container Board and three dominantly serves the stable and growing food and beverage markets.

On the volume side, all Gi products and geographies showed softness compared to the prior year with global steel and resin based products, both down mid double digits on a per day basis.

And slightly down in Latam and North America.

Through August we do not have a line of sight into any notable upward demand inflections in our <unk> business and we'll continue to manage this business as we have through the year with a focus on cost and customer service I commend our global team for their exemplary performance.

Sequentially, our third quarter closely mirrored our second quarter with demand flat in EMEA, and APAC and slightly down in Latam and North America.

Through August we do not have a line of sight into any notable upward demand inflections in our Gi business and we will continue to manage this business as we have through the year with a focus on cost and customer service.

<unk> in the third quarter and throughout 2023.

Please turn to slide seven.

Larry Hilsheimer: There are two facilities in Urbana, Ohio and in Fairfield, California, a site which is strategically located to serve the high-end wine bottling business in Appah Valley. This business is immediately marked margin accretes to the Global Gryph portfolio and is expected to contribute if it are a force energies of 15 to 20 million per year. While the business is small relative to our global portfolio, several organic and inorganic growth opportunities remain to quickly grow and further scale this niche business.

Paper packaging third quarter sales declined $146 million year over year, primarily due to demand weakness across our converting businesses and mills.

I commend our global Gi PT for their exemplary performance in the third quarter and throughout 2023.

We took approximately 55000 tons of economic downtime across our mill system in the third quarter as we faced nearly 10% per day volume declines across our primary converting operations.

Please turn to slide seven.

Paper packaging third quarter sales declined $146 million year over year, primarily due to demand weakness across our converting businesses and mills.

The continued low volume environment combined with rising OCC costs during the quarter led to both EBITDA and.

We took approximately 55000 tons of economic downtime across our mill system in the third quarter as we faced nearly 10% per day volume declines across our primary converting operations.

And EBITDA margin compression compared to prior year that said.

Larry Hilsheimer: On top of the favorable standalone financials, Colpac's converting network consumes approximately 25,000 tons of paper per year, adding incremental downstream integration into our PPS network. Less or certainly not least, Colpac's management team is an excellent cultural fit to drive. We have known and done business with the Colp family for years and share a set of values on how to take care of colleagues and serve customers. We are excited to partner with Colpac in this new venture and grow the business together.

Our PPS team utilizes the same playbook S G IP and reference to value over volume and cost elimination, resulting in a still healthy seven 4% EBITDA margin for the quarter.

The continued low volume environment combined with rising OCC costs during the quarter led to both EBITDA.

And EBITDA margin compression compared to prior year that said.

Our PPS team is managing the business very well against multiple headwinds and I'm proud of their results and continued dedication during these challenging times.

Our PPS team utilizes the same playbook STI P and reference to value over volume and cost elimination, resulting in a still healthy seven 4% EBITDA margin for the quarter.

I will now turn the presentation over to Larry on slide eight.

Our Pts team is managing the business very well against multiple headwinds and I'm proud of their results and continued dedication during these challenging times.

As only and I mentioned in earlier prepared remarks, our team is executing well in a historically challenging demand environment.

Larry Hilsheimer: I conclude by saying that even after the performing impact of this acquisition, our balance sheet remains in great shape and we sit below the midpoint of our targets leverage ratio range. Our M&A pilot line remains robust and we intend to continue deploying capital to a small value accreted targets in the future.

It is an enterprise wide effort to deliver these results and my heartfelt. Thanks goes out to each department with being bright for delivering for our customers and our shareholders. This year.

I will now turn the presentation over to Larry on slide eight.

As only and I mentioned in earlier prepared remarks, our team is executing well in a historically challenging demand environment.

Back to the Q3 financials sales decreased approximately $290 million year over year, primarily due to lower volumes and the impact of significantly lower steel costs.

It is an enterprise wide effort to deliver these results and my heartfelt. Thanks goes out to each department with being bright for delivering for our customers and our shareholders. This year.

Ole Rosgaard: Now, I'd like to shift gears and take a deeper dive into our segment results. So please turn to slide sticks. Our GIP business produced an excellent result with flat year-over-year growth profits despite volume headwinds of nearly 20 percent in the Americas and nearly 10 percent in a mere NAPAC. Once again, the strict adherence to our value over volume philosophy in the markets, the benefits of our cost-out actions taken earlier this year add lower year-over-year input costs led to an adjusted EBITDA lift of nearly 10 million year-over-year despite substantially lower revenues.

Despite this adjusted EBIT declined less than 25 million, leading to over 150 basis points of margin expansion.

Back to the Q3 financials sales decreased approximately $290 million year over year, primarily due to lower volumes and the impact of significantly lower steel costs.

Most impressive however was our free cash flow performance.

Cash flow dollars were down only $8 million year over year on substantially higher free cash flow conversion.

Despite this adjusted EBIT declined less than $25 million, leading to over 150 basis points of margin expansion.

Just to remind everyone Q3 of last year was the highest third quarter cash flow in the history of our company and we missed it this quarter by only $8 million with 290 million lower sales volume is down nearly 15% year over year, higher capex and $11 million of higher interest costs related to higher rate.

Most impressive however was our free cash flow performance.

Cash flow dollars were down only $8 million year over year on substantially higher free cash flow conversion.

Just to remind everyone Q3 of last year was the highest third quarter cash flow in the history of our company and we missed it this quarter by only $8 million with $290 million lower sales volume is down nearly 15% year over year, higher capex and $11 million of higher interest costs related to higher rate.

And our recent M&A activity.

That's truly outstanding.

Ole Rosgaard: On the volume sides, all GIP products and geographies showed softness compared to the prior year with global steel and resin-based products both down mid-double digits on a third-day basis. Sequentially, our third quarter closely mirrored our second quarter with demand flat in the NAPAC and slightly down in Latin and North America. Through August, we do not have a line of sign into any notable upward demand inflections in our GIP business and will continue to manage this business as we have through the year with a focus on cost and customer service. I commend our global GIP team for their exemplary performance in the third quarter and throughout 2020.

To put it another way on a trailing 12 month basis, our adjusted free cash flow is tracking at $580 million more than double the average annual free cash flow generated between our 2019 and 2021 fiscal years.

Ole Rosgaard: 33.

And our recent M&A activity that's truly outstanding.

On any measure the cash output of this company is miles ahead of where it once was and we still do not believe that that fact is fully recognized by the market.

We have raised the bar on performance and the elevated cash flow dynamic has opened up a lot of possibilities for further value creation through M&A and returning cash to shareholders.

On any measure the cash output of this company is miles ahead of where it once was and we still do not believe that that fact is fully recognized by the market.

And now I'd like to touch on our other capital allocation priorities on slide nine before discussing guidance.

Only discuss the recent acquisition of cold back in his remarks, we're pleased to be taking another step on our investor day commitment to grow downstream integration in our paper system at the same time, we are pursuing our resin based acquisition cap and VIP. We have spent over $550 million on M&A over the last nine months.

We have raised the bar on performance and the elevated cash flow dynamic has opened up a lot of possibilities for further value creation through M&A and returning cash to shareholders.

Larry Hilsheimer: Please turn to slide 7. Paper packaging, third quarter sales declines 146 million year over year, primarily due to demand weakness across our converting businesses and mills. We took approximately 55,000 tons of economic downtime across our mill system in the third quarter as we faced nearly 10% per day volume declines across our primary converting operations.

And now I'd like to touch on our other capital allocation priorities on slide nine before discussing guidance.

But our work is not done and our pipeline remains robust.

We expect to continue generating sufficient cash to fund various actionable opportunities and still maintain a strong balance sheet in.

In addition to pursuing inorganic growth I'm excited to announce we are again, raising our dividend fulfilling our commitment we made to investors over a year ago.

We have spent over $550 million on M&A over the last nine months, but our work is not done and our pipeline remains robust we expect to continue generating sufficient cash to fund various actionable opportunities and still maintain a strong balance sheet.

Larry Hilsheimer: The continued low-volume environments combined with rising OCC costs during the quarter led to both EBITDA dollar and EBITDA margin compression compared to prior year. That said, our PPS team utilized the same playbook as GIP in reference to value over volume and cost elimination resulting in a still healthy 7.4% EBITDA margin for the quarter.

While our dividend yield may no longer be industry, leading thanks to some long overdue appreciation in our stock price is still one of the most compelling dividend offerings in our industry by raising our dividend for the coming year by 4%. We are reaffirming our commitment to deliver a cash directly back to our shareholders.

In addition to pursuing inorganic growth I am excited to announce we are again, raising our dividend fulfilling our commitment we made to investors over a year ago.

While our dividend yield may no longer be industry, leading anxious to some long overdue appreciation in our stock price. It is still one of the most compelling dividend offerings in our industry by raising our dividend for the coming year by 4%. We are reaffirming our commitment to deliver a cash directly back to our shareholders.

As our business grows we expect to grow our dividend at a commensurate rate to ensure shareholders are fairly compensated for their commitment to us and finally as you recall last quarter, we completed our $150 million share repurchase program and while we are not executing on any current buyback programs, we retain an open authorization.

Larry Hilsheimer: Our PPS team is managing the business very well against multiple headwinds and are proud of their results and continuous dedication during these challenging times.

For $2 6 million shares and May execute further repurchases repurchases opportunistically in the coming years with that I'd like to close by discussing our revised guidance on slide 10.

Larry Hilsheimer: I will now turn the presentation over to Larry on slide 8. Thank you, Oli. As Oli and I mentioned in earlier prepare remarks, our team is executing well in a historically challenging demand environment.

As you can see the midpoint of our guidance for EBITDA and free cash flow remains unchanged.

Larry Hilsheimer: It is an enterprise wide effort to deliver these results and my heartfelt thanks goes out to each department within Greif for delivering for our customers and our shareholders this year. Back to the Q3 financials, sales decreased approximately $290 million year-over-year primarily due to lower volumes and the impact of significantly lower steel costs. Despite this, adjusted EBITDA declined less than 25 million leading to over 150 basis points of margin expansion. Most impressive, however, was our free cash flow performance.

For $2 6 million shares and May execute further repurchases repurchases opportunistically in the coming year.

Given the closer line of sight to full year results. We are tightening the range by $10 million on each side and now expect full year EBITDA to land between 790 and $820 million and full year free cash flow between 404 hundred $30 million.

With that I'd like to close by discussing our revised guidance on slide 10.

As you can see the midpoint of our guidance for EBITDA and free cash flow remains unchanged give.

Our overall third quarter financial results largely met our expectations. However, the individual drivers different volumes were below plan in nearly all substrates, but margins were better for the reasons previously mentioned as with prior quarters. Our current forward guidance assumes no improvement on volumes through the end of the year. Additionally, we will plan.

Given the closer line of sight to full year results. We are tightening the range by $10 million on each side and now expect full year EBITDA to land between 790% and $820 million and full year free cash flow between 400 $430 million.

Larry Hilsheimer: Cash flow dollars were down only $8 million year-over-year on substantially higher free cash flow conversion. Just to remind everyone, Q3 of last year was the highest highest third quarter cash flow in the history of our company. Can we miss at this quarter by only 8 million with 290 million lower sales? Volume is down nearly 15% year-over-year, higher tax and 11 million of higher interest costs related to higher rates in our recent M&A activity.

To share our views on fiscal 'twenty four in our Q4 call in early December we expect to finish the year with another quarter of strong performance. Despite the persistent macroeconomic challenges we face I would like to remind everyone that the midpoint of our guidance range implies implies the best <unk>.

Second best financial performance in Greg's 145 year history surpassed only by a record year. In 2022, we are confident that we have set a new bar for performance and expect that we will continue to deliver these exceptional results as we make future progress on our build to last journey OE.

Sure our views on fiscal 'twenty four in our Q4 call in early December we expect to finish the year with another quarter of strong performance. Despite the persistent macroeconomic challenges, we face I'd like to remind everyone that the midpoint of our guidance range implies implies the best second best financial performance in Greg's 145 years.

Larry Hilsheimer: That's truly outstanding. To put it another way, on a trailing 12-month basis, our Justin free cash flow is tracking at 580 million more than double the average annual free cash flow generated between our 2019 and 2021 fiscal years. On any measure, the cash output of this company is miles ahead of where it once was and we still do not believe that that fact is fully recognized by the market.

I'll hand, it back to you to close on slide 11, Thanks, Larry as Larry just mentioned our guidance reflects the expectation of the second best year in <unk> 145 year history, and we are extremely proud to be in that position considering the headwinds we have been facing great companies often prove their worth.

History surpassed only by a record year in 2022.

We are confident that we have set a new bar for performance and expect that we will continue to deliver these exceptional results as we make future progress on our build to last journey.

Larry Hilsheimer: We have raised the bar on performance and the elevated cash flow dynamic has opened up a lot of possibilities for further value creation through M&A and returning cash to shareholders.

Okay, I'll hand, it back to you to close on slide 11, Thanks, Larry.

In times of great difficulty through perseverance grit and dedication to excellence.

We just mentioned our guidance reflects the expectation of the second best year, and Gripes Hone hundred 45 year history, and we are extremely proud to be in that position considering the headwinds we have been facing great.

Larry Hilsheimer: And now I'd like to touch on our other capital allocation priorities on slide nine before discussing guidance.

Build on less is how we demonstrate that perseverance and I see daily and the passion of our colleagues and decision making at every level of our business.

Larry Hilsheimer: Holy discuss, the recent acquisition of coal-packed in his remarks. We're pleased to be taking another step on our investor-day commitment to grow downstream integration in our paper system. At the same time, we're pursuing our resin-based acquisition cap and GIP. We have spent over 550 million on M&A over the last nine months, but our work is not done and our pipeline remains robust. We expect to continue generating sufficient cash to fund various actionable opportunities and still maintain a strong balance.

Great companies, often prove their worth in times of great difficulty through perseverance grit and dedication to excellence.

We are well positioned for a demand rebound whenever that comps and in the meantime, we are excited to continue building this business and making progress on our long term strategy.

Build on less is how we demonstrate that perseverance and I see daily and the passion of our colleagues and decision making at every level of our business.

Thank you for your interest in <unk> operator, please open the line to questions.

Thank you.

We are well positioned for a demand rebound whenever that comps and in the meantime, we are excited to continue building this business and making progress on our long term strategy.

As a reminder to ask a question. Please press star one on your phone and wait for your name to be announced to withdraw your question. Please press star one again.

Larry Hilsheimer: In addition to pursuing inorganic growth, I'm excited to announce we are again raising our dividend full filling a commitment we made to investors over a year ago. While our dividend yield may no longer be industry leading, thanks to some long overdue appreciation in our stock price, it is still one of the most compelling dividend offerings in our industry. By raising our dividend for the coming year, we are reaffirming our commitment to deliver cash directly back to our shareholder. As our business grows, we expect to grow our dividend at a commensurate rate to ensure shareholders are fairly compensated for their commitment to us.

We thank you for your interest in <unk> operator, please open the line to questions.

Standby as we compile the Q&A roster.

Okay.

One moment please for our first question.

Thank you.

As a reminder to ask a question. Please press star one on your phone and we clear name to be announced to withdraw your question. Please press star one again.

And our first question will come from Michael Hoffman of Stifel. Your line is open.

Standby as we compile the Q&A roster.

Thank you.

Larry for taking the questions I look forward to seeing your next week in Paris and London.

One moment please for our first question.

When we finish to Q I have in my notes, if I'm wrong I'm wrong I had my notes.

And our first question will come from Michael Hoffman of Stifel. Your line is open.

Since the second half.

Larry Hilsheimer: And finally, as you recall last quarter, we completed our $150 million share repurchase program. And while we are not executing on any current buyback programs, we retain an open authorization for 2.6 million shares and may execute further repurchases, repurchases, opportunistically, in the coming year.

So the EBITDA is going to track around couple of hundred million dollars in the <unk> and then improve modestly into <unk>.

Larry for taking the questions I look forward to seeing you next week in Paris and London.

To hit the midpoint.

When we finished two two.

You beat the outlook for <unk>, given your again repeated exceptional performance around cost.

My notes, if I'm wrong I'm wrong.

Notes.

Cadence in the second half.

That has the fourth quarter down pretty healthy as well.

Larry Hilsheimer: With that, I'd like to close by discussing our revised guidance on slide 10. As you can see, the midpoint of our guidance for EBITDA and free cash flow remains unchanged. Given the closer line of sight to full-year results, we are tightening the range by 10 million on each side and now expect full-year EBITDA to land between $790 and $820 million and full-year free cash flow between $400 and $430 million. Our overall third quarter financial results largely met our expectations.

What's kind of sort of the EBITDA is going to track around couple hundred million dollars in the <unk> and then improve modestly in the <unk> pit.

How am I what am I.

My interpretation of.

The implied EBITDA being 185 versus something that was like.

To hit the midpoint.

You beat the outlook for <unk>, given your again repeated exceptional performance around cost.

$202 10 originally.

Yes, Michael Youre correct.

Q3 ended up being better on the margin side volume degradation no was more than we expected and we don't see that mark that volume pickup.

The fourth quarter down pretty healthy.

How am I, what my interpretation of the.

The implied EBITDA being 185 versus something that was like.

$202 10 originally.

Picking up and we've seen agg perform less favorable than we normally do.

Larry Hilsheimer: However, the individual drivers differ. Volumes were below planned in nearly all substrates, but margins were better for the reasons previously mentioned. As with prior quarters, our current forward guidance assumes no improvement on volumes through the end of the year.

Yes, Michael Youre correct I mean.

Q3 ended up being better on the margin side volume degradation no was more than we expected and we don't see that mark that volume.

So with that that trend it just shifted things a bit we also had anticipated.

Yes that we would have some a tax refund item that is in Latin America like 6 million Bucks, we had anticipated that might occur later it came into the third quarter is actually a noncash item.

Ole Rosgaard: Additionally, we will plan to share our views on fiscal 24 in our Q4 call in early December. We expect to finish the year with another quarter of strong performance despite the persistent macroeconomic challenges we face. I'd like to remind everyone that the midpoint of our guidance range implies the best financial performance in gripes 145-year histories surpassed only by our record year in 2022. We are confident that we have set a new bar for performance and expect that we will continue to deliver these exceptional results as we make future progress on our builds to last journey.

Picking up and we've seen agg perform less favorable than we normally do.

So with that that trend it just shifted things a bit we also had anticipated.

As well, which really impacted cash flow a little bit, but it's really those two items.

Yes that we would have to have some a tax refund item that is in Latin America is like 6 million Bucks, we had anticipated that might occur later it came into the third quarter is actually a noncash item.

Obviously, we hope volumes will pick up and surprise us a bit in the fourth quarter, but we have not seen that in August yet.

Okay, and then to that point.

We've talked before about sort of major end markets and VIP for chemical paints and coatings and lubricants.

As well, which really impacted cash flow a little bit, but it's really those two items.

So are we are hearing the message that it's not worth it.

Obviously, we hope volumes will pick up and surprised us a bit in the fourth quarter, but we have not seen that in August yet.

Ole Rosgaard: Holy, I'll hand it back to you to close on slide 11. Thanks, Larry. As Larry just mentioned, our guidance reflects the expectation of the second best year in gripes 145-year history, and we are extremely proud to be in that position considering the headwinds we have in our facing.

Just not any better.

Or is some of those got worse.

Okay, and then to that point.

Hi, Michael.

We've talked before about sort of major end markets and VIP for chemical paints and coatings and lubricants.

Our customers.

Telling us that it's not getting worse, but they're also telling us that they don't expect any improvements.

So are we hearing our message that its not worth it.

Ole Rosgaard: Great companies often prove their worth in times of great difficulty through perseverance, grids, and dedication to excellence. Build on last is how we demonstrate that perseverance, and I see it daily in the passion of our colleagues and decision making at every level of our business. We are well positioned for demand rebounds whenever that comes, and in the meantime we are excited to continue building this business and making progress on our long-term strategy.

Over the next two quarters. So from what we hear we will be in the second quarter of 2020 fall before.

Just not any better.

Or is some of those got worse.

Hi, Michael.

Our customers.

Even in a remote chance of improvements that that's what we hear from our customers. Okay and then on TPS.

Telling us that it's not getting worse, but they're also telling us that they don't expect any improvements.

I cover things that recycle all this OCC and that into my coverage says that they are starting to see improving demand.

Over the next two quarters. So from what we hear we will be in the second quarter of 2020 fall before.

So is there a light at the end of the tunnel and all of this.

Even in a remote chance of improvements but.

The finished goods inventory clearing and demand starts to improve.

What we hear from our customers.

Ole Rosgaard: We thank you for your interesting rights.

And then on TPS.

Operator: Operator, please open the line to questions. Thank you. As a reminder to ask a question, please press star 11 on your phone and wait for your name to be announced. To withdraw your question, please press star 11 again. Stand by as we compile the Q&A roster. One moment please for our first question.

I cover things that recycle all the associates and that in my coverage.

Yes, Mike were I think part of what <unk> created a little bit of demand on the waste companies for the OCC side of things is really just related to some new.

Says that they are starting to see improving demand.

So is there a light at the end of the tunnel and all of us.

Mill capacity opening in recycled mills.

The finished goods inventory clearing and demand starts to improve.

Outside of that we're not we saw a couple.

Yes, Mike we're I think part of what <unk> created a little bit of demand on the waste companies for the OCC side of things is really just related to some new.

At times over the last month, or so where we saw a spike in orders for a week within the next week. They fell back off so we haven't seen anything sustained that would indicate any left and we're not hearing anything from our customers.

Michael Hoffman: And our first question will come from Michael E. Hoffman of Diffle. Your line is open. Thank you, Ole and Larry, for taking the questions. I look forward to seeing you next week in Paris and London. When we finish 2Q, I have my notes, if I'm wrong, I accept I'm wrong. I have my notes, the cadence into the second half, what's going to sort of e-bita, I was going to track around a couple hundred million in the 3Q and then improve modestly into 4Q to hit the midpoint.

Mill capacity opening in recycled mills.

In the paper business.

Outside of that we're not we saw a couple.

That gives them any.

Real solid indications of a of a inflection point.

But it sounds like you feel like you have to hit a bottom if youre getting momentary spikes or probably hit a bottom.

Hope so I mean, you know that.

We think that but.

In the paper business.

That gives them any.

We thought the second half of this fiscal year would be good and I missed that call. So.

Real solid indications of a of a inflection point.

I'm not really good with my Crystal ball.

But it sounds like you feel like you have hit a bottom if youre getting momentary spikes you probably hit a bottom yes, we hope so.

Michael Hoffman: You beat the outlook for a 3Q given, again, repeated exceptional performance around cost. That has the fourth quarter down pretty healthy. What's my interpretation of the implied e-bita being 185 versus something that was low 200s to 10 originally? Michael, you're correct. The Q3 ended up being better on the margin side. Volume degradation, though, was more than we expected. We don't see that mark or that volume picking up. We've seen ag perform less favorable than we normally do.

You and I both.

And then last one for me is why not own 100% of coal.

We think that but.

This is a deal that.

We thought the second half of this fiscal year would be good and I missed that call. So.

Because of our long relationship with them.

I'm not I'm not really good with my Crystal ball.

They approached us to help because of growth opportunities, but maybe I'll, let Matt talk a little bit about that because Matt leads our business development efforts.

You and I both.

And then last one for me is why not own 100% of coal.

Dealt with the KOL family on this yes.

Yes, so Michael the reason to not own 100% is that we end the call believe that there is substantial growth opportunity ahead, and we want to have aligned incentives as we try to grow that business together part of the partnership and the reason it makes sense is because they see real opportunities in the market to grow substantially but they need to make sure they have the mill.

This is a deal that.

Because of our long relationship with them.

They approached us to help because of growth opportunities, but maybe I'll, let Matt talk a little bit about that because Matt leads our business development efforts.

<unk> dealt with the KOL family on this.

Michael Hoffman: With that trend, it just shifted things a bit. We also had anticipated that we would have some tax refund item that is in Latin America, like $6 million. We had anticipated that might occur later. It came into third quarter. It's actually a non-cash item as well, which really impact cash flow a little bit, but it's really those two items. Obviously, we hope volumes will pick up and surprise us a bit in the fourth quarter, but we have not seen that in August yet.

City to do it so that's the strategic rationale we're excited about adding into the portfolio from a margin perspective from an end market perspective, but also think that that 51% ownership stake in partnership going forward makes sense for both of us to maximize the growth and value creation that business overtime, yes. They are.

City to do it so that's the strategic rationale we're excited about adding into the portfolio from a margin perspective from an end market perspective, but also think that that 51% ownership stake in partnership going forward. It makes sense for both of us to maximize the growth and value creation that business overtime, yes. They are high.

Really respected in the industry.

They're worried as their bond kind of thing they are good people there, Ohio people.

Michael Hoffman: Okay, and then to that point, we've talked before about major end markets and GIPs, chemical paints and coatings and lubricants. Are we hearing a message that it's not worse? It's just not any better, or some of those got worse. Michael, our customers are killing us, it's not getting worse, but they're also killing us that they don't expect any improvements over the next two quarters. From what we hear, we will be in the second quarter of 2024, before they've seen even any remote chance of improvements.

And they want to participate in the growth.

Okay. Thank you very much.

Thank you.

Really respected in the industry.

And one moment please for our next question.

So are there weren't as their bond kind of thing they are good people there, Ohio people.

Our next question will come from the line of Ghansham Panjabi of Baird. Your line is open.

And they want to participate in the growth.

Okay. Thank you very much.

Hey, guys good morning.

Thank you.

And I know, it's very difficult to disaggregate, but on the volume decline in Gi P.

And one moment please for our next question.

How would you separate end market weakness versus any incremental destocking at the customer level and I'm, just asking that because as raw material prices started to decline for some of your customers. They did start to accelerate destocking and just kind of wondering where we are in that phase.

Our next question will come from the line of Ghansham Panjabi of Baird. Your line is open.

Hey, guys good morning.

Michael Hoffman: That's what we hear from our customers. Okay, and then on TPS, I cover things that recycle all this OCC, and that end of my coverage says that they're starting to see improving demand, so is there a light at the end of the demand starts to improve? Yeah, Mike, we're, I think, part of what's creating a little bit of demand on the waste companies for the OCC side of things is really just related to some new mill capacity opening and recycling mills outside of that word.

And I know, it's very difficult to disaggregate, but on the volume decline in VIP.

Hi, Ghansham solid.

We don't think betting piece.

Destocking has come to an end it but it's difficult for us to build.

See whether it's really come to an end, but we believe.

Destocking and just kind of wondering where we are in that phase.

While we see now is really this.

Manifestation of extremely low demand in the markets.

Hi, <unk>.

We don't do things better.

If that sales got it.

Destocking has come to an end it but it's difficult to us too.

And then in terms of the margin improvement in VIP, which has been obviously very notable in the context of the volume decline that you've cited how should we think about incrementals as volumes eventually recover and I'm just asking because there are there any big cost reversal headwinds, we should keep in mind in that scenario.

See whether it's really come to an end, but we believe what we see now is really this.

Manifestation of extremely low demand in the markets.

Michael Hoffman: We saw a couple times over the last month or so where we saw a spike in order for a week, but then the next week they fell back off, so we haven't seen anything sustained that would indicate any lift, and we're not hearing anything from our customers in the paper business that gives them any real solid indications of a, of a, an complex But it sounds like you feel like you have to hit a bottom. If you're getting momentary spikes, you're probably hit a bottom.

Got it.

But obviously on that side.

And then in terms of the margin improvement in VIP, which has been obviously very notable in context of the volume declines you've cited how should we think about incrementals as volumes eventually recover and I'm just asking because there are there any big cost reversal headwinds, we should keep in mind in that scenario.

We've taken a lot of cost outs some of it is structural with on rooftop.

Rooftop consolidations.

We also are able to in that basis to flex really really rapidly as demand goes down.

So if you if demand returns.

But obviously on that side, we've we've taken a lot of cost outs. Some of it is structural with on rooftop.

We have room to we could we could increase our capacity, let's say, 2% to 5% with without any.

Rooftop consolidations.

Michael Hoffman: Yeah, we hope so. I mean, you know, we think that, but, you know, we thought the second half of this fiscal year would be good and I missed that call, so I'm not really good with my crystal ball. Yeah, you and I both. And then last one for me is, why not own 100% of coal? We, you know, this is a deal that, you know, because of our long relationship with them, you know, they approached us to help because of growth opportunities.

We also are able to in that basis to flex really really rapidly as demand goes down.

Cost increases bumps if demand goes up further than that you would have to add shifts. So youll see variable cost goes up in line with increased demands, but a lot of the cost we've taken out is structural.

So if you if demand returns, we obviously have room to we could we could increase our capacity, let's say, 2% to 5% with it without any.

Michael Hoffman: Well, maybe I'll let Matt talk a little bit about that because Matt, you know, leads our business development efforts and dealt with the coal family on this. Yeah, so Michael, the reason to not own 100% is that we and the coal's believe that there's substantial growth opportunity ahead, and we want to have aligned incentives as we try to grow that business together. Part of the partnership reason it makes sense is because they see real opportunities in the market to grow substantially, but they need to make sure they have the milk capacity to do it.

Got it and then just one final one on co pack. If you broke out the sales number I missed that so if you could please repeat that and then also as it relates to fiscal year 'twenty four I mean, obviously very early.

Cost increases bumps if demand goes up further than that you would have to add shifts. So youll see variable cost goes up in line with increased demand, but a lot of the cost we've taken out is structural.

Michael Hoffman: So that's the strategic rationale. We're excited about adding into the portfolio from a margin perspective from an end margin perspective, but also think that that 51% ownership stake and partnership going forward makes sense for both of us to maximize the growth and valuation that business over time. Yeah, and they're highly respected in the industry because of, you know, sort of their word is their bond kind of thing. They're good people. They're a lot of people. And they want to participate in the growth. Okay. Thank you very much. Thank you.

Big range of outcomes based on the macro complexity, etc, but can you give us some of the known variances that we should keep in mind as we finalize our modeling estimates for fiscal year 'twenty four you have co pack.

Michael Hoffman: And one moment please for our next question.

Got it and then just one final one on Kolpak. If you broke out the sales number I missed that so if you could please repeat that and then also as it relates to fiscal year 'twenty four I mean, obviously very early.

Do you see the EBITDA contribution from there.

Any flow through from cost savings and price declines in paper and anything you could share there.

Range of outcomes is based on the macro complexity et cetera, but can you give us some of the known variances that we should keep in mind as we finalize our modeling estimates for fiscal year 'twenty four you have co pack.

Yeah Ghansham this is Matt on coal pack.

We didn't give a revenue number but EBITDA run rate EBITDA was about $17 million to $18 million.

The EBITDA contribution from there.

And then that does not include kind of the incremental benefits that go to the mills from us absorbing more tons.

Any flow through from cost savings and price declines in paper and anything you could share there.

Yes, Ghansham this is Matt on coal pack.

And you think you can think about that on a full year run rate basis, we're not going to give revenue right now.

We didn't give a revenue number but EBITDA run rate EBITDA is about $17 million to $18 million.

Our margins, but that should be instructive as you build the model for next year.

And then that does not include kind of the incremental benefits that go to the mills from us absorbing more tons.

On the other components you can add a portion of the contribution from Lee a couple of months a portion from <unk> and then obviously this when you think about next year from an M&A basis, and then in terms of the other cost elements.

And you think you can think about that on a full year run rate basis, we're not going to give revenue right now.

Around margins, but that should be instructive as you build the model for next year.

I don't know you were asking for thinking about next year I don't know if we really have that yeah I would just say on the M&A side John .

Between lease and jewelry and co pack and probably a $40 million of incremental revenue. This year, we'd take out two maybe on the Tamar things that were up.

Ghansham Panjabi: Our next question will come from the line of Guantan Panjabi of beard.

Ghansham Panjabi: Your line is open.

Ghansham Panjabi: Hey guys, good morning. You know, I know it's very difficult to disaggregate, but on the volume decline in GIP, you know, how would you separate and market weakness versus any incremental destocking at the customer level? And I'm just asking that because as rom trope prices started to decline for some of your customers, they did start to accelerate destocking and just kind of wondering where we are in that phase.

I don't know you were asking for thinking about next year I don't know if we really have that yes, I would just say on the M&A side John .

Up.

Yeah.

Net 38, and if you look at the numbers we provided on each of those 33 for Lee 20, <unk> century, and 17 on co pack on a full year basis. So you'd have a lift of maybe 28 next year dirty kind of.

Between lease and jewelry and co packed probably a $40 million of incremental revenue. This year, we'd take out two maybe on the Tamar things that were up.

<unk>.

And then on the cost Takeouts, we haven't quantified the.

Up.

Net 38, and if you look at the numbers we provided on each of those 33 for lead 20, <unk> century in 17 and pulled back on a full year basis. So you'd have a lift of maybe 28 next year 30 kind of number.

The rooftop consolidation piece there are there's obviously some permanent cost take out there on structural over time, we've taken out a significant number this year of call it roughly $30 million of overtime some of that.

Ghansham Panjabi: Hi, Guantan Panjabi. We don't think that these stockings has come to an end, but it's difficult to, you know, see whether it's really come to an end. But we believe what we see now is really just a manifestation of extremely low demand in the markets. If that's open. And then in terms of the margin improvement in GIP, you know, which has been obviously very notable in context of the volume declines you've cited, how should we think about incremental as volumes eventually recover and just asking because there any big cost reversal.

And then on the cost Takeouts, we haven't quantified the.

Shift in volume related, but we think theres somewhere 10% to $13 million or <unk>.

Permanent structural change in how we're running the business.

Okay Super helpful. Thank you.

Thank you.

Again, one moment please for our next question.

Shift in volume related, but we think theres somewhere 10% to $13 million or <unk>.

Okay.

Ghansham Panjabi: Edwin's we should keep in mind in that scenario. But obviously on on that side, we we've taken a lot of cost outs, some of it is structural with on, you know, rooftop considerations. We also are able to in that business to flex, you know, really, really rapidly as demand goes down. So if demand returns, we obviously have room to, you know, we can we can increase our capacity. Let's say two to five percent without any, you know, cost increases, but if demand goes up further than that, you would have to add shifts. So you'll see, you know, where will cost goes up in line with, you know, increased demands. But a lot of the cost we've taken out is structural.

Permanent structural change in how we're running the business.

Our next question will come from George Staphos of Bank of America. Your line is open thanks.

Ghansham Panjabi: Oh. Got it.

Okay Super helpful. Thank you.

Thanks very much.

Hi, Ali Hillary Matt Good morning.

Thank you.

George.

Again, one moment. Please next question.

Congratulations on the performance.

I wanted to.

Okay.

Lot of the questions I've already forgotten at the heart of matter for you and again with really really good performance in light of things.

Our next question will come from George Staphos of Bank of America. Your line is open thanks.

Thanks very much.

When you're talking to your customers only what are they saying about why.

Hi, Ali Hillary Matt Good morning.

George.

Believe demand isn't lifting yet again I know, that's really really hard to quantify.

Congratulations on the performance.

I wanted to.

You cover so many markets and so many customers, but is there a common denominator, one or two things that they're seeing in terms of why we're not seeing demand lift.

Lot of the questions I've already forgotten at the heart of matter for you and again with really really good performance in light of things.

Downstream.

When you're talking to your customers only what are they saying about why.

Yes, so first of all when I speak to when I speak to a lot of them that are big global customers.

Ghansham Panjabi: And then just one final one on Colpac. If you broke out the sales number, I missed that, so if you could please repeat that. And then also as relates to, you know, fiscal year 24. I mean, obviously very early, you know, big range of outcomes just based on the macro complexity, et cetera. But can you give us some of the known variances that we should keep in mind as we finalize, you know, our modeling estimates for fiscal year 24. You have Colpac and, you know, obviously the EBITDA contribution from there, any flow through from cost savings, price declines, and paper, anything you could share there.

Believe demand isn't lifting yet again I know, that's really really hard to quantify.

They are taking plants down they are taking a lot of economic downtime.

You cover so many markets and so many customers, but is there a common denominator or one or two things that they're seeing in terms of why we're not seeing demand lift.

It's really back to what we have discussed previously that the economy has shifted from a <unk>.

Downstream.

Yes, so first of all when I speak to when I speak to a lot of them are big global customers.

Buying things to going out and consumer spending.

That money on services instead.

Dave taking plants down they are taking a lot of economic downtime.

I saw recently a couple of articles from the big box retailers in terms of how they are suffering.

It's really back to what we have discussed previously that the economy has shifted from a <unk>.

Ghansham Panjabi: Yeah, Ghansham, this is Matt. On Colpac, we didn't give a revenue number, but EBITDA, run rate EBITDA is about $17, $18 million. And then that does not include kind of the incremental benefits that go to the mills from a plus absorbing more tons. And you can think about that on a full year run rate basis. We're not going to give revenue right now and around margins, but that should be instructive as you build a model for next year.

So that's the closest I can get and then.

Buying things to going out and consumer spending.

In terms of.

The interest rates people are not moving now as this as they have been means.

That money on services instead.

It means that they don't buy.

I saw recently a couple of articles from the big box retailers in terms of how they are suffering.

<unk> moved houses they don't extend it pains that sort of thing so.

But to put my finger on one particular item, it's really really difficult.

<unk>.

The closest I can get them.

In terms of.

And on the AG side, you said AG is maybe trending a little bit less positive than you normally would like.

The interest rates people are not moving houses as they have been means.

It means that they don't buy.

Ghansham Panjabi: On the other components, you know, you can add a portion of the contribution from Lee, a couple of months of a portion from Centurion, and then obviously this, what you think about next year from an M&A basis. And then in terms of the other cost elements, I don't know, you were asking for thinking about next year, I don't know if we really have that. Yeah, I would just say, on the M&A side, Ghansham, you know, between Lee's, Centurion and Colpac could probably have $40 million of the incremental revenue this year.

And is there any anything to take away from that yes.

<unk> moved houses that they don't sell it pains that sort of thing so.

What I've been told also on AG is that in times of hardship what the individual farmers tend to do is to use less fertilizer and less volatile, but that sort of thing.

But to put my finger on one particular item is really really difficult.

And on the AG side, you said AG is maybe trending a little bit less positive than you normally would like.

It's just a.

And is there any anything to takeaway from that yes.

Part.

Part of <unk>.

Managing that business.

What I've been told it's also on AG is that in times of hardship what the individual farmers tend to do is to use less fertilizer and less volatile and that sort of thing.

Understood understood can you talk about.

What price cost benefit you might have gotten from steel.

Ghansham Panjabi: We'd take out two, maybe, on the TEMA things that we're up, you know, up net 38. And if you look at the numbers, we provided on each of those at 33 for Lee, 20 for Centurion, 17 on Colpac on a full year basis. So you'd have a lift of maybe 28 next year, 30, you know, kind of number. And then on the cost takeouts, we haven't quantified the rooftop consolidation piece. There's obviously some permanent cost take out there on structural overtime.

In the fiscal third and what you might be expecting in the fiscal fourth and then back to God. Toms earlier question. So should we take away that.

It's just.

As part of <unk>.

Managing that business.

Understood understood.

As things ultimately hopefully pick up there's maybe 20 million of cost that will come back into the business on an annualized basis.

Can you talk about.

What price cost benefit you might have gotten from steel in the fiscal third and what you might be expecting in the fiscal fourth and then back to <unk> earlier question. So should we take away that as things ultimately hopefully pick up there's maybe 20 million of cost that will come back.

George Yes, there was a slight sleep better.

Situation we added.

On a year over year basis on steel because last year, we had a rapidly decreasing as steel cost curve. So we had higher inventory walking through but it was not material for the quarter.

Ghansham Panjabi: You know, we've taken out a significant number this year, call it roughly $30 million of overtime. Some of that, you know, shift and volume related. But we think there's somewhere 10 to 13 million dollars of permanent structural change in how we're running the business.

Into the business on an annualized basis.

George Yes, there was a slight sleep better.

Ghansham Panjabi: Okay, super helpful. Thank you.

As to that $20 million of differential on that over time number I mentioned.

Situation we added.

On a year over year basis on steel because last year, we had a rapidly decreasing as steel cost curve. So we had higher inventory walking through but it was not material for the quarter.

Yes, it will come back, but that only comes back with.

Sales and and that would be leveraging our fixed cost footprint because.

Because we arent building new factories to get that I'm.

George Staphos: Again, one moment please for our next question. Our next question will come from George Staffel's of Bank of America. Your line is open. Thanks very much. Hi, Oli. Hi, Larry. Matt. Good morning.

Add to that $20 million the differential on that over time number I mentioned.

So it'll be adding labor back, but it won't be adding anything on depreciation and other costs that go in so.

Yes, it will come back, but that only comes back with with sales and and that would be leveraging our fixed cost footprint because.

Still nice margin lift.

Yes sure.

I get that just in terms of when we do our stack, we need to make sure that we have.

Because we arent building new factories to get that.

George Staphos: Congratulations on the performance. I wanted to, a lot of the questions I've already sort of gotten at the heart of matter for you. And again, what was really, really good performance and light of things. When you're talking to your customers, only what are they saying about why they believe demand isn't lifting it? Again, I know that's really, really hard to quantify. You know, you cover so many markets and so many customers, but is there a common denominator?

So it'll be adding labor back, but it won't be adding anything on depreciation and other costs that go in so.

Kind of a small negative slice for the 'twenty, what I'm getting after volume after incremental margins and so on.

Hey, George it's important to mention one important dimension those costs don't come back at the same rate sales okay.

Still nice margin lift.

Yes, sure, yes, I get that just in terms of when we do our stack we need to make sure that we have.

George Staphos: One or two things that they're seeing in terms of why we're not seeing demand lift, and Downstream. Yeah, so first of all, when I speak to a lot of them, our big global customers, they've taken plants down, they've taken a lot of economic downtime. It's really back to what we have discussed previously that the economy has shifted from buying things to going out and consumer spending, they have money on services instead.

Okay. So it's not one to one relationship demand for improved sales dollars improved cost come right back and they come back a lot more slowly and but there's a lot of kind of slack capacity that we have in our system right now and existing shifts. So we can handle more demand at an inflection without layering in incremental costs right away.

Kind of a small negative slice for the 'twenty, what I'm getting after volume after incremental margins and so on.

Hey, George it's important to mention important dimension those costs don't come back at the same rate sales deal. Okay. So.

It's not one to one relationship demand for improved sales dollars improve cost come right back and they come back a lot more slowly and there is a lot of kind of slack capacity just that we have in our system right now and existing shifts. So we can handle more demand at an inflection without layering in incremental costs right away, but over time.

But over time as sales come back Thats, obviously, a good problem to solve that.

That's what it all he was mentioning if you go up 2% to 3% we don't have to add a dime you go up it could go up 20%, yet you have thrown out a shift or something yeah, and Josh just a final comment on that.

No I'm sorry.

Yeah, just a final comment on that at this go back to our strategy of value over volume, we will not take on business. So we are running at I won't say full capacity, but healthy capacity utilization in all our facilities, we will not take on business with low margins and then as you know.

As sales come back Thats, obviously, a good problem to solve that.

George Staphos: I saw recently a couple of articles from the big box retailers in terms of how they're suffering. That's the closest I can get. And then in terms of the interest rates, people are not moving houses as they have been, means that they don't buy goods when they move houses, they don't necessarily paint and that's all the things. But to put my finger on one particular item is really, really difficult. Understood. And on the ag side, you said ag is maybe trending a little bit less positive than you normally would like to do.

Yes, that's what it all he was mentioning if you go up 2% to 3% we don't have to add a dime you got to go up 20%, yet you have thrown out a shift or something yeah, and Josh just a final comment on that.

I'm sorry.

Alright.

Just a final comment on that at this go back to our strategy of value over volume, we will not take on business. So we are running at I won't say full capacity, but healthy capacity utilization in all our facilities, we will not take on business with low margins and then apps.

Costs in our plants in terms of a lot of shifts will produce.

Products that we make more margin so that's not our strategy.

No it makes sense.

My last question and I'll turn it over.

Same theme in terms of okay, let's get on the other side of the mountain and volumes are better and so on where to hopefully a better 'twenty four.

<unk> costs in our plants in terms of it not a shift to produce.

George Staphos: Anything to take away from that? Yeah, what I've been told also on ag is that in times of hardship, what the individual farmers tend to do is to use less fertilizer and less mildness sort of thing. It's just a part of managing their business. Understood. Can you talk about what price cost benefit you might have gotten from steel in the fiscal third and what you might be expecting in the fiscal fourth, and then back to Gonchum's earlier question.

Free cash flow conversion has been excellent this year well above your your goal in the last quarter.

Products that we make no margin so that's not our strategy.

No. It makes sense. So my last question and I'll turn it over.

Is there a chance that maybe realizing youre not going to guide on 24 that the conversion of 24 may be a little bit below 50% because you do have to add back to working capital you do have to do some other things. We're working for now and then tell me a little bit about the program that you're offering your employees to buy stock at a discount.

Same theme in terms of okay, let's get on the other side of the mountain and volumes are better and so on where to hopefully a better <unk>.

Four.

Free cash flow conversion has been excellent this year well above your your goal in the last quarter.

What did you compare that with in terms of other ways to incentivize performance.

And ownership thanks, guys.

So.

You too.

For now and then tell me a little bit about the program that you're offering your employees to buy stock at a discount.

Things on that I mean, it's all going to depend on the pace of the increase of demand George and also then where does the cost of steel and up is the big driver for us in terms of what will be the impact on working capital build.

George Staphos: So should we take away that as things ultimately hopefully pick up, there's maybe 20 million of costs that will come back into the business on annualized basis? Yeah, there was a slightly better situation. We had it on a year-over-year basis on steel. Because last year we had a rapidly decreasing steel cost curve. So we had higher inventory locking through, but it was not material for the quarter. As to that 20 million differential on that overtime number I mentioned.

What did you compare that with in terms of other ways to incentivize performance.

And ownership thanks, guys yeah.

So.

OCC will play into that as well obviously if demand comes back you would think that's going to drive steel cost up in OCC, but.

Two things on that I mean, it's all going to depend on the pace of the increase of demand George and also then where does the cost of steel and up is the big driver for us in terms of what will be the impact on working capital build.

We would still have our goal to be 50% or better and we have.

Other opportunities within our supply chain.

Initiatives that we believe can keep us at that.

OCC or play into that as well obviously if demand comes back you would think that's going to drive steel cost up in OCC, but.

At that our goal levels so.

George Staphos: Yeah, it will come back, but that only comes back with sales and that would be leveraging our fixed cost footprint. Okay, because we aren't building new factories to get that. You know, so it'll be adding labor back, but it won't be adding anything on your appreciation and other costs that go in. So it's still a nice margin list. I guess just in terms of when we do our stack, we need to make sure that we have kind of a small negative slice for the 20, what I'm getting after volume, after incremental more and so on.

That'll be our focus I mean, obviously the outsized performance that we had this quarter is substantially above our goal, we would love that but we don't see that but just bring in another example, co pack is well above our 50% on free cash flow conversion and we're trying to focus on those type of businesses as.

We would still have our goal to be 50% or better and we have.

Other opportunities within our supply chain.

Initiatives that we believe can keep us at that at.

Our goal levels so.

That'll be our focus I mean, obviously the outsized performance that we had this quarter is substantially above our goal, we would love that but we don't see that but just broken. Another example, co pack is well above our 50% on <unk>.

We.

Execute on our M&A strategy.

In both the resin business and also in the downstream in our paper business with respect to the.

The stock purchase plan for our colleagues this actually emanated from request from our employees.

Free cash flow conversion and we're trying to focus on those type of businesses as we are.

George Staphos: It's important to mention, those costs don't come back at the same rate sales. So it's not a one-to-one relationship. You know, demand improves, sales dollars improve, cost come right back in. They come back a lot more slowly, and there's a lot of kind of slack capacity just that we have in our system right now on existing ships. So we can handle more demand and an inflection without layering in incremental costs right away.

Execute on our M&A strategy.

We had a number of request as we went around new plants around the world.

In both the resin business and also in the downstream in our paper business with respect to the.

From probably colleagues who had worked at other places that had this and they said hey look we really like what's going on in the company.

The stock purchase plan for our colleagues this actually emanated from request from our employees.

Could we entertain something like this and so we presented the board they approved it.

Yes, we had a good take up in the first initial.

Had a number of request as we went around new plants around the world.

Quarter of application and have had really nice feedback from our colleagues. So we look forward to it growing from here.

From probably colleagues who had worked at other places that had this and they said hey look we really like what's going on the company.

George Staphos: But over time, you know, as sales come back, that's a good problem to solve. That's a nice demand. Yeah, that's what I was mentioning. You know, if you go up two to three percent, we don't have to add a dime. You go up 20 percent. Yeah, you have to run out of shift or something. Yeah. And just to find and comment on that. No, just the final comment on that, let's go back to our strategy of value over volume.

Should we entertain something like this and so we presented to the board they approved it.

Was there any sort of discussion about like what kind of discount you're giving your employees to buy the stock right.

We had good take up in the first initial.

Others would like a discount to the market, but yes, it's a 15% discount which is pretty standard in these programs.

Quarter of application and have had really nice feedback from our colleagues. So we look forward to it growing from here.

Okay.

Alright, guys I appreciate it thanks, so much.

Thanks George.

Thank you.

Are there any sort of discussion about like what kind of discount you're giving your employees to buy the stock right.

George Staphos: We will not take on business. So we are running at, I won't say full capacity, but healthy capacity utilization in all our facilities. We will not take on business with low margins and then add cost in our plants in terms of not a shift to produce products that we make low margins on. That's not our strategy. No, it makes sense, Oli. My last question and I'll turn it over. Same theme in terms of, okay, let's get on the other side of the mountain and volumes are better and so on, we're hopefully a better 24.

Again to ask a question. Please press star one on your phone some wait for your name to be announced literally your question. Please press star one again.

Others would like a discount to in the market, but yes, it's a 15% discount which is pretty standard in these programs.

Please go to our next question.

Yeah.

Alright, guys I appreciate it thanks, so much.

Our next question will come from Gabe Haiti of Wells Fargo. Your line is open.

Thanks George.

Thank you.

Again to ask a question. Please press star one on your phone some wait for your name to be announced literally your question. Please press star one again.

Oh, Hey, Larry Matt Good morning.

Okay.

I'm curious.

Again, a lot of ground's been covered.

One moment please for our next question.

And it's challenging to answer a question like this but.

Our next question will come from Gabe Haiti of Wells Fargo. Your line is open.

From you from a competitive landscape standpoint.

George Staphos: Free cash look version has been excellent this year, above your goal in the last quarter. Is there a chance that maybe realizing you're not going to get on 24, that the conversion in 24 maybe is a little below 50% because you do have to add back to what we're doing. Work in capital, you do have to do some other things or know. And then tell me a little bit about the program that you're offering your employees to buy stock at a discount.

More specifically thinking about the more mature markets in North America and Europe .

Holy Larry Matt Good morning.

Great.

Do you believe that we've seen sort of higher cost of capital.

I'm curious.

Again, a lot of ground's been covered.

Manifests and different pricing behavior or competitive activity.

And it's challenging to answer a question like this but.

From you from a competitive landscape standpoint.

In the markets in which you participate.

More specifically thinking about the more mature markets in North America and Europe .

Or is that something that we still think is on the come.

That would be my first question.

Do you believe that we've seen sort of higher cost of capital.

George Staphos: What did you compare that with in terms of other ways to incentivize performance and ownership? Thanks guys. Yeah, so two things on that, I mean, it's all going to depend on the pace of the increase of demand George and also then where does the cost of steel end up as the big driver for us in terms of what will be the impact on working capital bills. You know, OCC will play into that as well.

Yes, I don't know that we would necessarily attribute competitive behavior to their cost of capital although.

Manifests and different.

Pricing behavior or competitive activity in the markets in which you participate.

Obviously in our VIP business one of our primary competitors is very highly levered. So does put pressure on them, but I think it puts pressure in the right direction.

Or is that something that we still think is on the come.

That would be my first question.

Yes, I don't know that we would necessarily attribute competitive behavior to their cost of capital although.

That's a good thing I mean, the more the place where we're seeing that really play out more is in our strategic M&A activities I mean, it's clearly put.

Obviously in our VIP business one of our primary competitors is very highly levered. So does put pressure on them, but I think it puts pressure in the right direction.

George Staphos: Obviously, if demand comes back, you would think that's going to drive steel costs up in OCC. But we would still have our goal to be 50% or better and we have other opportunities within our supply chain initiatives that we believe can keep us at that, you know, at that our goal level. So that'll be our focus. I mean, obviously the outsized performance that we had this quarter is substantially above our goal.

The P/e model in a much different position than they were two or three years ago.

No.

Puts us in a very very good position relative to what we're trying to do in the market.

That's a good thing I mean more the place where we're seeing that really play out more is in our strategic M&A activities I mean, it's clearly put.

So I know thats not exactly responsive to what your question was the game but.

The P/e model in a much different position than they were two or three years ago.

We see the favorability there we're not seeing anything in the competitive marketplace that I would attribute to their <unk>.

Puts us in a very very good position relative to what we're trying to do in the market.

George Staphos: We would love that, but we don't see that, but just for another example, Colpac is well above our 50% on pre cash flow conversion and we're trying to focus on those type of businesses as we execute on our M&A strategy. In both the resin business and also in the downstream in our paper business with respect to the stock purchase plan for our colleagues. This actually emanated from requests from our employees. We had a number of requests as we went around to plants around the world.

Cost of capital at least that we could we can discern.

So no thats not exactly responsive to what your question was Gabe but.

Sure.

Maybe ask the question a little bit better.

We see the favorability there we're not seeing anything in the competitor marketplace that I would attribute to their cost of capital at least that we could we could discern.

In a down demand environment would be just intuitively, how you would think about competitors coming out and maybe being a little bit more aggressive pickup business and keep here.

Are you seeing that or again.

Kind of it seems like based on your results. The answer is no and in fact, you're able to.

Sure.

Maybe ask the question a little bit better.

Down demand environment would be just intuitively, how you would think about competitors coming out and maybe being a little bit more aggressive pick up business and keep here.

George Staphos: From probably colleagues who had worked at other places that had this and they said, hey, look, we really like what's going on in the company. Could we entertain something like this? And so we presented the board they approved it. And, you know, we had good take up in the first initial quarter of application and have had really nice feedback from our colleagues. So we look forward to it growing from here. Was there any sort of discussion about like what kind of discount are you giving your employees to buy the stock, right?

Price for value.

I can give you a crystal clear, yes to that.

Yeah.

Okay.

Alright, and then I guess, just one last one.

Are you seeing that or.

It seems like based on your results.

Appreciating that there's some math behind it but you made a pretty strong statement that.

No and in fact, you're able to.

Price for value.

So it sounds like you're going to be out.

Okay. If I can I can give you a crystal clear yes to that.

Doing some M&A theres the pipeline is pretty full.

Yeah.

Is there a point at which share repurchase becomes more compelling than maybe deploying capital on the M&A side or is it not.

Okay.

Alright, and then I guess, just one last one.

Appreciating that there's some math behind it but you made a pretty strong statement that.

A binary decision like that from a I guess my financial return standpoint.

So it sounds like you're going to be out.

Yeah, I don't I don't think it's binary yes, if we found that we could not deploy.

Doing some M&A the pipeline is pretty full.

George Staphos: You know, others would like a discount too in the market. Yeah, it's a 15% discount, which is pretty standard in these programs. Okay, all right guys, I appreciate it, thanks so much. Thank you. Again, to ask the question, please for a star 1-1 on your phone and wait for your name to be announced. Which are your questions, please for a star 1-1 again. One moment please for our next question.

Is there a point at which share repurchase becomes more compelling than maybe deploying capital on the M&A side or is it not.

Deploy capital in attractive M&A, along our strategic objectives, then it would become more compelling to start buying shares back because we continue to believe our shares are phenomenally undervalued.

A binary decision like that.

I guess my financial return standpoint, yes.

Yes, I don't I don't think it's binary yes, if we found that we could not deploy.

I think our multiples are stupid low but.

But that said the M&A deals we are doing the returns that we've got forecast are quite compelling and to the extent that we continue to have those type of opportunities. We'll go down that path I mean, I don't remember <unk> talked about this I mean, you know the co pack deals that eight times and then after synergies that we'll get from.

Deploy capital and attractive M&A, along our strategic objectives, then it would become more compelling to start buying shares back because we continue to believe our shares are phenomenally undervalued.

George Staphos: Our next question will come from Gabe Hajde of Wells Fargo. Your line is open.

I think our multiples are stupid low but.

George Staphos: Ole, Larry, Matt, good morning. I'm curious. Again, a lot of grounds uncovered and it's challenging to answer a question like this, but from a competitive landscape standpoint, more specifically thinking about the more mature markets in North America and Europe, do you believe that we've seen sort of higher cost of capital manifests in different pricing behavior or competitive activity in the markets in which you participate? Or is that something that we still think is on the come?

But that said the M&A deals we are doing as the returns that we've got forecasts are quite compelling and to the extent that we continue to have those type of opportunities. We'll go down that path I mean, I don't remember Matt talked about this I mean, the co pack deals that eight times and then after synergies that we'll get from.

Integration price six so if we can if we can do deals like that that are high margin high cash flow conversion.

And those kind of multiples will be doing that.

For a long time before we do a lot of capital on stock repurchase, but if we can't then we will go the other way and and these are not mutually exclusive like I said, we will be doing some stock repurchase stock opportunistically over the next year as well.

Integration price six so if we can if we can do deals like that that are high margin high cash flow conversion.

At those kind of multiples will be doing that.

For a long time before we do a lot of capital on stock repurchase, but if we can't then we will go the other way and these are not mutually exclusive like I said, we will be doing some stock repurchase stock opportunistically over the next year as well.

George Staphos: It would be my first question. That's a yeah, but I don't know that we would necessarily attribute competitive behavior to their cost of capital, though obviously in our GIP business, one of our primary competitors is very highly levered, so does put pressure on them, but think it puts pressure in the right direction. That's a good thing. The place where we're seeing that really play out more is in our strategic M&A activities.

Okay last one for me.

I know George was pushing that working capital a little bit.

Capex has been elevated over the past two years I think I read some articles.

Over the past week or so that you guys made some investments at the River Mill Riverdale Mill.

In Virginia.

At least from a planning budgeting standpoint.

Okay last one from me.

I know George was pushing that working capital a little bit.

On the Capex side, Larry is that can.

Capex has been elevated over the past two years I think I read some articles.

Can you give us a ballpark of that.

Maybe it's a net 160 range or something like that where you expect them to be down from where we are this year or are you seeing.

Over the past week or so that you guys made some investments that we were no Riverdale mill.

Enough opportunities in the pipeline organically he might have a $180 million to $200 million of Capex next year.

George Staphos: It's clearly put the PE model in a much different position than they were two or three years ago and puts us in a very, very good position relative to what we're trying to do in the market. No, that's not exactly responsive to what your question was, Gabe, but we see the favorability there. We're not seeing anything in the competitive marketplace that would attribute to their cost of capital, at least that we could discern.

In Virginia.

At least from a planning budgeting standpoint.

On the Capex side, Larry is that can.

I think the levels, we've been running last couple of years or something I would continue to model and I think we've got opportunities, including our whole effort around Digitization I mean.

Can you give us a ballpark of that maybe its in that $1 60 range or something like that where you expect it to be down from where we are this year are you seeing.

Enough opportunities in the pipeline organically.

We believe that there's going to be substandard returns from us digitizing more.

Might have a $180 million to $200 million of Capex next year.

And becoming much more customer friendly.

I think the levels, we've been running the last couple of years or something I would continue to model and I think we've got.

So we've got the opportunity to deploy capital in areas that we believe will return well for us. So I think that level is good for your modeling purposes.

Including our whole effort around Digitization I mean.

We believe that there's going to be substantive returns from us digitizing more.

George Staphos: Sure. I get maybe ask the question a little bit better in a down-demand environment would be just intuitively how you would think about competitors coming out and maybe be a little bit more aggressive to pick up business and keep share. Are you seeing that? Or again, it seems like based on your results, the answer is no, and in the fact, you're able to, you know, price for value.

Great. Thank you.

And becoming much more customer friendly.

Thank you.

And once again to ask a question. Please press star one on your phone.

So we've got the opportunity to deploy capital in areas that we believe will return well for us. So I think that level is good for your modeling purposes.

Please for our next question.

Okay.

And our next question is a follow up from Michael Hoffman of Stifel. Your line is open.

Great. Thank you.

Thank you.

George Staphos: Gabe, I can give you a crystal clear yes to that. Yeah. Okay. All right.

I just wanted to make sure I understood. The one answer the unequivocal, yes is the yes, the customers or the competitors are being disciplined or yes, they're being they're acting badly.

Once again to ask a question. Please press star one on your phone.

Please for our next question.

George Staphos: And then, I guess just one last one, appreciating that there's some math behind it, but you meet a pretty strong statement that still sounds like you're going to be out doing some M&A. The pipeline's pretty full. Is there a point in which share repurchase becomes more compelling than maybe deploying capital on the M&A side? Or is it not a binary decision, like that? I guess mathematical return standpoint. Yeah, I don't think it's binary.

Okay.

I don't know whether you call it acting badly but are they I think the question is are they being super competitive and the answer is yes.

And our next question is a follow up from Michael Hoffman of Stifel. Your line is open.

I just wanted to make sure I understood. The one answer the unequivocal, yes is the yes, the customers or the competitors are being disciplined or yes. They are being they are acting badly.

But not irrational.

Otherwise.

We've always got somebody acting irrational somewhere in a rural Michael me, but when you've got as many plants as we do in the number of customers. There is always going to be something where some about some lone wolf out there is totally irrational, but as abroad.

I don't know whether you call it acting badly but are they I think the question is are they being super competitive and the answer is yes.

George Staphos: I guess if we found that we could not deploy capital in attractive M&A along our strategic objectives, then it would become more compelling to start buying shares back. Because we continue to believe our shares are phenomenally undervalued. Yeah, I think our multiples are stupid low. But, you know, but that's the M&A deals we're doing as returns that we've got forecasts are quite compelling. And to the extent that we continue to have those type of opportunities, we'll go down that path.

But not irrational.

Answer.

Otherwise.

Across the customer base, no theyre not being irrational.

We've always got somebody acting irrational somewhere in the rural Microsemi, but when you've got as many plants as we do in the number of customers, there's always going to be something where some about some lone wolf out there is is totally irrational, but as abroad.

We're doing it at prices in some cases that were not going to do because we're not going to chase. The volume like we've said our focus is on value and delivering the best customer service in the world and being responsive and really treat our customers well and getting paid for the value and I said earlier, we don't need to chase volume Yeah right yeah.

Answer.

Cross the customer base, no theyre not being irrational.

Okay.

At prices in some cases that were not going to do because we're not going to chase the volume Mike. We've said our focus is on value and delivering the best customer service in the world and being responsive and really treat our customers well and getting paid for the value and I said earlier, we don't need to chase volume Yeah, right Yeah no.

I applaud the action I've seen it across other industries. When you do that you get the kind of results youre producing but the other read through to this is the moment volume starts to improve.

George Staphos: I mean, I don't remember if Nat talked about this. I mean, you know, the Colpac deals at eight times. And then, you know, after synergies that we'll get from integration price six. So if we can, if we can do deals like that that are high margin, high cash flow conversion, you know, at those kind of multiples, we'll be doing that, for a long time before we would do a lot of capital on stock repurchase. But if we can't then we'll go the other way and these are not mutually exclusive. Like I said, we will be doing some stock repurchased stuff opportunistically over the next year as well.

George Staphos: Okay.

Back right off of that so there's a snap around price potential.

We would love to see that okay, great. Thank you.

Todd the action I've seen it across other industries. When you do that you get the kind of results are producing but the other read through to this is the moment volume starts to improve.

Thank you.

And I'm seeing no further questions in the queue I would now like to turn the conference back to Matt <unk> for closing remarks.

Back right off of that so theres, a snap around price potential.

Thank you everyone for joining today I hope you have a wonderful day.

We would love to see that okay, great. Thank you.

Yeah.

This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.

Thank you.

And I'm seeing no further questions in the queue I would now like to turn the conference back to Matt <unk> for closing remarks.

Larry Hilsheimer: Last one for me. I know George was pushing that work in capital a little bit. CapEx has been elevated over the past two years. I think I read some articles over the past two years. Last week or so that you guys made some investments at the Riverville, Riverville, Mill, in Virginia. At least from a planning budgeting standpoint on the CapEx side, Larry, is that, you know, can you give us a ballpark adept, you know, maybe it's in that 160 range or something like that, were you expecting to be down from from where we are this year, are you seeing enough opportunities in the pipeline organically where you might have 180 to 200,000 of CapEx next year.

Thank you everyone for joining today hope you have a wonderful day.

Yeah.

This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.

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Okay.

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Yes.

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Okay.

Larry Hilsheimer: I think the levels we've been running last couple years or something, I would continue to model in. I think we've got, you know, options, including our whole effort around digitization. I mean, we believe that there's going to be substantive returns from us digitizing more and becoming much more customer friendly. So, you know, we've got the opportunity to play capital in areas that we believe will return well for us. So I think that level is good for your modeling purpose.

Yes.

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Okay.

Larry Hilsheimer: Great. Thank you.

Yes.

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Okay.

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Yeah.

Yes.

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Operator: I want to ask a question. Please press star one, one on your phone. One moment, please.

Okay.

Michael Hoffman: For our next question.

Hum.

Okay.

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Okay.

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Michael Hoffman: And our next question is a follow up from Michael E Hoffman of Diffle. Your line is open. Thank you. I just want to make sure I understood the one answer. The unequivocal yes is the yes. The customers are the competitors are being disciplined or yes, they're being, they're acting badly. I don't know whether you call it acting badly, but are they, I think the question is, are they being super competitive in the answer?

No.

Okay.

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Okay.

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Okay.

Michael Hoffman: Yes. But not irrational. Otherwise, we've always got somebody acting irrational somewhere in the world, Michael. You know, when you've got as many plants as we do and as the number of customers, there's always going to be something where some, but some lone wolf out there is totally irrational, but as a broad answer across the customer base. No, they're not being irrational. They're doing it at prices, in some cases, that we're not going to do because we're not going to chase the volume, like we've said.

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Okay.

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Okay.

Michael Hoffman: Our focus is on value and delivering best customer service in the world and being responsive and really treating our customers well and getting paid for the value. And I said, we don't need to chase volume. Right, yep. No, I applaud the action. I've seen it across other industries and when you do that, you get the kind of results you're producing. But the other reed through to this is the moment volume starts to improve. You know, they'd back right off of that so there's a snap around price as potential. We would love to see that. Okay.

Okay.

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Good day and thank you for standing by welcome to the Great third quarter 2023 earnings Conference call.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question during that session you will need to press star one on your phone.

N here, an automated message advising our hand is raised to withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

Now I'd like to hand, the conference over to your Speaker today, Mr. Matt Leahy Mr. Leahy. Please go ahead.

Thanks, and good morning, everyone welcome to <unk> third quarter fiscal 2023 earnings Conference call. This is Matt Leahy, Greg <unk>, Vice President of corporate development, and Investor Relations and I'm joined by only Ross Gardner <unk>, President and Chief Executive Officer, and Larry Hill, Shimer Gripes, Chief Financial Officer, We will take questions at the end of.

Please turn to slide two.

In the appendix of today's presentation and now turn the presentation over to OLED on slide three thanks, Matt and good morning, everyone.

Our global <unk> team executed very well in our fiscal third quarter and posted strong performance. Despite the continuation of historic volume headwinds or.

While building the future.

Before covering our results I want to share an exciting updates on two of our key missions and our built for that strategy.

Creating thriving communities and submission devoted to cultivating a culture of appreciation inclusion and recognition for all of our internal colleagues and external stakeholders in the third quarter, we launched our colleague stock purchase plan a program that.

Enables colleagues from corporate down through production to acquire <unk> class Acs at a discount to market prices.

Michael Hoffman: Great. Thank you.

We believe in the power of our partnership to drive greater accountability and commitment to excellence across the organization and this program will provide the means for our colleagues to participate in the economic benefits and value creation.

Operator: And I'm seeing no further questions in the queue.

I am proud to welcome our colleagues to the table as fellow owners of our company and look forward to expanding this program in the months and years to come.

Matt Leahy: I would now like to turn the conference back to Matt Leahy for closing remarks. Thank you everyone for joining today.

Matt Leahy: I hope you have a wonderful day. This concludes today's conference calls. Thank you all for participating. You may now disconnect and have a pleasant day.

On our mission to deliver legendary customer service each quarter, we present latest results of our customer satisfaction index and mechanism. We use to formally receive regular feedback from customers on overall satisfaction with grief in terms of product quality.

Operator: In the next episode, we'll see you in the next episode. Good day, and thank you for standing by.

Operator: Mr. Leahy, please go ahead. Thanks and good morning, everyone. Welcome to Greif's 3rd quarter, fiscal 2023 earnings conference call. This is Matt Leahy, Greif's vice president of corporate development and investor relations, and I'm joined by Ole Rosgaard, Greif's president and chief executive officer, and Larry Hill Shimer, Greif's chief financial officer. We will take questions at the end of today's call. In accordance with regulation fair disclosure, please ask questions regarding issues you consider important, because we are prohibited from discussing material non-public information with you on an individual basis.

Customer service and our ability to deliver value.

Our aspirational benchmark of success is a score of 95 out of one hundreds.

This quarter, our global consolidated score was $94 to just shy of that gold and an exceptional result, given the challenges our customers are facing in the markets.

Operator: Please turn to slide two. As a reminder 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-gap financial measures and reconciliation to the most directly comparable gap metrics to the appendix of today's presentation. And now turn the presentation over to Ole on slide three. Thanks, Matt, and good morning, everyone. Our global drive team executed very well in our fiscal 3rd quarter and posted strong performance, despite the continuation of historic volume headwinds.

Gripes steadfast commitments to our customers is evidence.

We will provide you and support you and builds on our existing relationships in good times and in advance and you can count on us to deliver with quality and service Excellence every day.

Our dedication and relentless focus on customer service is core to who we are as an organization and our excellent CSI call June this challenging period as a reminder of the value we provide.

Operator: Our teams are leaning on our built-to-last strategy to drive results in this difficult environment, and I could not be proud of the work we are doing to manage and improve the business and better serve customers. Our performance in the first nine months of 2023, with strong EBITDA performance and margins and free cash flow conversion, well above our target is 50%. It's a testament to the growing resilience of our business model, and our commitment to both manage the present while building the future.

Now I'd like to shift focus back to financial results on slide four where I'll turn it over to Larry to kick things off.

Thanks, Joey and good morning, everyone.

Given <unk> overall financial performance relative to the operating environment. We have been in this year. We went to briefly step back from our single quarter results in just take stock of where the company is now relative to our initial view in fiscal 'twenty three guidance provided in December of 2022.

Operator: Before further covering our results, I want to share an exciting update on two of our key missions in our built-to-last strategy. Creating thriving communities is a mission devoted to cultivating a culture of appreciation, inclusion, and recognition for all our internal colleagues and exterms stakeholders. In the third quarter, we launched our colleague stock purchase plan, a program that enables colleagues from corporates down through production to acquire growth classes at a discount to market prices.

8% to $906 million in EBITDA, and $410 million to $460 million in free cash flow.

I'll be Frank with everyone. While we considered at the time the possibility of an extended slow demand cycle, we did not wait that heavily.

Doing so would imply we felt that we were headed into another industrial recession.

Clearly that initial assumption in December was wrong and while we may not be in a broad economic recession global manufacturing PMI remained below 50 for the 11 11 months in a row and our year to date volumes across GIC in Pts are both tracking down mid to high teens year to date.

Operator: We believe in the power of partnership to drive greater accountability and commitment to excellence across the organization, and this program will provide the means for our colleagues to participate in the economic benefits of value creation. I'm proud to welcome our colleagues to the table as fellow owners of our company and look forward to expanding this program in the month and years to come. On our mission to deliver legendary customer service, each quarter we present latest results of our customer satisfaction index and mechanism we use to formally receive regular feedback from customers on overall satisfaction with Greif in terms of product quality, customer service, and our ability to deliver value.

That's not indicative of an industrial recession and I'm not sure what is.

A few points comparing that scenario against our current environment.

Number one recession scale drum volumes assumed 5% down versus actual Q3 are down over 10%.

Recession until the index prices assumed down 20% versus the actual down 15 through July .

Operator: Our aspirational benchmark of success is a score of 95 out of 100. This quarter our global consolidated score was 94.2 just shy of that gold and an exceptional result given the challenges our customers are facing in the markets. Greif's steadfast commitment to our customers is evidence. We will provide you and support you and build on our existing relationships in good times and in bads and you can count on us to deliver with quality and service excellence every day. Our dedication and relentless focus on customer service is core to who we are as an organization and our excellent CSI score during this challenging period is a reminder of the value we provide.

Recession mail volumes assumed 5% down versus the national down over 20% in Q3.

The recession containerboard prices assumed 10% versus the actual Q3 down about 8%.

And yet our current guidance midpoint contemplates EBITDA and free cash flow that is over $100 million above the level, we provided for a recession scenario with only a partial lift from M&A I.

I illustrate these points to try to hammer home, how well our teams are executing and I also want to share my heartfelt. Thanks to all of our greif colleagues for their commitment and dedication this year.

Matt Leahy: Now I'd like to shift focus back to financial results on slide 4. We'll turn it over to Larry to kick things off. Thanks a lot and good morning everyone. Given Greif's overall financial performance relative to the operating environment we have been in this year we want to briefly step back from our single quarter results and just take stock of where the company is now relative to our initial view in fiscal 23 guidance provided in December 2022.

Matt Leahy: At that time we had started to see demand soft softness in many of our end markets and I discussed on our 2.4.22 earnings call how given our level of uncertainty we had run a robust scenario analysis to arrive at the wide guidance range for 2023 of 820 to 960 million in EBITDA and 410 to 460 million in free cash flow. I'll be frank with everyone while we considered at the time the possibility of an extended slow demand cycle we did not wait that heavily as doing so would imply we felt that we were headed into another industrial recession.

Our free cash generation was also extra ordinary reported at $167 1 million nearly equal to the very strong Q3 of 2022.

But on volumes, which were more or less 15% lower.

As mentioned in my opening remarks that free cash flow figure represents a conversion rate of over 70%, which is well ahead of our long term target more than 50%.

Matt Leahy: Clearly that initial assumption in December was wrong and while we may not be in a broad economic recession global manufacturing PMI's remained below 50 for the 11th month in a row and our year-to-date volumes across GIP and PPS are both tracking down mid to high teens year-to-date. If that's not indicative of an industrial recession then I'm not sure what is. Another relevant comparison is the recessionary scenario slide we outlined at our investor day in June of last year showing downside risk to 600 to 700 million of EBITDA and 260 to 320 million in free cash flow.

To drive improvements improvements across our business.

We also announced another step up in our annual reoccurring dividends with our total quarterly dividend now at 52 and.

78.

For class eight and Bcf respectively.

The strength of our balance sheet and growing free cash flow generation has widened our available capital allocation opportunities and we are excited to continue to deliver cash to our shareholders.

Matt Leahy: A few points comparing that to the scenario against our current environment. Number one, recessions still drum volumes assumed 5% down versus actual Q3 of down over 10%. Recession still index prices assumed down 20% versus the actual down of 15 through July. Recession mill volumes assumed 5% down versus an actual down over 20% in Q3. Recession container board prices assumed 10% versus the actual Q3 down about 8%. To summarize, current steel drum volumes are cracking down double the downside scenario.

On slide five please.

Co pack is a truly special paper converting business as the number two supplier of bulk and speciality petitions in North America.

Are those on familiar competition is a divider included commonly in corrugated boxes as a method of separating franchise content such as glass bottles.

Matt Leahy: Mill volumes are down quadruple the downside scenario, and overall pricing declines nearly match our downside scenario. And yet, our current guidance midpoint contemplates EBITDA and free cash flow that is over $100 million above the level we provided for a recession scenario, with only a partial lift from M&A.

Italy located to serve the high end widened bottling business in Napa Valley.

Larry Hilsheimer: I illustrate these points to try to hammer home how well our teams are executing, and I also want to share my heartfelt thanks to all of our Greif colleagues for their commitment and dedication this year. Holy thanks for letting me take the time to boast about our team's performance, but it's really commendable how well we are doing, and I'd like our investors to keep in that in mind as they consider our detailed results.

This business is immediately mark margin accretive to the global growth portfolio and is expected to contribute to EBITDA before synergies of $15 million to $20 million per year.

While the business is small relative to our global portfolio, several organic and inorganic growth opportunities remain to quickly grow and further scale. This business.

Larry Hilsheimer: Thanks Larry, and well said, as Larry just mentioned, we again reported strong adjusted EBITDA of 226.5 million. Only 2 million shy of our previous quarter and less than 25 million short of the very strong 2022 comparative periods. Our free cash generation was also extraordinary. Reported at 167.1 million nearly equal to the very strong Q3 of 2022, but on volumes which were more or less 15% lower, as mentioned in my opening remarks, that free cash flow figure represents a conversion rate of over 70%, which is well ahead of our long-term target of more than 50%.

On top of the favorable Standalone financials co packs converting network consumes approximately 25000 tons of paper per year.

Adding incremental downstream integration into our PPS network.

Last but certainly not least co packs management team is an excellent cultural fit to drive we have known and done business with the KOL family for years and share a set of values on how to take care of colleagues and serve customers.

We are excited to partner with co pack and this new venture and grow the business together.

Larry Hilsheimer: Our discipline's approach to managing costs and working capital are driving this performance, as we are truly playing with the entire piano, spanning from operational and commercial excellence in these tips to supply chain and sourcing and automation efforts, all to drive improvements across our business. We also announced another step up in our annual reoccurring dividends, with our total quarterly dividend now at 52 cents and 78 cents for class A and VCR's respectively. The strength of our balance sheet and growing free cash flow generation has widened our available capital allocation opportunities, and we are excited to continue to deliver cash to our shareholders.

Value accretive targets in the future.

Now I'd like to shift gears and take a deeper dive into our segment results. So please turn to slide six.

Our VIP business produced excellent results with flat year over year gross profit despite volume headwinds of nearly 20% in the Americas and nearly 10% in EMEA and APAC.

Once again, the strict adherence to our value over volume philosophy in the markets.

Larry Hilsheimer: Lastly, I'm excited to announce another addition to the GRIF portfolio. At this past week, we signed an agreement to acquire 51% ownership in COPEC, which I'd like to discuss more on the following slides. Slide five, please. COPEC is a truly special paper converting business, as the number two supplier of bulk and specialty petitions in North America. For those unfamiliar, a petition is a divider included commonly in corrugated boxes as a method of separating fragile content such as glass balls.

The benefits of our cost out actions taken earlier this year and lower year over year input costs led to an adjusted EBITDA lift of nearly $10 million year over year, despite substantially lower revenues.

On the volume side, all Gi products and geographies showed softness compared to the prior year with global steel and resin based products, both down mid double digits on a per day basis.

Sequentially, our third quarter closely mirrored our second quarter with demand flat in EMEA, and APAC and slightly down in Latam and North America.

Larry Hilsheimer: Colpac Manufacturers, a wide range of petitions from both URP and Container Board, and three dominantly serves the stable and growing food and beverage markets. There are two facilities in Urbana, Ohio and in Fairfield, California, a site which is strategically located to serve the high-end wine bottling business in Appah Valley. This business is immediately marked margin accretes to the Global Gryph portfolio, and it's expected to contribute if it are a force energies of 15 to 20 million per year.

Through August we do not have a line of sight into any notable upward demand inflections in <unk> business and we'll continue to manage this business as we have through the year with a focus on cost and customer service.

I commend our global team for their exemplary performance in the third quarter and throughout 2023.

Please turn to slide seven.

Paper packaging third quarter sales declined $146 million year over year, primarily due to demand weakness across our converting businesses and mills we.

Larry Hilsheimer: While the business is small relative to our global portfolio, several organic and inorganic growth opportunities remain to quickly grow and further scale this niche business. On top of the favorable standalone financials, Colpac's converting network consumes approximately 25,000 tons of paper per year, adding incremental downstream integration into our PPS network. Less, but certainly not least, Colpac's management team is an excellent cultural fit to drive. We have known and done business with the Colp family for years and share a set of values on how to take care of colleagues and serve customers.

We took approximately 55000 tons of economic downtime across our mill system in the third quarter as we faced nearly 10% per day volume declines across our primary converting operations.

The continued low volume environments combined with rising OCC costs during the quarter led to both EBITDA.

And EBITDA margin compression compared to prior year that said.

Our PPS team utilizes the same playbook, SG IP and reference to value over volume and cost elimination, resulting in a still healthy seven 4% EBITDA margin for the quarter.

Larry Hilsheimer: We are excited to partner with Colpac in this new venture and grow the business together. I conclude by saying that even after the performing impact of this acquisition, our balance sheet remains in great shape, and we sit below the midpoint of our target's leverage ratio range. Our M&A pipeline remains robust, and we intend to continue deploying capital to a small value of created targets in the future.

Our Pts team is managing the business very well against multiple headwinds and I'm proud of their results and continued dedication during these challenging times.

I will now turn the presentation over to Larry on slide eight.

Ali as only and I mentioned in earlier prepared remarks, our team is executing well in a historically challenging demand environment.

It is an enterprise wide effort to deliver these results and my heartfelt. Thanks goes out to each department within <unk> for delivering for our customers and our shareholders. This year.

Ole Rosgaard: Now, I'd like to shift gears and take a deeper dive into our segment results, so please turn to slide sticks. Our GIP business produced an excellent result with flat year-over-year growth profits despite volume headwinds of nearly 20% in the Americas and nearly 10% in a mere NAPAC. Once again, the strict adherence to our value over volume philosophy in the market, the benefits of our cost-out actions taken earlier this year and lower year-over-year input costs led to an adjusted EBITDA lift of nearly 10 million year-over-year despite substantially lower revenues.

Back to the Q3 financials sales decreased approximately $290 million year over year, primarily due to lower volumes and the impact of significantly lower steel costs.

Despite this adjusted EBIT declined less than $25 million, leading to over 150 basis points of margin expansion.

Most impressive however was our free cash flow performance.

Cash flow dollars were down only $8 million year over year on substantially higher free cash flow conversion.

Just to remind everyone Q3 of last year was the highest highest third quarter cash flow in the history of our company and we missed it this quarter by only $8 million with 290 million lower sales volume is down nearly 15% year over year, higher capex and $11 million of higher interest costs related to higher rate.

Ole Rosgaard: On the volume side, all GIP products and geographies showed softness compared to the prior year with global steel and resin-based products both down mid-double digits on a third-day basis. Sequentially, our third quarter closely mirrored our second quarter with demand flat in the mere NAPAC and slightly down in Latin and North America. Through August, we do not have a line of style into any notable upward demand inflections in our GIP business and will continue to manage this business as we have through the year with a focus on cost and customer service. I commend our global GIP team for their exemplary performance in the third quarter and throughout 2020.

Ole Rosgaard: 33.

And our recent M&A activity that is truly outstanding.

On any measure the cash output of this company is miles ahead of where it once was and we still do not believe that that fact is fully recognized by the market.

We have raised the bar on performance and the elevated cash flow dynamic has opened up a lot of possibilities for further value creation through M&A and returning cash to shareholders.

Larry Hilsheimer: Please turn to slide seven. Paper packaging, third quarter sales declines 146 million year over year, primarily due to demand weakness across our converting businesses and mills. We took approximately 55,000 tons of economic downtime across our mill system in the third quarter, as we faced nearly 10% per day volume declines across our primary converting operations.

And now I'd like to touch on our other capital allocation priorities on slide nine before discussing guidance.

Larry Hilsheimer: The continued low-volume environments combined with rising OCC costs during the quarter led to both EBITDA dollar and EBITDA margin compression compared to prior year. That said, our PPS team utilized the same playbook as GIP in reference to value over volume and cost elimination, resulting in a still healthy 7.4% EBITDA margin for the quarter.

In addition to pursuing inorganic growth I am excited to announce we are again, raising our dividend fulfilling our commitment we made to investors over a year ago.

While our dividend yield may no longer be industry, leading thanks to some long overdue appreciation in our stock price. It is still one of the most compelling dividend offerings in our industry by raising our dividend for the coming year by 4%. We are reaffirming our commitment to deliver a cash directly back to our shareholders.

Larry Hilsheimer: Our PPS team is managing the business very well against multiple headwinds and are proud of their results and continuous dedication during these challenging times.

Larry Hilsheimer: I will now turn the presentation over to Larry on slide eight. Thank you, Oli. As Oli and I mentioned in earlier prepare remarks, our team is executing well in a historically challenging demand environment.

Larry Hilsheimer: It is an enterprise wide effort to deliver these results and my heartfelt thanks goes out to each department within Greif for delivering for our customers and our shareholders this year. Back to the Q3 financials, sales decreased approximately $290 million year over year, primarily due to lower volumes and the impact of significantly lower skill costs. Despite this, adjusted EBITDA declined less than 25 million, leading to over 150 basis points of margin expansion.

For $2 6 million shares and May execute further repurchases repurchases opportunistically in the coming year.

With that I'd like to close by discussing our revised guidance on slide 10.

As you can see the midpoint of our guidance for EBITDA and free cash flow remains unchanged give.

Larry Hilsheimer: Most impressive, however, was our free cash flow performance. Cash flow dollars were down only $8 million year over year on substantially higher free cash flow conversion. Just to remind everyone, Q3 of last year was the highest third quarter cash flow in the history of our company and we missed it this quarter by only $8 million with $290 million lower sales. Volume is down nearly 15% year over year, higher tax and 11 million of higher interest costs related to higher rates in our recent M&A activity.

Our overall third quarter financial results largely met our expectations. However, the individual drivers differ.

Volumes were below plan in nearly all substrates, but margins were better for the reasons previously mentioned as with prior quarters. Our current forward guidance assumes no improvement on volumes through the end of the year. Additionally, we will plan to share our views on fiscal 'twenty four in our Q4 call in early December we expect to finish the year with another.

Larry Hilsheimer: That's truly outstanding. To put it another way, on a trailing 12 month basis, our adjusted free cash flow is tracking at 580 million more than double the average annual free cash flow generated between our 2019 and 2021 fiscal years. On any measure, the cash output of this company is miles ahead of where it once was and we still do not believe that that fact is fully recognized by the market. We have raised the bar on performance and the elevated cash flow dynamic has opened up a lot of possibilities for further value creation through M&A and returning cash to shareholders.

<unk> strong performance. Despite the persistent macroeconomic challenges, we face I would like to remind everyone that the midpoint of our guidance range implies implies the best second best financial performance in Greg 145 year history surpassed only by a record year. In 2022, we are confident that we have set a new bar for performance.

And expect that we will continue to deliver these exceptional results as we make future progress on our build to last journey.

Okay, I'll hand, it back to you to close on slide 11, Thanks, Larry.

As mentioned our guidance reflects the expectation of the second best year in <unk> hundred 45 year history, and we are extremely proud to be in that position considering the headwinds we have been off facing great companies often prove their worth in times of great difficulty through perseverance.

Larry Hilsheimer: And now I'd like to touch on our other capital allocation priorities on slide 9 before discussing guidance.

Larry Hilsheimer: Only discuss the recent acquisition of coal back in his remarks. We're pleased to be taking another step on our investor day commitment to grow downstream integration in our paper system. At the same time, we're pursuing our resin-based acquisition path in GIP. We have spent over 550 million on M&A over the last nine months, but our work is not done and our pipeline remains robust. We expect to continue generating sufficient cash to fund various actionable opportunities and still maintain a strong balance.

Grids and dedication to excellence.

Built on less is how we demonstrate that perseverance and I see daily and the passion of our colleagues and decision making at every level of our business.

We are well positioned for a demand rebound whenever that pumps and in the meantime, we are excited to continue building this business and making progress on our long term strategy.

Larry Hilsheimer: In addition to pursuing inorganic growth, I'm excited to announce we are again raising our dividend, fulfilling a commitment we made to investors over a year ago. While our dividend yield may no longer be industry leading, thanks to some long overdue appreciation in our stock price, it is still one of the most compelling dividend offerings in our industry. By raising our dividend for the coming year by 4%, we are reaffirming our commitment to deliver cash directly back to our shareholder. As our business grows, we expect to grow our dividend at a commensurate rate to ensure shareholders are fairly compensated for their commitment to us.

We thank you for your interest in <unk> operator, please open the line to questions.

Thank you.

As a reminder to ask a question. Please press star one one on your phone and we are planning to be announced to withdraw. Your question. Please press star one again.

Standby as we compile the Q&A roster.

One moment please for our first question.

And our first question will come from Michael Hoffman of Stifel. Your line is open.

Thank you.

Larry for taking the questions I look forward to seeing you next week in Paris and London.

When we finished <unk>.

My notes, if I'm wrong I'm wrong.

My notes that the cadence in the second half.

Larry Hilsheimer: But that, I'd like to close by this by discussing our revised guidance on slide 10. As you can see, the midpoint of our guidance for EBITDA and free cash flow remains unchanged. Given the closer line of sight to full-year results, we are tightening the range by 10 million on each side and now expect full-year EBITDA to land between $790 and $820 million and full-year free cash flow between $430 million. Our overall third quarter financial results largely met our expectations.

So the EBITDA is going to track around couple hundred million dollars in the <unk> and then improve modestly into <unk>.

To hit the midpoint.

Yes.

The outlook for <unk>, given you again repeat and exceptional performance around cost.

That has the fourth quarter down pretty healthy.

One of them.

The interpretation of.

The implied EBITDA being 185 versus something that was like.

<unk> 210 originally.

Larry Hilsheimer: However, the individual drivers differ. Volumes were below plan in nearly all substrates, but margins were better for the reasons previously mentioned. As with prior quarters, our current forward guidance assumes no improvement on volumes through the end of the year.

Yes, Michael you are correct.

Q3 ended up being better on the margin side volume degradation no was more than we expected and we don't see that mark that volume.

Ole Rosgaard: Additionally, we will plan to share our views on fiscal 24 in our Q4 call in early December. We expect to finish the year with another quarter of strong performance despite the persistent macroeconomic challenges we face. I'd like to remind everyone that the midpoint of our guidance range implies the best, second best financial performance in gripes 145-year histories surpassed only by our record year in 2022. We are confident that we have set a new bar for performance and expect that we will continue to deliver these exceptional results as we make future progress on our builds to last journey.

Picking up and we've seen agg perform less favorable than we normally do.

So with that that trend it just shifted things a bit we also had anticipated.

Yes that we would have some a tax refund item that is in Latin America is like 6 million Bucks, we would anticipate that might occur later it came into the third quarter, it's actually a noncash item.

As well, which really impacted cash flow a little bit, but it's really those two items.

Obviously, we hope volumes will pick up and surprised us a bit in the fourth quarter, but we have not seen that in August yet.

Ole Rosgaard: Holy, I'll hand it back to you to close on slide 11. Thanks, Larry. As Larry just mentioned, our guidance reflects the expectation of the second best the year in gripes 145-year history. And we are extremely proud to be in that position considering the headwinds we have in our facing.

Okay, and then to that point.

We've talked before about sort of major end markets and VIP for chemical paints and coatings and lubricants.

So are we hearing the message that it's not worth it.

It's just not any better.

Ole Rosgaard: Great companies often prove their worth in times of great difficulty through perseverance, grids, and dedication to excellence. Build on last is how we demonstrate that perseverance. And I see it daily in the passion of our colleagues and decision making at every level of our business. We are well positioned for demand rebounds whenever that comes. And in the meantime, we are excited to continue building this business and making progress on our long-term strategy.

Or is some of those got worse.

Hi, Michael.

Our customers.

Telling us that it's not getting worse, but they're also telling us that they don't expect any improvements.

Over the next two quarters. So from what we hear we will be in the second quarter of 2020 ball before.

Even in a remote chance of improvements, but that's what.

What we hear from our customers.

Ole Rosgaard: We thank you for your interesting rights.

And then on TPS.

I cover things that recycle all the associates and that in my coverage.

Says that there is.

Starting to see improving demand.

So is there a light at the end of the tunnel and all of this.

The finished goods inventory clearing and demand starts to improve.

Yes, Mike were I think part of what <unk> created a little bit of demand on the waste companies for the OCC side of things is really just related to some new.

Michael Hoffman: And our first question will come from Michael E. Hoffman of Diffle. Your line is open. Thank you, Ole and Larry for taking the questions. I look forward to seeing you next week in Paris and London. When we finish 2Q, I have given my notes, if I'm wrong, I accept I'm wrong. I have my notes, the cadence in the second half, what's going to sort of ebit, I was going to track around a couple hundred million in the 3Q and then improve modestly into 4Q to hit the midpoint.

Mill capacity opening in recycled mills.

Outside of that we're not we saw a couple.

At times over the last month, or so where we saw a spike in orders for a week within the next week. They fell back off so we haven't seen anything sustained that would indicate any lift and we're not hearing anything from our customers.

The paper business.

That gives them any.

Real solid indications of a of a.

Inflexion point.

But it sounds like you feel like you have hit a bottom if youre getting momentary spikes you probably hit a bottom yes, we hope so.

Michael Hoffman: You beat the outlook for a 3Q given, you're again, repeated exceptional performance around cost. That has the fourth quarter down pretty healthy. What's my interpretation of the implied ebit job being 185 versus something that was low 200s to 10 originally? Yeah, Michael, you're correct. The Q3 ended up being better on the margin side. Volume degradation, though, was more than we expected. We don't see that mark or that volume picking up and we've seen ag perform less favorable than we normally do.

We think that but.

<unk>.

We thought the second half of this fiscal year would be good and I missed that call. So I'm.

I'm not I'm not really good with my Crystal ball.

You and I both.

And then last one for me is why not own 100% of coal.

This is a deal that.

Because of our long relationship with them.

They approached us to help because of growth opportunities, but maybe I'll, let Matt talk a little bit about that because Matt leads our business development efforts.

<unk> dealt with the KOL family on this.

<unk> to do it so that's the strategic rationale we're excited about adding into the portfolio from a margin perspective from an end market perspective, but also think that that 51% ownership stake in partnership going forward makes sense for both of us to maximize the growth and value creation that business overtime, yes. They are high.

Michael Hoffman: Okay. Then to that point, we've talked before about major end markets and GIPs for chemical paints and coatings and lubricants. Are we hearing a message that it's not worse? It's not. Hi, Michael. Our customers are killing us. It's not getting worse, but they're also telling us that they don't expect any improvements over the next two quarters. From what we hear, we will be in the second quarter of 2024, before they've seen even any remote chance of improvements.

Really respected in the industry.

So are there weren't as their bond kind of thing they are good people there, Ohio people.

And they want to participate in the growth.

Okay. Thank you very much.

Thank you.

And one moment please for our next question.

Our next question will come from the line of Ghansham Panjabi of Baird. Your line is open.

Hey, guys good morning.

Michael Hoffman: That's what we hear from our customers. Okay. Then on TPS, I cover things that recycle all this OCC, and that end of my coverage says that they're starting to see improving demand. Is there a light at the end of the tunnel and all of this, the Finnish goods inventory clearing and demand starts to improve? I think part of what's creating a little bit of demand on the waste companies for the OCC side of things is really just related to some new mill capacity opening and recycling with mills.

I know, it's very difficult to disaggregate, but on the volume decline in Gi P.

Destocking and just kind of wondering where we are in that phase.

Hi, Ghansham solid.

We don't think better.

Destocking has come to an end it but it's difficult for us to.

See whether it's really come to an end, but we believe what we see now is really this.

Michael Hoffman: Outside of that, we saw a couple times over the last month or so where we saw a spike in order for a week, but then the next week, they fell back off. So we haven't seen anything sustained that would indicate any lift. And we're not hearing anything from our customers in the paper business that gives them any real solid indications of an inflection point. But it sounds like you feel like you have to hit a bottom.

Manifestation of extremely low demand in the markets.

If that sales got it.

But obviously on that side.

We've taken a lot of cost outs some of it is structural with AWN.

Michael Hoffman: If you're getting momentary spikes, you're probably hit a bottom. Yeah, we hope so. I mean, you know, we think that, but, you know, we thought the second half of this fiscal year would be good and I missed that call. So I'm not, I'm not really good with my crystal ball. Yeah, you and I both. And then last one for me is why not own a hundred percent of coal? We, you know, this is a deal that, you know, because of our long relationship with them, you know, they approached us to help because of growth opportunities.

Rooftop consolidations.

We also are able to in that basis to flex really really rapidly as demand goes down.

So if you if demand returns, we obviously have room to.

We can increase our capacity, let's say, 2% to 5% with without any.

Michael Hoffman: Well, maybe I'll let Matt talk a little bit about that because Matt, you know, leads our business development efforts and dealt with the coal family on this. Yeah, so Michael, the reason to not own a hundred percent is that we and the coal believes that there's substantial growth opportunity ahead. And we want to have aligned incentives as we try to grow that business together. Part of the partnership, the reason it makes sense is because they see real opportunities in the market to grow substantially, but they need to make sure they have the milk capacity to do it.

Cost increases bumps if demand goes up further than that you would have to add shifts. So youll see variable cost goes up in line with increased demands, but a lot of the cost we've taken out.

True.

Got it and then just one final one on.

Kolpak if you broke out the sales number I missed that so if you could please repeat that and then also as it relates to fiscal year 'twenty four I mean, obviously very early big range of outcomes is based on the macro complexity et cetera, but can you give us some of the known variances that we should keep in mind as we finalize our modeling estimates for fiscal year 'twenty four you have co pack.

Obviously, the EBITDA contribution from there.

Michael Hoffman: So that's the strategic rationale. We're excited about adding into the portfolio from a margin perspective from an end margin perspective, but also think that that 51% ownership, stake and partnership going forward makes sense for both of us to maximize the growth and value creation that business over time. Yeah, and they're highly respected in the industry because of, you know, sort of their word is their bond kind of thing, they're good people, they're Ohio people. And they want to participate in the growth. Okay, thank you very much. Thank you. And one moment please for our next question.

Any flow through from cost savings price declines in paper or anything you can share there.

Yes, Ghansham this is Matt on coal pack.

We didn't give a revenue number but EBITDA run rate EBITDA is about $17 million to $18 million.

And then that does not include kind of the incremental benefits that go to the mills from us absorbing more tons.

And you can think about that on a full year run rate basis, we're not going to give revenue right now.

Our margins, but that should be instructive as you build the model for next year.

Michael Hoffman: Our next question will come from the line of Kancham Punjabi of beard. Your line is open. Hey guys, good morning. You know, I know it's very difficult to disaggregate, but on the volume decline in GIP, you know, how would you separate and market weakness versus any incremental destocking at the customer level? And I'm just asking that because as Ram Choprais has started to decline for some of your customers, they did start to accelerate destocking and just kind of wondering where we are in that phase.

I don't know you were asking for thinking about next year I don't know if we really have that yes, I would just say on the M&A side John .

Between lease and jewelry in co pack and probably a $40 million of incremental revenue. This year, we'd take out two maybe on entertainment things that were up.

Up.

Net 38, and if you look at the numbers we provided on each of those 33 for Lee 20 for Centurion in 17 on co pack on a full year basis. So you'd have a lift of maybe 28 next year 30 kind of number.

Michael Hoffman: Hi guys, I'm sorry. We don't think that destocking has come to an end, but it's difficult to, you know, see whether it's really come to an end. But we believe what we see now is really does the manifestation of extremely low demand in the markets. And then in terms of the margin improvement in GIP, you know, which has been obviously very notable in context of the volume declines you've cited, how should we think about incremental as volumes eventually recover and just asking because they're any big cost reversal.

And then on the cost Takeouts, we haven't quantified the.

Shift in volume related, but we think theres somewhere 10% to $13 million or.

Michael Hoffman: Edwin's we should keep in mind in that scenario. But obviously on that side, we take a lot of cost outs, some of it is structural with on, you know, rooftop considerations. We also are able to in that business to flex, you know, really, really rapidly as demand goes down. So if demand returns, we obviously have room to, you know, we can increase our capacity. Let's say it's 2 to 5% without any cost increases, but if demand goes up further than that, you would have to act at shifts. So you will see, you know, where will cost goes up in line with, you know, increased demands, but a lot of the cost we've taken out is structural.

Permanent structural change in how we're running the business.

Okay Super helpful. Thank you.

Thank you.

Again, one moment please for our next.

Question.

Okay.

Our next question will come from George Staphos of Bank of America. Your line is open.

Thanks very much.

Hi, Ali Larry Matt Good morning.

George.

Congratulations on the performance.

Thanks.

I wanted to.

Lot of the questions I've already forgotten at the heart of matter for you and again with really really good performance in light of things.

When you're talking to your customers what are they saying about why they believe demand isn't lifting yet again I know, that's really really hard to quantify.

Ghansham Panjabi: Got it, and then just one final one on Colpac. If you broke out the sales number, I missed that, so if you could please repeat that. And then also as relates to, you know, fiscal year 24, I mean, obviously very early, you know, big range of outcomes just based on the macro complexity, et cetera. But can you give us some of the known variances that we should keep in mind as we finalize our modeling estimates for fiscal year 24?

You can cover some of the markets and so many customers, but is there a common denominator or one or two things that they're seeing in terms of why we're not seeing demand lift.

<unk> stream.

Yes, so first of all when I speak to when I speak to a lot of them are big global customers.

Ghansham Panjabi: You have Colpac and, you know, obviously the EBITDA contribution from there, any flow through from cost savings, price declines and paper, anything you could share there. Yeah, Ghansham, Mrs. Matt, on Colpac, we didn't give a revenue number, but EBITDA, run rate EBITDA is about $17, $18 million. And then that does not include kind of the incremental benefits that go to the mills from us absorbing more tons. And you can think about that on a full year run rate basis.

Dave taking plants down they are taking a lot of economic downtime.

It's really back to what we have discussed previously that the economy has shifted from a <unk>.

Buying things to going out and consumer spending.

Yes money on services instead.

I saw recently a couple of articles from the big box retailers in terms of how they are suffering.

Yes.

The closest I can get and then.

In terms of.

Ghansham Panjabi: We're not going to give revenue right now and around margins, but that should be instructive as you build a model for next year. On the other components, you know, you can add a portion of the contribution from Lee, a couple months of a portion from Sincurion, and then obviously this, when you think about next year from an M&A basis. And then in terms of the other cost elements, I don't know, you were asking for thinking about next year.

The interest rates people are not moving now as this as they have been means.

It means that they don't buy.

<unk> moved houses.

I said it pains that sort of thing so but to put my finger on one particular item, it's really really difficult.

And on the AG side, you said AG is maybe trending a little bit less positive than you normally would like.

Ghansham Panjabi: I don't know if we really have that. Yeah, I would just say on the M&A side, Ghansham, you know, between Lee's and Sincurion and Colpac and probably $40 million of the incremental revenue this year, we take out two maybe on the TEMA things that we're up, you know, up net 38. And if you look at the numbers, we provided on each of those at 33 for Lee, 20 for Centurion, 17 on Colpac on a full year basis.

And is there any anything to take away from that.

But what I've been told it's also on AG is that in times of hardship what the individual farmers tend to do is to use less fertilizer and less volatile, but that sort of thing.

It's just.

Yes.

Part of <unk>.

Managing that business.

Understood understood.

Can you talk about.

Ghansham Panjabi: So you'd have a lift of maybe 28 next year, 30, you know, kind of number. And then on the cost takeouts, we haven't quantified the rooftop consolidation piece. There's obviously some permanent cost take out there on structural overtime. You know, we've taken out a significant number this year, call it roughly $30 million of overtime. Some of that, you know, shift and volume related. But we think there's somewhere 10 to 13 million dollars of permanent structural change in how we're running the business. Okay, super helpful. Thank you. Again, one moment, please.

What price cost benefit you might have gotten from steel.

In the fiscal third and what you might be expecting in the fiscal fourth and then back to God. Sam's earlier question. So should we take away that.

As things ultimately hopefully pick up there's maybe 20 million of cost that will come back into the business on an annualized basis.

George Yes, there was a slight sleep better.

Situation we added.

On a year over year basis on steel because last year, we had a rapidly decreasing as steel cost curve. So we had higher inventory walking through but it was not material for the quarter.

As to that $20 million differential on that over time number I mentioned.

Ghansham Panjabi: For our next question. Our next question will come from George Staffos of Bank of America. Your line is open. Thanks very much. Hi, Oli. Hi, Larry. Matt. Good morning.

Yes, it will come back, but that only comes back with.

Sales in and that we leveraging our fixed cost footprint because.

Because we arent building new factories to get that.

So it will be adding labor back, but it won't be adding anything on depreciation and other costs that go in so.

Still nice margin lift.

Yes sure.

George Staphos: One or two things that they're seeing in terms of why we're not seeing demand lift, and Downstream. Yeah, first of all, when I speak to a lot of them, our big global customers, they've taken plants down, they've taken a lot of economic downtime. It's really back to what we have discussed previously that the economy has shifted from buying things to going out and consumer spending, they have money on services instead. I saw recently a couple of articles from the big box retailers in terms of how they're suffering.

I get that just in terms of when we do our stack, we need to make sure that we have.

Kind of a small negative slice for the 'twenty, what I'm getting after volume after incremental margins and so on.

Hey, George it's important to mention one important dimensions those costs don't come back at the same rate sales deal. Okay. So.

It's not one to one relationship demand for improved sales dollars improved cost come right back and they come back a lot more slowly and there is a lot of kind of slack capacity that we have in our system right now and existing shifts. So we can handle more demand at an inflection without layering in incremental cost right away, but over time.

As sales come back Thats, obviously, a good problem to solve that means demand from potential at all he was mentioning if you go up 2% to 3%. We don't have had a dime you got 20%, yes, after now to shift or something yeah, and Josh just a final comment on that.

George Staphos: That's the closest I can get. Then in terms of the interest rates, people are not moving houses as they have been means that they don't buy goods when they move houses, they don't necessarily paint, and that's all the things. But to put my finger on one particular item, it's really, really difficult. Understood. And on the Ag side, you said Ag is maybe trending a little bit less positive than you normally would like to have.

Sorry.

Just a final comment on that and just go back to our strategy of value over volume.

We will not take on business. So we are running at I won't say full capacity, but healthy capacity utilization in all our facilities, we will not take on business with low margins and then apps.

<unk> costs in our plants in terms of not a shift to produce.

George Staphos: Anything to take away from that? Yeah, what I've been told also on Ag is that in times of hardship, what the individual farmers tend to do is to use less fertilizer and less well-known sort of thing. It's just a part of managing their business.

Products that we make more margin so that's not our strategy.

No it makes sense.

My last question and I'll turn it over.

Same theme in terms of okay, let's get on the other side of the mountain and volumes are better and so on where to hopefully a better <unk>.

Four.

Free cash flow conversion has been excellent this year well above your goal in the last quarter.

George Staphos: Understood. Can you talk about what price cost benefit you might have gotten from steel in the fiscal third, and what you might be expecting in the fiscal fourth, and then back to Ganchum's earlier question. So should we take away that as things ultimately, hopefully pick up, there's maybe 20 million of costs that will come back into the business on annualized basis. George, there was a slightly better situation. We had it on a year-over-year basis on steel, because last year we had a rapidly decreasing steel cost curve, so we had higher inventory locking through, but it was not material for the quarter.

No and then tell me a little bit about the program that you're offering your employees to buy stock at a discount what would you compare that with in terms of other ways to incentivize performance.

And ownership thanks, guys.

Yes so.

Yes, two things on that I mean, it's all going to depend on the pace of the increase of demand.

George and also then where does the cost of steel and up is the big driver for us in terms of what will be the impact on working capital build.

OCC will play into that as well obviously if demand comes back you would think that's going to drive steel cost up in OCC, but we.

George Staphos: As to that, 20 million differential on that overtime number, I mentioned, yeah, it will come back, but that only comes back with sales, and that would be leveraging our fixed cost footprint, because we aren't building new factories to get that. So it'll be adding labor back, but it won't be adding anything on your depreciation and other costs that go in. So still a nice margin lift. Yes, I get that just in terms of when we do our stack, we need to make sure that we have kind of a small negative slice for the 20 as what I'm getting at after volume, after incremental more and so on.

We would still have our goal to be 50% or better and we have.

Other opportunities within our supply chain.

Initiatives that we believe can keep us at that.

At that our goal levels so.

George Staphos: George, those costs don't come back at the same rate sales. So it's not a one-to-one relationship. You know, demand improves, sales dollars improve, cost come right back in. They come back a lot more slowly, and there's a lot of kind of slack capacity just that we have in our system right now on existing shifts. So we can handle more demand and an inflection without layering in incremental costs right away, but over time, as sales come back, that's a good problem to solve that needs to manage.

We.

Execute on our M&A strategy.

In both the resin business and also in the downstream in our paper business with respect to the.

The stock purchase plan for our colleagues this actually emanated from request from our employees.

We had a number of request as we went around new plants around the world.

From probably colleagues who had worked at other places that had this and they said hey look we really like what's going on in the company.

Could we entertain something like this and so we presented to the board they approved it.

George Staphos: Yeah, that's what all it was mentioning. You know, if you go up two to three percent, we don't have to add a dime. You go up to, you know, go up 20 percent. Yeah, you have to run out of shift or something, yeah. And George, just to find and come up with that. No, I'm sorry. Yeah, just the final comment on that, this go back to our strategy of value over volume.

Yes, we had good take up in the first initial.

Quarter of application and have had really nice feedback from our colleagues. So we look forward to it growing from here.

Was there any sort of discussion about like what kind of discount you're giving your employees to buy the stock right.

George Staphos: We will not take on business, so we are running at, I won't say full capacity, but healthy capacity utilization in all our facilities. We will not take on business with low margins and then ask, you know, cost in our plants in terms of not a shift to produce products that we make low margins on. That's not how it's better. No, it makes sense, Oli.

Others would like a discount to the market, but yes, it's a 15% discount which is pretty standard in these programs.

Okay.

Alright, guys I appreciate it thanks, so much.

Thanks George.

Thank you.

Again to ask a question. Please press star one on your phone some wait for your name to be announced literally your question. Please press star one again.

George Staphos: My last question, and I'll turn it over, same theme in terms of, okay, let's get on the other side of the mountain and volumes are better and so on, we're hopefully a better 24. Free casual conversion has been excellent this year, above your goal in the last quarter. Is there a chance that may be realizing you're not going to go out on 24, that the conversion in 24 maybe is a little below 50 percent because you do have to add back to working capital, you do have to do some other things or know.

Moment, please for our next question.

Our next question will come from Gabe Haiti of Wells Fargo. Your line is open.

Holy Larry Matt Good morning.

Okay.

I'm curious.

Again, a lot of ground's been covered.

And it's challenging to answer a question like this but.

From you from a competitive landscape standpoint.

More specifically thinking about the more mature markets in North America and Europe .

George Staphos: And then tell me a little bit about the program that you're offering your employees to buy stock at a discount. What did you compare that with in terms of other ways to incentivize performance and ownership? Thanks, guys. Yeah, so two things on that. I mean, it's all going to depend on the pace of the increase of demand, George, and also then where does the cost of steel end up as the big driver for us in terms of what will be the impact on working capital bills.

Do you believe that we've seen sort of a higher cost of capital.

Manifests in India.

Pricing behavior or competitive activity.

And the markets in which you participate.

Or is that something that we still think is on the call.

That would be my first question.

Yes, I don't know that we would necessarily attribute competitive behavior to their cost of capital although.

George Staphos: You know, OCCO play into that as well. Obviously, if demand comes back, you would think that's going to drive steel cost up in OCC, but we would still have our goal to be 50 percent or better. And we have other opportunities within our supply chain initiatives that we believe can keep us at that, you know, at that our goal level. So that will be our focus. I mean, obviously the outsized performance that we had this quarter is substantially above our goal.

Obviously in our VIP business one of our primary competitors is very highly levered. So does put pressure on them, but I think it puts pressure in the right direction.

No.

That's a good thing I mean, the more the place where we're seeing that really play out more is in our strategic M&A activities I mean, it's clearly put.

The P/e model in a much different position than they were two or three years ago.

Puts us in a very very good position relative to what we're trying to do in the market.

George Staphos: We would love that, but we don't see that. But just for another example, Culpack is well above our 50 percent on pre cash flow conversion. And we're trying to focus on those type of businesses as we execute on our M&A strategy in both the resin business and also in the downstream in our paper business with respect to the stock purchase plan for our colleagues. This actually emanated from requests from our employees.

So I know thats not exactly responsive to what your question was the game but.

We see the favorability there we're not seeing anything in the competitive marketplace that I would attribute to their <unk>.

Cost of capital at least that we could we could discern.

Sure.

Maybe ask the question a little bit better.

Down demand environment would be just intuitively, how you would think about competitors coming out and maybe even a little bit more aggressive pickup business and keep here.

George Staphos: We had a number of requests as we went around to plants around the world. From probably colleagues who had worked at other places that had this and they said, hey, look, we really like what's going on in the company. Could we entertain something like this? And so we presented it to the board they approved it. And, you know, we had good take up in the first initial quarter of application and have had really nice feedback from our colleagues that we look forward to growing from here. Was there any sort of discussion about, like, what kind of discount are you giving your employees to buy the stock, right? You know, others would like a discount too in the market.

Are you seeing that or.

Can it seems like based on your results.

There is no and in fact, you are able to to.

Price for value.

Okay. If I can I can give you a crystal clear yes to that.

Yeah.

Okay.

Alright, and then I guess, just one last one.

Appreciating that there's some math behind it but you made a pretty strong statement that.

So it sounds like you're going to be out.

Doing some M&A theres the pipeline is pretty full.

Is there a point at which share repurchase becomes more compelling than maybe deploying capital on the M&A side or is it not.

George Staphos: Yeah, it's a 15 percent discount, which is pretty standard in these programs. Okay, all right guys, I appreciate it, thanks so much. Thank you. Again, to ask a question, please first start 1-1 on your phone and wait for your name to be announced. Which are your questions, please first start 1-1 again. One moment please for our next question.

A binary decision like that.

Yes, Matthew until we kind of standpoint.

Yes, I don't I don't think it's binary yes, if we found that we could not deploy.

Gabe Hajde: Our next question will come from Gabe Haley of Wells Fargo. Your line is open.

Yes, I think our multiples are stupid low but.

Gabe Hajde: Ole Larry, Matt, good morning. I'm curious, and again, a lot of grounds uncovered and it's challenging to answer a question like this, but from a competitive landscape standpoint, more specifically thinking about the more mature markets in North America and Europe, do you believe that we've seen sort of higher cost of capital manifests in different pricing behavior or competitive activity in the markets at which you participate? Or is that something that we still think is on the come?

But that said the M&A deals we are doing the returns that we've got forecast are quite compelling and to the extent that we continue to have those type of opportunities. We'll go down that path I mean, I don't remember <unk> talked about this I mean, the kolpak deals that eight times and then after synergies that we'll get from.

Integration price six so if we can if we can do deals like that that are high margin high cash flow conversion.

At those kind of multiples will be doing that.

Gabe Hajde: It would be my first question. I don't know that we would necessarily attribute competitive behavior to their cost capital, though obviously in our GIP business, one of our primary competitors is very highly levered, so does put pressure on them, but think it puts pressure in the right direction. That's a good thing. The place where we're seeing that really play out more is in our strategic M&A activities. It's clearly put the PE model in a much different position than they were two or three years ago and puts us in a very, very good position relative to what we're trying to do in the market.

Okay last one from me.

I know George was pushing that working capital a little bit.

Capex has been elevated over the past two years I think I read some articles.

Over the past week or so that you guys made some investments there were no Riverdale mill.

In Virginia.

At least from a planning budgeting standpoint.

On the Capex side, Larry is that can.

Can you give us a ballpark of that maybe.

Maybe it's in that 160 range or something like that where you expect it to be down from where we are this year or are you seeing.

Gabe Hajde: So, no, that's not exactly responsive to what your question was Gabe, but we see the favorability there. We're not seeing anything in the competitive or marketplace that I would attribute to their cost of capital, at least that we could discern. Sure. Maybe ask the question a little bit better in a down-demand environment would be just intuitively how you would think about competitors coming out and maybe be a little bit more aggressive to pick up business and keep share. Are you seeing that? Again, it seems like based on your results. The answer is no, and in fact you're able to, you know, price for value.

Enough opportunities in the pipeline organically he might have a $180 million to $200 million of Capex next year.

I think the levels, we've been running last couple of years or something I would continue to model and I think we've got opportunities, including our whole effort around Digitization. I mean, we believe that there's going to be substantive returns from us digitizing more and becoming much more customer friendly.

So we've got the opportunity to deploy capital in areas that we believe will return well for us. So I think that level is good for your modeling purposes.

Great. Thank you.

Thank you.

Gabe Hajde: Gabe, I can give you a crystal clear yes to that. Yeah. Okay. All right.

And once again to ask a question. Please press star one on your phone.

Please go to our next question.

Gabe Hajde: And then I guess just one last one appreciating that there's some math behind it, but you made a pretty strong statement that still sounds like you're going to be out doing some M&A. The pipeline's pretty full. Is there a point in which share repurchase becomes more compelling than maybe deploying capital on the M&A side, or is it not a binary decision like that? I guess mathematical return standpoint. Yeah, I don't think it's binary.

Okay.

And our next question is a follow up from Michael Hoffman of Stifel. Your line is open.

Thank you I just wanted to make sure I understood. The one answer the unequivocal, yes is the yes, the customers or the competitors are being disciplined or yes. They are being they are acting badly.

I don't know whether you call it acting badly but are they I think the question is are they being super competitive and the answer is yes.

Gabe Hajde: I guess if we found that we could not deploy capital in attractive M&A along our strategic objectives, then it would become more compelling to start buying shares back to us. We continue to believe our shares are phenomenally undervalued. I think our multiples are stupid low. But, you know, but that said, the M&A deals we are doing as returns that we've got forecasts are quite compelling. And to the extent that we continue to have those type of opportunities, we will go down that path.

So not irrational.

Otherwise.

We've always got somebody acting irrational somewhere in the World Michael Me, but when you've got as many plants as we do in the number of customers. There is always going to be something where some but some lone wolf out there is totally irrational, but as a broad answer.

Across the customer base, no theyre not being irrational.

They are doing it at prices in some cases that were not going to do because we're not going to chase the volume Mike. We've said our focus is on value and delivering the best customer service in the world and being responsive and really treating our customers well and getting paid for the value and I said earlier, we don't need to chase volume right.

Gabe Hajde: I mean, I don't remember if Matt talked about this. I mean, you know, the Colpac deals at eight times. And then, you know, after synergies that we'll get from integration price six. So, if we can, if we can do deals like that that are high margin, high cast low conversion, you know, at those kind of multiples, we'll be doing that, for a long time before we do a lot of capital on stock repurchase. But if we can't, then we'll go the other way, and these are not mutually exclusive. Like I said, we will be doing some stock repurchase stuff opportunistically over the next year as well.

Alright, yes, I applaud the action I've seen it across other industries. When you do that you get the kind of results are producing but the other read through to this is the moment volume starts to improve.

They back right off of that so theres, a snap around price potential.

We would love to see that okay, great. Thank you.

Thank you.

And I'm seeing no further questions in the queue I would now like to turn the conference back to Matt <unk> for closing remarks.

Larry Hilsheimer: Okay, last one for me. I know George was pushing that work in capital a little bit. CapEx has been elevated over the past two years. I think I read some articles over the past week or so that you guys made some investments at the Riverville, Riverville, Mill in Virginia. At least from a planning budgeting standpoint, on the CapEx side, Larry, is that, you know, can you give us a ballpark of debt?

Thank you everyone for joining today hope you have a wonderful day.

Yeah.

This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.

Larry Hilsheimer: You know, maybe it's in that 160 range or something like that, where you expect it to be down from where we are this year. Are you seeing enough opportunities in the pipeline organically where you might have 180 to 200 million of CapEx next year? I think the levels we've been running last couple of years are something I would continue to model in. I think we've got, you know, options, including our whole effort around digitization.

Larry Hilsheimer: I mean, we believe that there's going to be substantive returns from us digitizing more and becoming much more customer friendly. So, you know, we've got the opportunity to deploy capital in areas that we believe will return well for us. So I think that level is good for your modeling purposes.

Gabe Hajde: Great. Thank you. Once again, to ask a question, please press DAW 11 on your phone. One moment, please, for our next question.

Michael Hoffman: And our next question is a follow up from Michael E.

Michael Hoffman: Hoffman of Diffle. Your line is open. Thank you. I just want to make sure I understood the one answer, the unequivocal yeses, the yes, the customers are the competitors are being disciplined or yes, they're being, they're acting badly. I don't know whether you call it acting badly, but are they, I think the question is, are they being super competitive in the answer? Yes. But not irrational. Otherwise, we've always got somebody acting irrational somewhere in the world.

Michael Hoffman: Michael, me, but you know, when you've got as many plants as we do and as the number of customers, there's always going to be something where some, but some lone wolf out there is totally irrational. But as a broad answer across the customer base, no, they're not being irrational. Okay. They're doing it at prices, in some cases, that we're not going to do because we're not going to chase the volume, like we've said.

Michael Hoffman: Our focus is on value and delivering best customer service in the world and being responsive and really treating our customers well and getting paid for the value. And I said earlier, we don't need to chase volume. Yeah. Right. Yeah. No, I applaud the action. I've seen it across other industries and when you do that, you get the kind of results you're producing. But the other read through to this is the moment volume starts to improve, you know, they back right off of that so there's a snap around price as potential. We would love to see that. Okay. Great.

Michael Hoffman: Thank you, and I'm seeing no further questions in the queue.

Matt Leahy: I would now like to turn the conference back to Matt Leahy for closing remarks. Thank you everyone for joining today.

Matt Leahy: I hope you have a wonderful day.

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