Q3 2024 Greif Inc Earnings Call

Operator: Thank you and good day everyone.

Thank you and good day, everyone welcome to <unk> fiscal third quarter 2024 earnings conference call. Joining the call today are Chief Executive Officer Raj <unk> will provide you an update on current business trends as well as the latest updates on our ongoing operating model change, which will be a focus.

Bill DOnofrio: Welcome to Greif's fiscal third quarter and 2024 earnings conference call. During the call today, our distinct executive officer, Ole Rosgaard, will provide you an update on current business trends as well as the latest updates on our ongoing operating model change, which will be a focal point of our upcoming Investor Day on December 11th.

At our upcoming Investor day on December 11th.

Bill DOnofrio: Our chief financial officer, Larry Hilsheimer, will provide an overview of our third quarter financial results and our fiscal four-year guidance.

Speaker Change: Chief Financial Officer, Larry Hill, Shimer, who will provide an overview of our third quarter financial results and our fiscal full year guidance.

Bill DOnofrio: In accordance with Regulation Fair Disclosure, please ask questions regarding topics you consider important because we are prohibited from discussing material non-public information with you on an individual basis.

Speaker Change: In accordance with regulation fair disclosure. Please ask questions regarding topics you consider important because we are prohibited from discussing material nonpublic information with you on an individual basis. Please.

Bill DOnofrio: Please turn to slide two. 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.

Speaker Change: Please turn to slide two.

Speaker Change: During today's call, we will make forward looking statements involving plans expectations and beliefs related to future events.

Speaker Change: 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 metrics that can be found in the appendix of today's presentation.

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

Bill DOnofrio: I'll now turn the presentation over to Ole on slide three.

Speaker Change: I'll now turn the presentation over to only on slide three thank.

Ole Rosgaard: Thank you, Bill. Hello, and thank you for joining us. Over the past quarter, I've had the privilege of visiting many of our more than 250 plants around the world. Each week, I make it a priority to spend time with our teams on the ground, often joining them in the early hours for the daily 6 a.m. Safety meeting. These moments are truly energizing and remind me of the incredible commitment and dedication that our colleagues demonstrate every day. I'm tremendously proud of how our people live, our purpose and values, driving safety, quality, operational excellence, and importantly, delivering legendary customer service.

only: Thank you Bill Hello, and thank you for joining us.

Speaker Change: Over the past quarter.

Speaker Change: It's a big change many of our more than 250 plants around the world.

Last week I made it a priority to spend time with our teams on the ground often joining them in the early hours for the daily six a M safety meeting.

Speaker Change: These moments are truly energizing and remind me of the incredible commitment and dedication that our colleagues demonstrate every day.

I'm tremendously proud of how our people live our purpose and values driving safety quality operational excellence and importantly, delivering legendary customer service.

Ole Rosgaard: It's clear that these are more than just words. They are principles embodied in the work our teams do day in and day out across every location.

Speaker Change: It's clear that these are more than just words they are principles embodied in the work our teams do day in and day out across every location.

Ole Rosgaard: I also want to extend a heartfelt thank you to our leaders and executive team for their outstanding leadership during this quarter. Working alongside such a committed and talented group of people is not just a source of pride for me, but also a privilege. As we review our results today, it's important to remember that the achievements we're sharing are the results of thousands of people pulling together, aligned by a shared purpose and values. I'm excited about where we headed and the opportunities that lie ahead. A drive all the work we perform is focused on our purpose, creating packaging solutions for lives essentials.

Speaker Change: I also want to extend a heartfelt. Thank you to our leaders and executive team for their outstanding leadership. During this quarter working alongside such a committed and talented group of people is not just a source of pride for me on also a privilege.

Speaker Change: As we review our results today, it's important to remember that the achievements will be sharing the results of thousands of people pulling together.

Speaker Change: <unk> purpose and values.

Speaker Change: I'm excited about where we had it and the opportunities that lie ahead.

Bryce: And Bryce.

Bryce: All of the work we perform is focused on our purpose, creating packaging solutions for life's essentials.

Ole Rosgaard: Whatever you're located today, listening to this, look around the room: the adhesive that holds your desk together, the chemicals used to manufacture your smartphone, the form in your seat cushion, the salt and the shoes, the orange juice you have for breakfast, the vitamins supplements you took this morning, and the lubricants in the car you drove to work. All of these are essential everyday products, and all of them at one time contain materials which were stored and shipped in drive packaging products. We know that it was drive products because drive maintains leading positions in nearly all industrial packaging capabilities globally, and by no accident.

Bryce: Wherever you are located today.

Thanks to this memorandum.

The adhesives that holds your desk together the chemicals used to manufacture a smartphone the film in your seat question the social issues. The Orange juice you have for breakfast.

Bryce: And supplements you took this morning, and the lubricants and the car you drove to work all of these are essential everyday products and all of them at one time, some change materials, which were stored and ships and thrive packaging products, we know that.

Greiff: It was scribe trucks, because greiff maintains leading positions in nearly all industrial packaging capabilities globally.

Ole Rosgaard: Those leading positions are the result of the deeply entrenched competitive advances we have developed in our business. The most critical of which is our legendary customer service as outlined in our vision statements.

Bryce: No accidents.

Speaker Change: With leading positions either was solid.

Speaker Change: Deeply entrenched competitive advantages we have developed in our business. The most critical of which is our legendary customer service as outlined in our recent statements.

Ole Rosgaard: Greif is in the middle of a significant evolution. We are making excellent progress on our strategic missions by following our principles, and all of this is engineered. Greif to create a flywheel of financial success through the Greif business system.

Speaker Change: Price is in the middle of a significant evolution.

Speaker Change: We are making excellent progress on our strategic missions by following our principles and all of this isn't it.

Speaker Change: It's engineered to create a flywheel all financial success through the horizon business system.

Ole Rosgaard: Towards the end of today's prepared remarks, I will provide you with some more information on the operating model chains we announced last December and are nearing completion on.

Speaker Change: Towards the end of today's prepared remarks, I will provide you.

Speaker Change: Are you with some more information on the operating model change, we announced last December.

Speaker Change: And are nearing completion on for now let's shift gears to near term performance in fiscal Q3, Please turn to slide fault.

Ole Rosgaard: For now, let's shift gears to near-term performance in fiscal Q3.

Ole Rosgaard: Please turn to slide forward. I am pleased to report another solid quarter for Greif, where we continue to successfully manage through a variable and uncertain operating environments. All regions globally experience net growth in the quarter, despite chockiness on an individual end market basis. Although small on a year-on-year basis, we are encouraged that North America has now evidenced the east-to-west demand improvements we have talked about over the past quarters. There's still significant one way to reaching a normalized level of volumes. But recent trends have us cautiously optimistic as we have exited the trough of on volumes.

Speaker Change: Yeah.

Speaker Change: I am pleased to report another solid quarter for <unk>, where we continue to successfully manage through a bearable and uncertain operating environments.

Speaker Change: All regions globally experienced net growth in the quarter. Despite choppiness on an individual end market basis.

Speaker Change: Although small on a year on year basis. We are encouraged that North America is now evidenced the east to west demand improvements, we've talked about over the past quarters.

Speaker Change: There is still significant runway to reaching a normalized level of volumes, but recent trends have us cautiously optimistic as we have exited.

Ross: Ross on volumes. This trend also applies to our Latam region.

Ole Rosgaard: This trend also applies to our Latin region. Impact improvement, while expected, was also encouraging. As we mentioned, Q2 was negatively impacted by a short but significant de-stocking as the Chinese New Year, but is now on the path to recovery. Amir, our largest GIP market, adds approximately 45% of GIP sales. Saw a third straight quarter of sequential improvements.

Ross: APAC improvement while expected was also encouraging as we mentioned Q2 was negatively impacted by a sharp a significant destocking as the Chinese new year, but it's now on the path to recovery.

Ross: EMEA our largest market.

Ross: Approximately 45% of <unk> sales saw a third straight quarter of sequential improvements.

Ole Rosgaard: This is particularly important as underlying macroeconomic data from Canada Q1 into Canada Q2 continue to be negative, with PMI fluctuating around the 45 mark. In both Q2 and Q3, loops, chemicals, paints and coatings, and markets are a source of strength. This is equally notable as our volume performance in the quarter outtaste many of the leading companies serving those end markets. This outperformance demonstrates our legendary customer service paired with the Drive Business System in action. We are maintaining close relationships with our customers and then reacting with decisive action when change occurs.

Ross: Is particularly important as underlying macroeconomic data from calendar Q1 into calendar Q2 continues to be negative with PMI fluctuating around the 45 Mark.

Ross: Both Q2, and Q3 loops chemicals paints and coatings end markets are soft.

Ross: Loss of strength.

Ross: This is equally notable and solid volume performance in the quarter outpaced many of the leading companies serving dose and markets.

Ross: This outperformance demonstrates our legendary customer service pad with the Greif business system in action.

Ross: We are maintaining close relationships with our customers and then reacting with decisive action when changed because.

Larry Hilsheimer: With that, I will turn things over to Larry on slide five to walk through our third quarter results.

Ross: With that I will turn things over to Larry on slide five to walk through our third quarter results Merit. Thank you Lee and thank you all for joining our call as always matching we made progress on our operating model change in the quarter and are nearing completion in the meantime, we continue to execute our strategy well and produce.

Larry Hilsheimer: Larry. Thank you, Oli, and thank you all for joining our call. As Oli mentioned, we made progress on our operating model change in the quarter; in our nearing completion. In the meantime, we continue to execute our strategy well and produce solid financial results under the circumstance. I-PAC-IN, I-CAM integration continues in synergy; capture is in line with our business case expectations. We additionally made steps toward simplifying our portfolio through the divestiture of BELSA Petroleum Company, which provided additional debt paydown towards our long-term debt leverage ratio range of two to two and a half times. Please note that while our current leverage is at 3.66, this does not include the impact of the Delta sale proceeds received on August 1st.

Larry: Solid financial results under served under the circumstances.

Ross: Packet.

Larry: The integration continues and synergy capture is in line with our business case expectations. We Additionally made steps towards simplifying our portfolio through the divestiture of Delta Petroleum company, which provided additional debt pay down towards our long term debt leverage ratio range of two to two five times.

Larry: Please note that while our current leverage is at 366. This does not include the impact of the Delta.

Larry: Proceeds received on August 1st.

Larry Hilsheimer: The pro-form adjusted leverage, including Delta proceeds, would have been 3.59X. As for financial results, we finished the quarter at 194 million of adjusted EBIT, a 34 million of free cash flow in adjusted earnings per share of $1.3. This EBIT of performance was driven by the volume performance that only outlined in his remarks and was in line with our expectations. Our free cash flow performance was also aligned to our expectations for a Q3, as we had modest working capital use as we ramped up the business with the nascent volume recovery.

Larry: The pro forma adjusted leverage including Delta proceeds would have been $3 $5 Nymex.

Larry: As for our financial results. We finished the quarter at 194 million of adjusted EBITDA $34 million of free cash flow and adjusted earnings per share of $1. Three this EBITDA performance was driven by the volume performance that we outlined in his remarks and was in line with our expectations our free cash flow performance.

Larry: Also aligned to our expectation for Q3, as we had modest working capital use as we ramped up the business with the nascent volume recovery.

Larry Hilsheimer: Please turn to slide 6 to walk through GIP results. In Q3, GIP saw demand improvement in all regions, totaling nearly 5% on a global year-over-year basis.

Larry: Please turn to slide six to walk through GIC results.

Larry: In Q3, Tip's saw demand improvement in all regions totaling nearly 5% on a global year over year basis.

Larry Hilsheimer: While this is encouraging, I remind you that, on a global basis, the current volume shortfalls to 2022 levels are significant. GIP EBIT of margins remain strong on a sequential basis, supported by our continued mech shift into higher margin polymer-based products.

Larry: While this is encouraging I remind you that on a global basis. The current volume shortfalls to 2022 levels are significant.

Larry: EBITDA margins remained strong at a sequential basis supported by our continued mix shift into higher margin polymer based products.

Larry Hilsheimer: On a year-over-year basis, EBIT of margins were down 200 basis points due to expected cost inflation, primarily related to acquisitions, investments in our ongoing operating model change, and several one-time benefits in 23, which did not occur.

On a year over year basis, EBIT margins were down 200 basis points due to expected cost inflation, primarily related to acquisitions investments and our ongoing operating model changed and several onetime benefits in 'twenty, three which did not recur.

Larry Hilsheimer: Please turn to slide 7 for PPS results. Our paper business continued to experience the same conflicting dynamics as in Q2: continued improvement in volume and demand for our product, coupled with partially unrealized paper pricing increases. We firmly believe these are warranted based on our significant input cost inflation, as well as improving demand.

Larry: Please turn to slide seven for PPS results.

Larry: Our paper business continued to experience the same conflicting dynamics as in Q2 continued improvement in volume and demand for our products coupled with partially unrealized paper price increases. We firmly believe these are warranted based on our significant input cost inflation as well as improving demand as a result.

Larry Hilsheimer: As a result, PPS margins continued to lag prior year. The paper solutions team is continuing to manage controllables well, including successful price increase implementation with our non-index based customers in URB. However, the outside impact of the index-driven price cost dynamic, which we still view to not be in sync with real market trends, is ahead when we have and will continue to aggressively work to offset.

Larry: TPS margins continued to lag prior year. The paper solutions team is continuing to manage controllable as well, including successful price increase implementation with our non index based customers and new RV.

Larry: However, the outsized impact of the index driven price cost dynamic, which we still view did not be in sync with real market trends is a headwind we have and will continue to aggressively work to offset.

Larry Hilsheimer: Please turn to slide 8 to discuss Fiscal 2024 guidance. When considering our guidance update, we ultimately determined that maintaining our guidance range consistent with our Q3 call is appropriate. Relative to our Q2 guidance, we are anticipating slightly more favorable price costs due to better paper pricing and value-based pricing in GIP. In Q3, all the volumes were positive, and all regions year over year.

Larry: Please turn to slide eight to discuss fiscal 2020 for guidance.

Larry: When considering our guidance update we ultimately determined that maintaining our guidance range consistent with our Q3 call is appropriate.

Larry: Relative to our Q2 guidance, we are anticipating slightly more favorable price cost due to better paper pricing and value based pricing in VIP in Q3, although volumes were positive in all regions year over year. The pace of that improvement was less than anticipated in Q2 and will present, a slight headwind relative to prior.

Larry Hilsheimer: The pace of that improvement was less than anticipated in Q2, and will present a slight headwind relative to prior guidance. We benefited from a variety of small-cost tailwinds and S&A relative to our prior guidance. However, some of that was offset by other items, such as a slight headwind from the lack of contribution from Delta in Q4.

Larry: The guidance, we benefited from a variety of small cost tailwind in SG&A relative to our prior guidance.

Larry: However, some of that was offset by other items such as a slight headwind from the lack of contribution from Delta in Q4.

Larry Hilsheimer: What is important to remember when considering this Q4 guidance is the significance of certain tailwinds on the horizon. Our volumes, while improving, are still down significantly on a two-year stack. A return to 2022 volumes, which in fact were actually lower than 21, would be approximately 160 million of EBITDA. Adding the guidance midpoint of 700 million of EBITDA and the 160 million of volume-related increase, along with the incremental fiscal 25 impact of recently recognized paper price increase, would return EBITDA to over $900 million. In the near term, we will continue to focus diligently on operational excellence and lean on our close customer relationships to ensure we maximize value capture when volume recovery begins in earnest.

Larry: But it is important to remember when considering this Q4 guidance is the significance of certain tailwind on the horizon.

Larry: Our volumes, while improving are still down significantly on a two year stack.

Larry: It returned to 2022 volumes, which in fact were actually lower than 'twenty, one would be approximately $160 million of EBITDA.

Larry: Adding the guidance midpoint of $700 million of EBITDA in the $160 million of volume related increase.

Along with the incremental fiscal 'twenty five impact of recently recognized paper price increase will return EBITDA to over $900 million.

Larry: The near term, we will continue to focus diligently on operational excellence and lean on our close customer relationships to ensure we maximize value capture when volume recovery begins in earnest.

Larry Hilsheimer: Please turn to slide 9 to discuss capital allocation.

Larry: Please turn to slide nine to discuss capital allocation.

Larry Hilsheimer: We remain committed to our disanling approach to capital allocation, and this Q4 continued to demonstrate that through our capital deployment actions. We have long stated that our two priority deployment objectives are funding safety and maintenance cap ex, which ensures continued cash generation and funding are continually increasing dividend.

Speaker Change: We remain committed to our disciplined approach to capital allocation and this quarter continued to demonstrate that through our capital deployment actions. We have long stated that our two priority deployment objectives, our funding safety and maintenance Capex, which ensures continued cash generation and funding our continually increasing dividend earlier.

Larry Hilsheimer: Earlier this week, we announced another increase in our quarterly dividend. After those modest uses of cash, our next priority is growing our business aligned to our strategy. Earnings growth remains our core focus; however, sometimes it is wise to first shrink in order to enable that growth.

Speaker Change: This week, we announced another increase in our quarterly dividend.

Speaker Change: After those modest uses of cash our next priority is growing our business aligned to our strategy earnings growth remains our core focus. However, sometimes it is why is the first shrink in order to enable that growth we demonstrated that willingness this quarter with our sale of Delta.

Larry Hilsheimer: We demonstrated that willingness this quarter with our sale of Delta.

Ole Rosgaard: With that, I'll turn things back to Oli on slide 10 to provide you with a preview of our upcoming Investor Day.

Onion: With that I'll turn things back to only on slide 10 to provide you with a preview of our app for our upcoming Investor day.

Ole Rosgaard: Thank you, Larry. Greg has an investor day coming up on December 11 in Midtown, New York, and one item I would like to preview with you today or for you today, which will be important to our discussion in December, is our ongoing operating model change. We are currently in the process of organizing our operations and commercial functions by material solution as opposed to geography. While still ongoing, we now have better clarity on the lightly material solution verticals which will encompass that organizational structure. Polymers, metals, paper, integrated products, and our land portfolio.

Larry: Thank you Larry.

Larry: Greg has an investor day coming up on December 11 in Midtown New York, and one item I would like to preview with you to date all for you today, which will be important to our discussion in December is our ongoing operating model change.

Speaker Change: We are currently in the process of organizing our operations and commercial functions by materials solution as opposed to geography.

Speaker Change: While it's still ongoing we now have better clarity on the likely material solution verticals, which will encompass that organizational structure.

Speaker Change: Paul Amos metals payable integrated products and our land portfolio.

Ole Rosgaard: Through organizing by material solutions, we plan to capture three distinct benefits, all of which we will discuss in detail at our upcoming Investor Day. First, it will enable us to accelerate market alliance and value-driven growth through concentrating commercial and operations functions by subject matter expertise. That will enable us to better capitalize on our comprehensive suite of packaging solutions by optimizing pricing and account planning to drive higher margins. Secondly, by realigning functions, we will maximize the effectiveness of all our enabling functions. It will better align business results to individual functions and drive accountability at all levels of the organization.

Speaker Change: We're organizing biomaterial solutions, we plan to capture three distinct benefits all of which we will discuss in detail at our upcoming Investor day.

Speaker Change: First it will enable us to accelerate market alliance and value driven growth through concentrating commercial and operations functions by subject matter expertise.

That will enable us to better capitalize on our comprehensive suite of packaging solutions by optimizing pricing and account planning to drive higher margins.

Speaker Change: Secondly by realigning functions, we will maximize the effectiveness of all of our enabling functions.

Speaker Change: Better align business results to individual functions and drive accountability at all levels of the organization.

Ole Rosgaard: The cost efficiency is driven by that approach will also enhance margins.

Speaker Change: The cost efficiencies driven by that approach while also enhanced margins.

Ole Rosgaard: Lastly, it will allow us to provide a deeper level of transparency to our investor community and help us to provide more predictable returns. It will streamline our capital allocation prioritization and execution, allowing us to deploy cash for growth faster. It will also enhance our speed and ability to integrate acquisitions effectively and expand synergy capture on future deals.

Speaker Change: Lastly, it will allow us to provide a deeper level of transparency to our investor community and help us to provide more predictable returns it will streamline our capital allocation prioritization and execution, allowing us to deploy cash for growth faster.

Speaker Change: It will also enhance our speeds and ability to integrate acquisitions effectively and expand synergy capture on future deals.

Ole Rosgaard: Additionally, we are currently assessing whether this upcoming change will result in a change to externally reported segments. We are frequently heard feedback from our investor community that our current external segmentation is not sufficiently detailed on a product basis to clearly show the growth and margin profile of these leading businesses. That assessment is still ongoing, but we are confident that the end result will provide transparency our investors are looking for.

Speaker Change: Additionally, we are currently assessing whether this upcoming change will result in a change to externally reported segments. We.

Speaker Change: We are frequently heard feedback from our investor community that our current external segmentation is not sufficiently details on a product basis. So clearly showed a growth and margin profile of these leading businesses.

Speaker Change: That assessment is still ongoing but we are confident that the end result will provide the transparency our investors are looking for and starting at our Investor Day, We plan to shift our cadence of talking about the business primarily by material solution.

Ole Rosgaard: And starting at our investor day, we plan to shift our cadence of talking about the business primarily by material solution and in markets with some regional color added.

Speaker Change: And in markets with some regional color additives.

Ole Rosgaard: Please turn to slides 11. Part of the driving force behind our operating model change relates to shifting the mix of products in our portfolio, specifically our growth of polymers as a percentage of sales. We have been very clear in that focus that our growth priorities lie in resin or, more accurately, polymer based packaging solutions. And we have acted decisively on that focus over the past 24 months. In 2015, our business mix was approximately 10% in polymer-based packaging solutions. As of our previous Investor Day in 2022, that makes has shifted to 15%. And now, in just two short years, that mix is now approximately 20%.

Speaker Change: Please turn to slide 11.

Speaker Change: Okay.

Speaker Change: Part of the driving force behind our operating model change relates to shifting the mix of products in our portfolio, specifically our growth of polymers as a percentage of sales.

Speaker Change: We have been very clear and that focus that our growth priorities lie in resin or more accurately polymer based packaging solutions.

Speaker Change: We have acted decisively on that focus over the past 24 months.

Speaker Change: In 2015, our business mix was approximately 10% and polymer based packaging solutions.

Speaker Change: As our previous Investor day in 2022 that mix has shifted to 15% and now in just two short years that makes is now approximately 20% we anticipate that shift to continue as we have significant runway for further growth in our polymer based products.

Ole Rosgaard: We anticipate that shift to continue as we have significant runway for further growth in our polymer-based products. This quarter, the sale of Delta further accelerated that portfolio shift. While Delta is a solid business and we received great value for it, it's not called to rise growth priorities and core competitive advantages as it served much more cyclical and markets.

Speaker Change: This quarter the sale of Delta further accelerated that portfolio shift.

Speaker Change: While the Delta is a solid business and we have received great value for it it's not core to drive graphs.

Speaker Change: <unk> gross priorities and cost competitive advantages asset served much more cyclical end markets.

Ole Rosgaard: For those reasons, we are parting ways, and in doing so, added balance sheet flexibility by paying down debt with the proceeds. Please turn slide 12.

Speaker Change: For those reasons, we have parted ways and in doing so at a balance sheet flexibility by paying down debt with the proceeds.

Speaker Change: Please turn to slide 12.

Ole Rosgaard: To our investors, we sincerely hope you make the time to come to visit us at our Investor Day on December 11th. And as a reminder, please reach out to investorday at gripe.com, and I'll repeat that, investorday at gripe.com, with any questions or to request a registration. I hope you have enjoyed our presentation today, and I would like to reaffirm to you that our vision to be that best performing customer service company in the world also extends to our financial customers.

Speaker Change: To our investors, we sincerely hope you make the time to come to visit us at our Investor Day on December 11th.

And as a reminder, please reach out to Investor day at <unk> Dot Com and I will repeat that <unk>.

Speaker Change: Rest of the day at <unk> Dot com with any questions also request a registration.

Speaker Change: I hope you have enjoyed our presentation today and I would like to reaffirm to you that our vision to be the best performing customer service company in the World also extends to our financial customers.

Ole Rosgaard: We are deeply committed to validating your investment in us through continued solid financial results and are proactively modernizing and involving our business to warns, continues and increased investments.

Speaker Change: We are deeply committed to validating your investment in us through continued solid financial results and are proactively modernizing and evolving our business to warrant continued and increased investments.

Ole Rosgaard: One hour at earnings is not sufficient time to probably communicate the merit of ways we are creating value at Greif, and so I am confident that after hour half day together in December you will depart with strong confirmation that Greif is primed for breakout success in both the near and long-term through our proven execution on the build for last strategy.

Speaker Change: One hour had earnings is not sufficient time to properly communicate the myriad of ways, we are creating value right and so I'm confident that after our half stay together in December you will depart with strong confirmation that price is prime spot breakout success.

Speaker Change: And both the EMEA and long term through our proven execution on the build to last strategy. Thanks.

Operator: Thank you once more, and operator, will you please open the lines for Q&A. Certainly, as a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster in one moment for our first question.

Speaker Change: Thank you once more and operator will you. Please open the lines for Q&A.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Speaker Change: And one moment for your first question.

Matt Roberts: And our first question will be coming from Matt Roberts of Raymond James; your line is open. Hi, good morning. Only Larry and Bill, thank you all very much.

Speaker Change: And our first question will be coming from Matt Roberts of Raymond James Your line is open.

Matt Roberts: Hi, Good morning, Ole Larry and and Bill. Thank you all very much I appreciate the slides 10 and 11 in the prelude to Investor day here, So maybe without getting too much Thunder from December but can you help me understand the margin contribution benefit you've received as a result of that mix shift and how it.

Ole Rosgaard: Oh yeah, I appreciate the slides 10-11 and the pray to the investor day here. So anyway, without stealing too much thunder from December, maybe you help me understand the margin contribution or benefit you've received as a result of that mixed shift and how incremental margins on the poly-based products compare to the total portfolio average or maybe there are longer-term margin targets that are achievable, either in GIP or that poly-based business within GIP. Hi Matt, I certainly can. Maybe first just remind you of our M&A selection criteria. So when we review target companies, one of the criteria is to make sure that the EBITDA margin is a creative to our current margins, and that means that we're only looking at companies with a margin at or above 18%. We're also looking at companies with a free cash flow in excess of 50%, and the segments we're looking at is primarily polymer, like resin-based segments in the premium end of the markets. You will typically find those companies having up to mid-20 EBITDA margins.

Speaker Change: Incremental margins on the poly based products compared to the total portfolio average.

Speaker Change: Or maybe is there a longer term margin targets, you think are achievable either in VIP or without that probably are based.

Speaker Change: With MGIC.

Speaker Change: Hi, Matt I, certainly can maybe first just remind you of our.

Speaker Change: M&A.

Speaker Change: Selection criteria.

Speaker Change: When we review target companies one of the criteria is to make.

Speaker Change: Make sure that the EBITDA margin is accretive to our current markets and that means that we only looking at companies with our margin at or above 18% and we're also looking at companies with a free cash flow.

Speaker Change: 50%.

Speaker Change: And.

Speaker Change: The segments that we're looking at is primarily.

Speaker Change: Polymer resin based segments.

Speaker Change: In the premium end of the markets and you will typically find those companies having it all up to like mid <unk> EBITDA margins.

Ole Rosgaard: Obviously, we have a current business, so even with the acquisitions, we make that out; whilst they're creative, it's not changing the margins for the whole enterprise. But in the long term, you will see a trend towards reaching the 80% margin. Thanks; I appreciate that and look forward to hearing more in December.

Speaker Change: Obviously, we have a current business so even with the acquisitions, we make that once the creative is not changing the margins for the whole enterprise, but in the long term you will see a trend towards reaching the 80% Mark.

Speaker Change: Thanks, a lot I appreciate that and look forward to hearing more in December.

Larry Hilsheimer: As a fellow, Larry, you noted in the presentation continued price cost headwinds, albeit sequentially improving, and since last quarter, we've seen other CCP announced slightly, and $20 go through on URB that you did mention. So maybe relative to your expectations you gave in the last quarter, at current prices, where is the price cost range tracking in your guide, and is there a certain price you need to see either in URB or container board to be at the midpoint there? Would any changes here and out be more of a 2025 impact? Thank you all again for taking the question.

And as a follow up Larry you noted in the presentation continued price cost headwinds, albeit sequentially improving since last quarter. We've seen as you can see from that slightly and 20 hours got through on your B that you did mentioned so maybe relative your expectations you gave in the last quarter at current prices.

Speaker Change: Where is the price cost range tracking in your guide and is there a certain price do you need to see either in Europe or containerboard to be at the midpoint. There would any changes here and it would be more of a 2025 impact. Thank you all again for taking my questions.

Larry Hilsheimer: Yeah, you know, Matt, thanks. In the quarter, we ended up benefiting from a little better than we anticipated on the price increases due to the volatile recognition, typically through RISC. We had assumed the only partial recognition of the outstanding price increases at that time, but then they actually recognized 40 in June and for container board in August for you are B. So the net impact of those provided a little bit of a tailwind for our revised four-year guidance. And we also had better-than-expected value-based pricing benefits in G.I.P.; our team just did a great job in focusing on value of volume.

Speaker Change: Yes.

Matt Roberts: Matt Thanks.

Speaker Change: Quarter, we ended up benefiting from a little better than we anticipated on the price increases.

Speaker Change: Due to the volatile recognition.

Typically through really weird assumed only partial recognition of the outstanding price increases at that time, but then they actually recognized 40 in June.

Speaker Change: Our containerboard and 24 in August for U R. B. So the net impact of those provided a little bit of a tailwind.

Speaker Change: For our revised full year guidance and we had.

Speaker Change: Also had better than expected value based pricing benefits in VIP keeps just did a great job on focusing on value over volume.

Larry Hilsheimer: Kind of combined benefits are slightly better than expected in raw material costs for a little bit of an upside as well. In relation to paper pricing guidance, you know, we still believe there should be more to come. I don't anticipate anything in the remainder of our fiscal year, but certainly we're optimistic that something should be recognized in 25 given the inflationary cost in the entire industry and improving demand trends, particularly in container board. Volumes, on the other hand, actually, we're well better. We're slightly below what we had expected. You know, we talked in the last quarter that we had seen some looked in demand, and we're hopeful that that would continue to improve.

Speaker Change: The combined benefit says or slightly better than expected.

Speaker Change: And raw material costs were a little bit of an upside as well in relation to that.

Speaker Change: Paper pricing guidance, we still believe there should be more to come I don't anticipate anything in the remainder of our fiscal year, but certainly were.

Speaker Change: Optimistic that something should be recognized in 25, given the inflationary cost in the entire industry and improving demand trends, particularly in containerboard.

Speaker Change: Volumes on the other hand actually were.

Speaker Change: Better were slightly below what we had expected we talked in the last quarter that we have seen some lift in demand and we're hopeful that that would continue.

Larry Hilsheimer: It was more mixed than we expected, and for that reason, there's sort of a little bit of a downside relative to where our Q2 guide was. And we also had some miscellaneous cost bucket improvements as we focused on improving things, but that's a little bit offset by the take out of the fourth quarter even. And we would have had from Delta had we not sold it. When you put all that together, it just let us do where our guidance range didn't change on a haul-over basis.

Continue to improve it was more mix than we expected and for that reason there is sort of a little bit of downside relative to where our Q2 guide was and we also had some miscellaneous.

Speaker Change: Cost bucket improvements as we focused on improving things, but yes, that's a little bit offset by the take out of the fourth quarter EBIT.

Speaker Change: <unk> had from Delta had we not sold it.

Speaker Change: When you put all that together led us to where our guidance range didn't change.

Speaker Change: On a on a hall over basis.

Larry Hilsheimer: You know, as far as things before beyond 24, we're not there yet. I mean, things are changing so rapidly in the environment. You know, we'll see what we get from the Fed in September, which I think could be a big impetus for us across our platform.

Speaker Change: As far as things before beyond 'twenty, we're not there yet I mean things are changing so rapidly in the environment. We will see what we get from the fed in September, which I think could be a big impetus for us across our platform. So we will be talking about guidance.

Larry Hilsheimer: So we'll be talking about guidance, obviously, at our next call. It also, though, we do, you know, we've had to start up of our Dallas sheet feeder.

Speaker Change: Obviously at our next call.

Speaker Change: Also though we do.

Speaker Change: We've had the startup of our Dallas sheet feeder.

Larry Hilsheimer: But we have had no net bottom line benefit to that yet as we go through our startup cost, but we're very excited about what that will be contributing for us and in 25 as well. Appreciate all the questions. Thank you.

Speaker Change: But we have had no net bottom line benefit to that yet as we go through our startup costs that we're very excited about what that will be contributing for US then in 'twenty five as well.

Speaker Change: Yeah.

Speaker Change: I appreciate all the color. Thank you guys again.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Ghansham Panjabi: Our next question will be coming from Gunshin Punjabi of Baird, Yalim. Thank you, operator. Good morning, everybody.

Speaker Change: Our next question will be coming from Ghansham Panjabi of Baird. Your line is open.

Ghansham Panjabi: Yes. Thank you operator, good morning, everybody.

Ghansham Panjabi: You know, I guess going back to slide six, where you're talking about the near-term outlook within GIP and customer sentiment and so on and so forth. Can you just give us a bit more color as relates to, you know, your direct conversations with customers and context of the environment that we have today. And then just in terms of, you know, your volumes that have started to plateau at a sort of a lower, longer, you know, volume dynamic, basically, maybe touch on competitive activity. Are you seeing anything different than the usual competition that you think.

Ghansham Panjabi: I guess going back to slide six where you're talking about the near term outlook with engie, IP and customer sentiment and so on and so forth can you just give us a bit more color as it relates to your direct conversations with customers in context of the environment that we have today and then just in terms of your volumes that are starting to plateau at a sort of a lower for longer.

Speaker Change: Volume dynamic basically maybe touch on competitive activity are you seeing anything different than the usual competition that you've seen in the industry over time.

Ole Rosgaard: in the industry of time. Thanks, Ghansham. Yeah, first of all, I mean, market competition has really not eased. Despite, you see some positive volume trends, the number of tenders or high cues remains very high. And we see market participants, or some market participants, are pricing at what we believe to be loss-making levels to maintain their volume. We continue our strict adherence to our value or volume approach. And we simply focus on maintaining trusted relationships with our customers and the commitment of our teams to operational excellence and our value or volume philosophy. It's a large part of our continued market strength in GIP over the past quarters.

Ghansham Panjabi: Thanks Ghansham.

Ghansham Panjabi: Yes first of all I mean market competition has really northeast.

Speaker Change: You'll see some positive volume trends.

Speaker Change: The number of <unk> remains very high and we see market participants or some market participants are pricing at what we believe to be loss, making levels to maintain that volume.

Speaker Change: We continue our strict adherence to our value over volume approach and we simply focus on maintaining trusted relationships with our with our customers and the commitment of our teams to operational excellence and our value over volume philosophy is a large part of our continued margin strength.

Speaker Change: And <unk> over the past quarters. Despite these competitive pressures.

Ole Rosgaard: Despite these compensated pressures, in the past we have seen customers return to us after chasing low-competitive pricing and our superior quality and our legendary customer service. This really, in our view, we weren't able to be matched, so over time those customers come back, and then we went in the long term.

Speaker Change: In the past, we have seen customers returned to us after chasing low competitive pricing.

Speaker Change: Our and our superior quality at our Mexico customer service.

Mr <unk>: Mr <unk>.

Mr <unk>: Unable to be batched, so over time those customers come back and then we win in the long term.

Mr <unk>: In terms of.

Ole Rosgaard: In terms of sort of a bit more color, in our Q2, the strongest volume was coming from loops, bulk chemicals, and pavement coatings. But, as you may have noticed in those customers' own earnings calls, they seem to be less bullish than before in these end markets. And the end markets we are investing in have likewise been mixed: food and beer from being solid, but ACME is still stagnating after the destruct that occurred earlier in the year.

Mr <unk>: In terms of.

Mr <unk>: Bit more color.

Mr <unk>: <unk>.

Speaker Change: In our Q2, the strongest volume was coming from loops bulk chemicals and paint and coatings.

Speaker Change: As you may have noticed in those customers all set on the earnings calls.

Speaker Change: They seem to be less bullish than before in these end markets.

Speaker Change: And the end markets, we invest again have likewise been mixed food and Bev had been solid box at Kim is still stack meeting after the destock that occurred earlier in the year you may have read an article a recent article in the Wall Street Journal.

Ole Rosgaard: You may have read an article, a recent article in the Wall Street Journal about the accessor in North America, where this year the farmers will have a bump-up crop, but they're going to lose money. And the article goes into what that means to them in terms of investing and fertilizer and so on, and even machinery. But overall, I feel that our teams have done a really exceptional job of engaging with our customers and keeping those tabs on shifting demand patterns. And it shows in our volume performance. And if you compare our volumes to some of these significant players in the end markets we serve like loops, bulk chemicals, and we have outperformed due to our quick reaction time.

Speaker Change: About.

Speaker Change: E <unk> in North America, whereas this year the farmers will have a bumper crop.

Speaker Change: They are going to lose money and the article goes into what that means to them in terms of investing in.

Speaker Change: <unk> and <unk>.

Speaker Change: So on an even machinery.

Bill DOnofrio: Thank you and good day everyone. Welcome to Greif's fiscal third quarter in 2024 earnings conference call. During the call today, our distinct executive officer, Ole Rosgaard, will provide you an update on current business trends as well as the latest updates on our ongoing operating model change, which will be a focal point of our upcoming investor day on December 11th.

Speaker Change: But overall I feel that our teams have done a really exceptional job of engaging with our customers and keeping close tabs on shifting demand patterns and it shows in our volume performance and if you compare our volumes through some of the significant players in the end markets, we serve like Luke's Biochemicals.

Speaker Change: So on.

Bill DOnofrio: Our Chief Financial Officer, Larry Hilsheimer, will provide an overview of our third quarter financial results and our fiscal four year guidance. In accordance with regulation fair disclosure, please ask questions regarding topics you consider important because we are prohibited from discussing material non-public information with you on an individual basis. Please turn to slide two. 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 that can be found in the appendix of today's presentation.

Speaker Change: We have outperformed due to our quick reaction time.

Ole Rosgaard: But that doesn't mean we're resting on our laurels. Now we're going to keep that focus up, and overall demand signals are very mixed still. So we just remain deeply connected with our customers as a critical supply chain partner. And expect that will continue to drive better than industry volume performance.

Speaker Change: But that doesn't mean, we are resting on our laurels, we're going to keep that focus up.

Speaker Change: Overall demand signals are very it makes bill so we just remain deeply connected with our customers.

Speaker Change: As a critical supply chain partner.

Speaker Change: And I expect that will continue to drive better than industry volume performance.

Ghansham Panjabi: Okay, thanks, Oli. Very comprehensive.

Okay: Okay. Thanks Ali very comprehensive and then on the reorganization by substrate versus geography.

Ghansham Panjabi: And then on the reorganization by substrate versus geography, is this something that the customers themselves have been pushing for, or is it just a natural evolution based on all the acquisitions you've done and the scale of the company at this point. And just separately, what percentage of your sales base in GIP goes to multinationals that want a cross-board. Carter supplier.

Speaker Change: Is this something that the customers themselves have been pushing for or is it just a natural evolution based on all the acquisitions you've done in the scale of the company at this point and just separately what percentage of your sales base in CIP goes to multinationals that want a cross border supplier.

Bill DOnofrio: I'll now turn the presentation over to Ole on slide three.

Ole Rosgaard: Well, first of all, the changes we are anticipating to make. Number one, yes, it's really to serve our customers better. So, if you think of, you know, GIP and PPS, in GIP, we have all types of materials that we're making, whether it's polymer-based steel, fiber drums, and so on. So, in a way, our teams are kind of a Jackson of all trades. And what we want to do in our drive to be even better is to really focus on one material solution. So, blow-molding a gerrycan is obviously different from making a steel drum. So, separating like gerrycans out in a separate SPU, under a separate SPU management, means that all they need to think about is be the best in the world in making gerrycans.

Speaker Change: Well first of all the changes.

Ole Rosgaard: Thank you, Bill.

Ole Rosgaard: Hello, and thank you for joining us. Over the past quarter, I've had the privilege of visiting many of our modern 250 plants around the world. Each week, I make an opportunity to spend time with our teams on the ground, often joining them in the early hours for the daily 6 a.m, safety meeting. These moments are truly energizing and remind me of the incredible commitment and dedication that our colleagues demonstrate every day.

Speaker Change:

Speaker Change: Anticipating to make.

Speaker Change: Number one yes, it's really to serve our customers better.

So if you think of <unk> PPS.

Speaker Change: AIP, we have all types of materials that were making whether it's polymer based steel fiber dorms and so on so so in a way our teams are kind of Jacksonville, all trades and what we want to do in our drive to be even better is to really focus on one material solutions so blow molding.

Ole Rosgaard: I'm tremendously proud of how our people live, our purpose, and values, driving safety, quality, operational excellence, and importantly, delivering legendary customer service. It's clear that these are more than just words. They are principles embodied in the work our teams do day in and day out across every location. I also want to extend a heartfelt thank you to our leaders and executive team for their outstanding leadership during this quarter. Working alongside such a committed and talented group of people is not just a source of pride for me, but also a privilege.

Eric: It's Eric and there's obviously different from making our steel drum so separating like gerrick asked out in a separate SBU under a separate SBU management means that all I need to think about is be the best in the world and making generic answer and that will help our customers with even better quality.

Ole Rosgaard: And that will help our customers with, you know, even better quality. And at the same time, we're doing that for each of our material solutions.

Eric: And at the same time, we'd do it that far east of our material solutions and then we have extracted the commercial organization out of all of those so our commercial organization becomes an enabling function so to speak on the chief commercial officer.

Ole Rosgaard: And then we've extracted the commercial organization out of all those. So, our commercial organization becomes an enabling function, so to speak, under a Chief Commercial Officer. And that will drive up sales and cross-sales, as in the past, a salesperson would have visited a customer in the morning. And another salesperson from Drive comes to sell a lot of product in the afternoon. And by combining sales this way, we will just be much more effective in that. And it'll also drive margins. And we will be able to serve our customers better. And then lastly, when we do an M&A, we will be even more effective in integrating, you know, these companies into our structure.

Eric: Yes.

Eric: That will drive.

Eric: Up sales and cross sales.

Ole Rosgaard: As we review our results today, it's important to remember that the achievements we're sharing are the results of thousands of people pulling together, aligned by a shared purpose and values. I'm excited about where we headed and the opportunities that lie ahead. A drive all the work we perform is focused on our purpose, creating packaging solutions for lives essentials. Whatever you're located today, listening to this, look around the room, the adhesive that holds your desk together, the chemicals used to manufacture your smartphone, the form in your seat cushion, the salt and the shoes, the orange juice you have for breakfast, the vitamin supplements you took this morning, and the lubricants in the car you drove to work.

Speaker Change: As in the past a salesperson whats have visited our customer in the morning, and then auto salesperson from Bryce comes to selling out of product in the afternoon and by combining sales. This way we will just be much more effective.

Speaker Change: And it will also drive margins and we will be able to serve our customers better and then lastly, when we do M&A.

Speaker Change: We will be even more effective in integrating.

Speaker Change: These companies into our structure. So overall the structure has been decided though is being the science for growth.

Ole Rosgaard: So, overall, the structure has been designed or is being designed for growth.

Ghansham Panjabi: Okay, perfect.

Operator: Thank you.

Speaker Change: Okay perfect. Thank you.

Mike Rocksland: And one moment for our next question. Our next question will be coming from Mike Rocksland of Truist Securities. Your line is open. Thank you, Ali. Sorry, I'm not taking like questions. I just wanted to follow quickly on your last question. On the portfolio transformation, does that require any additional headcount given the Salesforce split? Well, you mean in our evolution to modernize the organization? Exactly. Yeah. It's not designed to reduce headcount. That's has never been asked of the increases. Now, it won't be an increase. It won't increase.

Speaker Change: And one moment for our next question.

Speaker Change: Our next question will be coming from Mike Rosslyn of tourist Securities. Your line is open.

Mike Rosslyn: Thank you Ali and Bob for taking my questions.

Ole Rosgaard: All of these are essential everyday products and all of them at one time contain materials which were stored and shipped in drive packaging products. We know that it was drive products because drive maintains leading positions in nearly all industrial packaging capabilities globally and by no accident. Those leading positions are the result of the deeply entrenched competitive advantages we have developed in our business. The most critical of which is our legendary customer service as outlined in our vision statements.

Mike Rosslyn: Just wanted to follow up quickly on your response to the last question.

The portfolio transformation that require any additional head count given the sales force split.

Speaker Change: But I mean in our evolution to modernize the organization exactly yes.

Speaker Change: It's not it's not decided to reduce head count that's never been asked of it increases.

Speaker Change: No it won't be to increase yes.

Ole Rosgaard: We've had some questions whether we will be checking out, you know, headcounts, and it's not designed to take our headcount, but we do believe we will be able to operate much more effectively. And as we are adding volume or growing our volume, we will be able to do that without any further headcounts of the organization. So, in effect, we will be operating much more effectively, but we certainly won't be adding volume. Got you, because I was wondering, as your Salesforce, it sounds like your Salesforce is now going to become specialists in an entire data product.

Speaker Change: We won't increase it.

<unk>.

Speaker Change: We've had some questions.

Speaker Change: We will be taking out head counts.

Ole Rosgaard: Greif is in the middle of a significant evolution. We are making excellent progress on our strategic missions by following our principles and all of this is engineered. Greif to create a flywheel of financial success through the Greif business system. Towards the end of today's prepared remarks, I will provide you with some more information on the operating model chains we announced last December.

Speaker Change: But it's not designed to take out head count, but we do believe we will be able to operate much more effectively and as we are adding.

Speaker Change: Volume, while growing our volume, we will be able to do that without adding further headcount to the organization. So in effect, we will be operating much more effectively.

Speaker Change: But we're starting to won't be adequately.

Speaker Change: Got you because I was just wondering if as your sales force.

Speaker Change: It sounds like your Salesforce and now going become specialists.

Ole Rosgaard: And our new completion on.

Speaker Change: Targeted product.

Ole Rosgaard: So I'm sure I'm going to. Yeah, now the Salesforce will be more journalists, and they will turn more from farmers to hunters. And then we have created a very strong product management function that will be more of a support to Salesforce. Our Salesforce teams acting as product managers, we will have a dedicated central product management function by material solution, serving the sales teams for also our customers. Thanks. No, it's very clear.

Ole Rosgaard: For now, let's shift gears to near term performance in fiscal Q3. Please turn to slide forward. I'm pleased to report another solid quarter for Greif where we continue to successfully manage through a variable and uncertain operating environments. All regions globally experience net growth in the quarter despite chockiness on an individual end market basis. Although small on a year on your basis, we are encouraged that North America has now evidenced. The East to West demand improvements we have talked about over the past quarters.

Brian: I'm sorry, Brian.

Brian: The sales force will be more generalists, and then I will turn more from pharma to want US and then we have created a.

Brian: Very strong.

Brian: Management function that will.

Brian: It'd be more of a support to sales so rather than our sales teams acting as product managers, we will have a dedicated central product management function <unk> solution.

Brian: So having the sales teams, but also our customers.

Speaker Change: Got it that's very clear thank you Ali.

Larry Hilsheimer: Thank you, Oli. In terms of global industrial packaging, what do you attribute your outperformance relative to the market to? Obviously, you show sequential improvement; the media, despite PMI's remaining depressed.

Speaker Change: In terms of global industrial packaging what have you.

Speaker Change: You attribute your outperformance relative to the market to obviously, we showed sequential improvement the anemia. Despite PMI has remained depressed. So I'm wondering if this thing that you're doing differently. Some type of restocking like how are you able to outperform despite the bold the go to market as still being somewhat challenged.

Ole Rosgaard: There's still significant one way to reaching a normalized level of volumes, but recent trends have us cautiously optimistic as we have exited the trough of on volumes. This trend also applies to our Latin region. Effect improvement while expected was also encouraging. As we mentioned, Q2 was negatively impacted by a short but significant de-stocking as the Chinese New Year, but it's now on the path to recovery. Amir, our largest GIP market and approximately 45% of GIP sales saw a third straight quarter of sequential improvements.

Ole Rosgaard: So I'm wondering if there's something that you're doing differently or something like a restart. How are you able to outperform despite the both the quarter market still being so much challenge? Well, I mean, I gave a lot of cue to our teams, and that's one of them. But it's really our long-term focus on customer service. That's driving that. You know, you imagine you probably had the experience of dealing with a vendor or a store where you've got really bad service, and you go home, you tell your family, I'm never going to go back there again, and everybody, and that word spreads.

Speaker Change: Well I mean.

Speaker Change: I gave a lot of kudos to our team said.

Speaker Change: One of them.

Speaker Change: But it's really our long term focus on customer service, that's driving that.

Speaker Change: I imagine you probably had the experience of dealing with a vendor a store where you got a really bad service Center. You go home you till you tell your family I'll never going to go back. There again, then everybody and that word spreads and Conversely, you'll probably also try to shop somewhere deal with a vendor that has provided you that exceptional level of cost.

Ole Rosgaard: And conversely, you'll probably also try to shop somewhere or deal with a vendor that just provided you that exceptional level of customer service. And then you tell people that as well, and then you prefer that over, and you'll even prepare to pay a bit more for that service. And the same thing goes with our customers. So we have for a very long time focused on providing legendary customer service. And we get better and better and better. And in that respect, I mean, we're chasing perfection, knowing that we will ever catch it, but in the process, we have become best in class.

Ole Rosgaard: This is particularly important as underlying macroeconomic data from Canada Q1 into Canada Q2 continued to be negative with PMI fluctuating around the 45 mark. In both Q2 and Q3, loops, chemicals, paints and coatings and markets are a source of strength. This is equally notable as our volume performance in the quarter outtaste many of the leading companies serving those end markets. This outperformance demonstrates our legendary customer service paired with the drive business system in action. We are maintaining close relationships with our customers and then reacting with decisive action when change occurs.

Speaker Change: On the service.

Speaker Change: But you tell people that as well.

Speaker Change: That's all work and you'll even prepare to pay a bit more for that service and the same thing goes with our customers. So we have a very long time focused on providing legendary customer service.

Speaker Change: We get better and better and better and in that respect I mean, we are chasing perfection, knowing that we will never catch it but in the process, we have become best in class.

Ole Rosgaard: And that is really why we can... We can deliver solid results in this current environment. Got it.

Speaker Change: And that is really why we can.

Deliver solid results in this current environment.

Operator: And one final question.

Speaker Change: Got it.

Speaker Change: Alright.

Operator: Yeah, of course. I'm sorry, but go on. No, I'm sorry. I was just going to add, you know, on top of that, you know, providing, you know, top quality products as you would expect. Got it.

Speaker Change: Of course, one high quarter sorry.

Speaker Change: No I'm sorry please.

Speaker Change: I was just going to add on top of vaccine, providing top quality products as you would expect.

Larry Hilsheimer: With that, I will turn things over to Larry on slide five to walk through our third quarter results.

Larry Hilsheimer: And this one final question for turning it over just in terms of PPS and non-index customers. How much of your business is non index? And are you fully implementing the announced price increases with those non-index customers?

Speaker Change: Got it and just one final question before turning it over just.

Larry Hilsheimer: Larry. Thank you, Oli and thank you all for joining our call. As Oli mentioned, we made progress on our operating model change in the quarter in our nearing completion. In the meantime, we continue to execute our strategy will and produce solid financial results under the circumstance. [inaudible] I-Pakin. I-Pakin. What is important to remember when considering this Q4 guidance is the significance of certain tailwinds on the horizon. Our volumes, while improving, are still down significantly on a two-year stack.

Larry Hilsheimer: A return to 2022 volumes, which in fact were actually lower than 21, would be approximately 160 million of EBITDA. Adding the guidance midpoint of 700 million of EBITDA and the 160 million volume-related increase, along with the incremental fiscal 25 impact of recently recognized paper price increase, would return EBITDA to over $900 million.

Speaker Change: In terms of PPS.

Larry Hilsheimer: In the near term, we will continue to focus diligently on operational excellence and lean on our close customer relationships to ensure we maximize value capture when volume recovery begins in earnest. Please turn to slide 9 to discuss capital allocation. We remain committed to our disanling approach to capital allocation, and this Q4 continued to demonstrate that through our capital deployment actions. We have long stated that our two priority deployment objectives are funding safety and maintenance cat-backs, which ensures continued cash generation, and funding are continually increasing dividend.

Speaker Change: Non index customers yet how much of your business is non index and are you full fully implementing the announced price increases with those non index customers.

Larry Hilsheimer: Earlier this week, we announced another increase in our quarterly dividend. After priority is growing our business aligned to our strategy, earnings growth remains our core focus. However, sometimes it is wise the first shrink in order to enable that growth.

Larry Hilsheimer: Yeah, I'll let Larry take that. So, you know, when we look at that, it's really about 35% of our customers in the URB space. And so, you know, just driving, yeah, that we've had great success. I can't tell you it's 100% of that 35%, but it's pretty close. Got it.

Larry: I'll, let Larry.

Larry: So when we look at that it's really about 35% of our customers in the <unk> space.

So.

Speaker Change: Just driving that.

Larry: We've had great success I can't tell you, it's a 100% of that 35%, but it's pretty close.

Operator: Thank you guys very much, and welcome to the final quarter. Thank you.

Speaker Change: Got it. Thank you guys very much and good luck in the quarter.

Mike Rosslyn: Thanks, Mike.

Gabe Hajde: And our next question will be coming from Gabe Haiti, a Wells Fargo. Your line is open. Holy Larry Bill. Good morning. I wanted to Larry, you gave us an inch. So I'm going for the mile. If you can help us in the fiscal 25. On some of the known items that you kind of called out, and I'm thinking about Delta Petroleum for sure, you said a little bit of the headwind in the fourth quarter. Is that maybe a 15 to 20 million dollar annualized EBITDA number that we should be thinking about, you know, for the assets sold and then kind of gross price flowing through based on.

Mike Rosslyn: Yeah.

Speaker Change: And our next question will be coming from Gabe Haiti of Wells Fargo. Your line is open.

Gabe Haiti: Fully Larry Bill good morning.

Gabe Haiti: Alright, good morning.

Gabe Haiti: I wanted to Larry gave us.

Gabe Haiti: So I'm going for the mile. If you can help us.

Speaker Change: Fiscal 'twenty five.

Speaker Change: On some of the known items that you kind of called out and Im thinking about Delta petroleum for sure.

Speaker Change: You said, a little bit of a headwind in <unk>.

Speaker Change: The fourth quarter is that maybe a $15 million to $20 million annualized EBITDA number that we should be thinking about.

For the assets sold and then.

Speaker Change: Kind of growth price flowing through based on.

Larry Hilsheimer: and price increases that have already been reflected in the indices. And then I guess lastly, I think there were some higher compensation items called out in the press release. Is that kind of getting back to normal, which I guess is a good thing. But any other kind of one time items in the next year, we're thinking about. Yeah.

Speaker Change: Price increases that have already been reflected in the indices.

Speaker Change: And then I guess lastly, I think there was some higher compensation items called out in the press release.

Speaker Change: Is that kind of getting back to normal.

Speaker Change: That's a good thing.

Speaker Change: But any other kind of onetime items.

Speaker Change: Sure.

Speaker Change: Good.

Larry Hilsheimer: On Delta, no, that number's high. It was about our 90 million; it was about eight and a half times. You know, after even dealing with strain costs and that kind of stuff. So more and, you know, well, you can do the math on that. So, you know, now that, that business basket did in the year. So the fourth quarter actually was going to be a little higher than that. So it would be approaching 4 million in that quarter. But for a four year, you know, eight and a half times on 90 million. So, you know, relative to the pricing.

Speaker Change: On Delta now that number is high.

Speaker Change: It was about 90 million was about eight five times.

Maureen: After Dr stranded cost and that kind of stuff so maureen.

Maureen: You can do the math on that so.

Maureen: Now that business back late in the year. So the fourth quarter actually was going to be a little higher than that.

Speaker Change: <unk> approaching $4 million in that quarter, but.

Maureen: For a full year.

Maureen: Eight five times on 90 million subs.

Maureen: Relative to the pricing element.

Larry Hilsheimer: You know, we obviously had the $20 increase on you are be that ends up being about a million that will hit in the fourth quarter this year because it'll flow through mostly in October only. And on that 20 to at full and a four year basis, you know, for. You know, 10 bucks on you are be, you know, you basically have about 650 million times or what's that number? Yeah, 650,000 a month on the you are be and the incremental price increase that we had on the container board. Sorry, I'm struggling through my notes here for a minute here.

Maureen: We obviously added a $20 increase on U R. B that ends up being.

Maureen: About $1 million that will hit in the fourth.

Maureen: This year, because it'll flow through mostly.

Maureen: In October only.

Maureen: On that.

Maureen: At four and a full year basis.

Maureen: Four.

Maureen: <unk>.

Speaker Change: 10 Bucks on U R B.

Speaker Change: You basically have.

Matt Roberts: Hi, Matt.

Speaker Change: $650 million I am sorry, whats that number Dan is terrific.

Speaker Change: 650000, a month on the U R B.

Speaker Change: And.

The incremental price increase that we had on.

Speaker Change: The.

Speaker Change: Containerboard sorry.

Speaker Change: Struggling through my notes here for a minute here, Matt what's the number on containerboard.

Larry Hilsheimer: Matt, what's the number on container board? $750 for $10. Yes, yes, that are 50 per $10. So, on those moments. And that was recognized in June. So it'll be fully beneficial to keep for right. Yeah. That address. It just does.

700.

Matt Roberts: 50 for $10 seven.

Speaker Change: 750 per $10 or so.

Matt Roberts: Okay.

Speaker Change: And does how much that.

Speaker Change #100: That was recognized in June so it'll be fully beneficial to Q4 right.

Larry Hilsheimer: We demonstrated that willingness this quarter with our sale of Delta.

Okay.

Scott: Scott address that question.

Scott: Okay.

Larry Hilsheimer: I mean, I the other thing I was I was thinking about was I don't think that I heard economic downtime mentioned in the prepared remarks or in the slides. Just curious kind of where you guys are running in the system today. Yeah, we, we, you know, we've been running full out in our container board business. We've had some economic downtime in our URB space. Do you have that number? There was nothing significant from. Yeah, I know it's minor. So any economic and any paper grade, but I'm here off to the levels of from a backlog perspective and container board.

Speaker Change #102: Does that mean.

Speaker Change #103: The other thing I was thinking about was I don't think that I heard.

Speaker Change #104: Economic downtime mentioned in the prepared remarks or in the slides just curious kind of where you guys are running.

Speaker Change #105: In the system today.

Speaker Change #106: Yes, we are.

Speaker Change #107: We've been running full out in our containerboard.

Speaker Change #106: Business.

Speaker Change #106: We've had some economic downtime in our <unk>.

Speaker Change #106: <unk> space do you have that number.

Speaker Change #108: Nothing significant no.

Speaker Change #108: Its minor so any economic and any paper grade, but near optimal levels.

Speaker Change #108: From a backlog perspective in containerboard.

Larry Hilsheimer: Yeah. Okay.

Speaker Change #108: Yeah.

Larry Hilsheimer: And one last one, just on the M&A front. Obviously, you guys have enacted there. You called out kind of being 3.6 times levered on a pro form of basis. Are there still opportunities out there? Yeah. Given kind of where we are in the interest rate cycle, or do you feel like it might get more competitive again if the Fed, in fact, does touch? No, we still have a lot of opportunities. Gabe, we have a very robust pipeline. We are engaged with a lot of companies, and almost we continue to do that. We don't always decide the timing, so we have to continue that, and if an opportunity comes along, although the timing may not be ideal, we have the capability to do it.

Speaker Change #108: Okay.

Speaker Change #109: One last one just on the M&A front, obviously, you guys have been active there.

Speaker Change #110: You've called out kind of three six times levered on a pro forma basis.

Speaker Change #111: Are there still opportunities out there.

Speaker Change #111: Given kind of where we are in the interest rate cycle or.

Speaker Change #112: Do you feel like you might get more competitive again, if the fed in fact does.

Speaker Change #113: We still have a lot of opportunities.

Speaker Change #113: Chip.

Chip: Have a very robust pipeline.

Speaker Change #115: We are engaged with a lot of confidence that all of us.

Speaker Change #115: We continue to do that.

Speaker Change #115: We don't always decide the timing so we have to continue that and if an opportunity comes along although the timing may not be ideal we have the capability to do it.

Larry Hilsheimer: With that, I'll turn things back to Oli and Slide 10 to provide you with a preview of our upcoming investor date.

Larry Hilsheimer: But I will tell you that our focus right now is to pay down that so that we get back to the two-and-a-half ratio level. Understood.

Ole Rosgaard: Thank you, Larry. Gryff has an investor they coming up on December 11 in Midtown, New York, and one item I would like to preview with you today or for you today, which will be important to our discussion in December, is our ongoing operating model change. We are currently in the process of organizing our operations and commercial functions by material solution as opposed to geography. While still ongoing, we now have better clarity on the likely material solution verticals, which will encompass that organizational structure. Polymers, metals, paper, integrated products, and our land portfolio.

Speaker Change #115: I will tell you that our focus right now is to pay down debt. So that we get back to the tune of two and a half.

Speaker Change #115: Leverage ratio level.

Larry Hilsheimer: Thank you.

Speaker Change #116: Understood. Thank you.

Brian Butler: We will move on for our next question. Our next question will be coming from Brian Butler. Has Staphos, your line is open. Thank you. Good morning. Thanks for taking the questions. Brian?

Speaker Change #116: Keith.

Speaker Change #117: Our next question.

Speaker Change #118: And our next question will be coming from Brian Butler with Stifel. Your line is open.

Brian Butler: Thank you good morning, thanks for taking the questions.

Larry Hilsheimer: Just maybe on the first one, when you talk about that $160 million kind of in a more normalized volume environment, you know, what has to happen for that? I mean, are we there at current kind of volumes right now? If those just kind of sustain through the back, you know, or through 2025, or do we really need to see some step up in the macro recovery to kind of get back to kind of the normalized 2022 levels? Yeah, we, we need a step change just to give you a perspective on, you know, where, where we were and is volumes versus Q322.

Speaker Change #119: Hey, Brian.

Speaker Change #121: Just maybe on the on the first one when you talk about that $160 million kind of in a more normalized volume environment.

Speaker Change #119: <unk>.

Speaker Change #122: What has to happen for that I mean are we there at at current kind of volumes right. Now if that was just kind of sustained through the back through 2025 or do we really need to see some step up in the macro recovery to kind of get back to kind of the normalized 2022 levels yes.

Ole Rosgaard: Through organizing by material solutions, we plan to capture three distinct benefits, all of which we will discuss in detail at our upcoming investor date. First, it will enable us to accelerate market alliance and value driven growth through concentrating commercial and operations functions by subject matter expertise. That will enable us to better capitalize on our comprehensive suite of packaging solutions by optimizing pricing and account planning to drive higher margins. Secondly, by realigning functions, we will maximize the effectiveness of all our enabling functions. It will better align business results to individual functions and drive accountability at all levels of the organization. The cost efficiencies driven by that approach will also enhance margins.

Speaker Change #123: We need a step change just to give you a perspective on.

Speaker Change #122: Where we were.

Speaker Change #122: As volumes versus Q3 dollars 22.

Larry Hilsheimer: If you look back and let me just give you a number, just for example, for total, for total GIT, you know, if I go to Q322 to 21 was down 4.3%. The following year was down another 10.7. We've only regained 4% of that. Okay, so pretty significant drop-off scale from where we were. If I go to, you know, IVCs, they were because of acquisitions stuff, we are up nine and a half and Q322 over 21, but we were down 13.7%. 22, I can see you because of our acquisitions have come back. That's pretty, pretty strong.

Speaker Change #124: If you look back and let me just give you a number this for example, or total for total GIC.

Speaker Change #125: If I go to Q3 'twenty two to 'twenty, one was down four 3%.

And Europe was down another 10 points out.

Speaker Change #125: And we've only regained 4% of that.

Speaker Change #125: Okay, So pretty significant drop off scale from where we were if I go to.

Speaker Change #125: <unk>.

Speaker Change #125: <unk>.

Speaker Change #125: Or because of acquisitions and stuff we are up nine five <unk>.

Ole Rosgaard: Lastly, it will allow us to provide a deeper level of transparency to our investor community and help us to provide more predictable returns. It will streamline our capital allocation prioritization and execution allowing us to deploy cash for growth faster. It will also enhance our speed and ability to integrate acquisitions effectively and expand synergy capture on future deals.

Speaker Change #125: Q3, 'twenty two over 'twenty, one, but we were down 13, 7%. According to Idc's because of our acquisitions have come back pretty strong and if I go to paper and our total milk volumes, 22% to 21 was down $2. Six next year was down 16.3, and we've only recovered.

Larry Hilsheimer: But if I go to paper in our total mill volumes, 22 to 21 was down 2.6. Next year was down 16.3. And we've only recovered to 7.9% up. So we still have a long way to go to get back to the volume levels that we were at. And so, yeah, it is more of a macro issue, Brian, than it is, you know, just some marginal, marginal change. So if I look at PPS as a whole for us to get, if we got back to normal volume levels, and this is not yet including the impact of the price changes that have been recognized, this is just sort of average value add for the year.

Speaker Change #125: Third to seven 9% up so we still have a long way to go to get back to the volume levels that we were at <unk>.

Ole Rosgaard: Additionally, we are currently assessing whether this upcoming change will result in a change to externally reported segments. We are frequently heard feedback from our investor community that our current external segmentation is not sufficiently detailed on a product basis to clearly show the growth and margin profile of these leading businesses. Data assessment is still ongoing, but we are confident that the end result will provide transparency, our investors are looking for, and starting at our investor day, we plan to shift our cadence of talking about the business primarily by material solution and in markets with some regional color added.

Speaker Change #125: So yes, it is more of a macro issue Brian than it is.

Speaker Change #125: Just some marginal marginal change so.

Speaker Change #125: If I look at <unk>.

Speaker Change #125: TPS as a whole for us if we got back to normal volume levels and this is not yet including the impact of the price changes that have been recognized this as just sort of average.

Larry Hilsheimer: We pick up another $56 million of EBITDA in our VPS business. And on our old buying GIP business, it's a $90 million list. And then you go into the acquisitions that we've made. And if you get back to normalize values for them, you end up picking up another 21 million. So it's a big macro piece against the entire environment.

Speaker Change #125: Value add for the year, we pick up another $56 million of EBITDA in our bps business and.

Speaker Change #125: All buying GIC business, it's a $90 million left and then you go into the acquisitions that we've made and if you get back to normalized volumes for them you end up picking up another $21 million. So it's a big macro.

Ole Rosgaard: Please turn to slides 11. Part of the driving force behind our operating model change relates to shifting the mix of products in our portfolio, specifically our growth of polymos as a percentage of sales. We have been very clear in that focus that our growth priorities lie in resin or more accurately polymer based packaging solutions. And we have acted decisively on that focus over the past 24 months. In 2015, our business mix was approximately 10% in polymer based packaging solutions.

Speaker Change #125: Against the entire environment.

Ole Rosgaard: As of our previous investor day in 2022, that mix has shifted to 15%. And now in just two short years, that mix is now approximately 20%. We anticipate that shift to continue as we have significant runway for further growth in our polymer based products. This quarter, the sale of Delta further accelerated that portfolio shift. While Delta is a solid business and we received great value for it, it's not called to rise growth priorities and core competitive advantages as it served much more cyclical and markets. For those reasons, we are part of ways and in doing so, added balance sheet flexibility by paying down debt with the proceeds.

Ole Rosgaard: Brian, if I can just add a little bit of color to the 160 million as well. So, as Larry alluded to, that's not one single factor, as you have to consider that much of current volume dynamics is driven by, like, macroeconomic factors. So while we proved in Q3 that we can outpace the macro on volume, it is still the primary bottleneck to truly, you know, rebounding demand. And one major factor in that equation is the current interest rate situation. In previous instances, interest rate costs have been shown to drive production, specifically pinned our houses demands, both for new builds and existing housing sales.

Speaker Change #125: Ryan if I can just add a little bit of Carlos was $160 million.

Joe: Well Joe.

As Larry alluded to that's not one single factor.

Ryan: You have to consider that muscle of current volume dynamics is driven by macroeconomic factors.

Speaker Change #128: So why.

Speaker Change #129: While we approved in Q3 that we can outpace the macro on volume it is.

Speaker Change #130: Is that still the primary bottleneck to truly rebound in demand in one major factor in that equation is the current interest rate situation.

Speaker Change #130: In previous instances interest rate costs.

Speaker Change #131: <unk> shown to drive production.

Speaker Change #131: Specifically pent up housing demand, both for new builds and existing housing sales.

Ole Rosgaard: And that would be a major volume driver for us. As you know, when you move house or buy a new house, you do more than this by the house; you paint the walls in your old house for it to sell better. You may buy new carpets, appliances, and the owners of all items for, you know, when that happens. And all of those things, they drive industrial production and demand for our products. And then another component, as an example, would be, I just talked about earlier, and we are experiencing short-term softness. Some of it is interest rate playing in action too.

That would be a major volume private for us as you know when you move house or buy a new house you.

Speaker Change #132: You do more than just buy the house you paint the walls and the old house for it to sell better.

Speaker Change #132: By new carpets appliances, and the onto some other items for you know what.

Speaker Change #132: When that happens and all of those things.

Speaker Change #133: Drive industrial production and demand for our products.

Speaker Change #134: And then another component as an example would be <unk>.

Speaker Change #134: I just talked about it earlier.

Speaker Change #134: We are experiencing short term softness.

Speaker Change #134: Some of this interest rate.

Speaker Change #134: Plain inaction too and as that software that base again, you will see.

Larry Hilsheimer: And as that softness updates, you again will see that in segments that improve. So there's a lot of, you know, factors involved in returning to the 160 million. Okay, that's helpful.

Speaker Change #134: See that segment to improve so so theres a lot of.

Ole Rosgaard: Please turn to slide 12. To our investors, we sincerely hope you make the time to come to visit us at our investor day on December 11th. And as a reminder, please reach out to investor day at gripe.com and I'll repeat that investor day at gripe.com with any questions or to request a registration. I hope you have enjoyed our presentation today and I would like to reaffirm to you that our vision to be the best performing customer service company in the world also extends to our financial customers. We are deeply committed to validating your investment in us through continued solid financial results and are proactively modernizing and involving our business to warns, continues and increase investments.

Speaker Change #134: Factors involved and we're trading to the 116.

Speaker Change #135: Okay. That's helpful and second question when you think of the operating model evolution that you are kind of in the profits for what's the timeline on how long that that takes to kind of implement and is there a.

Larry Hilsheimer: And second question, when you think of the operating model evolution that you're kind of in the process for, what's the timeline on how long that takes to kind of implement, and is there a, you know, during that time, is there a short-term impact either on slower sales or higher costs as that gets pushed through? On sales, no. On costs that, obviously, we're doing this in conjunction with changing our fiscal year; you know, and that there are some costs involved in that, but it's not material. Yeah, we dispose, Brian. We were gonna end up incurring, you know, about six to seven million related to just the cost of going through this change.

During that time is there a short term impact either on slower sales are higher costs as that gets pushed through.

Speaker Change #136: On sales now on cost.

Speaker Change #137: Obviously, we are doing this in conjunction with changing our fiscal yes or no.

Speaker Change #138: There are some costs involved in that but it's not material.

Speaker Change #138: Yes, we do.

Speaker Change #138: Disclosed, Brian we were going to end up occurring.

Brian Butler: About six 6% to $7 million related to just the cost of going through this change.

Larry Hilsheimer: Okay, is that change kind of completed in fiscal 24 here, or does that really roll into 25 as well? We'll be rolling, we're evolving into this, and we will roll out the details in December, but we will be operating in this model beginning November 1st.

Brian Butler: Okay and does that does that change kind of completed in fiscal 2004 here or does that really roll into 'twenty five as well.

Ole Rosgaard: One hour and earnings is not sufficient time to probably communicate the merit of ways we are creating value at Greif and so I'm confident that after our half day together in December you will depart with strong confirmation that Greif is primed for breakout success in both the near and long term through our proven execution on the build for last strategy.

Be rolling we're evolving into this and we will roll out the details.

Brian Butler: December but we will be operating in this model beginning November one.

Ole Rosgaard: Okay, and then maybe one last one on your shift towards more polymers versus kind of the other segments. How do you view kind of the market organic growth for the polymers and that kind of specialty piece that you're moving into versus the other segments? You know, what does that organic growth look like? Yeah, well, first of all, why are we doing this? Well, we are growing in polymer-based products because the margin profile is much, much higher, and the cyclicality on those products is much, much lower. So we want to hire market companies that's a lot less cyclical.

Speaker Change #139: Okay, and then maybe one last one on your shift towards more polymers versus kind of the other segments.

Do you view kind of the market organic growth for the polymers and that kind of a specialty piece that youre moving into versus versus the other segments, where does that organic growth look like.

Bill DOnofrio: Thank you once more and operator will you please open the lines for Q&A.

Operator: Certainly as a reminder to ask a question please press star 11 on your telephone and wait for your name to be announced.

Yes, well first of all why are we doing this well.

Speaker Change #140: Growing and polymer based products because the margin profile is much much higher and the C class cyclicality on those products is much much lower so we want to be a higher margin company that says a lot less cyclical.

Matt Roberts: To withdraw your question please press star 11 again please stand by will we compile the Q&A roster and one moment for our first question and our first question will be coming from Matt Roberts of Raymond James your line is open.

Ole Rosgaard: On the organic side, I mean, next week, I'm traveling to Malaysia to open a new IBC plant, which is, this is polymer. We are, you know, adding lines all over the world all the time. We opened the earlier this year; we opened another IBC plant in Turkey, so yes, we are also growing organically. Okay, thank you for the question.

Speaker Change #140: On the organic side I mean next.

Ole Rosgaard: Hi good morning only Larry and Bill thank y'all very much. Oh yeah I appreciate the slides 10-11 and the prayer to investor day here so it would outskilling too much thunder from December maybe you help me understand the margin contribution or benefit you've received as a result of that mixed shift and how incremental margins on the poly based products compared to the total portfolio average or maybe there are longer term margin targets that could be achievable either in GIP or that poly based business within GIP.

Speaker Change #141: I am traveling to Malaysia to open a new IPC plants, which is versus polymorph.

Speaker Change #141: Yes.

Speaker Change #141: Adding lines all over the world all the time, we opened earlier this year, we opened a lot of RBC plant in Turkey. So yes, Brian we also.

Speaker Change #141: Growing organically.

Brian Butler: Thank you David.

Okay.

Brian Butler: Thank you for taking the questions.

George Staphos: Again, as a reminder to ask the question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again, and our next question will be coming from George Stappas, a Bank of America's securities.

Brian Butler: Okay.

Speaker Change #142: Again as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again and our next question will be coming from George Staphos of Bank of America Securities. Your line is open George.

Ole Rosgaard: Yeah I certainly can maybe first just remind you of our M&A selection criteria so when when we review target companies one of the criteria is to make sure that the EBITDA margin is a creative to our current margins and that means that we are only looking at companies with a margin at or above 18% and we're also looking at companies with a free cash flow in excess of 50% and the segments we're looking at is primarily polymer like resin based segments in the premium end of the markets and you will typically find those companies having up to like mid 20 EBITDA margins. Obviously we have a current business so even with the acquisitions we make that all whilst they're creative it's not changing the margins for the whole enterprise but in the long term you will see a trend towards reaching the 80% margin.

George Staphos: Your line is open, George. Hi everyone, good morning. Hope you're doing well.

George Staphos: Hi, everyone. Good morning.

Speaker Change #144: Hope you're doing well.

Ole Rosgaard: Hey, so we've touched on this a couple different ways on the call regarding Europe, but only as you think about it, is there a horizon where you won't be able to outperform Europe, in spite of your model, in spite of the legendary customer service? Where do you think the next couple of course, for this reason, you should be able to outperform in Europe, in spite of what's been sluggish conditions, that you could put some maybe some quantification on that somewhat sort of qualitative question.

George Staphos: Hey, so we've touched on this a couple different ways on the call regarding Europe, but only as you think about it is there a horizon, where you won't be able to outperform Europe.

Speaker Change #145: In spite of your modeling guide of the legendary customer service, where do you think the next couple of quarters within reason.

Speaker Change #146: You should be able to outperform.

Speaker Change #147: In Europe <unk>.

Speaker Change #148: But what's been sluggish conditions that you could put some some maybe some quantification on that somewhat sort of qualitative question. Secondly, can you talk about what your exit trends were by big business into the fourth quarter, particularly interested in what youre seeing in core choice.

Ole Rosgaard: Secondly, can you talk about what your exit trends were by big business into the fourth quarter, particularly interested in what you're seeing in court choice, in terms of the marginal trends there. and I'll leave it there; I might have one follow-up. Thanks, George. On Europe, first of all, the answer to the question is yes, I believe we can still out for. And why do I believe that? Well, if we look back, and I have to go back to our philosophy of value over volume, we have said no to quite a lot of business in the past, and we can see now that, after a certain period, that business is trickling back to us.

Speaker Change #148: In terms of the marginal trends there.

Speaker Change #149: And I'll leave it there might have one follow up.

Speaker Change #148: Yes.

Jos: Thanks for that Jos.

Larry Hilsheimer: Thanks well I appreciate that and look forward to hearing more in December. As a fellow Larry you noted in the presentation continue price cost headwinds I'll be sequentially improving and since last quarter we've seen OCC announced slightly and 20 dollars go through on on URB that you did mention so maybe build to your expectations you gave in the last quarter at current prices where is the price cost range tracking in your guide and is there a certain price you need to see either in URB or container board to be at the midpoint there there would any changes here and out be more of a 2025 impact.

Speaker Change #151: On the on Europe.

Speaker Change #151: First of all.

Speaker Change #153: The answer to your question is yes, I believe we can still outperform.

Speaker Change #154: And why do I believe that well, if we look back and I have to go back to our philosophy of value over volume.

Speaker Change #154: We have said no to quite a lot of business in the past.

Speaker Change #154: And we can see now thats.

Speaker Change #154: In the period that businesses trickling back to us. So that's one reason for why we will continue to outperform and the other one is we are really focused on growth and.

Ole Rosgaard: So that's one reason for why we will continue to outperform. Another one is we are really focused on growth in segments where we have not historically been very strong, and one is food and farmer. We have teams really been working hard on getting into those segments because the margins are higher, it's much more sticky, and we know it's much less cyclical as well. So, with that, those combinations, I believe that we will continue to see solid performance come out of Europe, and we have added more capacity as well, by the way, organically.

Speaker Change #154: Segments, where we have not historically been very strong.

Larry Hilsheimer: Thank you all again for taking the questions. Yeah, you know, Matt, thanks. In the corner we ended up benefiting from a little better than we anticipated on the price increases due to the volatile recognition, typically through RISC. We had assumed the only partial recognition of the outstanding price increases at that time, but then they actually recognized 40 in June and for container board in August for you RB. So the net impact of those provided a little bit of a tailwind for our revised four-year guidance.

Larry Hilsheimer: And we also had better than expected value-based pricing benefits in GIPs, our teams just did a great job on focusing on value of volume. Kind of combined benefits are slightly better than expected in raw material costs for a little bit of an upside as well. In relation to the paper pricing guidance, you know, we still believe there should be more to come. I don't anticipate anything in the remainder of our fiscal year, but certainly we're optimistic that something should be recognized in 25 given the inflationary cost in the entire industry and improving demand trends, tickling and container board.

Speaker Change #154: One is the food and pharma and we have teams really working hard on getting into those segments.

Speaker Change #154: Because the margins are higher.

It's much more sticky.

Speaker Change #154: Yes.

Speaker Change #154: It's much more a much less cyclical as well so with that those.

Speaker Change #154: Those combinations I believe that we will continue to see solid performance coming out of Europe.

Speaker Change #154: And we have added more capacity as well by the way organically.

Ole Rosgaard: Sequentially on core choice, core choice was all businesses, but yeah, lean with core choice. Sorry about that. I was just asking your second question. So sequentially, core choice was also nearly 10% as the demand continued to improve, which was slightly better than we expected in our Q2 guidance. And I would remind you and our investors of our niche role in North America, contain about as the champion of the independence, which gives us earlier visibility to demand cycles than our competition. As we have a view of the full markets, we are positioned well for this recovery.

Speaker Change #154: Sequentially on Encore choice.

Speaker Change #154: <unk>.

Speaker Change #154: But.

Speaker Change #155: But yes, I mean with courtyard, sorry about that.

Speaker Change #154: I would also just answering your second question.

Speaker Change #156: So as you have actually called choice was was also up nearly 10% as containerboard demand continue to improve which was slightly better than we expected in our Q2 guidance.

Speaker Change #156: And I would remind you and all the investments of our niche role in North America.

Speaker Change #156: Containerboard as a champion of the independence, which gives us earlier visibility to demand cycles.

Speaker Change #156: Our competition.

Speaker Change #156: As we have a view of the four markets. We are positioned well for this recovery champion on off the independent as a competitive advantage to us. So we are skilled at handling complexity. We can produce any flu any size wrong in any linerboard combination with speed and profitability. So.

Larry Hilsheimer: Volumes on the other hand actually were while better were slightly below what we had expected. You know, we talked in the last quarter that we had seen some looked in demand, and we're hopeful that that would continue to improve. It was more mixed than we expected. And for that reason, there's sort of a little bit of downside relative to where our Q2 guide was. And we also had some miscellaneous cost bucket improvements as we focused on improving things, but that's a little bit offset by the tank out of the fourth quarter, even when we would have had some doubt they had me not sold it.

Ole Rosgaard: Champion of the independence is a competitive advantage to us, so we are still skilled at handling complexity. We can produce any flu, any size, run, and any line about combination with speed and profitability. So with those, are some of the risks for why we see like that sort of growth and continue about. And only just in general.

Speaker Change #156: Those are some of the reasons why we see.

Speaker Change #156: That sort of growth in containerboard.

Speaker Change #156: Alright.

Speaker Change #157: Oh It was just in general.

Ole Rosgaard: And what were the other exit transit that you were seeing in the quarter? Can't really talk about quarter four, but the exit take quarter three is still choppy. I would say it's very choppy. It's a little bit like walking in sand. You take two steps forward and then you slide half a step backwards. So we have months where we see, yeah, it's all coming, and then the following months, you know, we see, you know, dive again, and then the next month it goes up again. But the overall trend is positive, you know, across the segment.

Speaker Change #158: And what were the other exit trends that you were seeing in the quarter.

Speaker Change #159: I can't really talk about quarter four but.

Speaker Change #160: Quarter three.

Larry Hilsheimer: When you put all that together, just let us do where our guidance range didn't change on a haul over basis. You know, as far as things before beyond 24, we're not there yet. I mean, things are changing so rapidly in the environment. You know, we'll see what we get from the Fed in September, which I think could be a big impetus for us across our platform.

Speaker Change #161: It's still choppy I would say, it's very choppy, it's a little bit like walking and saying if you take two steps forward and then slight step backwards.

So we have months, where we see yet it's all coming in the following months.

Speaker Change #161: Dive again in the next months it goes up again, but the overall trend is positive.

Speaker Change #161: Across across the segment, yes. The one thing August is always tough because it's.

Larry Hilsheimer: Yeah, the one thing August is always tough because it's, you know, vacation holiday month in Europe. And so, yeah, it always gets choppy, and it also goes to a lot to harvest seasons in the south of Europe. But they're substantially the same as what we saw accident in July. Thank you.

Larry Hilsheimer: So we'll be talking about guidance, obviously at our next call. It also though we do, you know, we've had to start up of our Dallas sheet feeder. But we have had no net bottom line benefit to that yet as we go through our startup cost, but we're very excited about what that will be contributing for us in 25 as well.

Speaker Change #161: Vacation holiday months in Europe, and so.

Larry Hilsheimer: Appreciate all the questions. Thank you guys again.

Speaker Change #161: It always gets choppy.

Operator: Thank you. And one moment for our next question.

Speaker Change #161: It also goes to lot to harvest seasons in the south of Europe.

Speaker Change #161: They are substantially the same as what we saw exiting in July.

Speaker Change #161: Okay.

George Staphos: Last question, Fallen. I'll turn it over. You know, back to Containerboard Court Choice and the business overall. To the extent that you have a view and your customers could offer one that you share on this conference call, you know, volumes for the calendar second quarter and cargated markets were okay, not great, you know, flat, up a little bit, down a little bit depending on, you know, what adjustment you want to make, but off very easy comparisons.

Speaker Change #161: Thank you.

Speaker Change #161: Last question follow on and I'll turn it over.

Speaker Change #162: Back to containerboard core choice and the business overall.

Ghansham Panjabi: Our next question will be coming from Gunshimp and Javi of Baird Yalim.

Speaker Change #163: To the extent that you have a view on your customers can offer one that you'd share on this conference call.

Ghansham Panjabi: Yeah, thank you operator.

Ole Rosgaard: Good morning, everybody. You know, I guess going back to slide six, we're talking about the near term outlook within GIP and customer sentiment and so on and so forth. Can you just give us a bit more color as it relates to, you know, your direct conversations with customers and context of the environment that we have today. And then just in terms of, you know, your volumes that are starting to plateau at a sort of a lower, longer, you know, volume dynamic, basically.

Speaker Change #164: Volumes for the calendar second quarter and targeted markets were okay not great.

Speaker Change #165: Flat up a little bit down a little bit depending on what adjustment you wanted to make but all very easy comparisons.

Ole Rosgaard: What are your customers saying, what are you saying through your businesses in terms of why we're saying that market trend, recognizing you're doing better, and what kind of, you know, holiday, calendar fourth quarter season are we setting up for in the cargated markets given what you're saying. Thank you, guys, and good luck the rest of the year. Thank you. Yeah. I mean, you know, George, we're hearing the same thing that we've been expressing. I mean, it's just a next bag out there. I mean, you know, if you read like the Dow CEO's comments in their earnings call, it's like, you know, he's talking very positively.

Speaker Change #166: What are your customers, saying what are you seeing through your businesses in terms of why we're seeing that market trend recognizing youre doing better.

Ole Rosgaard: Maybe touch on competitive activity, you're seeing anything different than the usual competition that you think, in the industry of time. Thanks, Ghansham. Yeah, first of all, I mean, market competition has really not eased. Despite, you know, you see some positive volume trends. The number of tenders or high cues remains very high. And we see market participants or some market participants are pricing at what we believe to be loss-making levels to maintain their volume.

Speaker Change #166: And what kind of.

Speaker Change #168: Holiday calendar fourth quarter season are we setting up for <unk>.

Speaker Change #169: Targeted markets given what you are saying, thank you guys and good luck the rest of the year.

Speaker Change #170: Thank you.

Speaker Change #171: Yes, I mean, Jordan, we're hearing the same thing.

Speaker Change #172: We've been expressing.

Speaker Change #173: <unk> a mixed bag out there.

Speaker Change #173: Yes, if you would read like.

Speaker Change #173: The Dow Ceos comments in their earnings call. It it's like yes.

Ole Rosgaard: We continue our strict adherence to our value or volume approach. And we simply focus on maintaining, you know, trusted relationships with our customers and the commitment of our teams to operational excellence and our value or volume philosophy. It's a large part of our continued margin strengths in GIP or the past quarters. Despite these compensators in the past, we have seen customers return to us after chasing low competitive pricing and our superior quality and our legendary customer service.

Speaker Change #173: Okay.

Speaker Change #173: Talking very positively if interest rates drop in home sales kickoff, we feel the same way.

Ole Rosgaard: If interest rates drop and home sales kick off, we feel the same way. I mean, you know, and we see others; I think Hank was very positive. He had other VASF not, you know, and in the paper business, it's the same kind of mixed bag as what we're hearing from our people on the street. It's one week, it's hot; the next week, it's not. It's that's why we termed it as mixed. And I think the rate drop will obviously affect this because, you know, the average person looks at that credit card debt and their payments, and it's linked to the interest rates.

Speaker Change #173: And we see others.

Speaker Change #173: I think the Henkel was very positive you had at other B B ASF not.

Speaker Change #174: In the paper business. It's the same kind of mix bag is what we're hearing from our people on the street. It's one week. It's hot next week it is not.

Speaker Change #174: That's why we termed it as mixed.

Speaker Change #174: Yes.

Speaker Change #174: I think the rate drop will obviously affect this.

Ole Rosgaard: This really, in our view, we weren't able to be matched. So over time, those customers come back and then we ran in the long term. In terms of, volume was coming from loops, bulk chemicals, and pavement coatings. But as you may have noted, in those customers' own earnings calls, they seem to be less bullish than before in these end markets. And the end markets we are investing in have likewise been mixed, food and beer from being solid, but our team is still stagnating after the de-stock that occurred earlier in the year.

Speaker Change #175: The average person looks at that credit card payments and it's linked to.

Speaker Change #175: So the interest rates and if they go down they get a little bit more money between the hands they shop more on Amazon and all that.

Ole Rosgaard: And if they go down, they get a little bit more money between their hands. They shop more on Amazon and, you know, it helps the industry. So we don't have a crystal ball because you're closer to it than we are. So we appreciate the color. Thank you. Thank you, George.

Speaker Change #176: It helps the industry so.

Speaker Change #175: No.

Speaker Change #175: <unk>.

Speaker Change #177: We don't have a crystal ball.

Speaker Change #177: I'm trying to say.

Speaker Change #177: Yes.

Speaker Change #179: Youre closer to it than we are so we appreciate the color.

George Staphos: Thank you George.

Gabe Hajde: No. In one moment for our next question, our next question is a follow-up from Gabe Hady of Wells Fargo. Your line is open. Thank you. Real quick.

Speaker Change #180: And one moment for our next question.

Speaker Change #181: Our next question is a follow up from Gabe Haiti of Wells Fargo. Your line is open.

Gabe Haiti: Thank you real quick.

Ole Rosgaard: When we're talking about, I guess, the different end markets, can you remind us roughly speaking, in your North American GIP business, how much is directionally tied to housing? It's difficult to give you a number on that. It really is because it's; it take chemical, bulk chemicals is one of our largest ones. Some goes into, you know, insulation; some goes into, you know, the soles in your shoes; and some goes into the fridge you buy. You don't have to get it on that at all. No worries. Thank you.

Gabe Haiti: When we're talking about I guess the different end markets can you remind us.

Ole Rosgaard: You may have read an article, a recent article in the Wall Street Journal about, you know, the accessor in North America, where this year the farmers will have a bump-up crop, but they're going to lose money. And the article goes into what that means to them in terms of investing and fertiliser and so on and even machinery. But overall, I feel that our teams have done a really exceptional job of engaging with our customers and keeping those tabs on shifting demand patterns.

Gabe Haiti: Roughly speaking in your North American VIP business, how much is.

Speaker Change #182: Directionally tied to housing.

Speaker Change #182: Oh.

Speaker Change #183: It's difficult to give you a number on that it really is because it.

Speaker Change #183: It takes chemical bulk chemicals is one of our largest once some goes into installation some goes into the sourcing issues and some goes into the Fritz you buy it's just difficult to.

Speaker Change #183: We don't we don't have any debt.

Ole Rosgaard: And it shows in our volume performance. And if you compare our volumes to some of these significant players in the end markets we serve, like loops, bulk chemicals, and so on, we have outperformed due to our quick reaction time. But that doesn't mean we're resting on our laurels. Now, we're going to keep that focus up and overall demand signals are very mixed still. So we just remain deeply connected with our customers as a critical supply chain partner. And expect that will continue to drive better than industry volume performance. Okay, thanks, Oli. Very comprehensive.

Speaker Change #183: On that at all game.

Speaker Change #184: No worries thank you.

Ole Rosgaard: And I would now like to turn the conference back to Ali for closing remarks. Thank you. And first of all, a big thank you for all the questions and your continued interest in growth. We really appreciate that.

Speaker Change #184: And I would now like to turn the conference back to Lee for closing remarks.

Lee: Thank you and first of all the big Thank you for all the questions and your continued interest in <unk>, we really appreciate that.

Ole Rosgaard: And we look forward to reporting our Q4 2024 earnings to you in early December and subsequently also seeing you at our Investor Day on December 11th in Midtown, New York.

We look forward to reporting our Q4 2024 earnings so you in early December.

Speaker Change #186: And subsequently also seeing you at our Investor Day on December 11th in Midtown New York have a wonderful day everyone.

Operator: Have a wonderful day, everyone.

Operator: And this concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change #187: And this concludes today's conference call. Thank you for participating you may now disconnect.

Ole Rosgaard: And then on the reorganization by substrate versus geography, is this something that the customers themselves have been pushing for or is it just a natural evolution based on, you know, all the acquisitions you've done and the scale of the company at this point. And just separately, what percentage of your sales base in GIP goes to multi-nationals that want a cross-board, or supplier? Well, first of all, the changes we are anticipating to make, number one, yes, it's really to serve our customers better.

Speaker Change #187: Okay.

Speaker Change #187: [music].

Speaker Change #187: Okay.

Speaker Change #187: [music].

Speaker Change #187: Yes.

Speaker Change #187: Okay.

Ole Rosgaard: So, if you think of, you know, GIP and TPS and GIP, we have all types of materials that we're making whether it's polymer-based steel, fiber drums and so on. So, in a way, our teams are kind of a jackson of all trades and what we want to do in our drive to be even better is to really focus on one material solution. So, blow-molding a gerrycan is obviously different from making a steel drum.

Ole Rosgaard: So, separating like gerrycans out in a separate SPU under a separate SPU management means that all they need to think about is to be the best in the world in making gerrycans. And that will help our customers with, you know, even better quality. And at the same time, we're doing that for each of our material solutions. And then, we've extracted the commercial organization out of all those so our commercial organization becomes an enabling function, so to speak, under a Chief Commercial Officer.

Ole Rosgaard: And that will drive up sales and cross-sales as in the past eight sales person who would have visited a customer in the morning. And another sales person from drive comes to sell a lot of product in the afternoon. And by combining sales this way, we will just be much more effective in that. And it'll also drive margins and we will be able to serve our customers better. And then lastly, when we do an M&A, we will be even more effective in integrating, you know, these companies into our structure. So, overall, the structure has been designed or is being designed for growth.

Operator: Okay, perfect. Thank you. And one moment for our next question.

Mike Roxland: Our next question will be coming from Mike Rockflind of Truist Securities.

Ole Rosgaard: Your line is open. Thank you, Ali. Sorry, I'm not taking like questions. Just wanted to follow quickly on your last question. On the portfolio transformation, does that require any additional headcount given the Salesforce split? Well, you mean in our evolution to modernize the organization? Exactly, yeah. It's not designed to reduce headcount. That's has never been as it increases it. Now, we won't increase it. We've had some questions whether we will be checking out headcounts and it's not designed to take our headcount, but we do believe we will be able to operate much more effectively.

Ole Rosgaard: And as we are adding volume or growing our volume, we will be able to do that without adding further headcounts to the organization. So, in effect, we will be operating much more effectively. But we certainly won't be adding. So, gotcha, because I was wondering as your Salesforce, it sounds like your Salesforce is now going to become specialists in target product. So, I'm sure good. Yeah, now the Salesforce will be more generalist and they will turn more from farmers to hunters.

Ole Rosgaard: And then we have created a very strong product management function that will be more of a support to Salesforce O'Runner and our Salesforce teams acting as product managers. We will have a dedicated central product management function by material solution serving the Salesforce teams but also our customers. Thanks.

Ole Rosgaard: No, it's very clear. Thank you, Ole.

Ole Rosgaard: In terms of global industrial packaging, what do you attribute your outperformance relative to the market to? Obviously, you show sequential improvement in media despite PMI's remaining depressed. So I'm wondering if there's something that you're doing differently or something like restarting? Like how are you able to outperform despite the both the border market still being so much challenge? Well, I mean, I gave a lot of cue to our teams and, you know, that's one of them.

Ole Rosgaard: But it's really our long-term focus on customer service, that's driving that. You know, imagine you probably had the experience of dealing with a vendor or a store where you've got a really bad service and you go home, you tell your family, I'm never going to go back there again and everybody. And that word spreads. And conversely, you'll probably also try to shop somewhere or deal with a vendor that just provided you that exceptional level of customer service.

Ole Rosgaard: And then you tell people that as well. And then you prefer that over and you'll even prepare to pay a bit more for that service. And the same thing goes with our customers. So we have for a very long time focused on providing legendary customer service and we get better and better and better. And in that respect, I mean, we're chasing perfection, knowing that we will ever catch it. But in the process, we have become best in class.

Ole Rosgaard: And that is really why we can deliver solid results in this current environment. I was just going to add, you know, on top of that, you know, providing, you know, top college products as you would expect. Got it.

Larry Hilsheimer: And this one final question for turning it over just in terms of PPS and non-index customers, how much of your business is non-index? And are you fully implementing the announced price increases with those non-index customers? Yeah, I'll let Larry take that. So, you know, when we look at that, it's really about 35% of our customers in the URB space. And so, you know, just driving, yeah, we've had great success. I can't tell you it's 100% of that 35% but it's pretty close. Got it. Thank you guys very much and good luck in the final quarter. Thanks, Mike.

Gabe Hajde: And our next question will be coming from Gabe Hady.

Gabe Hajde: How well is Fargo? Your line is open.

Larry Hilsheimer: Holy Larry Bill, good morning. I wanted to, Larry, you gave us an inch. So, I'm going for the mile. If you can help us in the fiscal 25 on some of the known items that you kind of called out. And I'm thinking about Delta petroleum for sure. You said a little bit of the headwind in the fourth quarter. Is that maybe a 15 to 20 million dollar annualized EBITDA number that we should be thinking about for the assets sold and then kind of gross price flowing through based on and pricing increases that have already been reflected in the indices.

Larry Hilsheimer: And then, I guess, lastly, I think there was some higher compensation items called out in the press release. Is that kind of getting back to normal, which I guess is a good thing, but any other kind of one-time items in the next year, as we've been thinking about? Yeah, on Delta, no, that number is high. It was about our 90 million, it was about 8.5 times, you know, after even dealing with strain costs and that kind of stuff.

Larry Hilsheimer: So, more in, you know, well, you can do the math on that. So, you know, now that business basket did in the year, so the fourth quarter actually was going to be a little higher than that, so it would be approaching 4 million in that quarter. But for a four-year, you know, 8.5 times on 90 million. So, you know, relative to the pricing element, you know, we obviously had the $20 increase on URB.

Larry Hilsheimer: That ends up being about a million that will hit in the fourth quarter this year because it'll flow through mostly in October only. And on that $20 and full four-year basis, you know, for 10 bucks on URB, you basically have about $650 million. I'm sorry, what's that number at the end? Yeah, 650,000 a month on the URB. And the incremental price increase that we had on the container board, sorry, I'm struggling through my notes here for a minute here, Matt, what's the number on container board?

Larry Hilsheimer: 750 per $10. Yes, 750 per $10. So, on those omens. And that was recognized in June, so it'll be fully beneficial to keep for. Right. Yeah. I had to address the last two multiple. Matt. It just does. I mean, the other thing I was thinking about was I don't think that I heard economic downtime mentioned in the prepared remarks or in the slides. Just curious kind of where you guys are running in the system today.

Larry Hilsheimer: Yeah, we've been running full out in our container board business. We've had some economic downtime in our URB space. Do you have that number? There was nothing significant from the notes minor, so. Any economic and any paper grade, but I'm here off to the levels of from a backlog perspective and container board. Yeah. Okay.

Larry Hilsheimer: And one last one, just on the M&A front, obviously you guys have been active there. You called out kind of being 3.6 times levered on a pro form of basis. Are there still opportunities out there? Given kind of where we are in the interest rate cycle, or do you feel like it might get more competitive again if the Fed in fact does touch? No, we still have a lot of opportunities. Gabe, we have a very robust pipeline.

Larry Hilsheimer: We are engaged with a lot of companies and almost we continue to do that. We don't always decide the timing, so we have to continue that. And if an opportunity comes along, although the timing may not be ideal, we have the capability to do it. But I will tell you that our focus right now is to pay down that so that we get back to the two and a half levels ratio level. Understood. Thank you.

Operator: We will move on for our next question.

Brian Butler: Our next question will be coming from Brian Butler.

Brian Butler: Has Staphel, your line is open? Thank you.

Larry Hilsheimer: Good morning. Thanks for taking the questions. Brian? Just maybe on the first one, when you talk about that $160 million kind of in a more normalized volume environment, what has to happen for that? I mean, are we there at current kind of volumes right now? Are those just kind of sustained through the back or through 2025? Or do we really need to see some step up in the macro recovery to kind of get back to the normalized 2022 levels?

Larry Hilsheimer: Yeah, we need a step change just to give you a perspective on where we were and is volumes versus Q322. If you look back and let me just say number, just for example, for total GIT, you know, if I go to Q322 to 21 was down 4.3%. The following year was down another 10.7. We've only regained 4% of that. Okay, so pretty significant drop off scale from where we were. If I go to, you know, IVCs, they were because of acquisitions stuff, we are up 9.5 and Q322 over 21, but we were down 13.7% 22.

Larry Hilsheimer: I can see you because of our acquisitions have come back. That's pretty, pretty strong. But if I go to paper in our total no volumes, 22 to 21 was down 2.6. Next year was down 16.3. And we've only recovered to 7.9% up. So we still have a long way to go to get back to the volume levels that we were at. And so yeah, it is more of a macro issue, Brian, than it is, you know, just some marginal, marginal change.

Larry Hilsheimer: So if I look at PPS as a whole for us to get, if we got back to normal volume levels, and this is not yet including the impact of the price changes that have been recognized, this is just sort of average value add for the year. We pick up another 56 million dollars of EBITDA in our VPS business. And on our old buying GIP business, it's a 90 million dollar list. And then you go into the acquisitions that we've made.

Larry Hilsheimer: And if you get back to normalize values for them, you end up picking up another 21 million. So it's a big macro piece against the entire environment. Brian, if I can just add a little bit of color to the 160 million as well. So as Larry alluded to, that's not one single factor. As you have to consider that much of current volume dynamics is driven by like macro economic factors. So while we proved in Q3 that we can outpace the macro on volume, it is still the primary bottleneck to truly, you know, rebounding demand.

Larry Hilsheimer: And one major factor in that equation is the current interest rate situation. In previous instances, interest rate costs have been shown to drive production. Specifically, it pinned our houses demands, both for new builds and existing housing sales. And that would be a major volume driver for us. As you know, when you move house or buy a new house, you do more than this by the house. You paint the walls and your own house for itself better.

Larry Hilsheimer: You may buy new carpets, appliances, and the owners of all items for, you know, when that happens. And all of those things, they drive industrial production and demand for our products. And then another component, as an example, would be ACK. I just talked about it earlier and we are experiencing short-term softness. Some of it is interest rate playing in action too. And as that softness updates, again, you will see that end segment improves. So there's a lot of, you know, factors involved in returning to the 160. Okay, that's helpful.

Larry Hilsheimer: And the second question, when you think of the operating model evolution that you're kind of in the process for, what's the timeline on how long that takes to kind of implement? And is there a, you know, during that time, is there a short-term impact either on slower sales or higher costs as that gets pushed through? On sales, no. On costs that obviously we're doing this in conjunction with changing our fiscal year, you know, and that there are some costs involved in that, but it's not material.

Larry Hilsheimer: Yeah, we dispose, Brian, we were going to end up incurring, you know, about six to seven million related to just the cost of going through this change. Okay, is that change kind of completed in fiscal 24 here, or does that really roll into 25 as well? We'll be rolling, we're evolving into this, and we will roll out the details in December, but we will be operating in this model beginning November 1st.

Ole Rosgaard: Okay, and then maybe one last one on your shift towards more polymers versus kind of the other segments. How do you view kind of the market organic growth for the polymers and that kind of specialty piece that you're moving into versus versus the other segments? You know, what does that organic growth look like? Yeah, well, first of all, why are we doing this? Well, we are growing in polymer-based products because the margin profile is much, much higher, and the cyclicality on those products is much, much lower.

Ole Rosgaard: So we want to be a higher margin company that's a lot less cyclical. On the organic side, I mean, next week, I'm traveling to Malaysia to open a new IVC plant, which is popular. We are, you know, adding lines all over the world all the time. We opened the earlier this year. We opened another IVC plant in Turkey. So yes, we are also growing organically.

Operator: Thank you for taking the questions. Again, as a reminder to ask the question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

George Staphos: And our next question will be coming from George Stappas, a bank of America's securities. Your line is open, George. Hi, everyone. Good morning. Hope you're doing well. Hey, so we've touched on this a couple different ways on the call regarding Europe. But only as you think about it, is there a horizon where you won't be able to outperform Europe in spite of your models, guide of the legendary customer service? Where do you think the next couple of course, within the reason, you should be able to outperform in Europe in spite of what's been sluggish conditions.

George Staphos: I think it could put some, maybe some quantification on that somewhat sort of qualitative question. Secondly, can you talk about what your exit trends were by big business into the fourth quarter, particularly interested in what you're seeing in court choice in terms of the marginal trends there? and I'll leave it there, I might have one follow on. Thanks, George.

Ole Rosgaard: On Europe, first of all, the answer to the question is, yes, I believe we can still out for. And why do I believe that? Well, if we look back and I have to go back to our philosophy of value over volume, we have said no to quite a lot of business in the past, and we can see now that after a certain period, that business is trickling back to us. So that's one reason for why we will continue to outperform.

Ole Rosgaard: Another one is we are really focused on growth in segments where we have not historically been very strong, and one is food and farmer, and we have teams really working hard on getting into those segments, because the margins are higher, it's much more sticky, and we know it's much less cyclical as well. So with that, those combinations, I believe that we will continue to see solid performance come out of Europe, and we have added more capacity as well, by the way, organically.

Ole Rosgaard: Sequentially on core choice, core choice was off. Well, all the businesses, but yeah, lean with core choice, sorry about that. I was just asking your second question. So sequentially core choice was also off nearly 10% as contained about demand, continued to improve, which was slightly better than we expected in our Q2 guidance. And I would remind you and our investors of our niche role in North America contain about as a champion of the independence, which gives us earlier visibility to demand cycles than our competition.

Ole Rosgaard: As we have a view of the full markets, we are positioned well for this recovery. Champion of the independence is a competitive advantage to us, so we are skilled at handling complexity. We can produce any flu, any size, run, and any line about combination with speed and profitability. So with those are some of the risks for why we see like that sort of growth and contain about oil. And always rest in general.

Ole Rosgaard: And what were the other exit transit that you were seeing in the quarter? I can't really talk about quarter four, but the exit for the three is still choppy. I would say it's very choppy. It's a little bit like walking a sand. You take two steps forward and then you slide half a step backwards. So we have months where we see, yeah, it's all coming and then the following months, you know, we see, you know dive again.

Ole Rosgaard: And then the next month it goes up again, but the overall trend is positive, you know, across the segment. Yeah, the one thing August is always tough because it's, you know, vacation holiday month in Europe. And so, yeah, it always gets choppy and it also goes to a lot to harvest seasons in the south of Europe. They're substantially the same as what we saw accident in July. Thank you. Last question, Fallen, I'll turn it over.

Ole Rosgaard: You know, back to Containerboard, Core Choice, and the business overall. To the extent that you have a view and your customers could offer one that you share on this conference call, you know, volumes for the calendar second quarter in cargated markets were okay, not great, you know, flat up a little bit down a little bit depending on, you know, what adjustment you want to make, but off very easy comparisons. What are your customers saying, what are you saying through your businesses in terms of why we're saying that market trend, recognizing you're doing better, and what kind of, you know, holiday, calendar fourth quarter season are we setting up for in the cargated markets given what you're saying.

Ole Rosgaard: Thank you guys and good luck the rest of the year. Thank you. Yeah, I mean, you know, George, we're hearing the same thing that we've been expressing. I mean, it's just a next bag out there. I mean, you know, if you'd read like the Dow CEO's comments in their earnings call, it's like, you know, he's talking very positively if interest rates drop and home sales kickoff, we feel the same way. I mean, you know, we can we see others, I think Hank was very positive.

Ole Rosgaard: He had other BSF not, you know, and in the paper business, it's the same kind of mixed bag as what we're hearing from our people on the street. It's one week, it's hot the next week, it's not, it's that's why we termed it as mixed. Yeah, and I think the rate drop will obviously affect this because, you know, average person looks at that credit card death and their payments and it's linked to, to the interest rates and if they go down, they get a little bit more money between the hands, they shop more on Amazon and, you know, it helps the industry. So we don't have a crystal ball because you're closer to it than we are. So we appreciate the color. Thank you. Thank you, George. Yeah.

Ole Rosgaard: In one moment for our next question, our next question is a follow up from Gabe Hady of Wells Fargo. Your line is open. Thank you. Real quick. When we're talking about, I guess, the different end markets, can you remind us roughly speaking in your North American GIP business, how much is directionally tied to housing? It's difficult to give you a number on that. It really is because it take chemical, bulk chemicals is one of our largest ones.

Ole Rosgaard: Some goes into, you know, insulation, some goes into, you know, the souls in your shoes and some goes into the fridge you buy. You know, it's just difficult to sort of, we don't have to know worries.

Ole Rosgaard: Thank you.

Ole Rosgaard: And I would now like to turn the conference back to O'Leigh for closing remarks. Thank you. And first of all, a big thank you for all the questions and you continued interest in GRIF. We really appreciate that. And we look forward to reporting our Q4 2024 earnings to you in early December. And subsequently also seeing you at our investor day on December 11th in Midtown, New York. Have a wonderful day, everyone, and this concludes today's conference call. Thank you for participating.

Operator: You may now disconnect.