Q3 2024 Greif Inc Earnings Call

Thank you for watching.

Speaker Change: Good day. Thank you for standing by. Welcome to the Christ 3rd Quarter 2020 for earnings conference call.

Speaker Change: At this time, all participants are now listening only mode.

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

Speaker Change: to ask the question during the session you will need to press star 1-1 on your telephone.

Speaker Change: You will then hear an automated message to find that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Donafrio, Vice President of Investor Relations and Corporate Development.

Bill Donafrio: Thank you and good day everyone. Welcome to Dry Fiscal Third Quarter in 2024, earnings conference call.

Speaker Change: 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 11.

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

Larry Hilsheimer: 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: Please turn to fly too.

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-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: All now turned the presentation over to Ole on 5-3. Thank you, Bill. Hello and thank you for joining us.

Ole: 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 AM safety meeting.

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

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

Operator: Good day. Thank you for standing by.

Bill DOnofrio: Welcome to the Greif's third quarter, 2024 earnings conference call. At this time, all participants aren't a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised, but today's conference is being recorded.

Ole: 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.

Ole: 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.

Bill DOnofrio: I would now like to hand the conference over to you.

Bill DOnofrio: To your speaker today, Bill DOnofrio, Vice President of Investor Relations, in corporate development. Thank you and good day everyone. Welcome to Greif's fiscal third quarter, 2024 earnings conference call.

Ole: I'm excited about where we hit it and the opportunities that lie ahead.

Ole Rosgaard: 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.

Ole: and Grife, all the work we perform is focused on our purpose, creating packaging solutions for lives essentials.

Ole: Whatever you are located today, listening to this, look around the room.

Ole: The adhesive that holds your desk together, the chemicals used to manufacture your smartphone.

Bill DOnofrio: Our chief financial officer, Larry Hillshimer, 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 2. During today's call, we will make forward-looking statements involving plans, expectations, and beliefs related to future events. Actual results could differ materially from those discussed. Additionally, we will be referencing certain non-GAAP financial measures and reconciliation to the most directly comparable GAAP metrics that can be found in the appendix of today's presentation.

Ole: The full minute seed question, the songs and the shows, the orange juice you would have for breakfast.

Ole: The vinavin supplements you took this morning, and the lubricants in the car you drove to work, all of these essential everyday products, at all of them, at one time contained materials which were stored and shipped in ripe packaging products.

Speaker Change: We know that. It was described towards, because Christ maintains leading positions in nearly all industrial tax and capabilities globally, and I know accidents.

Speaker Change: Ghost 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 business statements.

Ole Rosgaard: We will now turn the presentation over to Ole on slide 3. 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 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.

Speaker Change: Christ is in the middle of a significance evolution.

Speaker Change: We are making excellent progress on our strategic missions by following our principles and all of this is engineered to create a flywheel of financial success through the right business system.

Speaker Change: To us deals of today's prepared remarks, I will provide you with some more information on the operating model change we announced last December and are nearing completion on. For now, let's shift gears to nature performance in fiscal Q3, please turn to slide forward.

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.

Speaker Change: I'm pleased to report another solid court of advice where we continue to successfully manage through a variable and uncertain operating environments.

Speaker Change: All regions globally experience net growth in the quarter despite chuffiness on an individual and market basis.

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.

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

Speaker Change: They are still significant one way to reaching a normalized level of all tubes, but recent trends have us cautiously optimistic as we have expected the trough of on volumes. This trend also applies to our Latin region.

Ole Rosgaard: I'm excited about where we headed and the opportunities that lie ahead. At Greif, all the work we perform is focused on our purpose, creating packaging solutions for lives essentials. Whatever you are 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 salts in your 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, all of these are essential everyday products, and all of them at one time contain materials which were stored and shipped in grived packaging products.

Speaker Change: APAC Improvement, while expected, was also encouraging. As we mentioned, Q2 was negatively impacted by a short post-significant destocking as the Chinese New Year, but is now on the path to recovery.

Amir: Amir, our largest GIP market, and approximately 45% of GIP sales saw a third-strait corner of sequential improvements.

Amir: This is particularly important as underlying macroeconomic data from the calendar Q1 into calendar Q2 continue to be negative with PMI fluctuating around the 45 mark.

Ole Rosgaard: We know that, it was grived products because grived maintains leading positions in nearly all industrial packaging capabilities globally. And by no accidents, 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.

Amir: In both Q2 and Q3, loops, chemicals, paints and coatings and markets are source of strength.

Amir: This is equally notable as our volume performance in the quarter outtaste many of the leading companies serving those in markets.

Speaker Change: This outperformance demonstrates our legendary customer service paired with the Grife Business System in action.

Ole Rosgaard: Grived 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 to create a flywheel of financial success through the grived business system.

Speaker Change: We are maintaining close relationships with our customers and then reacting with decisive action when changed across.

Speaker Change: With that, I will turn things over to Larry on slide 5 to walk through our third quarter of us off. Very. Thank you, Ole, and thank you all for joining our call. As Ole mentioned, we made progress on our operating model change in the quarter in our completion.

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 our new completion on.

Larry Hilsheimer: In the meantime, we continue to execute our strategy well and produce solid financial results under the circumstances.

Ole Rosgaard: For now, let's shift gears to near-term performance in physical Q3. Please turn to slide fold. I'm pleased to report another solid quarter for grived, 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.

Larry Hilsheimer: I packet, I catam integration continues and synergy capture is in line with our business case expectations.

Speaker Change: We additionally made steps toward simplifying our portfolio through the divestiture of the Delta Patrol in company, which provided additional death paid down towards our long-term death-neverged ratio range of 2 to 2 and a half times.

Speaker Change: Please note that while our current leverage is at 3.66, this is not included in fact of the Delta Sale Proceeds received on August 1.

Speaker Change: The pro-former adjusted leverage including Delta Pro-Cets would have been 3.59X.

Speaker Change: As for financial results, we finished the quarter at 194 million of adjusted even up, 34 million of free cash flow and adjusted earnings per share of a dollar three.

Ole Rosgaard: There's still significant runway 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. 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.

Speaker Change: This even 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.

Speaker Change: Please turn this slide six to walk through GIP results.

Speaker Change: In Q3, GIP saw demand improvement in all regions, totally nearly 5% on a global year over your basis.

Speaker Change: While this is encouraging, I remind you that on a global basis, the current volume sure falls to 22 levels are significant.

Speaker Change: GIP, even a margins, remains strong as a sequential basis, supported by our continued mix shift into higher margin polymer-based products.

Ole Rosgaard: This is particularly important as underlying macroeconomic data from Canada Q1 into Canada Q2 continues 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 in markets. This outperformance demonstrates our legendary customer service paired with the Greif business system in action. We are maintaining close relationships with our customers and then reacting with decisive action when change occurs.

Speaker Change: On a year-over-year basis, even the 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 repurve.

Speaker Change: Please turn this slide seven for PPS results.

Speaker Change: Our paper business continued to experience the same conflicting dynamics as in Q2. Continue to improve an employment demand for our product coupled with partially unrealized paper pricing creases.

Speaker Change: We firmly believe these are warranted based on our significant input cost inflation as well as improving demand. As a result, PPS margins continue to lag prior year.

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

Speaker Change: The paper solutions team is continuing to manage controls as well, including successful pricing increase implementation with our non-index-based customers in URB.

Larry Hillshimer: 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 circumstances. I pack in, cam integration continues in synergy capture is in line with our business case expectations. We additionally made steps towards 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.

Speaker Change: 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.

Speaker Change: Please turn this lighting to discuss fiscal 2024 guidance.

Speaker Change: When considering our guidance update, we ultimately determine that maintaining our guidance range consistent with our two three call is appropriate.

Speaker Change: Relative to our future guidance, we are anticipating slightly more favorable price costs due to better paper pricing and value-based pricing and GDP.

Larry Hillshimer: 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 1. 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 EBITDA, 34 million of free cash flow and adjusted earnings per share of $1.3. This EBITDA performance was driven by the volume performance that Oli outlined in his remarks and was in line with our expectations. Our free cash flow performance was also aligned to our expectation for a Q3 as we had modest working capital use as we ramped up the business with the nascent volume recovery.

Speaker Change: In Q3, although volumes were positive and 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 guidance.

Speaker Change: We benefited from a variety of small cost tailwinds in SNA 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 NQ4.

Speaker Change: What is important to remember when considering this Q4 guidance is the significance of certain tailwinds on the horizon.

Speaker Change: 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.

Larry Hillshimer: Please turn to slide six to walk through GIP results. In Q3, GIP saw demand improvement in all regions totaling nearly 5% on a global year over your basis. While this is encouraging, I remind you that on a global basis, the current volume shortfalls to 2022 levels are significant.

Speaker Change: Adding the guidance midpoint of 700 million of EBITDA in 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 dollars.

Larry Hillshimer: GIP EBITDA margins remain strong as a sequential basis supported by our continued mech shift into higher margin polymer-based products. On a year-over-year basis, EBITDA 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.

Speaker Change: In the near term, we will continue to focus diligently on operational excellence and lean on our close customer relationship to ensure we maximize value capture when volume recovery begins in earnest.

Speaker Change: Please turn this slide, nine to discuss capital allocation.

Speaker Change: We remain committed to our dismal and approached capital allocation and this quarter continued to demonstrate that through our capital deployment actions.

Larry Hillshimer: Please turn to slide seven 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. As a result, PPS margins continued to lag prior year.

Speaker Change: We have long stated that our two priority deployment objectives are funding safety and maintenance capex, which ensures continued cash generation and funding our continually increasing dividend. Earlier 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, the line to our strategy. Herning's growth remains our core focus, however sometimes it is wise to first shrink in order to enable that growth. We demonstrated that willingness this quarter with our sale of Delta.

Larry Hillshimer: 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 worked offset.

Speaker Change: With that, I'll turn things back to Ole on Slight 10 to provide you with a preview of our up-for-up coming investment.

Ole: Thank you, Larry.

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

Larry Hillshimer: Matt, please turn to slide 8 to discuss this goal of 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.

Speaker 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.

Larry Hillshimer: In Q3, although volumes were positive and all regions year over year, the pace of that improvement 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 SNA 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 and Q4.

Speaker Change: Polymers, Medals, Paper, Integrated Products and our Land portfolio.

Speaker Change: Through organizing pine material 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.

Larry Hillshimer: 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 dollars.

Speaker Change: That will enable us to better capitalise on our comprehensive suite of packaging solutions by optimizing pricing and accounting to drive higher margins.

Speaker Change: Secondly, by re-adigning functions, we will maximize the effectiveness of all our enabling functions. It will better align business results to individual functions and drive accountability and all levels of the organization.

Larry Hillshimer: 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.

Speaker Change: The cost efficiencies driven by that approach will also enhance margins.

Speaker Change: Last week, it allowed us to provide a deeper level of transparency to our investor community and help us to provide more predictable returns.

Larry Hillshimer: Please turn to slide 9 to discuss capital allocation. We remain committed to our dissimilar approach to capital allocation and this quarter continue to demonstrate that through our capital deployment actions. We have long stated that our two priority deployment objectives are funding safety and maintenance capex, which ensures continued cash generation and funding are continually increasing dividend.

Speaker Change: It will streamline our capital, allocation, prioritization and execution allowing us to deploy cash for growth faster.

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

Larry Hillshimer: 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 the first shrink in order to enable that growth. We demonstrated that willingness this quarter with our sale of Delta.

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

Speaker Change: We have 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 market profile of these leading businesses.

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. 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.

Speaker Change: That assessment is still ongoing.

Speaker Change: While 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.

Marcus: from Mary Lee by Mattill Solutions and in Marcus with some regional color added.

Marcus: Please turn the slides in 11.

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 sales.

Ole Rosgaard: 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. 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.

Speaker Change: 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.

Speaker Change: In 2015, our business makes for approximately 10% in polynomial-based politics illusions.

Speaker Change: As of our previous investment day in 2022, that makes had shifted to 15%. And now, in just two short years, that makes is now approximately 20%.

Ole Rosgaard: 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. Lastly, it will allow us to provide a deeper level of transparency to our investor community and help us to provide more predictable returns.

Speaker Change: We anticipate that shift to continue as we have significant runway for further growth in our polymer-based products.

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

Speaker Change: Well, Delta is a solid business and we receive great value for it. It's not called to rise growth priorities and core competitive advantages as it serves much more cyclical and markets.

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

Speaker Change: Please turn this line 12.

Ole Rosgaard: 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. Additionally, we are currently assessing whether this upcoming change will result in a change to externally reported segments. We are frequently per 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.

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

Speaker Change: And as a reminder, please reach out to investordayatcries.com and I'll repeat that in investordayatcries.com with any questions or to 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 that best performing customer service company in the world also extends to our financial customers.

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

Ole Rosgaard: 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 and in markets with some regional color added. 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 sales.

Speaker Change: One hour had earnings, it's not sufficient time to probably communicate the mirrored of ways.

Speaker Change: We are creating value by Christ.

Speaker Change: and so I'm confident that after our half day together.

Speaker Change: In December, you will depart with strong condemnation that grife is primes for breakout success in both the near and long-term through our proven execution on the bill's last strategy.

Speaker Change: Thank you once more, and operator, will you please open the lights for Q&A.

Ole Rosgaard: 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 mix has shifted to 15%. And now in just two short years that mix is now approximately 20%.

Speaker Change: Certainly, as a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by, will we compile the Q&A roster? And one moment for our first question.

Speaker Change: And our first question will be coming from Matt Roberts of Raymond James, the Align is open.

Matt Roberts: Hi, good morning, only Larry and Bill, thank you all very much. Oh yeah, I appreciate the slides 10-11 in the trailer to investigate here.

Ole Rosgaard: We anticipate that shift to continue as we have significant one way 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 market. Roberts. For those reasons, we are part of ways and in doing so, add a balance sheet flexibility by paying down debt with the proceeds.

Matt Roberts: And without feeling too much thunder from December, maybe 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.

Speaker Change: or maybe there are longer term margin targets that is achievable either in GIP or that probably we're based business within GIP.

Speaker Change: I certainly can. Maybe first, I remind you of our M&A.

Speaker Change: Selection criteria. So when we review target companies, one of the criteria is to make sure that the A bit of a margin is the creative to our current margins.

Ole Rosgaard: 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 best of the day at Greif.com with any questions or to request the 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 towards continuous and increased investments. One hour at earnings is not sufficient time to probably communicate the merit of ways we are creating value at Greif.

Speaker Change: And that means that we are only looking at companies with a margin at or above 18%. And we are also looking at companies with a free cash flow in excess of 50%.

Speaker Change: [inaudible]

Speaker Change: 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 mid-20 EBITDA margins.

Speaker Change: Obviously, we have a current business, so even with the exercises, we make that out, once 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.

Speaker Change: Thanks very much for appreciate that and look forward to hearing more in December. As a follow-up, Larry, you noted in the presentation, continued price cost had wins.

Ole Rosgaard: And so I am confident that after our half day together in December, you will depart with strong confirmation that Greif is primed for a breakout success in both the near and long term through our proven execution on the build to last strategy.

Larry Hilsheimer: I'll be at Sequentially Improving and since last quarter we've seen us this week and then slightly in.

Speaker Change: 20 dollars go through on your B that you did mention. So maybe relative to your expectations, you did in the last quarter. Current prices, where is the price cost range tracking in your guide? And there's some price you need to see either in your B organ chain or board to be at the midpoint there, or would any changes here and out be more of a 2025 impact. Thank you all again for taking the questions.

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 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by where we compiled the Q&A roster in one moment for our first question.

Speaker Change: Yeah, you know, Matt, thanks. In the core, we ended up benefiting from a little better than we anticipated on the price increases. Due to the volatile recognition, typically through risky, we had assumed knowing partial recognition of the outstanding price increases at that time.

Matthew 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. Oh, yeah, I appreciate the slides 10-11 and the pray to investigate there. So, it was outskilling too much thunder from December.

Speaker Change: but then they actually recognized 40 in June and for a container board in 24 August for you or B. So the net impact of those provided a little bit of a tailwind for our revised four-year guidance.

Ole Rosgaard: I think you helped me understand the margin of 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 they're a longer term margin target that is achievable, either in GIP or with that poly-based business within GIP. Hi, Matt. I certainly can. Maybe first, I 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.

Speaker Change: and we had, we also had better than expected value-based pricing benefits in GIP, our teams just did a great job on focusing on value-a-revolume.

Speaker Change: Kind of mind benefits those are slightly better than expected.

Speaker Change: and in raw material parts for a little bit of an upside as well.

Speaker Change: In relation to paper pricing, guys, 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.

Speaker Change: the Employee Theory Costs and the entire industry and improving demand trends, tickling and panorboard.

Ole Rosgaard: And that means that we're only looking at companies with a margin at or above 18 percent. And we're also looking at companies with a free cash flow in excess of 50 percent. 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 mid-20 EBITDA margin. Williams. Obviously, we have a current business, so even with the acquisitions, we make that once they're creative.

Speaker Change: Volumes on the other hand actually were, while better, were slightly below what we had expected.

Speaker Change: You know, we talked in the last quarter that we had seen some left in demand and we're hopeful that that would.

Speaker Change: Continue to improve. It was more mixed than we expected and for that reason, there's a little bit of it.

Speaker Change: Downside relative to where a tutu guide was.

Speaker Change: 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 and what we would have had from doubt they had been not sold it.

Ole Rosgaard: 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. As a follow-up, Larry, you noted in the presentation, continued price cost had wins. I'll be sequentially improving, and since last quarter, we've seen other CCP announced slightly, and $20 goes through on URB that you did mention, so maybe both of 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?

Speaker Change: When you put all that together, just let us do where our guidance range didn't change on a hall over basis.

Speaker Change: DOS 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.

Speaker Change: which I think could be a big impetus for us across our platform, so we'll be talking about guidance, obviously, at our next call. It up also though, we do, you know, we've had to start up over Dallas Heat Feeder.

Speaker Change: But we haven't had no net bottom line benefit to that yet as we go through our startup costs but we're very excited about what that'll be contributing for us in 2025 as well.

Ole Rosgaard: Would any changes here and out be more of a 2025 impact? Thank you all again for taking the questions. 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 only partial recognition of the outstanding price increases at that time, but then they actually recognized 40 in June for container board in August for URB.

Speaker Change: Appreciate all the time, thank you guys again.

Speaker Change: Thank you. And one moment for our next question.

Speaker Change: Our next question will be coming from Gansham Punjabi, of Beard, Your Lime is open.

Gansham Punjabi: Yeah, thank you, I've been working on it. Good morning, everybody.

Gansham Punjabi: You know, I guess going back to slide six where you're talking about the near come-out look within GIP and you know, 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.

Ole Rosgaard: 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 GIP, our team 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, guys, you know, we still believe there should be more to come.

Speaker Change: You know, volume dynamically, maybe touch on competitive activity, you're seeing anything different than the usual competition that you've seen in the show of time.

Speaker Change: Thanks, Councillor. Yeah, first of all, I mean, Mark and competition has really not ease despite, you know, you see some positive volume trends. The number of tenders or I've used remains very high.

Speaker Change: and we see Matthew participants on some of the participants are pricing it, what we believe to be lost.

Ole Rosgaard: 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, while better, were slightly below what we had expected. You know, we talked on the last quarter that we had seen some looked in demand, and we're hopeful that that would continue to improve.

Speaker Change: Making levels to maintain their volume.

Speaker Change: We continue our strict adherence to our value or volume approach.

Speaker Change: and we simply focus on maintaining trusted relationships with our customers and commitment of our teams too.

Speaker Change: Operational Excellence in our value of value philosophy.

Mark Martin: It's a large part of our continued Mark Martin Strens in the GAP or the Passquarters.

Mark Martin: Despite these compensator pressures.

Ole Rosgaard: 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 tank out of the four-quarter even, and what it had from Delta had me not sold it. When you put all that together, it just let us to where our guidance range didn't change on a haul over basis.

Mark Martin: In the past, we have seen customers return to us after chasing long-competitive pricing and our superior quality and our legendary customer service.

Mark Martin: This really, you know, we were unable to be matched, so over time those customers come back and then we went in the long term in terms of...

Mark Martin: [inaudible]

Speaker Change: In our future, the strongest volume was coming from loops, bulk chemicals and paint and coatings. As you may have noticed, in those customers' own earnings calls, they seem to be less bullish than before in these end markets.

Ole Rosgaard: 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. 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'll be contributing for us in 25 as well. I appreciate all the comments. Thank you guys again. And one moment for our next question.

Speaker Change: and...

Speaker Change: The end mark as we are investing in have likewise been mixed food and there for being solid pots.

Speaker Change: At Kim is still stack-mating after the beast off that occurred earlier in the year.

Speaker Change: You may have read an article, a recent article in the Wall Street Journal about the access to in North America.

Speaker Change: where this year the farmers will have a bump-up crop but they're gonna lose money.

Speaker Change: and...

Speaker Change: The article goes into what that means to them in terms of investing in.

Ghansham Panjabi: Our next question will be coming from Ghansham Panjabi. Of Baird, Yalam is open. Yeah, thank you, operator. Good morning, everybody. 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 it relates to, you know, your direct conversations with customers and context of the environment that we have today.

Speaker Change: 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.

Speaker Change: and leaving those tabs on.

Speaker Change: Shifting the man 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.

Ghansham Panjabi: 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. Maybe touch on competitive activity. Are you seeing anything different than the usual competition that you've seen in the industry over time? Thanks, Ghansham. Yeah, first of all, I mean, market competition has really not ease the space, you know, you see some positive volume trends. The number of tenders or I have cues remains very high.

Speaker Change: Like Luke's Volk chemicals and so on.

Speaker Change: We have out-conformed due to our quick reaction time.

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

Speaker Change: Over all the manuscripts are very mixed still, so we would just remain deeply connected with our customers.

Speaker Change: As a critical supply chain partner and expect that will continue to drive better than industry volume performance.

Ghansham Panjabi: And we see market participants or some market participants are pricing at what we believe to be lost making levels to maintain their volume. We continue our strict adherence to our value of volume approach. And we simply focus on maintaining, you know, trusted relationships with our customers and the commitment of our teams to operate operational excellence and our value or volume philosophy. It's a large part of our continued market strength in GIP or the past quarters, despite these competitive pressures.

Ole: Okay, thanks, Ole, very comprehensive and then on the re-organization by substrate versus geography.

Speaker Change: 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-border supplier?

Speaker Change: Well, first of all, the changes we are anticipating to make, number one, yes, it's really to serve our customers better.

Ghansham Panjabi: In the past, we have seen customers return to us after chasing low competitive pricing. And our superior quality and our natural customer service is really in our view on able to be matched. So over time, those customers come back and then we went in the long term. In terms of, in terms of sort of a bit more color, in our Q2, the strongest volume was coming from loops, bulk chemicals, and pavement coatings.

Speaker Change: So if you think of GIP and TPS, in GIP, we have all types of materials that we're making, whether it's polymer based, steel, fiber drugs and so on, so in a way, our teams are kind of a jackson of all trades.

Speaker Change: and what we want to do in our drive to be even better is to really focus on one material solution. So, blow-moaling a Jericho and it's obviously different from making a steel drum.

Speaker Change: So separating, like, Jericho ends out in a separate SBU

Speaker Change: on the A-Sephrote SPU Management.

Ghansham Panjabi: 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 ACM is still stagnating after the destruct that occurred earlier in the year. 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 of crop, but they're going to lose money.

Speaker Change: Means that all they need to think about is be the best in the world and they can jaric hands and that will help our customers.

Speaker Change: with even better quality, and at the same, as we do, that's for each of our materials solutions.

Speaker Change: and then we've extracted the commercial organization out of all those, so our commercial organization becomes an innate link function, so to speak, on the H.E.F. commercial officer and...

Speaker Change: That will drive up sales across sales.

Speaker Change: As in the past, a salesperson would have visited a customer in the morning, and another salesperson from Brife comes to sell another product in the afternoon. And by combining sales this way, we will just be much more effective in...

Ghansham Panjabi: 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 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.

Speaker Change: in that and it'll also drive margins and we will be able to serve our customers better. And then lastly, when we do AMNA, we will be even more effective in integrating these companies into our structure. So all of our structures been designed or is being designed for growth.

Speaker Change: Okay, perfect, thank you.

Ghansham Panjabi: But that doesn't mean we're resting on our laurels. Now we're going to keep that focus up and overall demand cycles 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, Ole, very comprehensive, 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 multinationalists that want a cross-border supplier?

Speaker Change: and one moment for our next question.

Speaker Change: Our next question will be coming from Mike Rockfland of True Securities, your line is open.

Mike Rockfland: Thank you, Oli, that I are in Bill for taking like questions. Just wanted to follow quickly and got one of your slides to the last question. On the portfolio transformation, does that require any additional headcount given the self-force split?

Speaker Change: What do you mean in our evolution to modernized the organization? Exactly. Yeah.

Speaker Change: It's not designed to reduce headcount. That has never been said as to the increases. No, it won't increase. We've had some questions whether we will be taking out headcounts.

Ghansham Panjabi: 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 TPS, 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 jacks of all trades, and what we want to do in our drive to be even better is to really focus on one material solution.

Speaker Change: It's not the time to take our head count, but we do believe we will be able to operate much more effectively and as we are adding volume of roll out volume, we will be able to do that without adding further head count to the organization. So in effect, we will be operating much more effectively.

Speaker Change: but we certainly won't be adding further.

Speaker Change: God, because I was just wondering, as your sales force, it sounds like your sales force is not going to become special and sort of in a, in a, in part a product.

Speaker Change: Um, so I'm sure I got it.

Ghansham Panjabi: So blowing 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 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, as we do, that's 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.

Speaker Change: Yeah, now the second spot is going to be more.

Speaker Change: Janellist and they will turn more from farmers to hunters.

Speaker Change: and then we have created a very strong, product management function that will...

Speaker Change: The more of a support to sales or run, and our sales teams acting as product managers, we will have a dedicated central product management function by material solution, serving the sales teams but also our customers.

Speaker Change: God, that's very clear, thank you, Ole.

Ghansham Panjabi: And that will drive off 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 another 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. Okay, perfect. Thank you.

Speaker Change: In terms of global industrial packaging, what do you attribute your outperformance relative to the market too? Obviously, we showed sequential improvement in the media despite PMI's remaining depressed. So, I'm wondering if this thing that you're doing differently is sometimes released out, you're like, how are you able to outperform despite the both the go out of market still being so much else?

Speaker Change: Well, I mean, I gave a lot of cue loss to our teams and that's one of them, but it's really our long-term focus on customer service, that's why I think that's

Speaker Change: You know, you 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, that works great.

Speaker Change: and conversely, you're probably also trying to shop somewhere or deal with a vendor that has provided you that exceptional level of customer service.

Michael Roxland: And one moment for our next question. Our next question will be coming from Mike Roxland of Truist Securities. Your line is open. Thank you, Oli. Sorry, and I'll be taking like questions. Just wanted to follow up quickly and got one on your last question. On the portfolio transformation, does that require any additional headcount given the Salesforce split? Are you meaning in our evolution to modernize the organization? Exactly, yeah. It's not designed to reduce headcount.

Speaker Change: and then you tell people that as well and then you prefer that or and you'll even prepare to pay a bit more for that service and the same thing goes without customers so we are for a very long time focused on.

Speaker Change: 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 never catch it but in the process we have become best and class and that is really why we can

Michael Roxland: That's has never been asked of the increases. No, it won't be an increase. No, it won't increase. 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 to our volume, we will be able to do that without adding further headcounts to the organization.

Speaker Change: Deliver solid results in this current environment.

Speaker Change: [inaudible] Bill, Bill, Bill, Bill,

Bill Donafrio: I'm sorry, I'm sorry, I'm sorry, I'm sorry, please, I'm sorry, I'm sorry

Michael Roxland: So in effect, we will be operating much more effectively. Absolutely. But we certainly won't be adding. Got you, because I was wondering, as your sales force, I mean, it sells at your sales force and now they become specialists in, in, in, in, in, in, in part, a product. Um, so, I'm sure good. Yeah, no, the sales force will be more journalists and they will, they will turn more from farmers to hunters.

Speaker Change: I was this going to add on top of that, you know, providing, you know, top quality products, as you will expect.

Speaker Change: God, and this one final question we're turning it over just in terms of PPS and non-index customers. Yeah, how much of your business is non-index and are you fully implementing denounced price increases with those non-index customers?

Speaker Change: I'll let Larry take a look at that, it's about 35% of our customers in the URB space.

Michael Roxland: And, and then we have created a, and a very strong, a product, a management function that will, uh, be more of a support to, to sales or rather than our sales teams acting as product managers. We will have a dedicated central product management function by material solution, uh, serving the sales teams, but also our customers. Got it. No, it's very clear. Thank you, Oli. Um, in terms of global industrial packaging, what do you attribute your performance relative to the market to?

Speaker Change: and um...

Larry Hilsheimer: So, you know, just driving, yeah, that's, we've had great success, I can't tell you it's 100% of that 35% but it's pretty close.

Speaker Change: God bless you. Thank you guys very much and do watch the video of the fall quarter.

Speaker Change: Hi, five.

Speaker Change: And our next question will be coming from Gabe Haydee, a well fargo your line is open.

Gabe Haydee: Foley Larry Bill, good morning.

Gabe Haydee: Thanks for watching!

Michael Roxland: Obviously, we showed sequential improvement in India, despite PMIs remaining the press. So I'm wondering if there's things that you're doing differently and something to restart. He was like, well, how are you able to perform despite the both the Gordon market still being so much challenge? Well, I mean, I, I, I gave a lot of Q does to our teams and, you know, that's one of them. Um, but it's really our long term focus on customer service that's driving that.

Gabe Haydee: I wanted to where you gave us an inch, so I'm going for the mile. If you can help us in the fiscal 25.

Speaker Change: I'm some of the known items that you kind of called out and I'm thinking about deltropialing and for sure.

Speaker Change: He said a little bit of a headwind in...

Speaker Change: 4th quarter.

Speaker Change: Is that maybe a 15 to 20 million dollar annualized?

Michael Roxland: Um, you know, imagine you, you probably had the experience of dealing with a vendor or a store where you've got a really bad service. And you, you go home, you tell, 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. And then you tell people that as well.

Speaker Change: Eve at the A number that we should be thinking about, you know, for the asset sold, and then kind of gross price flowing through based on.

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

Michael Roxland: And then you, you prefer that over, and you're even prepared to pay a bit more for, for, 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, and we, 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.

Speaker Change: in the next year that we're thinking about.

Speaker Change: Yeah, on Delta, I know that number's high, yeah, we, if it was about our 90 million, it was about eight and a half times.

Speaker Change: You know, after even doing a strand costs and that kind of stuff, so more in, you know, well you can do the math on that. So...

Speaker Change: You know, now that business vastly didn't even hear so the fourth quarter actually was going to be a little higher than that, so it would be approaching a four million in that quarter, but for a full year, you know, eight to half times on 90 million.

Michael Roxland: Um, and that is really why we can deliver solid results in this current environment. Yeah, of course, one high question. 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. 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, fully implementing the announced price increases with those non index customers.

Speaker Change: You're relative to the pricing element, you know, we obviously had the $20 increase on, you are the end of being, um,

Speaker Change: about a million that will hit in the fourth quarter this year because it will flow through mostly in October only. And on that 20 to that full, at a four-year basis, um...

Michael Roxland: Yeah, I'll let Larry take that. So, you know, when we, 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, that we've had great success. I can't tell you it's 100% of that 35%, but it's, it's pretty close. Got it. Thank you guys very much.

Operator: Thank you.

Speaker Change: You've ten bucks on your B, you know, you basically have.

Speaker Change: about six out of 50 million times, or what's that number of DNA surfactors? Yes, six out of 50,000 among the URB.

Speaker Change: and the incremental pricing increase that we had on.

Speaker Change: The container board, sorry.

Gabrial Hajde: And our next question will be coming from Gabe Hady, a Wells Fargo, your line is open.

Larry Hillshimer: Ole, 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 a headwind in the fourth quarter. Is that maybe a $15 to $20 million 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 price increases that have already been reflected in the indices.

Speaker Change: on those elements and that was recognized in June so it'll be fully beneficial to keep for, right?

Speaker Change: Dad address the question more to know.

Speaker Change: 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.

Speaker Change: Yeah, we've been running full out in our container board.

Larry Hillshimer: 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 years, we're thinking about. Yeah, on Delta, no, that number's high. It was about our 90 million was about eight and a half times, you know, after even dealing with strain costs and that kind of stuff.

Speaker Change: Business. We've had some economic downtime in our URB space. Do you have that number? It was nothing significant in front of you. I know it's mine or so. Any, I can have a can any paper grade, but near off to the levels of from a backlog perspective and container board.

Speaker Change: Okay, and one last one, just on the aminate front, obviously you guys have been acted there. You called out kind of being 3.6 times levered on a pro-formal basis. Are there still opportunities out there?

Larry Hillshimer: So more in, you know, well, you can do the math on that. So, you know, now that business badly 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 to half times on 90 million. So, you know, relative to the pricing element, 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 will flow through mostly.

Speaker Change: And...

Speaker Change: Give him kind of where we are in the interest rates cycle or do you feel like it might get more competitive again if the Fed in fact does cut.

Speaker Change: Now we still have a lot of opportunities, we have a very robust pipeline.

Speaker Change: We are engaged with a lot of companies and owners. We continue to do that.

Speaker Change: 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 Hillshimer: In October only and on that 20 to at full and a four year basis, you know, for, you know, 10 bucks on, on you are be basically have about 650 million times. I'm sorry, what's that number at the end is $650,000? 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? $8750 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. Is that addressed? It just does.

Speaker Change: But I'll tell you that our focus right now is to pay down debts so that we get back to the two and a half leverage your level.

Anderson: Anderson. Thank you.

Anderson: Thank you.

Anderson: for our next question.

Speaker Change #100: Now our next question will be coming from Brian Butler, as they fool your mind as open.

Brian Butler: Thank you. Good morning. Thanks for taking the questions.

Speaker Change #102: Good morning.

Brian Butler: Just maybe on the first one, when you talk about that $160 million kind of in a more normalized volume environment.

Brian Butler: Uh, you know.

Speaker Change #103: What what have to happen for that? I mean, are we there at current kind of volumes right now? Get those just kind of sustained through the back, you know, or through 2025? Or do we really need to see some step up in the macro recoveries? It kind of gets back to kind of the normalized 2022 levels.

Larry Hillshimer: I mean, the other thing I was I was thinking about was I don't think that I heard economic downtime mentioned in the prepare remarks or in the slides, just curious kind of where you guys are running in the system today. 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. I know it's minor. Any economic in any paper grade, but near optimal levels from a backlog perspective in container board, yes.

Speaker Change #104: If you look back, let me just give you this number, just for example, for total GIP, you know, if I go to Q3 22 to 21, was down 4.3%. The following year is down another 10.7.

Speaker Change #105: We've only regained 4% of that.

Speaker Change #105: Thanks!

Speaker Change #106: So pretty significant drop-offs from where we were, if I go to, you know, IBCs.

Speaker Change #107: They were because of acquisition to step we were up nine and a half and Q322 over 21 but we were down 13.7 percent, 22. I can see you because of our acquisitions have come back for you pretty strong.

Larry Hillshimer: Okay, 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 levied 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 cut? No, we still have a lot of opportunities.

Speaker Change #107: But if I go to paper and it's a little no-value.

Speaker Change #107: 22 to 21 at down 2.6 next year is down 16.3

Speaker Change #107: and we've only recovered to 7.9% off. So we still have a long way to go to get back to the volume levels that we were at.

Speaker Change #108: and so yeah, it is more of a macro issue, a brand and it is, you know.

Larry Hillshimer: 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, but I'll tell you that our focus right now is to pay down that so that we get back to the two and a two and a half levels of the ratio level. Understood.

Speaker Change #108: You know, just some marginal change, so I look at PBS as a whole for us if we got back to normal volume levels and this is not including the impact of the price changes.

Operator: Thank you. One moment for our next question.

Speaker Change #108: that have been recognized. This is just sort of average value act for the year. We pick up another $56 million of EBITDA in our BPS business and on our old line GIP business it's a $90 million list.

Speaker Change #108: and then you go into the acquisitions that we've made and if you get back to normalized values for them, you end up picking up another 21 million. So it's a big macro piece against the entire environment.

Brian Butler: Our next question will be coming from Brian Butler. How stable your line is open. Thank you.

Speaker Change #108: and if I can just have a little bit of color, it's 160 million as well. So that's Larry alluded to that's not one single factor, Ash.

Brian Butler: Good morning. Thanks for taking the questions. I'm going to go ahead. 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? Are we there at current kind of volumes right now? Are those just kind of sustained 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?

Speaker Change #109: You have to consider that muscle of current volumes and amics is driven by macroeconomic factors.

Speaker Change #110: So, while we prove the IQ3 that we can outpace the macro and volume, it is a still the primary bottleneck to truly rebound in demand and one made major facts and ad equation.

Speaker Change #110: is the current interest rate situation. In previous interest rate cuts have been shown to drive production, specifically a tender house in the man, both for new builds and existing housing sales.

Brian Butler: 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, let me just say number, just for example, for total GIT, 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. So pretty significant drop off scale from where we were. If I go to IBCs, because of acquisitions and stuff, we were up 9.5 and Q322 over 21, but we were down 13.7%.

Speaker Change #110: and that would be a major volume driver for such you know when you move house or buy a new house.

Speaker Change #111: You do more than this by the house, you paint the walls in your house for it to sell better.

Speaker Change #112: You may buy new carpets, appliances, and hundreds of all items for, you know, when that happens and all of those things they drive industrial production and demand for our products.

Speaker Change #113: and then another component, as an example, would be act. I just talked about it earlier.

Speaker Change #114: We are experiencing short-term softness, some of it is interest rate, playing in action too, and as that softness of the pace, you will see that in segments, in crews, so there's a lot of factors involved in returning to the 116th.

Brian Butler: IBCs because of our acquisitions have come back. That's pretty strong. But if I go to paper in our total no volumes, 22 to 21 is down 2.6. Next year is down 16.3. And we've only recovered to 7.9% off. 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 brand than it is, you know, just some marginal change.

Speaker Change #114: Okay, that's all for the second question.

Speaker Change #115: 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 during that time? Is there a short term impact either on slower sales or higher costs?

Speaker Change #116: as that gets pushed through.

Speaker Change #117: On sales know, on costs that we're doing this in conjunction with changing our fiscal years, you know, and that they are some costs involving that, but it's not material.

Brian Butler: 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 ad for the year. We pick up another $56 million of EBITDA in our PPS 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.

Speaker Change #118: Yeah, we just closed brain, we were going to end up incurring a, you know, about six, six to seven million related to just the cost of going through this change.

Speaker Change #119: Okay, is that change kind of completed in fiscal 24th year or does that really roll in the 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: And if you get back to normalize volumes for them, you end up picking up another $21 million. So it's a big macro piece against the entire environment. 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. 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 and volume, it is still the primary bottleneck to truly, you know, rebounding demand.

Speaker Change #120: 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, the polymers and that kind of specialty piece that you're moving into versus versus the other segments. You know, what, what does that organic growth look like?

Speaker Change #121: First of all, why are we doing this? Well, we're growing in polymerase products because the March and profile is much more higher and the sick-lapse cyclicality of those products is much much more work. So we want to be a higher-marking company that's a lot less sick-lapse cyclical.

Brian Butler: 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 bills 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 in your old house for it to sell better.

Brian Butler: You may buy new carpets, appliances, and the hundreds of other 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 the plane in action too. And as that softness fades, you again, you will see that end segment that improves.

Speaker Change #122: on the organic size.

Speaker Change #122: Next week, I'm traveling to Malaysia to open a new IBC plant.

Speaker Change #122: which is part of our, we are, you know, adding lines all over the world all the time. We opened the earlier this year, we opened a lot of IBC plant in Turkey. So yes, right, we are also growing organically.

Speaker Change #123: Go ahead and say hi to both of you guys.

Speaker Change #124: Thank you. Thank you for all I think in the questions.

Speaker Change #124: [inaudible]

Speaker Change #125: 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. And our next question will be coming from George Stappos of Bank of America's Securities, your line is open George.

George Stappos: Hi, everyone. Good morning. Hope you do it well.

Brian Butler: So there's a lot of, you know, factors involved in returning to the 160. Okay, that's helpful. 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.

Speaker Change #127: Hey, I'm so...

Speaker Change #128: We've touched on this a couple of different ways on the call regarding Europe. But, Ole, as you think about it, is there horizon?

George Stappos: 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?

Ole: You should be able to outperform in Europe, in spite of what's been sluggish conditions. I think it puts some maybe some quantification on that somewhat to the qualitative question.

Brian Butler: 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. Okay, is that change kind of completed in fiscal 24 here, or does that really roll into 25 as well?

Speaker Change #129: 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.

Speaker Change #130: and I'll leave it there, might have one follow-up.

Speaker Change #131: for thanks for your questions.

Speaker Change #132: On Europe, first of all, the answer to the question is, yes, I believe we can still outform. And why do I believe that? Well, if we look back and I have to go back to our philosophy of value over volume.

Brian Butler: We'll be rolling, we're evolving into this and we will roll out the details in December, but we will be operating this model beginning November 1st. 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 what does that organic growth look like?

Speaker Change #132: We have said no to quite a lot of business in the past.

Speaker Change #132: and we can see now that after a certain period that business is trickling back to us.

Speaker Change #133: So let's test one.

Speaker Change #133: Reaching for a while, we will continue to perform. Another one is we are really focused on growth in

Brian Butler: 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 of those products is much, much lower. 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 IPC plant, which is this is polymer. We are, you know, adding lines all over the world all the time.

Speaker Change #133: Sex Months where we have not historically been very strong, and you know, one is the food and farmer, and we have teams really working hard on getting into those segments, because the march is a higher, it's much more sticky, and...

Speaker Change #133: We know it's much less cyclical as well. So with those combinations, I believe that we will continue to see solid performance come out of Europe.

Speaker Change #133: And we have ahead its more capacity as well, by the way, organically.

Brian Butler: We opened the earlier this year, we opened a lot of IPC plant in Turkey. So yes, we are also growing organically. Okay, thank you. Thank you for taking the questions. Okay, 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. And our next question will be coming from George Stappas, a bank of America securities, your line is open George.

Speaker Change #134: Sequentially on court choice was off, but, yeah, lean with court choice, sorry about that. I also say that in your second question, so it might be the court choice was...

Speaker Change #135: Also, up nearly 10% as contained about the man, continued to improve, which was slightly better than we expected in our Q2 guidance.

Speaker Change #135: and I would remind you and our investments of our niche role in North America.

George Staphos: Hi everyone, good morning. Hope you're doing well. Hey, so we've touched on this a couple of 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 courts within the reason, you should be able to outperform in Europe, in spite of what's been sluggish conditions.

Speaker Change #136: Container Board, as the champion of the independence, which gives us earlier visibility to demand cycles and our competition. As we have a view of the full markets, we're positioned well for this recovery. Champion of the independence is a competitive advantage to us.

Speaker Change #136: So, we skill that handling complexity, we could produce any flu, any size, run, and any light aboard combination with speed and profitability. So, we focus on some of the risks for why we see that sort of growth and sustainable.

George Staphos: If you 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. On Europe, first of all, the answer to the question is, yes, I believe we can still out for.

Ole Rosgaard: and Ole Rosgaard in general.

Speaker Change #138: 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 quarter three is still choppy. I would say it's very choppy, it's a little bit like walking and saying you take two steps forward and then you slide half a step backwards.

Speaker Change #138: So we have months where we see it's all coming and then the following months, we see it, you know, dive again and then the next months it goes up again, but the overall trend is positive, you know, on on, on, on, across the, the segment, yeah, the one thing, our guess is always tough because it's, it's, you know,

George Staphos: 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. 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.

Speaker Change #138: Public Education Holiday Month in Europe and so 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.

Speaker Change #139: Thank you. Last question, Paul, and I'll turn over, you know, back to container board, court choice and the business overall.

Paul: To the extent that you have a view in your customers could offer one that you'd share on this conference call. You know, volumes for the calendar second quarter and card-gitted markets were okay, not great.

George Staphos: 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. Sequentially on core choice, core choice was off. Yeah, lead with core choice. Sorry about that. I was just asking your second question. So sequentially core choice was also off nearly 10% as container bought demand continued to improve, which was slightly better than we expected in our Q2 guidance.

Speaker Change #141: You know, flat up a little bit down a little bit depending on what adjustment you want to make, but all very easy comparisons.

Speaker Change #142: 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?

Speaker Change #143: and what kind of...

Speaker Change #144: Holiday calendar fourth quarter season are we setting up four in the car get a mark it's given what you're seeing. Thank you guys and good luck the rest of the year.

Speaker Change #145: Yeah, I mean, you know, we're here in the same thing that we've been expressing. I mean, it's just a mixed bag out there, man. You know, if you'd read like the Dallas CEO's comments and their earnings call, it's like, you know.

George Staphos: And I would remind you and our audience of our niche role in North America, container bought as a 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. Champion of the independent 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.

Speaker Change #146: He's talking very positively if interest rates drop and home sales kick off.

Speaker Change #146: We feel the same way, you know, and we see others.

Hank: I think Hank will was very positive, he had other BASF not, you know, in the paper business it's the same kind of mix 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.

George Staphos: So we've those are some of the reason for why we see like that sort of growth in container bought. In general, 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.

Hank: and I think the rate drop will obviously affect this because you know.

Speaker Change #148: You know, average person looks at that credit card debt and that payments and it's linked 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.

George Staphos: 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 trends is positive, you know, across the segment. Yeah, the one thing, August is always tough because it's, you know, probably vacation holiday months in Europe. And so, yeah, it always gets choppy. And it also goes a lot to harvest seasons in the south of Europe.

Speaker Change #148: We don't have a Christmas ball of coach. You're closer to it than we are, so we appreciate the color of it. Thank you, George.

Speaker Change #149: and one moment for our next question.

Speaker Change #150: Our next question is a follow-up from Gabe Haiti, a well-fargo your line has opened.

Gabe Haiti: Thank you, real quick, but 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?

George Staphos: But they're substantially the same as what we saw exiting in July. Thank you. 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'd 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.

Speaker Change #152: Directionally tied to housing.

Speaker Change #153: It's difficult to give you a number on that, it really is, because it's...

Speaker Change #154: Take chemical bulk chemicals is one of our largest ones. Some goes into insulation, some goes into, you know, the soles in your shoes and some goes into the fridge you buy, you know, it's just difficult to, that's sort of how we don't have that argument in action on that argument.

Speaker Change #155: No worries, thank you.

George Staphos: 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.

Speaker Change #155: and I would now like to turn the conference back to Ole for closing remarks.

Ole Rosgaard: Thank you, Matt.

Ole Rosgaard: First of all, big thank you for all the questions and you continue to interest in Christ. 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. Have a wonderful day everyone!

George Staphos: I mean, it's just a nymph bag out there. I mean, you know, 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 kick off, we feel the same way. I mean, you know, we can we see others. I think Hankel was very positive. You had other BASF 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.

Speaker Change #156: and this concludes today's conference call. Thank you for participating. You may now disconnect.

George Staphos: 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, average person looks at their credit card death and their payments and it's linked 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.

Speaker Change #156: Thank you for watching.

Speaker Change #156: [inaudible]

George Staphos: 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? Oh, 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.

George Staphos: 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, you know, we don't, we don't have to be negative on that at all, Gabe. No worries. Thank you.

Speaker Change #156: [inaudible]

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. 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.

Operator: Have a wonderful day, everyone, and this concludes today's conference call. Thank you for participating. You may now disconnect. .

Speaker Change #157: Good day. Thank you for standing by. Welcome to the Christ 3rd Quarter 2020 for earnings conference called. At this time, all participants are now listening only mode.

Speaker Change #158: After the speaker's presentation, there will be a question and answer session.

Speaker Change #159: To ask the question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message to buy that at your hand is raised.

Speaker Change #159: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Bill Donafrio, Vice President of Investor Relations and Corporate Development.

Bill Donafrio: Thank you and good day everyone. Welcome to Grife Fiscal Third Quarter in 2024, earnings conference call.

Speaker Change #160: 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 11.

Speaker Change #161: Our chief financial officer, Larry Hill Schimer, will provide an overview of our third-quarter financial results and our fiscal four-year guidance.

Speaker Change #162: 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 #163: Please turn to fly too.

Speaker Change #164: During today's call we will make forward-looking statements involving plans, expectations, and beliefs related to future events.

Speaker Change #164: 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.

Bill DOnofrio: Matthew Eichmann, Matthew Eichmann, Matthew Eichmann, Matthew Eichmann Matthew Eichmann, Matthew Eichmann, Matthew Eichmann[inaudible] Bill DOnofrio, Vice President of Investor Relations, Incorporate Development. Thank you and good day everyone.

Speaker Change #164: Now turn the presentation over to Ole on 5-3. Thank you, Bill. Hello, and thank you for joining us.

Ole Rosgaard: 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 AM safety meeting.

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

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.

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.

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 the source of pride for me but also the privilege.

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.

Ole Rosgaard: I'm excited about where we hit it and the opportunities that lie ahead.

Bill DOnofrio: 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. Our Chief Financial Officer, Larry Hillshimer, will provide an overview of our third quarter financial results and our fiscal four-year guidance.

Ole Rosgaard: and Grif, all the word we perform is focused on our purpose, creating packaging solutions for lives essentials.

Grif: Whatever you are located today, listening to this, look around the room.

Grif: The adhesive that holds your desk together, the chemicals used to manufacture your smartphone.

Grif: The form in your seat cushion, the salts and the shoes, the orange juice, you would have for breakfast.

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. 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.

Grif: The Vynderman supplements you took this morning and the lubricants in the car you drove to work. All of these essential everyday products at all of them at one time contained materials which were stored and shipped in ripe packaging products.

Speaker Change #166: We know that. It was quite close. Because Christ maintains leading positions in nearly all industrial tax and capabilities globally. And I know accidents.

Speaker Change #167: Goes leading positions are the results of the deeply entrenched competitive advances we have developed in our business. The most critical of which is our legendary customer service and our land in our business statements.

Ole Rosgaard: I'll now turn the presentation over to Ole on slide three. 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 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. Lee. These moments are truly energizing and remind me of the incredible commitment and dedication that our colleagues demonstrate every day.

Speaker Change #167: Christ is in the middle of a significance evolution.

Speaker Change #167: We are making excellent progress on our strategic missions by following our principles and all of this is engineered to create a flywheel of financial success through the right business system.

Speaker Change #168: To us deals of today's prepared remarks, I will provide you with some more information on the operating model change we announced last December and I'm nearing completion on for now. Let's shift gears to nature performance in fiscal Q3, please turn to slide forth.

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.

Speaker Change #169: I'm pleased to report another solid quarter of a life where we continue to successfully manage through a variable and uncertain operating environments.

Speaker Change #169: All regions globally experience net growth in the quarter despite chockiness on an individual and market basis.

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.

Speaker Change #169: 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.

Speaker Change #169: There's still significant one way to reaching a normalized level of all yous, but recent trends have us cautiously optimistic as we have extended the trough of on volumes. This trend also applies to our Latin region.

Ole Rosgaard: I'm excited about where we headed and the opportunities that lie ahead. And Greif, all the work we perform is focused on our purpose, creating packaging solutions for lives essentials. Whatever you are located today, listening to this, look around the room, the adhesive that holds your desk together, the chemicals used to manufacture your smartphone, the foam in your seat cushion, the salt in your 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 #169: Impact Improvement, while expected was also encouraging. As we mentioned, Q2 was negatively impacted by a short post-significant destocking as the Chinese New Year, but is now on the path to recovery.

Speaker Change #170: I'm here, our largest GIP market, and approximately 45% of GIP sales saw a third-strate quarter of sequential improvements.

Speaker Change #171: This is particularly important as underlying macroeconomic data from Caledacue 1 into Caledacue 2 continues to be negative with PMI fluctuating around the 45 mark.

Ole Rosgaard: All of these are essential everyday products and all of them at one time contain materials which were stored and shipped in Greif packaging products. We know that. It was Greif products because Greif 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 advances we have developed in our business. The most critical of which is our legendary customer service as outlined in our vision statements.

Speaker Change #171: In both Q2 and Q3, loops, chemicals, paints and coatings and markets are source of strength.

Speaker Change #171: This is equally notable as our volume performance in the quarter outtaste many of the leading companies serving those in markets.

Speaker Change #171: This outperformance demonstrates our legendary customer service paired with the bright business system in action.

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 to create a flywheel of financial success through the Greif business system.

Speaker Change #172: We are maintaining close relationships with our customers and then reacting with the size of action when changed across.

Speaker Change #172: With that, I will turn things over to Larry on slide five to walk through our third quarter of a sort of spirit. Thank you, Ole, and thank you all for doing our call. As Ole mentioned, we made progress on our operating model change in the quarter in our nearing completion.

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 our new completion on. For now, let's shift gears to near-term performance in fiscal Q3. Please turn to slide 4. I'm pleased to report another solid quarter of a drive where we continue to successfully manage through a variable and uncertain operating environments. All regions globally experience net growth in the quarter despite chauvinists on an individual end market base.

Larry Hilsheimer: In the meantime, we continue to execute our spread of do-will and produce solid financial results under the circumstances.

Larry Hilsheimer: I packet, Cal Immigration Continues and Synergy Capture is in line with our business case expectations.

Larry Hilsheimer: We additionally made steps toward simplifying our portfolio through the divestiture of a belt of petroleum company, which provided additional death paid-down towards our long-term death leverage ratio range of two to two and a half times.

Larry Hilsheimer: Please note that while our current leverage is at 3.66, this is not included in fact of the Delta sale proceeds received on August 1.

Ole Rosgaard: Francis, 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. 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. A back improvement while expected was also encouraging.

Larry Hilsheimer: The pro-forma adjusted leverage including Delta Pro seats would have been 3.59X.

Larry Hilsheimer: As for financial results, we finished the quarter at 194 million of adjusted even up, 34 million of free cash flow and adjusted earnings per share of $1.3.

Larry Hilsheimer: This evening of performance was driven by the volume performance that all we outlined in his remarks and was in line with our expectations.

Larry Hilsheimer: Our free cash flow performance was also aligned to our expectation for a Q3, as we had modest working capital use as we ramped up the business with the nascent volume recovery. Please turn to slide six to walk through GIP results.

Ole Rosgaard: As we mentioned, Q2 was negatively impacted by a short 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. 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.

Larry Hilsheimer: In Q3, GIP saw demand improvement in all regions, totally nearly 5% on a global year over your basis.

Larry Hilsheimer: While this is encouraging, I remind you that on a global basis, the current volume sure falls to 22 levels are significant.

Larry Hilsheimer: GIP, even a margins remains strong as sequential basis supported by our continued mix shift into higher margin polymer base products.

Larry Hilsheimer: On a year-over-year basis, even the 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 recur.

Larry Hilsheimer: Please turn the slide seven for PPS results.

Ole Rosgaard: 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.

Larry Hilsheimer: Our paper business continued to experience the same conflicting dynamics as in Q2. Continue to improve an employment demand for our product coupled with partially unrealized paper pricing creases.

Larry Hilsheimer: We firmly believe these are warranted based on our significant input cost inflation as well as improving demand.

Larry Hilsheimer: As a result, PPS margins continue to lag prior year. The pay for solutions team is continuing to manage controls as well, including successful pricing, increase implementation with our non-index-based customers in URB.

Larry Hillshimer: With that, I will turn things over to Larry on slide five to walk through our third quarter results, Larry. Thank you, Owingen. Thank you all for joining our call.

Larry Hillshimer: 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 circumstances. I-PAC-N-CAM integration continues in synergy capture is in line with our business case expectations. We additionally made steps towards simplifying our portfolio through the divestiture of the Else 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. The pro-form adjusted leverage, including Delta proceeds, would have been 3.59X.

Larry Hilsheimer: However, the outside's impact of the index-driven price-concinemic, 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.

Speaker Change #173: Please turn this lighting to discuss fiscal 2024 guidance.

Speaker Change #174: When considering our guidance update, we ultimately determine that maintaining our guidance range consistent with our two three call is appropriate.

Speaker Change #175: Relative to our future guidance, we are anticipating slightly more favorable price costs due to better paper pricing and value-based pricing and GDP.

Speaker Change #175: In Q3, all the volumes were positive and 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 guidance.

Speaker Change #175: We benefited from a variety of small cost tailwinds in SNA 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 NQ4.

Larry Hillshimer: As for financial results, we finished the quarter at 194 million of adjusted even on 34 million of free cash flow in adjusted earnings per share of $1.3. This even of performance was driven by the volume performance that Oli outlined in his remarks and was in line with our expectations. Our free cash flow performance was also aligned to our expectations for Q3, as we had modest working capital use as we ramped up the business with the nascent volume recovery.

Speaker Change #175: But it's important to remember when considering this Q4 guidance is the significance of certain tailwinds on the horizon.

Speaker Change #175: Our volumes while improving are still down significantly on a two-year stack. In return to 2022 volumes, which in fact were actually lower than 21, would be approximately 160 million of EBITDA.

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

Speaker Change #175: Adding the guidance midpoint of 700 million of EBITDA in the 160 million volume related increase, along with the incremental fiscal 25 impact of recently recognized paper price increase, we return EBITDA to over $900 million.

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

Speaker Change #175: 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 Hillshimer: On 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 have three curves.

Speaker Change #175: Please turn to slide nine to discuss capital allocation.

Speaker Change #175: We remain committed to our dissonant approach to capital allocation, and this quarter continues to demonstrate that through our capital deployment actions.

Larry Hillshimer: 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 price increases. We firmly believe these are warranted based on our significant input cost inflation as well as improving demand.

Speaker Change #175: We have long stated that our two priority deployment objectives are funding safety and maintenance capex which ensures continued cash generation and funding our continually increasing dividend. Earlier this week, we announced another increase in our quarterly dividend.

Speaker Change #175: After those modest uses of cash, our next priority is growing our business to line to our strategy. Hernings Growth remains our core focus, however sometimes it is wise to first shrink in order to enable that growth. We demonstrated that willingness this quarter with our sale of Delta.

Larry Hillshimer: As a result, PPS margins continued to lag for a 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 offset.

Speaker Change #175: With that, I'll turn things back to Ole on Slight 10 to provide you with a preview of our up-coming investment.

Ole Rosgaard: Thank you, Larry.

Ole Rosgaard: Christ has an investment they're coming up on December 11th in Midtown, New York and one item I would like to preview with you today are for you today which will be important to our discussion in December is our ongoing operating model change.

Larry Hillshimer: 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.

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

Ole Rosgaard: While still ongoing, we now have better clarity on the likely material solution verticals, which will encompass that organizational structure. Polymos, metals, paper, integrated products, and our land portfolio.

Larry Hillshimer: In Q3, all the volumes were positive and 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 guidance. We benefited from a variety of small-cost tailwinds in SGNA 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.

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.

Ole Rosgaard: First, it will enable us to accelerate market alliance and value-driven growth through concentrating commercial and operations functions by subject-medant expertise.

Larry Hillshimer: 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. They returned 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.

Ole Rosgaard: That will enable us to better capitalise on our comprehensive suite of packaging solutions by optimizing pricing and accounting to drive higher margins.

Ole Rosgaard: Secondly, by readigning 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.

Larry Hillshimer: 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.

Ole Rosgaard: The cost efficiencies driven by that approach will also enhance Martin's.

Ole Rosgaard: Lastly, it allows us to provide a deeper level of transparency to our investor community and help us to provide more predictable returns.

Larry Hillshimer: Please turn to slide 9 to discuss capital allocation. We remain committed to our disinillined approach to capital allocation, and this quarter continues to demonstrate that through our capital deployment actions. We have long stated that our two-priority deployment objectives are funding safety and maintenance caps, which ensures continued cash generation, and funding are continually increasing dividend.

Ole Rosgaard: It will streamline our capital allocation, prioritization and execution allowing us to deploy cash for growth faster.

He: He will also enhance our speed and ability to integrate acquisitions effectively and expand synergy capture on future deals.

Larry Hillshimer: Prior this week, we announced another increase in our quarterly dividend. David. 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 it's the first shrink in order to enable that growth.

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

He: We are frequently prepared feedback from our investor community that our current external segmentation is not sufficiently detailed on a product basis to clearly show the growth and market profile of these leading businesses.

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

Ole Rosgaard: With that, I'll turn things back to Ole on slide 10 to provide you with a preview of our upcoming investor date. Thank you, Larry. Greif has an investor date coming up on December 11 in Midtown, New York.

He: That assessment is still ongoing.

He: 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.

Ole Rosgaard: 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 lively material solution verticals which will encompass that organizational structure. Polymers, metals, paper, integrated products, and our land portfolio.

Mary Lee: from Mary by material solution and in markets with some regional color added.

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.

Mary Lee: Please turn to slides in 11.

Mary Lee: 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 sales.

Mary Lee: 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.

Mary Lee: In 2015, our business makes for approximately 10% in polymer-based, packaging solutions.

Mary Lee: As of our previous investment day in 2022, that makes had shifted to 15%. And now, in just two short years, that makes is now approximately 20%.

Mary Lee: We anticipate that shift to continue as we have significant runway for further growth in our polymer-based products.

Mary Lee: This quarter, the sailor, Belfare, further accelerated that portfolio shift.

Mary Lee: While Delta is a solid business and we receive great value for it, it's not called to rise growth priorities and core competitive advantages as it serves much more cyclical and markets.

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.

Mary Lee: For those reasons, we are part of ways, and in doing so, and a balance sheet flexibility by paying down debt with the proceeds.

Speaker Change #178: Please turn this line 12.

Speaker Change #178: To our investors, we sincerely hope you make the time to come to visit us at our investors today on December 11th.

Speaker Change #178: And as a reminder, please reach out to investordayatcries.com, and I'll repeat that in investordayatcries.com with any questions or to request the registration.

Ole Rosgaard: Additionally, we are currently assessing whether this upcoming change will result in a change to externally reported segments. We are frequently per 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 #178: 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 #178: We are deeply committed to validating your investment in us through continued solid financial results and are proactively modernizing and involving our business towards continuous and increased investments.

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 column added. Roberts, please turn to slide 11.

Speaker Change #178: One hour had earnings, it's not sufficient time to probably communicate.

Speaker Change #179: The Mirat of Ways

Speaker Change #180: We are creating value at Christ.

Speaker Change #180: and so I'm confident that after our half day together in December you will depart with strong confirmation that Christ is prying for breakout success in both the near and long-term through our proven execution on the bill to last strategy.

Ole Rosgaard: 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 #181: Thank you once more, and operator, will you please open the lines for Q&A.

Speaker Change #182: Certainly as a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by, will we compile the Q&A roster? And one moment for our first question.

Speaker Change #183: And our first question will be coming from Matt Roberts of Raymond James, the line is open.

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.

Matt Roberts: Hi, good morning, only Larry and Bill, thank you all very much.

Matt Roberts: Oh, yeah, I appreciate the slides 10-11 in the trailer to investigate there, so anyway, that's going too much thunder from December. I think if you help me understand the margin of 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.

Ole Rosgaard: 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.

Speaker Change #184: Or maybe they're a longer term margin target that is achievable either in GIP or that probably earned based business within GIP.

Speaker Change #185: I certainly can. Maybe first, I remind you of our M&A.

Sylexia Crateria: Sylexia Crateria. So when we review target companies, one of the criteria is to make sure that the A bit of a margin is the creative to our current margins.

Ole Rosgaard: Please turn 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 grife.com and I'll repeat that, invest a day at grife.com with any questions or to request a registration.

Sylexia Crateria: And that means that we are only looking at companies with a margin at or above 18% and we are also looking at companies with a free cash flow in excess of 50%.

Sylexia Crateria: [inaudible]

Sylexia Crateria: 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 mid-20 EBITDA margins.

Ole Rosgaard: 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. 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. One hour at earnings is not sufficient time to probably communicate the merit of ways we are creating value at grife.

Speaker Change #187: Obviously, we have a current business, so even with the exercises we make now, whilst they're creative, it's not changing the margins for the whole enterprise, but in a long term, you will see a trend towards reaching the 80% margin.

Speaker Change #187: Thanks for what I appreciate that and look forward to hearing more in December. As a fellow Larry, you know that in the presentation continued, price cost had wins.

Ole Rosgaard: And so, I'm confident that after our half day together in December, you will depart with strong confirmation that grife is primed for great our success in both the near and long term through our proven execution on the build to last strategy.

Speaker Change #188: I'll be sequentially improving and since last quarter we've seen OCC come down slightly and 20 hours go through on the RB that you did mention so maybe build to your expectations you gave in the last quarter.

Speaker Change #189: at current prices. Where is the price cost range tracking in your guide? And there's some price you need to see either in your board to be at the midpoint there. What any changes here and out being more of a 2025 impact? Thank you all again for taking the questions.

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 where we compile the Q&A roster and one moment for our first question.

Speaker Change #189: Yeah, you know, Matt, thanks. In the quarter, we ended up benefiting from a little better than we anticipated on the price increases. Yeah, due to the volatile recognition, typically through RISI, we had assumed knowing partial recognition of the outstanding price increases at that time.

Matthew Roberts: And our first question will be coming from Matt Roberts of Raymond James, the airliners, so bad. Hi, good morning, only Larry and Bill, thank y'all very much. Oh, yeah, I appreciate the slides 10, 11, and the pray to investigate here. So, anyway, that's going too much thunder from December. I think if 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 they're a longer-term margin target.

Speaker Change #189: but then they actually recognized 40 in June and for container board in 24 August for you, RB. So the net impact of those, right as a little bit of a tailwind, for our revised four-year guidance.

Speaker Change #190: and we had, we also had better than expected value based pricing benefits in GIP, our teams just did a great job on focusing on value of volume.

Matthew Roberts: You think it's achievable, either in GIP or with 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 the creative to our current margins, and that means that we're 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%.

Speaker Change #190: Kind of mind benefits those are slightly better than expected.

Speaker Change #190: in raw material parts for a little bit of an upside as well.

Speaker Change #191: In relation to the paper pricing guys, 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 costs in the entire industry and improving demand trends, tickling and panoramic board.

Matthew Roberts: And the segments we're looking at is primarily polymer, like recent-based segments, in the premium end of the markets, and you will typically find those companies having up to mid-20 EBITDA margins. Obviously, we have a current business, so even with the acquisitions, we make that all, once 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.

Larry Hillshimer: Thanks, well, I appreciate that, and look forward to hearing more in December. As a follow-up, Larry, you noted in the presentation, continued price cost headwinds, albeit sequentially improving, and since last quarter, we've seen our CCP. And slightly, and 20 others go through on URB that you did mention. So maybe about to your expectations, you gave them 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?

Larry Hillshimer: Thank you all again for taking the question. 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 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 URB. So the net impact of those provided a little bit of a tailwind for our revised four-year guidance.

Larry Hillshimer: And we also had better than expected value-based pricing benefits in GIP. Our team just did a great job on focusing on value of volume. The combined benefits are slightly better than expected. In raw material costs were 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, particularly in container board.

Larry Hillshimer: Volumes, on the other hand, actually, while better, we're slightly below what we had expected. We talked in the last quarter that we had seen some lift 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 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 tank out of the fourth quarter even, and what it would have had from Delta had we not sold it.

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

Larry Hillshimer: So we'll be talking about guidance, obviously, at our next call. We've had the startup 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'll be contributing for us in 25 as well. I appreciate all the comments. Thank you guys again. Thank you.

Ghansham Panjabi: And one moment for our next question.

Ghansham Panjabi: Our next question will be coming from Ghansham Panjabi. Abair Yalam is open. Yeah, thank you, operator.

Ole Rosgaard: Good morning, everybody. 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.

Ole Rosgaard: Maybe touch on competitive activity, are you seeing anything different than the usual competition that you've seen in the industry of time? Thanks, Gansham. 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 IQs 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.

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 commitment of our teams to operational excellence and our value or volume philosophy. It's a large part of our continued market, market strength in the GOP or the past quarters, despite these competitive pressures. In the past, we have seen customers return to us after chasing low competitive pricing. And our superior quality and our natural customer service is really in our view, we weren't able to be matched.

Ole Rosgaard: So over time, those customers come back and then we ran in the long term. In terms of, 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.

Ole Rosgaard: But ECM is still stagnating after the de-stock that occurred earlier in the year. 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 of crop, but they're going to lose money. And the article goes into what that means to them in terms of investing in fertilizer and so on and even machinery.

Ole Rosgaard: 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 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.

Ole Rosgaard: 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, Ole, very comprehensive.

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-border supplier? Well, first of all, the changes we have, anticipating to make, number one, yes, it's really to serve our customers better.

Ole Rosgaard: 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 the jacks 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 blowing 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 off 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 another 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.

Ole Rosgaard: Okay. Perfect.

Michael Roxland: Thank you.

Michael Roxland: And one moment for our next question. Our next question will be coming from Mike Rockflin of true securities. Your line is open. Thank you. Thank you, Ali. Sorry, and I'll be taking like questions. Just want to follow up quickly and got one on your response the 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.

Michael Roxland: Yeah. It's not that we it's not designed to reduce headcount. That's has never been asked if it increases. Now, though, it won't increase. Yeah. Oh, it won't increase. It's we've had some questions whether we will be taking 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 grow our volume, we will be able to do that without adding further headcounts of the organization. So in effect, we will be operating much more effectively. Absolutely. But we certainly won't be adding.

Ole Rosgaard: Got you, because I was wondering, as your sales force, I mean, it's out of your sales force and now it's going to become specialists in an entire product. So, I'm sure good. Yeah, now, the sales force 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 sales or run. And our sales teams acting as product managers, we will have a dedicated, central product management function by material solution, serving the sales teams, but also our customers. Got it. No, it's very clear. Thank you, Oli.

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

Ole Rosgaard: 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 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 has 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 never catch it, but in the process, we have become best in class. 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-quality products, as you would expect.

Larry Hillshimer: God, 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? I'll let Larry take care of 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 me out of that. We've had great success. I can't tell you it's 100% of that 35% but it's pretty close. Thank you.

Gabrial Hajde: And our next question will be coming from Gabe Hady, of Wells Fargo, your line is open.

Larry Hillshimer: Ole, 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 kinda called out, and I'm thinking about Delta petroleum for sure, you said a little bit of a headwind in the fourth quarter, is that maybe a $15 to $20 million 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 price increases that have already been reflected in the indices.

Larry Hillshimer: 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, we're thinking about. Yeah, on Delta, no, that number's high. It was about our $90 million, it was about 8.5 times, you know, after even dealing with strain and costs and that kind of stuff.

Larry Hillshimer: So more in, you know, well, you can do the math on that. So, you know, now that business badly had been 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, you are being, that ends up being about a million that will hit in the fourth quarter this year, because it will flow through mostly in October only.

Larry Hillshimer: And on that 20, do it at full, at a four year basis, you know, for, you know, 10 bucks on, on URB, you basically have about $650 million, I'm sorry, what's that number at the end? It's $60,000. 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? $8750,000. Yeah, $750 per $10,000. So, on those omens. And that was recognized in June, so it'll be fully beneficial to keep for. Right. Yeah. That addressed the last two more. Matt.

Larry Hillshimer: It just still has, 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. I'm just curious kind of where you guys are running in the system today. 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 in front of you. I know it's minor, so. Any economic in any paper grade, but near optimal levels from a backlog perspective in container board, yeah.

Larry Hillshimer: Okay, and one last one just on the M&A front. Obviously, you guys have been acted there. You called out 10-a-b and 3.5 times lowered on a pro-former 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. No, we still have a lot of opportunities. We have a very robust pipeline.

Larry Hillshimer: 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'll tell you that our focus right now is to pay down that so that we get back to the two and a two and a half levels ratio level. Understood.

Larry Hillshimer: Thank you. One moment for our next question.

Brian Butler: Our next question will be coming from Brian Butler. A staple? Your line is open. Thank you. Good morning. Thanks for taking the questions. 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? Are we there at current kind of volumes right now? If those just kind of sustain 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 kind of the normalized 2022 levels?

Brian Butler: Yeah, we need a step change just to give you a perspective on where we were in his volumes versus Q322. If you look back, let me just give you a number, just for example, for total GIT, 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. So pretty significant drop off scale from where we were. If I go to IVCs, because of acquisitions, we are up 9.5 and Q322 over 21, but we if I go to paper, in our total no volumes, 22 to 21 was down 2.6.

Brian Butler: 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, and it is 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.

Brian Butler: We pick up another $56 million of EBITDA in our PPS 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. Brian, if I can just add a little bit of color to the 160 million as well.

Brian Butler: 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 and 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 cuts have been shown to drive production, specifically pinned our houses demands, both for new bills and existing housing sales.

Brian Butler: 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 on your old house for it to sell better. You may buy new carpets, appliances, and the hundreds of other items for, you know, when that happens. And all of those things, they drive industrial production and demand for our products.

Brian Butler: And then another component, as an example would be AC. 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 fades, again, you will see that end segment that improves.

Brian Butler: So there's a lot of, you know, factors involved in returning to Okay, that's helpful. 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.

Brian Butler: On costs that obviously we're doing this in conjunction with changing our physically year, you know, and that they are some costs involved in that, but it's not material. Yeah, we dispose, Brian, we were going to end up incurring, you know, about six, 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 in the 25 as well?

Brian Butler: 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. 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? What does that organic growth look like?

Brian Butler: Well, first of all, why are we doing this? Well, we are growing in polymer based products because the market profile is much, much higher. And the cyclicality on those products is much, much lower. 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 IPC plant, which is, which is popular. We are, you know, adding lines all over the world all the time.

Brian Butler: We opened the earlier this year, we opened another IPC plant in Turkey. So yes, right, we are also growing organically. Okay, thank you. Thanks. 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 Stappos, a bank of America securities. Your line is open George. Hi, everyone. Good morning. Hope you're doing well. Hey, so we've touched on this a couple of 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 courts for this reason?

George Staphos: You should be able to outperform Europe in spite of what's been sluggish conditions. If 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 you're seeing in court choice in terms of the marginal trends there. Thank you very much, and I'll leave it there. I might have one follow-up. Thanks, George.

George Staphos: 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.

George Staphos: 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.

George Staphos: Sequentially on core choice. Core choice was all of the 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 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.

George Staphos: 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 those are some of the reasons for why we see that sort of growth and continue about. And always just in general. And what were the other exit trends that you were saying in the quarter?

George Staphos: I 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.

George Staphos: But the overall trends 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, you know, it always gets choppy. And it also goes 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. Last question, follow-on, I'll turn it over. Back to container board court choice and the business overall.

George Staphos: To the extent that you have a view and your customers could offer one that you share on this conference call, volumes for the calendar second quarter in cargated markets were okay, not great. Flat up a little bit down a little bit depending on what adjustment you want. 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 holiday calendar fourth quarter season are we setting up for in the cargated markets given what you're saying?

George Staphos: 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 mixed bag out there. I mean, you know, if you'd read like the Dow see those comments in their earnings call, it's like, you know, he's talking very positively if interest rates drop and home sales kick off. We feel the same way.

George Staphos: I mean, you know, we can we see others. I think Hankel was very positive. You had other VASF not, you know, and in the paper business, it's the same kind of mixed bag is 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 term that is mixed. And I think the rate drop will obviously affect this because, you know, average person looks at their credit card death and their payments and it's linked to to the interest rates.

George Staphos: 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. Well, you're closer to it than we are. So we appreciate the color. Thank you. Thank you, George. And one moment for our next question. Our next question is a follow up from Gabe Haiti, a wolf bargo. Your line is open.

George Staphos: Thank you. Real quick. When we're talking about, I guess the different end market, can you remind us roughly speaking in your North American GIP business how much is directionally tied to housing? Oh, 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. 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 just sort of, you know, we don't we don't have that.

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 drive. 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 11 in Midtown, New York. Have a wonderful day everyone, and this concludes today's conference call. Thank you for participating. You may now disconnect.