Q1 2025 Greif Inc Earnings Call

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising that your hand is raised to withdraw. Your question. Please press star. 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.

Speaker Change: <unk> built an off Rio of Investor Relations and corporate development. Please go ahead.

Speaker Change: Thank you and good day, everyone welcome to <unk> first quarter 2025 earnings conference call. During the call today are Chief Executive Officer Ali Ross, Scott, who will provide a recap of our recent investor day and update on our announced optimization initiatives.

Okay.

Speaker Change: Good day and thank you for standing by welcome to the Greif first quarter 2025 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising that you're in.

Speaker Change: I'll, then discuss an additional key strategic announcements before providing an overview of current markets within our new reporting segments. Afterwards, our Chief Financial Officer, Larry Hill, Shimer will provide an overview of our first quarter financial results as well as 2025 guidance. Please turn to slide two.

Speaker Change: <unk> raised to withdraw your question. Please press star one again, please be advised that today's conference is being recorded.

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

Bill: I'd now like to hand, the conference over to your Speaker today, Bill <unk> of Investor Relations and corporate development. Please go ahead.

Speaker Change: During today's call, we will make forward looking statements involving plans expectations and beliefs related to future events actual results could differ materially from those discussed. Additionally, we will be referencing certain non-GAAP financial measures and the reconciliation to the most directly comparable GAAP metrics that can be found in the.

Speaker Change: Thank you and good day, everyone and welcome to <unk> first quarter 2025 earnings conference call. During the call today are Chief Executive Officer Ali Ross, Scott will provide a recap of our recent investor day and update on our announced optimization initiatives. He will then discuss an additional key.

Speaker Change: Appendix of today's presentation I'll now turn the presentation over to OLED on slide three thank you Bill and Hello, everyone. I was pleased to meet so many of you at our Investor Day last December as a reminder, at that event, we announced our new 2027 financial commitments of 1 billion.

Speaker Change: Strategic announcement before providing an overview of current markets within our new reporting segments. Afterwards, our Chief Financial Officer, Larry Hill, Shimer, who will provide an overview of our first quarter financial results as well as 2025 guidance.

Speaker Change: Please turn to slide two.

Speaker Change: In accordance with regulation fair disclosure for you to ask questions regarding topics you consider important because we are prohibited from discussing material nonpublic information with you on an individual basis. During today's call. We will make forward looking statements involving plans expectations and beliefs related to future events actual.

Speaker Change: EBITDA and $500 million free cash flow.

Speaker Change: Our bridge to $1 billion is very simple first over $100 million of known positive discrete items, which will impact EBITDA in 2025 and beyond notably the run rate impact of index paper pricing as of December 2024.

OLED: Results could differ materially from those discussed. Additionally, we will be referencing certain non-GAAP financial measures and the reconciliation to the most directly comparable GAAP metrics that can be found in the appendix of today's presentation I'll now turn the presentation over to OLED on slide three thank you Bill and Hello, everyone.

Speaker Change: Second volume recovery, which as discussed at Investor day will be accelerated by our enhanced business model. Once the industrial economy begins to recall and finally, we announced a 100 million dollar cost optimization efforts, we are undertaking which I will talk.

OLED: Were pleased to meet so many of you at our Investor Day last December.

OLED: As a reminder, at that event, we announced our new 2027 financial commitments of 1 billion EBITDA and 500 million free cash flow.

Speaker Change: And just a moment we have high conviction in these three leave us and we are confident in meeting or exceeding the commitments we laid out.

Our bridge to $1 billion is very simple first over 100 million of known positive discrete items, which will impact EBITDA in 2025 and beyond notably the run rate impact of index paper pricing as of December 2024.

Speaker Change: Please turn to slide four.

Speaker Change: At Investor Day, we demonstrated how we lead with our packaging solutions in essential industries, and how we are well positioned to grow through capitalizing on our new business model, leveraging our deep competitive advantages and continuously improving our business through the.

OLED: Second volume recovery, which as discussed at Investor day will be accelerated by our enhanced business model. Once the industrial economy begins to recover and finally, we announced a 100 million dollar cost optimization efforts, we are undertaking which I will.

Speaker Change: The greif business system to <unk>.

Speaker Change: And our 100 million cost optimization program.

Speaker Change: We combine this earning growth with responsible capital allocation designed to maximize return on invested capital and drive profitability towards our long term target of 18% plus EBITDA margin and 50% plus free.

OLED: And just a moment.

OLED: We have high conviction in these three leaves us.

OLED: We are confident in meeting or exceeding the commitments we laid out please turn to slide four.

Speaker Change: Cash flow conversion.

Speaker Change: While the current industrial economics provide some uncertainty on near term volume growth, we demonstrated in 'twenty to 'twenty, three and again in 'twenty to 'twenty four that we can produce solid financial results, regardless of the negative macroeconomic cycle.

OLED: At Investor Day, we demonstrated how we lead with our packaging solutions in essential industries, and how we are well positioned to grow through capitalizing on our new business model, leveraging our deep competitive advantages and continuously improving our business through.

Today I'd like to highlight the strength of our business in the context of a timely topic, making headlines tariffs.

OLED: The greif business system to <unk>, and our 100 million cost optimization program.

Speaker Change: As you know our supply channels are generally local to local.

OLED: We combined this earning growth with responsible capital allocation designed to maximize return on invested capital and drive profitability towards our long term target of 18% plus EBITDA margin and 50% plus.

Speaker Change: Additionally, thanks to our restructured business model, we have embedded flexibility and adaptability into our global supply chain, allowing us to seamlessly navigate disruptions without any material impacts.

OLED: Free cash flow conversion.

While the current industrial economics provide some uncertainty on near term volume growth. We demonstrated in 2023 and again in 2024 that we can produce solid financial results, regardless of the negative macroeconomic cycle.

Speaker Change: We view all key suppliers as critical partners and by fostering strong collaborative partnerships, we respond swiftly and effectively to avoid volatility.

Speaker Change: Supply chain team has conducted a thorough impact assessments across multiple tariff scenarios and developed a robust action plan to effectively mitigate any P&L exposure.

OLED: Today I'd like to highlight the strength of our business in the context of a timely topic, making handful hence tariffs.

Speaker Change: Regardless of potential tariff changes, our global scale operational agility and supplier relationships ensure we continue delivering legendary customer service, while driving sustainable profitable growth.

OLED: As you know our supply channels are generally local to local additionally, thanks to our restructured business model, we have embedded flexibility and adaptability into our global supply chain, allowing us to seamlessly navigate disruptions without any.

Speaker Change: Please turn to slide five.

Speaker Change: At our Investor day.

OLED: Material impacts.

OLED: At Greif, we view, our key suppliers as critical partners and by fostering strong collaborative partnerships, we respond swiftly and effectively to volatility.

Speaker Change: Only two months ago by the way with the holiday season between Larry announced our commitment of at least $15 million to $25 million of run rate savings identified by the end of fiscal 2025.

OLED: Our supply chain team has conducted a thorough impact assessments across multiple tariff scenarios and developed a robust action plan. So we are effectively mitigate any P&L exposure.

Speaker Change: I'm pleased to update you that we have already identified 5 million of savings on a run rate basis, and reaffirm our expectation to achieve at least $15 million to $25 million on a run rate basis by the end of this year.

OLED: Regardless of potential tariff changes, our global scale operational agility and supplier relationships ensure we continue delivering legendary customer service, while driving sustainable profitable growth.

Speaker Change: These savings, which are primarily a primarily SG&A related will fully benefit full year 2026 results and will also provide an incremental impact to the remainder of this year, which Larry will touch on guidance.

OLED: Please turn to slide five.

OLED: At our Investor day.

Speaker Change: You May also have noticed we referenced 13 million achieved within our press release that incremental 8 million is related to our recently announced mill closures. However, we did not want to include that in our full year 2026 run rate yet.

OLED: Only two months ago by the way with the holiday season in between.

OLED: <unk> announced our commitments of at least $15 million to $25 million of run rate savings identified by the end of fiscal 2025.

OLED: Pleased to update you that we have already identified $5 million of savings on a run rate basis, and reaffirm our expectation to achieve at least 15% to $25 million on a run rate basis by the end of this year.

Speaker Change: Yes, we are still assessing the timing of closure costs.

Speaker Change: Which may offset that benefit is short term.

Larry Hill: Larry will touch on that in a moment.

Larry Hill: We favor a bias for action and so expect to continue making good progress while also planning for near term accelerated growth.

These savings, which are primarily primarily SG&A related will fully benefits full year 2026 results and will also provide an incremental impact to the remainder of this year, which Larry will touch on guidance.

Larry Hill: As we refine our road map to realize the full $100 million, we will continue to provide you with updates.

Larry Hill: Let's now turn to slide six to discuss our novel recent decision.

Larry Hill: You May also have noticed we referenced 13 million achieved within our press release that incremental 8 million is related to our recently announced mill closures. However, we did not want to include that in our full year 2026 run rate yet.

Larry Hill: The organizational realignment that we executed in 2024, resulting in a new seven sbu's provided us the opportunity to step back and visualize how each piece of our portfolio fits into the great off price enterprise and how that translates.

Larry Hill: We are still assessing the timing of closure costs.

Larry Hill: May offset that benefit short term.

Larry Hill: And so meeting our aspirate rational growth objectives.

Larry Hill: Larry will touch on that in a moment.

Larry Hill: This work also expands beyond our Sbu's and focuses on what is core to the long term growth of Christ, including our capital deployment strategy.

Larry Hill: We favor a bias for action and so expect to continue making good progress while also planning for near term accelerated growth.

Larry Hill: As we refine our road map to realize the full $100 million, we will continue to provide you with updates.

Larry Hill: As such while we have a long history with our land holding business. So Terra. It has also become clear to us that this is better suited on a new almost as.

Larry Hill: Let's now turn to slide six to discuss our novel recent decision.

Larry Hill: As such we are announcing today, our intention to sell the entire timber portfolio of approximately 176 acres and use the proceeds to reduce debt.

Larry Hill: The organizational realignment that we executed in 2024, resulting in our new seven Sbu's provided us the opportunity to step back and visualize how each piece of our portfolio fits into the great off price enterprise and how that translates.

Larry Hill: We sincerely. Thank also terra colleagues for their years of dedicated service and for their world class execution mindsets.

Larry Hill: Into meeting our aspiration ratio growth objectives.

Larry Hill: We are fully committed to supporting the business and our colleagues during this transition periods.

Larry Hill: This work also expands beyond our Sbu's and focuses on what is core to the long term growth of Christ, including our capital deployment strategy.

Larry Hill: We will provide updates when available on this process.

Larry Hill: Let's now turn to slide seven to discuss current quarter trends.

Larry Hill: As such while we have a long history with our land holding business. So Terra. It has also become clear to us that this is better suited on a new almost as.

Larry Hill: And our first quarter of 2025, we continue to see changing demand trends and every product and region. However, as with the past 24 months. The products. We are investing in continued to outperform our legacy business Paula.

Larry Hill: As such we are announcing today, our intention to sell the entire timber portfolio of approximately 176 acres and use the proceeds to reduce debt.

Larry Hill: Polymers was up two 7% driven by small containers and I do see demand in the AG and food sectors, particularly in EMEA.

Larry Hill: We sincerely. Thank also terra colleagues for their years of dedicated service and for their world class execution mindsets.

Larry Hill: Integrated solutions, Likewise solid volume growth with both of our key product groups caps and closures and paints linings and adhesives experiencing low double digit growth.

Larry Hill: We are fully committed to supporting the business and our colleagues during this transition periods.

Larry Hill: We will provide updates when.

Larry Hill: Available on this process.

Larry Hill: A reminder, that these volume figures are presented on a same store basis in other words agnostic of recent acquisitions.

Larry Hill: Let's now turn to slide seven to discuss current quarter trends.

Larry Hill: And our first quarter of 2025, we continue to see changing demand trends and every product and region. However, as with the past 24 months. The products. We are investing in continued to outperform our legacy business.

Larry Hill: Fiber was the next strongest solution with volumes slightly up and operating rates in both paper grades in line with the industry.

Larry Hill: Metals continue to be impacted most by the soft industrial economy due to the high exposure to bulk chemicals petrochemicals and lubricant markets.

Larry Hill: Polymers was up two 7% driven by small containers and Ibs C demands in the AG and food sectors, particularly in EMEA.

Larry Hill: As you may have seen in some of our key customers earnings reports earlier. This February those customers continue to suffer from this extended industrial contracts from.

Larry Hill: Integrated solutions Likewise saw volume growth with both of our key product groups caps and closures and paints linings and adhesives experiencing low double digit growth.

Larry Hill: It was encouraging to see January PMI bumped slightly above 50, however, we still feel the underlying demand in those sectors is uncertain.

Larry Hill: A reminder, that these volume figures are presented on a same store basis in other words agnostic of recent acquisitions.

Larry Hill: While we greatly appreciate our relationships with these important customers, it's important for us to balance out the cyclical nature of their needs by continuing our focus on growing in pharma flavors and fragrances foods and agrochemical segments.

Larry Hill: Fiber was the next strongest solution with volumes slightly up and operating rates in both paper grades in line with the industry.

Larry Hill: Metals continue to be impacted most by the soft industrial economy due to the high exposure to bulk chemicals petrochemicals and lubricant markets.

Larry Hill: Although we are shifting towards discussing our business on a solutions basis as opposed to regional basis I know a regional view is helpful to our investors and so I will offer some brief comments EMEA.

Larry Hill: As you may have seen in some of our key customers earnings reports earlier. This February those customers continue to suffer from this extended industrial contraction.

Larry Hill: EMEA continues to demonstrate the highest level of resilience followed by APAC Les.

Larry Hill: It was encouraging to see January PMI bumped slightly above 50, however, we still feel the underlying demand in those sectors is uncertain.

Larry Hill: Latam has started to trend slightly downward, which is something we are monitoring, but the clear outlier remains North America, where demand sentiment continues to be the most bearish.

Larry Hill: While we greatly appreciate our relationships with these important customers, it's important for us to balance out the cyclical nature of their needs by continuing our focus on growing in pharma flavors and fragrances foods and agrochemical segments.

Larry Hill: With that I will turn things over to Larry to discuss our first quarter results on slide eight.

Speaker Change: Following up on always comments on taking strategic actions towards our long term goals I'd first like to briefly touch on another strategic announcement in late January we announced the planned closure of our <unk> paperboard machine and hostile Georgia as well as our containerboard and <unk> flex machine in.

Larry Hill: Although we are shifting towards discussing our business on a solutions basis as opposed to regional basis I know a regional view is helpful to our investors and so I will offer some brief comments.

Speaker Change: Pittsburgh, Massachusetts at Investor Day, our Chief Operations Officer, Jim Kellerman talked about our quadrant analysis to assess plant is either invest to grow protect the core transformer fix and divest or close.

Larry Hill: EMEA continues to demonstrate the highest level of resilience followed by APAC.

Larry Hill: Latam has started to trend slightly downwards, which is something we are monitoring, but the clear outlier remains North America, where demand sentiment continues to be the most bearish.

Speaker Change: Despite the continued excellent work by our colleagues at the end of the day. These two facilities fell into the lower quadrant and did not achieve the level of earnings necessary to support our continued operations.

Larry Hill: With that I will turn things over to Larry to discuss our first quarter results on slide eight. Thank you following.

Speaker Change: The two closures will reduce our containerboard mill capacity by 100000 tons in our U R. B capacity by 90000 tons.

Speaker Change: Following up on always comments on taking strategic actions towards our long term goals I would first like to briefly touch on another strategic announcement in late January we announced the planned closure of our <unk> paperboard machine and hostile Georgia as well as our containerboard and <unk> flex machine in Fitchburg mass.

Speaker Change: In the short term this action will be an EBITDA headwind of $3 million in fiscal 'twenty five versus our prior guidance due to onetime closure costs and the timing of shifting tons to other facilities. We expect this closure to be EBIT positive of $8 million by 2027 due to the increased efficiency of those tons being.

Speaker Change: Juices at Investor Day, our Chief Operations Officer, Kim Kellerman talks about our quadrant analysis to assess plant is either invest to grow and protect the core transformer fix and divest or close despite.

Speaker Change: Redeployed into our remaining don't matter.

Speaker Change: As we are still working through the closure and not certain of the exact timing of the benefits. We have not yet included in the run rate optimism cost optimization achievement at all we touched on earlier.

Speaker Change: Despite the continued excellent work by our colleagues at the end of the day. These two facilities fell into the lower quadrant and did not achieve the level of earnings necessary to support our continued operations.

While building for the future. We have also remained resilient in our day to day execution adjusted EBITDA for the quarter was $145 million, an improvement of $7 million over the prior year quarter and in line with our expectations for Q1 adjust.

Speaker Change: The two closures will reduce our containerboard mill capacity by 100000 tons in our U R. B capacity by 90000 tons.

Speaker Change: Adjusted EPS for the quarter was 39, which was lower than prior year due primarily to the non recurrence of a onetime tax benefit of $48 million as well as $14 million of higher interest expense. This year due to higher debt from recent acquisitions.

Speaker Change: In the short term this action will be an EBITDA headwind of $3 million in fiscal 'twenty five versus our prior guidance due to onetime closure costs and the timing of shifting tons to other facilities.

Speaker Change: We expect this closure to be EBIT positive of $8 million by 2027 due to the increased efficiency of those tons being redeployed into our remaining mill net.

Speaker Change: Working capital management was solid in the quarter. However, adjusted free cash flow was a net use of 62 million slightly higher of a Houston prior year due primarily to the higher interest expense.

Speaker Change: As we are still working through the closure and not certain of the exact timing of the benefits. We have not yet included it in the run rate optimism cost optimization achievement that OE touched on earlier.

Speaker Change: Please turn to slide nine where I'll provide some additional context to our performance at a segment level.

Speaker Change: Gross profit margins in three of our four segments increased year over year due to effective cost management and GBS 2.0 gains despite the stagnant demand environment that only touched on earlier.

Speaker Change: While building for the future. We have also remained resilient in our day to day execution adjusted EBITDA for the quarter was $145 million, an improvement of $7 million over the prior year quarter and in line with our expectations for Q1.

Speaker Change: Integrated solutions gross profit margins were down year over year, primarily due to product mix note also that Q1 results for our now divested Delta billing business are presented an integrated process solutions. Prior year results and was an EBIT contributor of $2 8 million.

Speaker Change: Adjusted EPS for the quarter was 39, which was lower than prior year due primarily to the non recurrence of a onetime tax benefit of $48 million as well as $14 million of higher interest expense. This year due to higher debt from recent acquisitions.

Speaker Change: While the overall gross profit improvement did drive 7 million positive EBITDA year over year EBITDA margins were also impacted by higher year over year SG&A costs.

Speaker Change: Capital management was solid in the quarter. However, adjusted free cash flow was a net use of 62 million slightly higher of a Houston prior year due primarily to the higher interest expense. Please.

Speaker Change: As we discussed throughout 2020 form we anticipated short term SG&A cost inflation, as we reallocate and invest resources to areas of maximum long term value creation right. Now we are at the peak of that curve.

Speaker Change: Please turn to slide nine where I'll provide some additional context to our performance at a segment level.

Speaker Change: Gross profit margins in three of our four segments increased year over year due to effective cost management and GBS 2.0 gains despite the stagnant demand environment that only touched on earlier.

Speaker Change: We have completed our business reorganization in 2024, our new structure and SB use are in place and now is when we will start aggressively pursuing streamlining over those processes. This short term divergence between gross profit.

Speaker Change: Integrated solutions gross profit margins were down year over year, primarily due to product mix note also that Q1 results for our now divested Delta billing business are presented an integrated process solutions. Prior year results and was an EBIT contributor of $2 8 million.

Speaker Change: Gross profit and EBITDA margin percentage is mostly due to higher SG&A cost, which is one of the key opportunities listed in our.

Speaker Change: $100 million cost optimization initiative, which only discussed earlier.

Speaker Change: The overall gross profit improvement did drive 7 million positive EBITDA year over year EBITDA margins were also impacted by higher year over year SG&A costs as.

Speaker Change: Please turn to slide 10 to discuss 2025 guidance.

Speaker Change: As a reminder, this fiscal year is only 11 months and we will conclude on September 30th following a two month fourth quarter.

Speaker Change: As we discussed throughout 2020 form we anticipated short term SG&A cost inflation, as we reallocate and invest resources to areas of maximum long term value creation right. Now we are at the peak of that curve.

Speaker Change: In Q4, we presented a low end only view of guidance, which incorporates only known upsides year over year, but all downsides of which we have visibility.

Speaker Change: We have completed our business reorganization in 2024, our new structure and SB use are in place and now is when we will start aggressively pursuing streamlining over those processes. This short term divergence between gross profit growth.

Speaker Change: Given the lack of any compelling demand inflections. We concluded that low end guidance continues to be appropriate. However, we also feel it is warranted to raise the low end for specific known upsides.

Speaker Change: First an additional $27 million of positive price cost, which reflects the $40 per ton containerboard price increase announced by received last Friday as well as our lower full year old at full year OCC assumption of $85 per ton.

Speaker Change: Gross profit and EBIT margin percentage is mostly due to higher SG&A cost, which is one of the key opportunities listed in our.

Speaker Change: $100 million cost optimization initiative, which only discussed earlier.

Speaker Change: Please turn to slide 10 to discuss 2025 guidance.

Speaker Change: And Additionally factors in better price cost in our polymers and metals business, which is trending better than our original low end guidance assume.

Speaker Change: As a reminder, this fiscal year is only 11 months and we will conclude on September 30th following a two month fourth quarter.

Speaker Change: As I mentioned during our Q4 call we anticipated a short term headwind in Q1 related to the flow through of high priced steel in our balance sheet, our supply chain team did a good job of neutralizing that impact.

Speaker Change: In Q4, we presented a low end only view of guidance, which incorporates only known upsides year over year, but all downsides of which we have visibility.

Speaker Change: Additionally, our metals team has had great success with value over volume discipline in the quarter. Those two factors drove the metals price cost tailwind in the quarter.

Speaker Change: Given the lack of any compelling demand inflections. We concluded that low end guidance continues to be appropriate. However, we also feel it is warranted to raise the low end for specific known upsides.

Speaker Change: $8 million of lower transport and manufacturing costs, which are actualizing lower than assumed in our original low end guidance due to continued solid day to day management by our GBS group.

Speaker Change: First an additional $27 million of positive price cost, which reflects the $40 per ton containerboard price increase announced by received last Friday as well as our lower full year and full year OCC assumption of $85 per ton.

Speaker Change: Lastly, we are including $3 million, which reflects the portion of run rate impact of the cost initiatives savings only touched on earlier, which will be beneficial to physical twenty-five. However that is offset by the $3 million of headwind from the recent no closures I discussed earlier. This net change results in a new low end got EBIT guidance of seven.

Speaker Change: And Additionally factors in better price cost in our polymers and metals business, which is trending better than our original low end guidance as soon.

Speaker Change: As I mentioned during our Q4 call we anticipated a short term headwind in Q1 related to the flow through of high priced steel in our balance sheet.

Speaker Change: 110 million for fiscal 'twenty five.

Speaker Change: Our low end free cash flow guidance is also raised by 20 million to $245 million for the full year, partially offsetting our EBIT an increase of $35 million is an assumption of $20 million higher working capital costs, which reflects the working capital impact of improving paper price cost, but additionally, being.

Speaker Change: Our supply chain team did a good job of neutralizing that impact.

Speaker Change: Additionally, our metals team has had great success with value over volume discipline in the quarter. Those two factors drove the metals price cost tailwind in the quarter.

Speaker Change: Second $8 million of lower transport and manufacturing costs, which are actualizing lower than assumed in our original low end guidance due to continued solid day to day management by our GBS group.

Speaker Change: Low end guidance, we've contemplated some downside for further cost inflation without the benefit of offsetting mitigating actions separately.

Speaker Change: Lastly, we are including $3 million, which reflects the portion of run rate impact of the cost initiatives savings only touched on earlier, which will be beneficial to fiscal 'twenty. Five however that is offset by the $3 million of headwind from the recent no closures I discussed earlier.

Speaker Change: We assume a small $6 million incremental tailwind in other operating costs, which balances to the $20 million free cash flow guidance increase.

Speaker Change: This is a low end view and so our expectations is not that the business will end the year at this performance, but it is the only data point, which we have conviction in sharing at this point in subsequent quarters, we will reassess returning to a range guidance per our usual approach with that let me turn it over to Ali to close on slide 11. Thanks, Larry.

Speaker Change: This net change results in a new low end got EBIT guidance of $710 million for fiscal 'twenty five.

Speaker Change: And free cash flow guidance is also raised by $20 million to $245 million for the full year, partially offsetting our EBIT increase of $35 million is an assumption of $20 million higher working capital costs, which reflects the working capital impact of improving paper price cost, but additionally, being low.

Ali Ross: As demonstrated our at our recent Investor day, we continue optimizing and fine tuning our business. We are transitioning from goods to grades we are a market leader in our chosen markets. We have strong track records and are very disciplined in the way, we execute our scrap strategies.

Speaker Change: And guidance, we've contemplated some downside for further cost inflation without the benefit of offsetting mitigating actions.

Ali Ross: In other words, we are well positioned for growth, we are helping ourselves to grow and were depressed in a very depressed market and when that market just with terms, even the slightest we are in an ideal situation to take off.

Speaker Change: Separately.

Speaker Change: We assume a small $6 million incremental tailwind in other operating costs, which balances to the $20 million of free cash flow guidance increase.

Speaker Change: This is a low end view and so our expectations is not that the business will end the year at this performance, but it is the only data point, which we have conviction and sharing at this point in subsequent quarters, we will reassess returning to a range guidance per our usual approach with that let me turn it over to Ali to close on slide 11. Thanks, Larry.

Speaker Change: You for taking the time to listen in today operator, please open the lines for questions.

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

Speaker Change: As demonstrated our at our recent Investor day, we continue optimizing and fine tuning our business. We are transitioning from goods to grades we are a market leader in our chosen markets. We have strong track records and are very disciplined in the way, we execute our scrap strategies.

Speaker Change: One moment for our first question.

Ghansham Panjabi: Which will be coming from Ghansham Panjabi.

I'm sorry of Baird. Your line is open.

Ghansham Panjabi: Yeah. Thanks, operator, good morning, everybody.

Ghansham Panjabi: I just wanted to go back to the to the first quarter results specific to fiber.

Ali Ross: In other words, we are well positioned for growth, we are helping ourselves to grow and were depressed in a very depressed market and when that market just returns even the slightest we are in an ideal situation to take off.

Ghansham Panjabi: Just your view as it relates to weather that came in on an operating profit basis or EBITDAR whichever way you want to look at it in line with your plan.

Speaker Change: Because it was quite a bit below our expectation in context of your price increases et cetera. Thank you.

Ghansham Panjabi: Yes got you thanks for the question.

Ali Ross: For taking the time to listen in today operator, please open the lines for questions.

Ghansham Panjabi: Let me go to that it came in line with our expectations actually a little bit slightly better here here's the issue that's confusing the matter.

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

Ghansham Panjabi: We have a protocol for allocating SG&A across the businesses.

Ghansham Panjabi: We ask all of your patience as we transition to this new business model.

Ali Ross: And one moment for our first question.

Speaker Change: Which will be coming from Ghansham Panjabi. Your line is I'm sorry of Baird. Your line is open.

Ghansham Panjabi: Because it's having impact and the way that we allocate our SG&A is based on value add which is just our price versus less raw material, but I would tell you that gross profit is a really good proxy.

Ghansham Panjabi: Yes, thanks, operator, good morning, everybody.

Speaker Change: I just wanted to go back to the to the first quarter results specific to fiber.

Speaker Change: Just your view as it relates to weather that came in on an operating profit basis or EBITDA whichever way you want to look at it in line with your plan.

Ghansham Panjabi: So what happens is that margins are expanding in the fiber business. It gets allocated a bigger portion of our SG&A and somebody might say well why do you do that well if you talk to virtually any CFO or a controller and you talk about getting into allocations. Among your internal businesses. It is a.

Speaker Change: It was quite a bit below our expectation in context of your price increases et cetera. Thank you.

Speaker Change: Yes got you thanks for the question.

Let me go to that it came in line with our expectations actually a little bit slightly better here's the issue that's confusing the matter.

Ghansham Panjabi: Rat Rabbit hole you'd go down forever I mean people will argue about how you allocate so we have a basic protocol for how we've done it and it's in our former operating model you really didn't see it because it go across geographies and you had all of the different segments going into those geographies. So again I ask you a barrier patient, but yes fiber was.

Speaker Change: We have a protocol for allocating SG&A across the businesses.

Speaker Change: We ask all of your patience as we've transitioned to this new business model.

Speaker Change: <unk>, it's having impacts and the way that we allocate our SG&A is based on value add which is just our price versus less raw material, but I would tell you that gross profit is a really good proxy.

Ghansham Panjabi: Good for US it's picked up a higher allocation of SG&A and then SG&A was higher than what most of you building your models.

Ghansham Panjabi: We thought we had done a good job of articulating. The fact that we were going to have SG&A cost for example for <unk> in this first quarter. Since we didn't have it last year. We thought we'd explained we had made some investments that we're going to turn around obviously, we didn't explain it enough.

Speaker Change: So what happens is that margins are expanding in the fiber business. It gets allocated a bigger portion of our SG&A.

Speaker Change: And somebody might say well why do you do that well.

Speaker Change: If you talk to virtually any CFO or a controller and you talked about getting into allocations. Among your internal businesses. It is a.

Ghansham Panjabi: And so that one falls on us we werent.

Ghansham Panjabi: Doing as well as we'd hoped relative to all of you as our customers slash investors.

Speaker Change: Rat Rabbit hole you'd go down forever I mean people argue about how you allocate so we have a basic protocol for how we've done it.

Ali Ross: Okay. That's very helpful. Larry Thank you for that and then only you know your comments on.

Speaker Change: In our former operating model.

Speaker Change: The global businesses EMEA would be the most resilient in North America, maybe at the other extreme in terms of being the weakest.

Speaker Change: Didn't see it because it go across geographies and you had all of the different segments going into those geographies. So again asset barrier patient, but yes fiber was good for us it's picked up a higher allocation of SG&A and then SG&A was higher than what most of you building your models.

Is it a difference in terms of end market exposure that would explain the two because that's certainly kind of counterintuitive relative to you know the macroeconomic strength between the two regions and then related to that.

Speaker Change: We thought we had done a good job of articulating. The fact that we were going to have SG&A cost for example for <unk> in this first quarter since we didn't have it last year.

Speaker Change: What is what is your expectation in terms of volume assumptions as it relates to your guidance.

Speaker Change: Well, thanks, Ghansham well first of all as we all.

Speaker Change: We thought we had explained we had made some investments that we're going to turn around obviously, we didn't explain it enough.

Speaker Change: We laid out even in 2022, and then at our recent Investor day and segments and end markets. We are targeting for growth at all of those are GDP plus growth markets. One of those is the agrochemical markets and that's really where you'll have seen significant growth here.

Speaker Change: And so that one falls on us we werent.

Speaker Change: Doing as well as we'd hoped relative to all of you as our customers slash investors.

Larry Hill: Okay. That's very helpful. Larry Thank you for that and then only your comments on.

Speaker Change: Recently coming out of both both EMEA, but also in North America.

Speaker Change: The global businesses EMEA being the most resilient in North America, maybe at the other extreme in terms of being the weakest.

Speaker Change: What's the status.

Speaker Change: We continue to focusing on those markets and just to remind you, it's food and beverage pharma medical in its flavor and fragrance. In addition to two agrochemicals.

Speaker Change: Is it a difference in terms of end market exposure that would explain the two because thats certainly kind of counterintuitive relative to macroeconomic strength between the two regions and then related to that.

Speaker Change: As to your.

Ghansham Panjabi: Second question, just remind me again ghansham.

Speaker Change: What is what is your expectation in terms of volume assumptions as it relates to your guidance.

Ghansham Panjabi: <unk> volume assumptions, you know as you kind of think about the portfolio for fiscal year 'twenty five.

Ghansham Panjabi: Yes so.

Well, Thanks, Scott, Yeah, well first of all as we out.

Ghansham Panjabi: We have seen obviously in some of these markets I just mentioned, especially in the polymer markets. We have seen some sequential improvements.

Speaker Change: We laid out even in 2022, whether at our recent Investor day, which segments and end markets. We are targeting for growth at all of those are GDP plus growth markets. One of those is the agrochemical markets and that's really where you'll have seen significant growth here.

Ghansham Panjabi: But I would say our caution.

Ghansham Panjabi: Being too optimistic generally we don't see any difference at all.

Ghansham Panjabi: The previous quarter.

Ghansham Panjabi: Sequentially so.

Speaker Change: Recently coming out of both both EMEA, but also in North America.

Ghansham Panjabi: I haven't seen any inflection point, yes.

Speaker Change: What's the status.

Ghansham Panjabi: We will keep look we are opening.

Speaker Change: We continue to focusing on those markets and just to remind you, it's food and beverage pharma medical in its flavor and fragrance. In addition to two agrochemicals.

Ghansham Panjabi:

Speaker Change: Yeah, well you could call this green shoots, but it's too early to say anything on that so.

Ghansham Panjabi: I'm cautiously optimistic about the future.

Speaker Change: As to your.

Ghansham Panjabi: Got it thanks, so much.

Ghansham Panjabi: Second question, just remind me again ghansham, yes.

Ghansham Panjabi: Yes.

Ghansham Panjabi: Our next question.

Ghansham Panjabi: Bedded volume assumptions as you kind of think about the portfolio for fiscal year 'twenty five.

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

Ghansham Panjabi: Yes, so we.

Matt Roberts: Hey, good morning, everybody. Thank you for taking the questions.

Ghansham Panjabi: We have seen obviously in some of these markets I just mentioned, especially in the polymer markets. We have seen some sequential improvements.

Speaker Change: Maybe maybe Larry.

Speaker Change: A point on the SG&A that some of us might have mixed in there could.

Ghansham Panjabi: But I would say our caution.

Speaker Change: Could you just help us frame the margin expectation going into <unk>, and maybe how that progresses through the year and any lingering impacts we should expect in the next quarter.

Ghansham Panjabi: Being too optimistic generally we don't see any difference.

Ghansham Panjabi: The previous quarter.

Ghansham Panjabi: Sequentially so.

Speaker Change: Caught off guard.

Ghansham Panjabi: I haven't seen any inflection point yet.

Speaker Change: One internal model there.

Speaker Change: Yeah good.

Ghansham Panjabi: We will keep look we hope.

Speaker Change: Good question, Matt Thanks.

Ghansham Panjabi:

Speaker Change: So if you look just to give some perspective in a little more color back on some of those elements. When we look at SG&A sort of year over year.

Ghansham Panjabi: Yeah.

Ghansham Panjabi: Call It green shoots, but it's too early to say anything on that so.

Ghansham Panjabi: I'm cautiously optimistic about the future.

Speaker Change: IPad is like $11 million, which $5 million was amortization related to purchase price allocations on so first of all items of goodwill it kinds of intangibles, you've got another element, that's a little bit less clear, but when we went to this new structure re looking at all.

Ghansham Panjabi: Got it thanks, so much.

Ghansham Panjabi: Yes.

Ghansham Panjabi: Our next question.

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

Matt Roberts: Hey, good morning, everybody. Thank you for taking the questions.

Speaker Change: Maybe maybe Larry.

Speaker Change: Point on the SG&A that some of us might have mixed in there.

Speaker Change: Of our enabling functions and where cost presided we ended up moving some people out of what we're manufacturing.

Speaker Change: Could you just help us frame the margin expectation going into <unk>, and maybe how that progresses through the year and any lingering impacts we should expect in the next quarter.

Speaker Change: Channels into enabling functions like into Kim <unk> group or in their supply chain out of factories that ended up just doing a shift.

Speaker Change: Okay.

Speaker Change: Got it got it on my own internal model there.

Speaker Change: Call it $3 million of cost of goods sold into SG&A levels on a full year basis, it's like $10 million.

Speaker Change: Yeah.

Matt Roberts: Good question, Matt Thanks.

Matt Roberts: So if you look just to give some perspective in a little more color back on some of those elements. When we look at SG&A sort of year over year in AIPAC Chem is like $11 million, which $5 million was amortization related to purchase price allocations on so first of all items of goodwill.

Speaker Change: So I'm just talking about quarter right now and so you've got those two items as we go through the year, obviously once we get to when we bought AIPAC Cam you're gonna have not that year over year increments and just generally our EBIT margins are going to steadily improve through the year, which is which is.

Matt Roberts: Intangibles, you have got another element, that's a little bit less clear, but when we went to this new structure re looking at all of our enabling functions and where cost presided we ended up moving some people out of what we're manufacturing.

Speaker Change: Typical for us to get volume lifts, which leverages our fixed.

Speaker Change: Fixed.

Speaker Change: Cost leverage in those kind of things so steady increased margins for the remainder of the year and then that year over year comparison matching on AIPAC game.

Matt Roberts: Channels into enabling functions like into Kim <unk> group or in the supply chain out of factories that ended up just doing a shift.

Speaker Change: Very helpful. I appreciate all the detail there Larry.

Speaker Change: And then secondly, maybe if I could ask on the timberland sale.

Matt Roberts: Cost $3 million of cost of goods sold into SG&A levels on a full year basis, it's like $10 million.

Speaker Change: Any additional color I know I know, it's early in the process, but any additional color on on this asset and how it compared to the timberland that was sold in 2021 I believe so terra was $9 million in EBITDA last year versus I think less than $2 million of what you sold in 2021, So wonder any differences that we should consider when thinking.

Matt Roberts: So I'm just talking about quarter right now and so you've got those two items as we go through the year, obviously once we get to when we bought AIPAC Cam you're gonna have not that year over year increments and just generally our EBIT margins are going to steadily improve through the year, which is which is.

Speaker Change: About proceeds there in terms of either age or productivity of the temporary there or any other business considerations are good factset that make it different.

Matt Roberts: Typical for us to get volume lifts, which leverages our fixed.

Matt Roberts: Fixed.

Speaker Change: Thanks again for taking the questions.

Matt Roberts: Cost leverage in those kind of things so steady increase the margins through the remainder of the year and then that year over year comparison matching on AIPAC camp.

Speaker Change: So yeah I mean.

Speaker Change: We can't comment on timing or value at this time in 2021, it's a long time ago and when you look at the different tracks of Timberland and so on it's fair difference you you can't really compare them.

Matt Roberts: Very helpful. I appreciate all the detail there Larry.

Matt Roberts: And then secondly, maybe if I could ask on the timberland sale.

Speaker Change: We are highly confident in both interest in value and in fact, we all ongoing basis receive unsolicited office fall timberland.

Speaker Change: Any additional color I know I know, it's early in the process, but any additional color on on this asset and how it compared to the timberland that was sold in 2021 I believe so terra was $9 million in EBITDA last year versus I think less than $2 million of what you sold in 2021. So I'm wondering any differences that we should consider when thinking.

Speaker Change: We know we can get a very good price points.

Speaker Change: We can't comment on it is that.

Speaker Change: This moment in time.

Speaker Change: That's certainly fair.

Speaker Change: Maybe if I could kind of a different angle on that.

Speaker Change: Talk recently about where that increase in polymer mix and even getting to 30% organically. So maybe once the land is gone and some of the fiber closures.

Speaker Change: About proceeds there in terms of either age or productivity of the temporary there or any other business considerations are good factors that make it different.

Speaker Change: Figure out what the polymer mix will be or what the remaining gap to get to that level will be largely due to a higher growth end markets from polymers or just where you would see that that shaking out. Thanks again.

Speaker Change: Thanks again for taking the questions.

Speaker Change: As all year.

Speaker Change: We can't comment on timing or value at this time in 2021, it's a long time ago and when you look at the different tracks of Timberland in Epsilon, It's fair difference.

Speaker Change: Yes, but as we explained that's both at Investor day in 'twenty, two and then last year, we are shaping our portfolio and we have identified the sick with markets like I mentioned before <unk> Kim food.

Speaker Change: You can't really compare them.

Speaker Change: We are highly confident in both interest in value and in fact, we saw ongoing basis receive unsolicited offer small timberland and we know we can get a very good price points.

Speaker Change: Pharma and so on is a GDP plus growth in segments those end segments.

We can't comment on it is at this moment of time.

Speaker Change: Service.

Speaker Change: With basically polymer solutions.

Speaker Change: Yeah, that's certainly fair.

Speaker Change: Maybe if I could kind of a different angle on that yes.

And that's why we've talked about so much about polymer solutions.

Speaker Change: Talk recently about where that increase in polymer mix and even getting to 30% organically. So maybe once land has gone and some of the fiber closures can you talk about what the polymer mix will be or what.

Speaker Change: The sale of our land.

Speaker Change: Not linked to that.

Speaker Change: The state of our land with all the proceeds will be used to pay down debt basically.

Speaker Change: That's it and they will take our leverage down and give us more firepower for the future, but we will continue to focus on those segments I mentioned and grow our.

Speaker Change: <unk> got to get to that level will be largely due to a higher growth end markets from polymers or just where you see that shaking out. Thanks again.

Speaker Change: But as we explained that's both at Investor day in 'twenty through and last year, we are shaping our portfolio and we have identified the sick, but markets like I mentioned before <unk> Kim food.

Speaker Change: Polymer business and I'll supplement when all he said earlier, just a little bit as you know.

Speaker Change: While the prior sale was so long ago, it's not indicative at all pieces of land are different.

Speaker Change: By pieces.

Speaker Change: Pharma and so on is a GDP plus growth in segments those end segments.

Speaker Change: City downtown properties different than out in the suburbs, but.

Speaker Change: Everything is different that said a lot of things that have been happening in land management and our team is really good at what they do so things like carbon sequestration solar farms all of those things have actually been increasing the value of timberland.

Speaker Change: Our service.

Speaker Change: With basically polymer solutions.

Speaker Change: And Thats why we talk about so much about polymer solutions.

Speaker Change: The sale of our land is not linked to that.

Speaker Change: Date of our land.

Speaker Change: <unk> will be used to pay down debt basically.

Speaker Change: Does that mean every one of our acreage is going to be worth more than the last time.

Speaker Change: That's it.

Speaker Change: Take our leverage down and give us more firepower for the future, but we will continue to focus on those segments I mentioned and grow our customized polymer business.

Speaker Change: We don't know.

Speaker Change: But like always said he is we've gotten a lot of just inbound calls with broad offers most of the time, they're higher values than what we got we sold before but that doesn't guarantee anything.

Speaker Change: Ill supplement when all he said earlier, just a little bit.

Speaker Change: While the prior sale was so long ago, it's not indicative at all pieces of land are different.

Speaker Change: Part of that is that we will have a tax Erika we've said before we always have low tax bases and just as a perspective of time. The last time it took us about eight months to do the transaction.

Speaker Change: By pieces.

Speaker Change: City downtown properties different than out in the suburbs, but.

Speaker Change: Everything is different that said a lot of things that have been happening in land management and our team is really good at what they do so things like carbon sequestration solar farms all of those things have actually been increasing the value of timberland.

Speaker Change: Whether it's eight months 10 months six months, but we don't know, but what we're going to do is maximize value.

Speaker Change: That's the primary focus of this.

Larry Hill: Larry Thank you both again.

Speaker Change: And one moment our next question.

Larry Hill: Yeah.

Speaker Change: And our next question will be coming from audit Shrestha.

Speaker Change: Does that mean every one of our acreage is going to be worth more than the last time we.

Speaker Change: With Stifel. Your line is open.

Speaker Change: No.

Speaker Change: But like always said.

Speaker Change: Hi, good morning, Thanks for taking my questions.

Speaker Change: We've gotten a lot of just the inbound calls with broad offers most of the time, they're higher values than what we got we sold before but that doesn't guarantee anything.

Speaker Change: Just going back to the guide maybe could you help us bridge sort of the 27 million price cost spread.

Speaker Change: Much of that is actually been fiber versus Palmer.

Speaker Change: Part of that is that.

Speaker Change: In metals and.

Speaker Change: We will have a tax Erika we have said before we always have low tax basis, and just as a perspective of time. The last time it took us about eight months to do the transaction.

Speaker Change: And just so im.

Speaker Change: I understand that clearly the 15 to 25 million run rate savings, that's actually not built into the guidance. So that creates some sort of upside I think you've captured $3 million of that is that correct.

Speaker Change: Whether it's eight months 10 months six months, but we don't know, but what we're going to do is maximize value.

Speaker Change: Yes, that's correct so just a bridge.

Speaker Change: So you've gone from the 675 guide.

Speaker Change: That's the primary focus of this.

Speaker Change: The price cost element of it is about $27 million. Yeah, we have roughly 800 million tons of containerboard 40, Bucks that'd be $32 million a year half a year's 16 pick up another $3 million on our OCC cost assumption going down for the full year average.

Larry Hill: Larry and I really thank you both again.

Speaker Change: And one moment our next question.

Larry Hill: Yeah.

Speaker Change: And our next question will be coming from added Shrestha.

Speaker Change: With Stifel. Your line is open.

Adish Shrestha: Hi, good morning, Thanks for taking my questions.

Speaker Change: 87 to 80 to get to $3 million. So thats 19 of that 27. The other is split across the the remaining its substrates little bit actually price increase and integrated products and benefit in both polymers and steel at relatively small levels.

Speaker Change: Just going back to the guide.

Speaker Change: Could you help us bridge sort of the $27 million price cost right.

Speaker Change: Much of that is actually being fiber versus power and.

Speaker Change: In metals and.

Speaker Change: And just so I.

Speaker Change: I understand that clearly the $15 million to $25 million run rate savings, that's actually not built into the guidance. So that creates some sort of upside I think you've captured $3 million of that is that correct.

Speaker Change: Okay, great. Thank you.

Speaker Change: Sure.

Speaker Change: In terms of volume we get it right.

Speaker Change: Yes, that's correct so just a bridge.

Speaker Change: Should we think about the cadence.

Speaker Change: You're going from the 675 guide.

Speaker Change: We're going to do Q&A into sort of.

Speaker Change: The price cost element of it is about $27 million. Yeah, we have roughly 800 million tons of containerboard 40, Bucks that'd be $32 million a year half a year's 16 pick up another $3 million on our OCC cost assumption going down for the full year average.

Speaker Change: The second half and for the full year, how should we think about volume year over year.

Speaker Change: I think the way to look at.

Speaker Change: The way to look at it I mean first of all you've got a built in iPad, Ken because we acquired it last April so that impacts things.

Speaker Change: For the next.

Speaker Change: 87 to 80 to get to $3 million. So thats 19 at that 27. The other is split across the remaining substrates little bit actually price increase and integrated products and benefit in both polymers and steel at relatively small levels.

Speaker Change: And a half February March and part in April.

Speaker Change: You then have I.

Speaker Change: I would say.

Speaker Change: We don't have a clear picture of what we think is going to happen on volumes. If we did we'd have a range I mean, that's the whole constraint here, we don't know when the inflection is going to come but I would say the best guide to users just just look at the <unk>.

Speaker Change: Okay, great. Thank you.

Speaker Change: Same path that we've had for the past two years I mean, that's what we've got built in our guidance and that's what I would say you shouldn't utilizing yours.

Speaker Change: In terms of volume so that we get it right.

Speaker Change: Should we think about the cadence.

Speaker Change: We're going to Q&A into sort of the.

Speaker Change: So slight pickup in Q2, Q3 and slight falloff in Q4 generally thats.

Speaker Change: The second half.

Speaker Change: For the full year, how should we think about volume year over year, I think the way to the <unk>.

Speaker Change: The high level stuff.

Speaker Change: To look at it I mean first of all you've got a built in iPad, Ken because we acquired last April so that impacts things.

Speaker Change: Alright, thank you.

Speaker Change: One moment for our next question.

Speaker Change: And our next question will be coming from Michael Rochman of Truest. Your line is open.

Speaker Change: For the next.

Speaker Change: And a half February March and part in April.

Speaker Change: Yeah, Hi, guys. This is Nick <unk> on for Mike Thanks for taking my questions.

Speaker Change: Then have.

I would say.

Speaker Change:

Speaker Change: We don't have a clear picture of what we think is going to happen on volumes. If we did we'd have a range I mean, that's the whole constrained here, we don't know when the inflection is going to come but I would say the best guide to use is just just look at the <unk>.

Speaker Change: First off can you maybe elaborate on some of the demand trends in box board. It specifically as your closure announcement for off spill. It includes commentary that.

Speaker Change: Specific sub segments of demand were declining.

Speaker Change: Same path that we've had for the past two years I mean, that's what we've got built in our guidance and that's what I would say you should utilize and yours.

Speaker Change: And then maybe an early read on trends, you're seeing right now in box board in containerboard.

Speaker Change: I think I was only here so.

Speaker Change: So slight pickup in Q2, Q3 and slight falloff in Q4 generally that's.

Speaker Change: Bulk spot, it's basically flat year on year.

Speaker Change: And when you look at the <unk> business then the protection is softness.

Speaker Change: The high level stuff.

Speaker Change: Yeah.

Speaker Change: Alright, thank you.

Speaker Change: But the coupon call it themselves like spiral bound products, they actually all year on year.

Speaker Change: One moment for our next question.

Speaker Change: And our next question will be coming from Michael Rochman of Truest. Your line is open.

Speaker Change: Until we see a paper market inflection, we don't really see a big driver of demand and the biggest product. We have is actually call for people. So we're selling that paper mills, so when we see.

Speaker Change: Yeah, Hi, guys. This is Nick <unk> on for Mike Thanks for taking my questions.

Speaker Change:

Speaker Change: First off can you maybe elaborate on some of the demand trends in box board. It specifically as your closure announcement for off spill. It includes commentary that.

But their main inflection bet in that basis will take office flow.

Speaker Change: Got it thank you and then.

Speaker Change: I guess covering all your strategic actions.

Speaker Change: Specific sub segments of demand were declining.

Speaker Change: And in the framework of that quadrant analysis, you would have had the investor day.

Speaker Change: And then maybe an early read on trends, you're seeing right now in box board in containerboard.

Speaker Change: I mean are there.

Speaker Change: If you can answer.

Speaker Change: I think I was only here so.

Speaker Change: More mills that fall into that kind of.

Speaker Change: Bulk spot is basically flat year on year.

Speaker Change: Correction or invest to grow divest close buckets.

Speaker Change: And when you look at the <unk>.

Speaker Change: <unk> business than Vf's protection is softness.

Speaker Change: Or how much can we.

Speaker Change: Yes, Nico we couldn't comment on that right now we're looking at all of our footprint, obviously that impact human beings in jobs. So I'm going to talk about what's on our list at this point in time.

Speaker Change: But the coupon cost themselves like spiral bound products, they actually all year on year.

Speaker Change: Until we see a paper market inflection, we don't really see a big driver of demand and the biggest product. We have is actually call for paper. So we're selling that paper mill. So when we see it.

Speaker Change: But everything we have is under review as part of this cost cost optimization.

Speaker Change: No I completely understand thank you very much for the color.

Speaker Change: But their main inflection bad debt basis will take office flow.

Speaker Change: Yeah.

Speaker Change: Our next question.

Speaker Change: Got it thank you and then.

Speaker Change: Our next question will be coming from Richard Carlson of Wells Fargo. Your line is open Richard.

Speaker Change: I guess covering all your strategic actions.

Speaker Change: And in the framework of that quadrant analysis, you would have had the investor day.

Speaker Change: Hi, good morning, guys.

Speaker Change: So I just wanted to revisit the timberland sale and wonder if if that is an indication that you have a full pipeline and some capital that you can redeploy there.

Speaker Change: I mean are there.

Speaker Change: If you can answer.

Speaker Change: <unk>.

Speaker Change: More mills that fall into that kind of.

Correction or invest to grow divested close buckets.

Speaker Change: And then secondly, also wanted to ask you about the competitive landscape specifically to polymers in metals, just wondering if you're seeing any signs of stress in some of your smaller competitors.

Speaker Change: Yeah.

Speaker Change: Or how much can we.

Yes, we can.

Speaker Change: We couldnt comment on that right now we're looking at all of our footprint, obviously that impact human beings and job. So I could talk about what's on our list at this point in time.

Speaker Change: Now I'll address the first part.

Speaker Change: <unk> always said it before we're selling the timberland because we looked at our portfolio. We had used the incoming calls we think it's the decision that it's a better asset for somebody else to us and we're going to use the proceeds to pay down debt.

Speaker Change: But everything we have is under review as part of this gas cost optimization.

Speaker Change: It's always also said before our M&A pipeline always as robust, but that doesn't mean, you're going to spend it tomorrow either.

Speaker Change: Completely understand thank you very much for the color.

Speaker Change: Our next question or.

Speaker Change: These were analyzing a lot of things and looking at a lot of things. Our first priority right now is always paying down debt.

Speaker Change: Our next question will be coming from Richard Carlson of Wells Fargo. Your line is open Richard.

Richard Carlson: And with that Richard.

Hi, good morning, guys.

Richard Carlson: We continue to work on our pipeline and as I always said it is solid.

Speaker Change: So I just wanted to revisit the timberland sale and wonder if if that is an indication that you have a full pipeline and some capital that you can redeploy there.

Richard Carlson: Spend a lot of time with Renault with target so all of that.

Richard Carlson: We're not going to lead off on that but we don't always decided the timing.

Speaker Change: And then secondly, I also wanted to ask you about the competitive landscape specifically to polymers in metals, just wondering if you're seeing any signs of stress in some of your smaller competitors.

Richard Carlson: All of these things and with regard to competition.

Richard Carlson:

Speaker Change: Now I'll address the first part.

Richard Carlson: <unk> you.

Richard Carlson: We focus on value over volume.

Speaker Change: <unk> always said it before we're selling that timberland because we've looked at our portfolio. We had these incoming calls we think it's a decision that it's a better asset for somebody else to us and we're going to use the proceeds to pay down debt.

Richard Carlson: That's because that's served us well.

Richard Carlson: In times like this when you.

Richard Carlson: We know all macroeconomic.

Richard Carlson: Parameters.

Speaker Change: As always also said before our M&A pipeline always as robust, but that doesn't mean, you're going to spend it tomorrow either.

Richard Carlson: And the market then that competition tends to be more hungry for volume.

Richard Carlson: And if we can get a fair price for what we do on the service we provide we walk away.

Speaker Change: It means we're analyzing a lot of things and looking at a lot of things our first priority right now as I was paying down debt.

Richard Carlson: This caused the most changed.

Richard Carlson: And with that Richard.

Richard Carlson: <unk> tends to come back to us.

Richard Carlson: Because all of our service and our product.

Richard Carlson: We continue to work on our pipeline and as David said, it's solid.

Richard Carlson: Policy is a very very high compared to a local player.

Speaker Change: Spent a lot of time with Renault with target so all of that.

Speaker Change: We're not going to lead off on that but we don't always decided the timing.

Richard Carlson: Once some volume so we don't see that as an issue in Prague.

Speaker Change: All of these things and with regard to competition.

Speaker Change: Probably as can be lost market shares.

Speaker Change: And so that is a big no we haven't.

Speaker Change: Basically.

Okay.

Speaker Change: We focus on value over volume.

Speaker Change: So in other words <unk> Congress, we are confident in our ability to maintain our market position due to our differentiated value proposition.

Speaker Change: And that's served us well.

Speaker Change: In times like this when you.

Speaker Change: Have.

Speaker Change: Overall macroeconomic.

Speaker Change: Very helpful. Thank you very much.

Speaker Change: Parameters.

Speaker Change: And as a reminder to ask a question. Please press star one.

Speaker Change: And the market then that competition tends to be more hungry for volume.

Speaker Change: Wait for your name to be announced.

Speaker Change: And if we can get a fair price for what we do on the service we provide we bought away those customers.

Speaker Change: Our next question will be coming from Daniel Herrmann of Sidoti <unk> Company. Daniel Your line is open.

Speaker Change: <unk> tends to come back to us.

Daniel Herrmann: Thank you Hey, guys. Good morning, Thank you for taking my questions.

Speaker Change: Because all our service and our product quality is a very very high compared to a local player.

Daniel Herrmann: Kind of following up from an earlier question with.

Daniel Herrmann: Kind of shifting focus now towards end markets ever geographies and all the announcements from the Investor Day I was hoping maybe you could talk a little bit about the end markets in which you're most excited about and have the greatest level of confidence.

Speaker Change: For once some volume so we don't see that as an issue.

Speaker Change: As you probably asked can we lost market share.

Speaker Change: And so that is a big no we haven't.

Speaker Change: So in auto very helpful. Congress, we are confident in our ability to maintain our market position due to our differentiated value proposition.

Daniel Herrmann: We go out through 2025, and then on the flip side.

Daniel Herrmann: Where you have the most concerns and then with your ability to continue to execute and operate in a difficult environment.

Speaker Change: Very helpful. Thank you very much.

Daniel Herrmann: Increase in the low end of the guide.

Speaker Change: And as a reminder to ask a question. Please press star one one.

Daniel Herrmann: I'd just be curious to hear your thoughts about where you are.

Speaker Change: Wait for your name to be announced.

Daniel Herrmann: How do you feel about your current net leverage ratio.

Speaker Change: Our next question will be coming from Daniel Herrmann of Sidoti <unk> Company. Daniel Your line is open.

Larry Hill: Well I'll take the first question have you also to Larry.

Larry Hill: Just talk about the end markets.

Daniel Herrmann: Thank you Hey, guys. Good morning, Thank you for taking my questions.

Larry Hill: The one we are most excited about is agrochemical, that's the one we.

Daniel Herrmann: Kind of following up from an earlier question.

Larry Hill: We went into agrochemical in a big way, whether we acquire reliance Lee.

Daniel Herrmann: Kind of a shift in focus now towards end markets ever geographies and all the announcements from the Investor Day I was hoping maybe you could talk a little bit about the end markets in which you are most excited about and have the greatest level of confidence.

IPad came in basically.

Larry Hill: Became the global leader in the.

Larry Hill: That markets, providing based special solutions to the customers.

Larry Hill: And the other one that we have grown and is food and beverage where we have some very large global customers as well, we provide solutions to the end market that excites us as well where.

Daniel Herrmann: We go out through 2025, and then on the flip side.

Daniel Herrmann: Where you have the most concerns and then with your ability to continue to execute and operate in a difficult environment.

Daniel Herrmann: Increase in the low end of the guide.

But which takes a fair amount of time to get in the pharma space, We do have some solutions.

Daniel Herrmann: Just be curious to hear your thoughts about where you are.

How do you feel about your current net leverage ratio.

Larry Hill: Solutions that.

Speaker Change: I'll take the first question have you also to Larry.

<unk> provides with some pharma customers bought the runway that is very very long and it takes time, but obviously that end market excites us as well.

Speaker Change: Just talk about the end markets.

Speaker Change: The one we're most excited about is agrochemical, that's the one we.

Daniel Herrmann: And Daniel relative to our leverage ratio.

Speaker Change: Into agrochemical in a big way when we acquire reliance Lee IP.

Larry Hill:

Speaker Change: First of all I mean, obviously, we were thrilled that our board was wholeheartedly supportive of us moving forward on selling our land business, although it's hard to part ways with our colleagues who are so wonderful and great down there, but it's the right thing for US obviously those net proceeds are going to help us lower our.

Speaker Change: IPad Kim and basically.

Speaker Change: He became the global leader in the <unk>.

Speaker Change: That market's providing various special solutions to the customers.

Speaker Change: And the other one that's we have grown in is food and beverage where we have some very large global customers as well, we provide solutions to the end market that excites us as well where.

Debt.

Speaker Change: Ratio quite significantly that said, even if we weren't I am have not been added discomfort level at all because we are operating well in a very difficult environment and as we've said before if we recover to just normal volume levels out of this industrial recession. Whenever this happens I mean, we're looking at a $150 million.

Speaker Change: Which takes a fair amount of time to get into the <unk>.

Speaker Change: Pharma space, we do have some.

Speaker Change: Solutions that.

Speaker Change: We provide through some pharma customers bought the runway that is very very long and it takes time, but obviously that end market excites us as well.

Speaker Change: EBITDA lift from just that and that doesn't even take into impact our cost optimization efforts and.

Daniel Herrmann: And Daniel relative to our leverage ratio.

Speaker Change: So even at a $1 billion bridge, we showed at Investor Day didn't include the most recent price increase so we've got lots of factors here that are driving EBITDA. So that debt leverage ratio is going to come down very rapidly as as the.

Speaker Change:

Speaker Change: First of all I mean, obviously, we were thrilled that our board was wholeheartedly supportive of us moving forward on selling our land business, although it's hard to part ways with our colleagues who are so wonderful and great down there, but it's the right thing for US obviously those net proceeds are going to help us lower our debt.

Speaker Change: Industrial economy improves.

Speaker Change: That's really helpful. I really appreciate it guys and best of luck in the quarter.

Speaker Change: At <unk>.

Speaker Change: <unk> ratio quite significantly that said, even if we weren't I am have not been added discomfort level at all because we are operating well in a very difficult environment and as we've said before if we recover to just normal volume levels out of this industrial recession. Whenever this happens I mean, we're looking at $150 million of.

Daniel Herrmann: Thank you Daniel.

Speaker Change: And I'm showing no further questions at this time I would now like to turn the call back to <unk> for closing remarks.

Adam: Thank you and I would like to thank all Adam.

Adam: Honest and I'll address this for your time today and for your continued interest and investment in price.

Adam: We remain committed to delivering exceptional results and are focused on accelerating our performance towards our 2027 commitments of 1 billion EBITDA and $500 million in free cash flow.

Speaker Change: But a lift from just that and that doesn't even take into impact our cost optimization efforts and <unk>.

Speaker Change: So even at $1 billion bridge, we showed at Investor Day didn't include the most recent price increase so we've got lots of factors here that are driving EBITDA. So that debt leverage ratio is going to come down very rapidly as as the.

Adam: We are confident that our relentless pursuit of operational excellence and our customer centric growth will create enduring value for all our stakeholders. Thank you.

Speaker Change: Industrial economy improves.

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

Speaker Change: That's really helpful. I really appreciate it guys and best of luck in the quarter.

Speaker Change: Thank you Daniel Thanks, Thank you and I'm showing no further questions at this time I would now like to turn the call back to <unk> for closing remarks.

Speaker Change: Thank you and I would like to thank our analysts and our investors for your time today and for your continued interest and investment in price.

Speaker Change: We remain committed to delivering exceptional results and are focused on accelerating our performance towards our 2027 commitments of 1 billion EBITDA and $500 million in free cash flow.

Speaker Change: We are confident that our relentless pursuit of operational excellence and our customer centric growth will create enduring value for all our stakeholders. Thank you.

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

Speaker Change: Okay.

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Speaker Change: Good day, and thank you for standing by and welcome to the Greif first quarter 2025 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising that you ran.

Bill: It is raised to withdraw your question. Please press star 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 <unk> of <unk>.

Speaker Change: Best of relations and corporate development. Please go ahead.

Speaker Change: Thank you and good day, everyone welcome to <unk> first quarter 2025 earnings conference call.

Speaker Change: During the call today are Chief Executive Officer, only Ross Scott will provide a recap of our recent investor day and update on our announced optimization initiatives. He will then discuss an additional key strategic announcements before providing an overview of current markets within our new reporting segments afterwards, our chief financial.

Speaker Change: Officer, Larry Hill, Shimer, who will provide an overview of our first quarter financial results as well as 2025 guidance.

Speaker Change: Please turn to slide two.

Speaker Change: In accordance with regulation fair disclosure for you to ask questions regarding topics you consider important because we are prohibited from discussing material nonpublic information with you on an individual basis. During today's call. We will make forward looking statements involving plans expectations and beliefs related to future events actual.

Results could differ materially from those discussed. Additionally, we will be referencing certain non-GAAP financial measures and the reconciliation to the most directly comparable GAAP metrics that can be found in the appendix of today's presentation I'll now turn the.

Speaker Change: The presentation over to OLED on slide three thank you Bill and Hello, everyone. I was pleased to meet so many of you at our Investor Day last December.

Speaker Change: As a reminder, at that event, we announced our new 2027 financial commitments of 1 billion EBITDA and 500 million free cash flow.

Speaker Change: Our bridge two 1 billion is very simple.

Over $100 million of known positive discrete items, which will impact EBITDA in 2025 and beyond notably the run rate impact of index paper pricing as of December 2024 seconds volume recovery, which as discussed.

Speaker Change: At Investor Day will be accelerated by our enhanced business model once the industrial economy begins to recall and finally, we announced a $100 million cost optimization efforts, we are undertaking which I will touch on in just a moment.

Speaker Change: High conviction in these three pillars, and we are confident in meeting or exceeding the commitments we laid out.

Speaker Change: Please turn to slide four.

Speaker Change: At Investor Day, we demonstrated how we lead with our packaging solutions in essential industries, and how we are well positioned to grow through capitalizing on our new business model, leveraging our deep competitive advantages and continuously improving our business through the.

Speaker Change: The <unk> business systems to <unk>.

Speaker Change: And our 100 million cost optimization program.

Speaker Change: We combined this earning growth with responsible capital allocation designed to maximize return on invested capital and drive profitability towards our long term target of 18% plus EBITDA margin and 50% plus free.

Speaker Change: Cash flow conversion.

Speaker Change: While the current industrial economics provide some uncertainty on near term volume growth, we demonstrated in 2023 and again in 'twenty to 'twenty four that we can produce solid financial results, regardless of the negative macroeconomic cycle.

Speaker Change: Today I'd like to highlight the strength of our business in the context of it.

Speaker Change: Timely topic, making handful hence tariffs.

Speaker Change: Tariffs.

Speaker Change: As you know our supply channels are generally local to local additionally, thanks to our restructured business model, we have embedded flexibility and adaptability into our global supply chain, allowing us to seamlessly navigate disruptions without any.

Speaker Change: Material impacts.

Speaker Change: At Rice, we view, our key suppliers as critical partners and by fostering strong collaborative partnerships, we've responded swiftly and effectively to volatility.

Speaker Change: Our supply chain team has conducted a thorough impact assessments across multiple tariff scenarios and developed a robust action plan. So we effectively mitigated any P&L exposure.

Speaker Change: Regardless of potential tariff changes, our global scale operational agility and supplier relationships ensure we continue delivering legendary customer service, while driving sustainable profitable growth.

Speaker Change: Please turn to slide five.

Speaker Change: At our Investor day.

Speaker Change: Only two months ago by the way with the holiday season between Larry announced our commitment of at least $15 million to $25 million of run rate savings identified by the end of fiscal 2025.

Speaker Change: Pleased to update you that we have already identified $5 million of savings on a run rate basis, and reaffirm our expectation to achieve at least $15 million to $25 million on a run rate basis by the end of this year.

Speaker Change: These savings, which are primarily primarily SG&A related will fully benefits full year 2026 results and will also provide an incremental impact to the remainder of this year, which Larry will chalk zone and guidance.

Speaker Change: You May also have noticed we referenced 13 million achieved within our press release that incremental 8 million is related to our recently announced mill closures. However, we did not want to include that in our full year 2026 run rate yet.

Speaker Change: We are still assessing the timing of closure costs, which.

Speaker Change: <unk> may offset that benefit the short term.

Larry Hill: Larry will touch on that in a moment.

Larry Hill: We favor a bias for action and so expect to continue making good progress while also planning for near term accelerated growth.

Larry Hill: As we refine our road map to realize the full $100 million, we will continue to provide you with updates.

Larry Hill: Let's now turn to slide six to discuss our novel recent decision.

Larry Hill: The organizational realignment, we executed in 2024, resulting in our new seven Sbu's provided us the opportunity to step back and visualize how each piece of our portfolio fits into the great off price enterprise and how that translates.

Larry Hill: Into meeting our aspiration rational growth objectives.

Larry Hill: This work also expands beyond our Sbu's and focuses on what is core to the long term growth of Christ, including our capital deployment strategy.

Larry Hill: As such while we have a long history with our land holding business. So Terra. It has also become clear to us that this is better suited on a new ownership.

Larry Hill: As such we are announcing today, our intention to sell the entire timber portfolio of approximately 176 acres and use the proceeds to reduce debt.

Larry Hill: We sincerely thank our so terra colleagues for their ideas of dedicated service and for their world class execution mindsets.

Larry Hill: We are fully committed to supporting the business and our colleagues during this transition periods.

Larry Hill: We will provide updates when.

Larry Hill: Available on this process.

Larry Hill: Let's now turn to slide seven to discuss current quarter trends.

Larry Hill: And our first quarter of 2025, we continue to see changing demand trends and every product and region. However, as with the past 24 months. The products. We are investing in continued to outperform our legacy business.

Larry Hill: Polymers was up two 7% driven by small containers and IDC demands in the AG and food sectors, particularly in EMEA.

Larry Hill: Integrated solutions, Likewise solid volume growth with both of our key product groups caps and closures and pains linings and adhesives experiencing low double digit growth.

Larry Hill: A reminder, that these volume figures are presented on a same store basis in other words agnostic of recent acquisitions.

Larry Hill: Fiber was the next strongest solution with volumes slightly up and operating rates in both paper grades in line with the industry.

Larry Hill: <unk> continued to be impacted most by the soft industrial economy due to the high exposure to bulk chemicals petrochemicals and lubricant markets.

Larry Hill: As you may have seen in some of our key customers earnings reports earlier. This February those customers continue to suffer from this extended industrial contraction.

Larry Hill: It was encouraging to see January PMI bumps slightly above 50, however, we still feel the underlying demand in those sectors is uncertain.

Larry Hill: While we greatly appreciate our relationships with these important customers, it's important for us to balance out the cyclical nature of their needs by continuing our focus on growing in pharma flavors and fragrances foods and agrochemical segments.

Larry Hill: Although we are shifting towards discussing our business on a solutions basis as opposed to regional basis I know a regional view is helpful to our investors and so I will offer some brief comments EMEA.

Larry Hill: EMEA continues to demonstrate the highest level of resilience followed by APAC.

Larry Hill: <unk> has started to trend slightly downward, which is something we are monitoring, but the clear outlier remains North America, where demand sentiment continues to be the most bearish.

Larry Hill: With that I will turn things over to Larry to discuss our first quarter results on slide eight thank you.

Speaker Change: Following up on always comments on taking strategic actions towards our long term goals I would first like to briefly touch on another strategic announcement in late January we announced the planned closure of our <unk> paperboard machine hostile, Georgia as well as our containerboard and <unk> flex machine in Fitchburg mass.

Speaker Change: Juices at Investor Day, our Chief Operations Officer, Jim Kellerman talks about our quadrant analysis to assess plant is either invest to grow protect the core transformer fix and divest or close despite.

Speaker Change: Despite the continued excellent work by our colleagues at the end of the day. These two facilities fell into the lower quadrant and did not achieve the level of earnings necessary to support our continued operations.

Speaker Change: The two closures will reduce our containerboard mill capacity by 100000 tons and our <unk> capacity by 90000 tons.

Speaker Change: In the short term this action will be an EBITDA headwind of $3 million in fiscal 'twenty five versus our prior guidance due to onetime closure costs and the timing of shifting tons to other facilities.

Speaker Change: We expect this closure to be EBIT positive of $8 million by 2027 due to the increased efficiency of those tons being redeployed into our remaining mill net.

Speaker Change: As we are still working through the closure and not certain of the exact timing of the benefits. We have not yet included it in the run rate optimism cost optimization achievement that OE touched on earlier.

Speaker Change: While building for the future. We have also remained resilient in our day to day execution adjusted EBITDA for the quarter was 145 million an improvement of $7 million over the prior year quarter and in line with our expectations for Q1.

Speaker Change: Adjusted EPS for the quarter was 39, which was lower than prior year due primarily to the non recurrence of a onetime tax benefit of $48 million as well as $14 million of higher interest expense. This year due to higher debt from recent acquisitions working capital management was solid in the quarter.

Speaker Change: <unk> however, our adjusted free cash flow was a net use of 62 million slightly higher of a Houston prior year due primarily to the higher interest expense. Please.

Speaker Change: Please turn to slide nine where I'll provide some additional context to our performance at a segment level.

Gross profit margins in three of our four segments increased year over year due to effective cost management and GBS 2.0 gains despite the stagnant demand environment that only touched on earlier.

Speaker Change: Integrated solutions gross profit margins were down year over year, primarily due to product mix note also that Q1 results for our now divested Delta billing business are presented an integrated process solutions. Prior year results and was an EBIT contributor of $2 8 million.

Speaker Change: While the overall gross profit improvement did drive 7 million positive EBITDA year over year EBIT margins were also impacted by higher year over year SG&A costs as we discussed throughout 2020 form we anticipated short term SG&A cost inflation, as we reallocate and invest resources to <unk>.

Speaker Change: There is a maximum long term value creation right now we are at the peak of that curve. We have completed our business reorganization in 2024, our new structure and SB use are in place and now is when we will start aggressively pursuing streamlining of those processes. This short term divergence between gross profit.

Speaker Change: The gross profit and EBITDA margin percentage is mostly due to higher SG&A cost, which is one of the key opportunities listed in our $100 billion cost optimization initiative, which already discussed earlier.

Speaker Change: Please turn to slide 10 to discuss 2025 guidance.

Speaker Change: As a reminder, this fiscal year is only 11 months among and will conclude on September 30th following a two month fourth quarter.

Speaker Change: In Q4, we presented a low end only view of guidance, which incorporates only known upsides year over year, but all downsides of which we have visibility.

Speaker Change: Given the lack of any compelling demand inflections. We concluded that low end guidance continues to be appropriate. However, we also feel it is warranted to raise the low end for specific known upsides.

Speaker Change: First an additional $27 million of positive price cost, which reflects the $40 per ton containerboard price increase announced by received last Friday as well as our lower full year and full year OCC assumption of $85 per ton in.

Speaker Change: And Additionally factors in better price cost in our polymers and metals business, which is trending better than our original low end guidance as soon.

Speaker Change: As I mentioned during our Q4 call we anticipated a short term headwind in Q1 related to the flow through of high priced steel in our balance sheet, our supply chain team did a good job of neutralizing that impact <unk>.

Speaker Change: Additionally, our metals team has had great success with value over volume discipline in the quarter. Those two factors drove the metals price cost tailwind in the quarter.

Speaker Change: Second $8 million of lower transport and manufacturing costs, which are actualizing lower than assumed in our original low end guidance due to continued solid day to day management by our GBS group.

Speaker Change: Lastly, we are including $3 million, which reflects the portion of run rate impact of the cost initiatives savings only touched on earlier, which will be beneficial to fiscal 'twenty. Five however that is offset by the $3 million headwind from the recent no closures I discussed earlier. This net change results in a new low end got EBIT guidance of <unk>.

Speaker Change: 710 billion for fiscal 'twenty five.

Speaker Change: Our low end free cash flow guidance is also raised by 20 million to $245 million for the full year, partially offsetting our EBIT increase of $35 million is an assumption of $20 million higher working capital costs, which reflects the working capital impact of improving paper price cost, but additionally, being.

Speaker Change: Low end guidance, we've contemplated some downside for further cost inflation without the benefit of offsetting mitigating actions separately, we assume a small $6 million incremental tailwind in other operating costs, which balances to the $20 million free cash flow guidance increase.

Ali Ross: This is a low end view and so our expectations is not that the business will end the year at this performance, but it is the only data point, which we have conviction and sharing at this point in subsequent quarters, we will reassess returning to our range guidance per our usual approach with that let me turn it over to Ali to close on slide 11. Thanks, Larry.

Ali Ross: As demonstrated our at our recent Investor day, we continue optimizing and fine tuning our business, we are transitioning from good to great.

Ali Ross: A market leader in our chosen markets. We have strong track records and are very disciplined in the way we execute our strategy strategies in other words, we are well positioned for growth, we are helping ourselves to grow and were depressed in a very depressed market and when that market returns.

Ali Ross: Even the slightest we are in an ideal situation to take off.

Ali Ross: For taking the time to listen in today.

Ali Ross: <unk>. Please open the lines for questions.

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

Ali Ross: One moment for our first question.

Ghansham Panjabi: Which will be coming from Ghansham Panjabi.

Speaker Change: I'm sorry of Baird. Your line is open.

Speaker Change: Yes, thanks, operator, good morning, everybody.

Speaker Change: I just wanted to go back to the to the first quarter results specific to fiber.

Speaker Change: Just your view as it relates to weather that came in on an operating profit basis, our EBITDA whichever way you want to look at it in line with your plan because it was quite a bit below our expectation in context of your price increases et cetera. Thank you.

Yes got you thanks for the question.

Speaker Change: Let me go to that.

Speaker Change: Came in line with our expectations actually a little bit slightly better.

Speaker Change: Here's the issue that's confusing the matter.

Speaker Change: We have a protocol for allocating SG&A across the businesses.

Speaker Change: We ask all of your patience as we've transitioned to this new business model, because it's having impact and the way that we allocate our SG&A is based on value add which is just our price versus less raw material, but I would tell you that gross profit is a really good proxy.

Speaker Change: So what happens is as margins are expanding in the fiber business. It gets allocated a bigger portion of our SG&A and somebody might say well why do you do that well if you talk to virtually any CFO or a controller and you talked about getting into allocations. Among your internal businesses. It is a.

Speaker Change: Rat Rabbit hole, you would go down forever I mean people argue about how you allocate so we have a basic protocol for how we've done it.

Speaker Change: In our former operating model.

Speaker Change: Didn't see it because it go across geographies and you had all of the different segments going into those geographies. So again I ask you a barrier patient, but yes fiber was good for US it's picked up a higher allocation of SG&A and then SG&A was higher than what most of your ability in your models.

Speaker Change: We thought we had done a good job of articulating. The fact that we were going to have SG&A cost for example for <unk> in this first quarter. Since we didn't have it last year. We thought we'd explained we had made some investments that we're going to turn around obviously, we didn't explain it enough.

Speaker Change: And so that one falls on us we werent.

Speaker Change: Doing as well as we'd hoped relative to all of you as our customers slash investors.

Speaker Change: Okay. That's very helpful. Larry Thank you for that and then your comments on.

Speaker Change: The global businesses EMEA being the most resilient in North America, maybe at the other extreme in terms of being the weakest.

Speaker Change: Is it a difference in terms of end market exposure that would explain the two because thats certainly kind of counterintuitive relative to macroeconomic strength between the two regions and then related to that.

Speaker Change: What is what is your expectation in terms of volume assumptions as it relates to your guidance.

Speaker Change: Well, Thanks, Scott, Yeah, well first of all as we all.

Speaker Change: We laid out even in 2022, and then at our recent Investor day and segments and end markets. We are targeting for growth at all of those are GDP plus growth markets. One of those ASD agrochemical markets and that's really where you will have seen significant growth here.

Coming out of both both EMEA, but also in North America.

Speaker Change: Besides us and we continue to focusing on those markets and just to remind you it's food and beverage pharma medical in its flavor and fragrance. In addition to two agrochemicals.

Speaker Change: S J.

Speaker Change: Second question, just remind me again ghansham.

Speaker Change: Embedded volume assumptions as you kind of think about the portfolio for fiscal year 'twenty five.

Speaker Change: Yes, so we.

Speaker Change: We have seen obviously in some of these markets I just mentioned, especially in the polymer markets. We have seen some sequential improvements.

Speaker Change: But I would say our caution.

Speaker Change: Being too optimistic generally we don't see any difference.

Speaker Change: The previous quarter.

Speaker Change: Sequentially so.

Speaker Change: I haven't seen any inflection point yet.

Speaker Change: Well look we all know margins on them.

Speaker Change: Yeah.

Speaker Change: Call It green shoots, but it's too early to say anything on that so.

Speaker Change: I'm cautiously optimistic about the future.

Speaker Change: Got it thanks, so much.

Speaker Change: Yes.

Speaker Change: Our next question.

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

Matt Roberts: Hey, good morning, everybody. Thank you for taking the questions.

Speaker Change: Maybe maybe Larry.

Speaker Change: Point on the SG&A that some of us might have mixed in there.

Speaker Change: Could you just help us frame the margin expectation going into <unk>, and maybe how that progresses through the year and any lingering impacts we should expect in the next quarter.

Speaker Change: All right.

Speaker Change: Got it on my own internal model there.

Speaker Change: Yes.

Speaker Change: Good question, Matt Thanks.

Speaker Change: So if you look just to give some perspective in a little more color back on some of those elements. When we look at SG&A sort of year over year C&I pet Chem is like $11 million, which 5 million was amortization related to purchase price allocations on so first of all items of goodwill.

Speaker Change: Intangibles, you have got another element, that's a little bit less clear, but when we went to this new structure re looking at all of our enabling functions and where cost presided we ended up moving some people out of what we're manufacturing.

Speaker Change: Channels into enabling functions like into Kim <unk> group or in the supply chain out of bankers that ended up just doing a shift.

Speaker Change: Call it $3 million of cost of goods sold into SG&A levels on a full year basis, it's like $10 million.

Speaker Change: So I'm just talking about quarter right now and so you've got those two items as we go through the year, obviously once we get to when we bought AIPAC Cam you're gonna have not that year over year increments and just generally our EBIT margins are going to steadily improve through the year, which is which is.

Speaker Change: Typical for us to get volume lifts, which leverages our fixed.

Speaker Change: Fixed.

Speaker Change: Cost leverage in those kind of things so steady increase the margins through the remainder of the year and then that year over year comparison matching on iPad.

Larry Hill: Very helpful. I appreciate all the detail there Larry.

Larry Hill: And then secondly, maybe if I could ask on the timberland sale.

Speaker Change: Any additional color I know I know, it's early in the process, but any additional color on this asset and how may it compared to the timberland that was sold in 2021 I believe so taro was $9 million in EBITDA last year versus I think less than $2 million of what you sold in 2021. So I'm wondering any differences that we should consider when thinking.

Speaker Change: About proceeds there in terms of either age or productivity of the timber there or any other business considerations are good factors that make it different.

Speaker Change: Thanks again for taking my questions.

Speaker Change: As all year.

Speaker Change: We can't comment on timing or value at this time in 2021, it's a long time ago and when you look at the different tracks of Timberland in Epsilon, It's fair difference.

Speaker Change: You can't really compare them.

Speaker Change: We are highly confident in both interest in value and in fact, we saw ongoing basis receive unsolicited office for our timberland and we know we can get a very good price points.

Speaker Change: We can't comment on it is that.

Speaker Change: One more time.

Speaker Change: Yeah, that's certainly fair.

Speaker Change: Maybe if I could kind of a different angle on that Gregg talked.

Speaker Change: Talk recently about where that increase in polymer mix and even getting to 30% organically. So maybe once land has gone and some of the fiber closures.

Speaker Change: Polymer mix will be or what the remaining gap to get to that level will be largely due to a higher growth end markets from polymers or just where you see that shaping out thanks again.

Speaker Change: But as we explained that's both at Investor day in 'twenty through that last year, we are shaping our portfolio and we have identified the end sick, but markets like I mentioned before <unk> Kim food.

Speaker Change: Pharma and so on is GDP plus growth in segments those end segments.

Speaker Change: Our service.

Speaker Change: With basically polymorph.

Speaker Change: Solutions.

Speaker Change: And Thats why we talk about so much about polymer solutions.

Speaker Change: The sale of our land.

Speaker Change: Linked to that.

Speaker Change: The state of our land with all the proceeds will be used to pay down debt basically.

Speaker Change: That's it.

Speaker Change: We will take our leverage down and give us more firepower for the future, but we will continue to focus on those set of segments I mentioned and grow our customized polymer business and I'll supplement what <unk> said earlier, just a little bit.

Speaker Change: While the prior sale.

Speaker Change: Long ago, it's not indicative in all pieces of land are different.

Speaker Change: By pieces of Citi.

Speaker Change: <unk> property is different than out in the suburbs, but.

Speaker Change: Everything is different that said a lot of things that have been happening in land management and our team is really good at what they do so things like carbon sequestration solar farms all of those things have actually been increasing the value of timberland.

Speaker Change: Does that mean every one of our acreage is going to be worth more than the last time.

Speaker Change: We don't know.

Speaker Change: But like always said he is.

Speaker Change: We've gotten a lot of just inbound calls with broad offers most of the time, they're higher values than what we got we sold before but that doesn't guarantee anything.

Speaker Change: The other part of that is that.

Speaker Change: We will have a tax Erika we have said before we always have low tax basis, and just as a perspective of time. The last time it took us about eight months to do the transaction.

Speaker Change: Whether it's eight months 10 months six months, but we don't know, but what we're going to do is maximize value and that's the primary focus of this.

Larry: Larry Thank you both again.

Speaker Change: Okay.

Speaker Change: And one moment for our next question.

Speaker Change: Yeah.

Speaker Change: And our next question will be coming from <unk>.

<unk>.

Speaker Change: With Stifel. Your line is open.

Speaker Change: Hi, good morning, Thanks for taking my questions.

Speaker Change: Just going back to the guide maybe could you help us bridge sort of that $27 million price cost spread.

Speaker Change: How much of that is actually been fiber versus power and.

Speaker Change: In metal and.

Speaker Change: And just to understand.

Speaker Change: I understand that clearly the 15% to 25 million run rate savings, that's actually not built into the guidance. So that creates some sort of upside I think you've captured $3 million of that is that correct. Yes. That's correct. Yes, that's correct. So just a bridge.

Speaker Change: You've gone from the 675 guide.

Speaker Change: The price cost element of it is about $27 million.

Speaker Change: Roughly 800 million tons of containerboard 40, Bucks that'd be $32 million a year half a year's 16 pick up another $3 million on our OCC cost assumption going down for the full year averaged 87 to 80 to get to $3 million. So thats 19 of that 'twenty.

Speaker Change: The other is split across the remaining substrates little bit actually price increase and integrated products.

Speaker Change: Benefit in both polymers and steel at relatively small levels.

Speaker Change: Okay, great. Thank you.

In terms of volume.

Speaker Change: Right.

Speaker Change: Should we think about the cadence.

Speaker Change: <unk> going to <unk> into sort of.

Speaker Change: The second half and for the full.

Speaker Change: Full year, how should we think about volume year over year.

Speaker Change: The way to Luca.

Speaker Change: The way to look at it.

Speaker Change: First of all you've got to build in AIPAC cap, because we acquired it last April so that impacts things.

Speaker Change: For the next month and a half February March and part in April.

Speaker Change: You then have.

I would say.

We don't have a clear picture of what we think is going to happen on volumes. If we did we'd have a range.

Speaker Change: That's the whole constrained here, we don't know when the inflection is going to come but I would say the best guide to use is just just look at the.

Speaker Change: Same path that we've had for the past two years I mean, that's what we've got built in our guidance and Thats, what I would say you should utilizing yours.

Speaker Change: So slight pickup in Q2, Q3, and a slight falloff in Q4 generally thats.

Speaker Change: High level stuff.

Speaker Change: Alright, thank you.

Speaker Change: One moment for our next question.

Speaker Change: And our next question will be coming from Michael Robertson of Truest. Your line is open.

Speaker Change: Yes, Hi, guys. This is Nick <unk> on for Mike Thanks for taking my questions.

Speaker Change: Right.

Speaker Change: First off can you maybe elaborate on some of the demand trends in box board. It specifically as your closure announcement for US still includes commentary that.

Speaker Change: Specific sub segments of demand were declining.

Speaker Change: And maybe an early read on trends, you're seeing right now in box board in containerboard.

Speaker Change: I think I was only here so.

Speaker Change: Total bulk spot is basically flat year on year.

Speaker Change: And when you look at the <unk>.

Speaker Change: <unk> business then the protection is softness.

Speaker Change: But the coupon cost themselves like spiral bound products, they actually all year.

Speaker Change: On the year.

Speaker Change: Until we see a paper market inflection, we don't really see a big driver of demand and the biggest product. We have is actually call for paper. So we're selling that paper mills, so when we see it.

Speaker Change: But demand inflection bad at that basis will take office flow.

Speaker Change: Got it thank you and then.

Speaker Change: I guess covering all your strategic actions.

Speaker Change: And in the framework of that quadrant analysis, you would have had the investor day.

Speaker Change: Are there.

Speaker Change: If you can answer.

Speaker Change: More mills that fall into that kind of.

Speaker Change: Correction or invest to grow divest close buckets.

Speaker Change: Or how much can we see.

Speaker Change: Yes, we can.

Speaker Change: Nico we couldnt comment on that right now we're looking at all of our footprint, obviously that impact human beings in jobs. So I'm going to talk about what's on our list at this point in time.

Speaker Change: But everything we have is under review as part of this cost cost optimization.

Speaker Change: Yeah.

No I completely understand thank you very much for the color.

Speaker Change: Our next question.

Speaker Change: Our next question will be coming from Richard Carlson of Wells Fargo. Your line is open Richard.

Speaker Change: Hi, good morning, guys.

Speaker Change: So I just wanted to revisit the timberland sale and wonder if if that is an indication that you have a full pipeline and some capital that you can redeploy there.

Speaker Change: Then secondly, I just wanted to ask you about the competitive landscape specifically to polymers in metals, just wondering if you're seeing any signs of stress in some of your smaller competitors.

Speaker Change: Now I'll address the first part only always said it before we're selling that timberland because we looked at our portfolio. We had these incoming calls we think it's the decision that it's a better asset for somebody else to us.

Speaker Change: And we're going to use the proceeds to pay down debt.

Speaker Change: As always also said before our M&A pipeline always as robust, but that doesn't mean, you're going to spend it tomorrow either.

Speaker Change: We're analyzing a lot of things and looking at a lot of things our first priority right now as I was paying down debt.

Richard Carlson: And with that Richard.

Richard Carlson: We continue to work on our pipeline and as Larry said, it's solid.

Speaker Change: I spent a lot of time with Renault with targets all of that and we're not going to lead off on that but we don't always decided the timing.

Richard Carlson: All of these things and with regard to competition.

Speaker Change: Basically.

Speaker Change: We focus on value over volume.

Speaker Change: And Thats and Thats served us well.

Speaker Change: In times like this when you.

Speaker Change: Have all.

Speaker Change: Correct.

Speaker Change: Parameters.

Speaker Change: And the market then that competition tends to be more hungry for volume.

Speaker Change: And if we can get a fair price for what we do and the service we provide we bought away those customers.

Speaker Change: Tends to come back to us.

Because all our service and our product quality is.

Speaker Change: Very very high compared to a local player.

Speaker Change: For once some volume so we don't see that as an issue.

Speaker Change: Probably I ask can be lost market shares.

Speaker Change: And so that is a big no we haven't.

Speaker Change: Okay.

Speaker Change: So in auto very helpful. Congress, we are confident in our ability to maintain our market position due to our differentiated value proposition.

Speaker Change: Very helpful. Thank you very much.

Speaker Change: And as a reminder to ask a question. Please press star one.

Speaker Change: Wait for your name to be announced.

Speaker Change: Our next question.

Speaker Change: Will be coming from Daniel Herrmann of Sidoti <unk> Company Daniel Your line is open.

Speaker Change: Thank you Hey, guys. Good morning, Thank you for taking my questions.

Speaker Change: Kind of following up from an earlier question with.

Speaker Change: Kind of a shift in focus now towards end markets over geographies and all the announcements from the Investor day.

Speaker Change: Hoping maybe you could talk a little bit about the end markets in which you are most excited about and have the greatest level of confidence.

Speaker Change: We go out through 2025, and then on the flip side.

Speaker Change: Where you have the most concerns and then with your ability to continue to execute and operate in a difficult environment.

Speaker Change: The increase in the low end of the guide.

Speaker Change: I'd just be curious to hear your thoughts about where you are.

Speaker Change: How you feel about your current net leverage ratio.

Larry Hill: I'll take the first question Larry.

Larry Hill: Just talk about the end markets.

Larry Hill: The one we're most excited about is agrochemical, that's the one we.

Larry Hill: We went into agrochemical in a big way, whether we acquire reliance Lee.

Larry Hill: Kim and basically.

Larry Hill: Became the global leader in the <unk>.

Larry Hill: Debt markets, providing various special solutions to the customers.

Larry Hill: And the other one that's we have grown in is food and beverage where we have some very large global customers as well, we provide solutions to the market that excites us as well where.

Speaker Change: Which takes a fair amount of time to get into the pharma space, We do have some.

Larry Hill: Solutions that.

Larry Hill: <unk> provides with some pharma customers, but the runway that is very very long and it takes time, but obviously that end market excites us as well.

Daniel Herrmann: And Daniel relative to our leverage ratio.

Larry Hill:

Larry Hill: First of all I mean, obviously, we were thrilled that our board was wholeheartedly supportive of us moving forward on selling our land business, although it's hard to part ways with our colleagues who are so wonderful and great down there, but it's the right thing for US obviously those net proceeds are going to help us lower our.

Larry Hill: Debt.

Larry Hill: Ratio quite significantly that said, even if we weren't I have not been added discomfort level at all because we are operating well in a very difficult environment and as we've said before if we recover to just normal volume levels out of this industrial recession. Whenever this happens I mean, we're looking at a $150 million.

Larry Hill: EBIT lift from just that and that doesn't even take into impact our cost optimization efforts and.

Larry Hill: Even at a $1 billion bridge, we showed at Investor Day didn't include the most recent price increase so we've got lots of factors here that are driving EBITDA. So that debt leverage ratio is going to come down very rapidly as as.

Larry Hill: <unk>.

Larry Hill: Industrial economy improves.

Speaker Change: That's really helpful. I really appreciate it guys and best of luck in the quarter.

Larry Hill: Thank you Daniel.

Speaker Change: And I'm showing no further questions at this time I would now like to turn the call back to <unk> for closing remarks.

Speaker Change: Thank you and I would like to thank our analysts and our investors for your time today and for your continued interest and investment in price.

Speaker Change: We remain committed to delivering exceptional results and are focused on accelerating our performance towards our 2027 commitments of 1 billion EBITDA and $500 million in free cash flow.

Speaker Change: We are confident that our relentless pursuit of operational excellence and our customer centric growth will create enduring value for all our stakeholders. Thank you.

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