Niccolo Piccini

Niccolo Piccini asked about rebalancing the long SBS position, specifically if it will be achieved by converting CRB business to SBS or through further opportunities like the La Tuque closure. He also inquired about the stickiness of the converted business if SBS and CRB prices rebalance.

Answer

Laurent Sellier (CEO of North America) suggested a combination of all factors, noting interesting opportunities in SBS despite secular pressures and the company's 'substrate agnostic' approach. CEO Anthony P. J. Smurfit emphasized that customers are switching for quality (visual appeal, machine runnability) rather than just price, which could make the converted business sticky even if prices rebalance, and reiterated their grade-agnostic approach.

Niccolo Piccini asked about rebalancing the long SBS position, specifically whether it would be achieved by converting CRB business to SBS or through further asset optimization like the La Tuque closure, and the stickiness of converted business given potential price rebalancing between SBS and CRB.

Answer

CEO of North America Laurent Sellier and CEO Anthony P. J. Smurfit explained that the strategy for SBS involves a combination of converting CRB to SBS/CUK and potential further consolidation. Smurfit emphasized that customer switching is primarily driven by quality and visual benefits, as well as machine runnability, rather than just price, and reiterated the company's 'grade agnostic' approach to meeting customer needs.

Nico Piccini questioned why the Q1 Timberlands EBITDA guide seemed light compared to historical trends, despite comments about regional log markets trending towards balance. He also asked about the key projects included in the $400-$450 million base capital expenditure target for 2026, excluding the Monticello facility.

Answer

CEO Devin Stockfish explained that the Q1 Timberlands EBITDA guide reflects softer log prices in Q4 and early Q1, leading the company to pull back Western Timberlands volume in Q1 to sell more later in the year when pricing is expected to improve, maximizing annual profitability. CFO David Wold stated that the base CapEx is for typical projects: reforestation, silviculture, roads, and bridges in Timberlands, and cost reduction, recovery, and reliability improvements in Wood Products mills, replicating past successful projects, with no single large project called out besides Monticello.

Nico Piccini asked why the Q1 Timberlands EBITDA guide appeared light compared to historical Q4 to Q1 bumps, despite comments about balanced regional log markets. He also sought details on the key projects within the $400 million-$450 million base CapEx target for 2026, excluding the Monticello EWP facility.

Answer

CEO Devin Stockfish explained that Q1 Western Timberlands volume was intentionally pulled back due to softer log prices in early Q1, with plans to spread volume later in the year when pricing is expected to improve. CFO David Wold stated that the base CapEx includes typical reforestation, silviculture, roads, and projects to reduce costs, improve recovery, and reliability in lumber mills, with no single large project outside Monticello.

Niccolo Piccini asked for insights into the expected volume trends by category in North America for the fourth quarter, commentary on promotional activity, and any read on October and November month-to-date volumes. He also inquired about any additional capacity unlocked at the Florida Can plant since its acquisition.

Answer

Daniel Fisher, CEO, noted that customers continue to promote multi-pack value, with cans winning against other substrates. He reiterated global volume growth expectations above 2%-3% for the full year, with North America above 1%-3%, EMEA at the top end of 3%-5%, and South America within 4%-6%. October volumes were in line with expectations, with price increases offset by promotional activity. Mr. Fisher confirmed that additional capacity has been unlocked at the Florida Can plant, which is performing well and will contribute more volume next year.

Niccolo Piccini of Truist Securities, on for Michael Roxanne, requested an update on the percentage of volumes under contract for 2026 and 2027. He also asked about the contribution of manufacturing efficiencies in Q2 and the outlook for future gains.

Answer

CEO Daniel Fisher reported that for North America, over 90% of 2026 volume and about 75% of 2027 volume is under contract. On efficiencies, he noted strong plant performance in South America and Europe. While North America was 'choppy' due to rapid growth and tariff-related supply chain issues, he expressed confidence in long-term efficiency gains, pointing to world-class safety and quality metrics as leading indicators.

Niccolo Piccini, on for Michael Roxanne, asked for an update on contracted volumes for 2026 and 2027 and inquired about manufacturing efficiencies.

Answer

Chairman & CEO Daniel Fisher reported that North American volumes are over 90% contracted for 2026 and about 75% for 2027. He noted that while plants are generally running well, North American efficiency was choppy in Q2 due to accelerated growth and tariff-related supply chain issues. He affirmed they are on track with long-term savings goals, supported by world-class safety and quality metrics.

Speaking for Michael Roxanne, Niccolo Piccini requested an update on the percentage of volumes under contract for 2026 and 2027. He also asked about contributions from manufacturing efficiencies in the quarter.

Answer

CEO Daniel Fisher stated that over 90% of 2026 North American volume is contracted, with 2027 at approximately 75%. He noted that while plants are generally running well under the 'ball business system,' North American efficiency was choppy in Q2 due to supply chain challenges from accelerated growth. However, he remains confident in long-term savings goals.

Niccolo Piccini of Truist Securities inquired about the company's expected cash generation post-divestitures, how Greif weighs capital allocation opportunities with its lower leverage, and what factors would enable the company to reach the high end of its EBITDA guidance.

Answer

EVP & CFO Larry Hilsheimer stated that cash flow generation is expected to remain strong and consistent, with the primary constraint on capital deployment being human capital for project execution. President, CEO & Director Ole Rosgaard outlined capital allocation priorities as dividends, maintenance, debt paydown, and organic growth. Hilsheimer added that achieving the high end of the guidance range is primarily dependent on volume performance in the final month of the fiscal year.

Niccolo Piccini from Truist Securities inquired about the state of the cattle cycle in South America and Australia and requested an update on the performance and growth of the fluids business.

Answer

President, CEO & Director Dustin Semach stated that the cattle cycles in South America and Australia are at 'peak-ish' levels and remain strong, contrasting with the downturn in the U.S. Regarding the fluids business, he noted the Cryovac solutions continue to perform well, while the Liquibox business has stabilized and is being positioned to return to its historical mid-single-digit growth rate.

Niccolo Piccini of Truist Securities, on for Michael Roxlin, asked about the contribution from manufacturing efficiencies to recent performance and future targets. He also inquired about the status of contract negotiations for 2026 and 2027 volumes.

Answer

CEO Oliver Graham confirmed that improved operational costs, driven by high plant utilization in North America and strong execution in Europe, were a positive contributor. Regarding contracts, he stated that 2026 volumes are largely secured or in late-stage negotiations, and visibility for 2027 is also becoming quite good as the post-COVID renewal cycle concludes.

Niccolo Piccini asked about the Bowling Green plant's operations amid weakness in the bourbon market and sought CEO Gordon Hardie's view on the margin gap with European competitors and how 'Fit to Win' addresses it.

Answer

CEO Gordon Hardie stated that the Bowling Green plant is focused on achieving efficient industrial scale and securing the right premium mix for its relatively small capacity. Regarding the European margin gap, he attributed it primarily to O-I's higher costs and less optimized footprint compared to peers. He affirmed that the 'Fit to Win' program is specifically designed to close this cost gap and enhance competitiveness, noting that O-I often has a superior premium product mix.

Niccolo Piccini of Truist Securities questioned the potential impact of the new U.S. administration's policies on Natural Climate Solutions (NCS), specifically asking about the vulnerability of solar, carbon capture (CCS), and wind initiatives.

Answer

President and CEO Eric Cremers assessed that solar and lithium initiatives are likely to be 'unscathed' by policy shifts, citing strong demand and bipartisan support. He identified carbon credits as having more risk and viewed CCS as the 'most vulnerable' due to its high dependence on government subsidies. Executive Wayne Wasechek added that interest from solar developers has remained strong post-election, with plans to add 10,000-12,000 more acres under option in 2025.

Niccolo Piccini, on behalf of Michael Roxland from Truist Securities, asked about the builder profile at the Chenal Valley development, specifically the mix of regional versus national builders. He also inquired about the general sentiment among these builder customers, given recent mixed earnings reports and higher mortgage rates.

Answer

Executive Wayne Wasechek clarified that the Chenal Valley community consists exclusively of regional builders, with no national builders present. He noted these builders are less capitalized to offer incentives. Despite this, he expressed optimism, citing strong lot sales across all price points in Q3 and better-than-expected demand continuing into Q4, which he attributed in part to the Federal Reserve's recent rate cut.

Niccolo Piccini, on for Mike Roxland, asked about the timing of commercialization for new wins in the Custom Containers segment and how capital expenditures are expected to evolve going forward.

Answer

President and CEO Adam Greenlee explained that recent wins in Custom Containers are smaller in scale than the large contracts commercialized earlier in 2024 but will contribute positively in 2025, reflecting a market-beating win rate. For future CapEx, he provided targets as a percentage of revenue: 5-6% for Dispensing & Specialty Closures, around 5% for Custom Containers, and 3-4% for Metal Containers, noting that these figures will now incorporate Weener's needs.

Asked for an update on benchmarking European assets against other regions and identifying quick operational wins. Also inquired about the timeline for rolling out the new commercial excellence model from the North American 'beachhead' to the rest of the company.

Answer

There is low-hanging fruit being addressed quickly, but the primary differentiator in performance is not geographic; there is a range of performance within each business with room for improvement everywhere. The new commercial process can be ingrained in the North American business within 6 months, with rollout to other businesses beginning midway through that and continuing through fiscal '25, with an impact expected to be relatively quick.