GREIF, INC (GEF)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered resilient operational performance despite macro contraction: Net sales rose to $1.27B (+5% YoY), Adjusted EBITDA increased 5.9% to $145.1M, while GAAP EPS fell to $0.15 due to the prior-year non-recurring $48.1M tax benefit and higher interest expense from acquisitions .
• Guidance raised: Low-end FY2025 Adjusted EBITDA lifted to $710M (from $675M) and Adjusted FCF to $245M (from $225M), reflecting containerboard price/cost improvements, lower transport/manufacturing costs, and early cost-optimization benefits; offset by working capital headwinds and mill closure timing .
• Strategic actions: Announced intent to divest ~176,000 timberland acres to reduce debt; closed Austell A1 URB machine and Fitchburg mill, consolidating 100k tons containerboard and 90k tons URB capacity; near-term $3M EBITDA headwind in FY25, turning positive by 2027 .
• Segment mix shift continues: Customized Polymer Solutions drove growth (+$67.1M net sales; +$13.7M Adj. EBITDA) aided by recent acquisitions; Sustainable Fiber improved on published index price increases; Metals faced FX and volume pressure; Integrated Solutions declined post-Delta divestiture .
• Estimates comparison unavailable: S&P Global consensus for Q1 2025 EPS/revenue could not be retrieved due to service limit, so beat/miss versus Street cannot be determined at this time [GetEstimates error].

What Went Well and What Went Wrong

• What Went Well

  • Adjusted EBITDA rose 5.9% to $145.1M, supported by cost management and margin gains in three of four segments despite stagnant demand .
  • Polymer Solutions strength: +$67.1M net sales (acquisitions +$58.5M), +$13.7M Adj. EBITDA; management reaffirmed polymer-led growth runway in agchem, food/bev, pharma .
  • Price/cost tailwinds and disciplined pricing in Metals; better-than-expected containerboard/URB price recognition and lower OCC drove guidance raise; CFO quantified ~$27M price/cost uplift embedded in FY2025 low end .
  • CEO tone on tariffs: local-to-local supply chains and agile operations mitigate potential tariff impacts; supply chain plans in place to protect P&L .
  • Quote: “This quarter highlights the resilience of our new business model amid multiple headwinds… accelerating our growth in both the near and long-term.” – CEO Ole Rosgaard .

• What Went Wrong

  • GAAP EPS dropped to $0.15 (vs $1.17 YoY) mainly on non-recurring prior-year tax benefit and higher interest expense from acquisitions; adjusted EPS fell to $0.39 .
  • Sustainable Fiber operating profit fell to $3.6M due to higher SG&A and impairment charges tied to plant closures; Adj. EBITDA modestly down .
  • Integrated Solutions down on Delta divestiture; sequential working capital and other asset/liability changes drove operating cash use, with Adjusted FCF at -$61.9M in Q1 .
  • Macro softness persists: management sees “no compelling demand inflection,” especially in North America; Metals remains most exposed to bulk chemicals/petrochemicals/lubes cycles .

Financial Results

Segment performance (Net Sales and Adjusted EBITDA):

Balance sheet and leverage KPIs:

Dividend declared:

Guidance Changes

Bridge commentary: +$27M price/cost (containerboard +$40/ton, lower OCC, polymers/metals) and +$8M lower transport/manufacturing costs; +$3M cost-optimization benefit in FY25 offset by $(3)M mill closure costs; net working capital headwinds partially offset Adjusted FCF increase .

Earnings Call Themes & Trends

Management Commentary

• CEO on strategic posture: “We are transitioning from good to great… well positioned for growth… when [the] market returns even the slightest, we are in an ideal situation to take off.” – Ole Rosgaard .
• CFO on FY2025 raise: “This net change results in a new low-end EBITDA guidance of $710 million… low-end free cash flow guidance is also raised by $20 million to $245 million.” – Larry Hilsheimer .
• CEO on portfolio optimization: “We are announcing today our intention to sell… approximately 176,000 acres [timberland] and use the proceeds to reduce debt.” – Ole Rosgaard .
• CFO on mill closures: “In the short term, this action will be an EBITDA headwind of $3 million in fiscal ’25… We expect this closure to be EBITDA positive of $8 million by 2027.” – Larry Hilsheimer .

Q&A Highlights

• Fiber results and SG&A allocation: Fiber met internal expectations; higher SG&A allocations (value-add basis) and elevated SG&A from acquisitions explain margin optics; investors asked for modeling clarity (Stifel/Baird) .
• Volume assumptions & cadence: Management sees slight pickup in Q2/Q3, slight fall-off in Q4; remains cautious with no inflection identified; polymer sequential improvements but too early to call trend (Baird) .
• Timberland sale: Proceeds targeted for debt reduction; strong inbound interest; tax haircut likely; timeline could be ~6–10 months (Raymond James) .
• Metals pricing/cost: Q1 tailwind as supply chain mitigated high-priced steel flow-through; continued value-over-volume discipline (Raymond James) .
• End-market focus: Agchem, food/bev leading; pharma has long runway; EMEA most resilient, NA bearish (Sidoti/Baird) .

Estimates Context

• Street consensus (S&P Global) for Q1 2025 EPS and revenue was unavailable at time of analysis due to service limit; therefore, a beat/miss determination vs consensus cannot be provided. Values would typically be retrieved from S&P Global; unavailable in this instance [GetEstimates error].
• Given estimates unavailability, we recommend rechecking S&P Global for Q1 2025 “Primary EPS Consensus Mean” and “Revenue Consensus Mean” to calibrate model updates.*

Key Takeaways for Investors

• Guidance raised despite macro caution: Low-end FY2025 Adjusted EBITDA to $710M and Adjusted FCF to $245M; near-term catalysts include continued flow-through of index price increases and cost-optimization benefits .
• Polymer-led mix shift remains the growth engine: Acquisition contributions and end-market focus in agchem/food/pharma underpin structurally higher margins and lower cyclicality; monitor synergy capture trajectory at Ipackchem .
• Fiber pricing turning supportive: Recognized containerboard/URB index increases and lower OCC underpin margin recovery; Dallas sheetfeeder and USPS award add visible volume tailwinds into FY2025 .
• Network optimization and asset sales accelerate deleveraging: Timberland divestiture should reduce net debt and improve leverage toward the 2–2.5x target; mill closures consolidate capacity for long-run efficiency gains .
• Metals still cyclical risk: FX and volume headwinds persist; management countering via pricing discipline; treat any macro upturn as incremental upside .
• Cash discipline: Q1 adjusted FCF was negative on seasonality and interest costs; FY2025 guide implies stronger H2 cash generation; dividend maintained .
• Trade positioning: Localized supply chains and contingency planning mitigate tariff risks; limited expected P&L disruption if tariffs evolve .

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Sources:
Financials, segments, KPIs, and guidance: Q1 2025 8-K and press release ; Q1 2025 press release duplicate .
Strategic actions: mill closures press release ; timberland divestiture intent .
Prior quarters for trend: Q4 2024 8-K ; Q3 2024 8-K .
Management/transcripts: Q1 2025 call (Ex. 99.2) ; Q4 2024 call .