Good day, and thank you for being here. Welcome to the Greif Fourth Quarter 2024 Earnings Call. Currently, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please note that today's conference is being recorded. I will now turn the call over to Bill D’Onofrio, Vice President of Corporate Development and Investor Relations. Please proceed.

Thank you, and good day, everyone. Welcome to Greif's fiscal Q4 2024 earnings conference call. During the call today, our Chief Executive Officer, Ole Rosgaard, will provide you an update on the operating model optimization effort we have undergone over the past year, which will be an important lead-in to our Investor Day next week. He will also provide his thoughts on fiscal 2024, as well as the current market landscape. Our Chief Financial Officer, Larry Hilsheimer will provide an overview of our fourth quarter financial results, as well as our 2025 guidance. In accordance with regulation fair disclosure, please ask questions regarding topics you consider important because we are prohibited from discussing material non-public information with you on an individual basis. Please turn to Slide 2. During today's call, we will make forward-looking statements involving plans, expectations, and beliefs related to future events. Actual results could differ materially from those discussed. Additionally, we will be referencing certain non-GAAP financial measures and 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 Ole.

Thanks, Bill, and good morning everyone and thank you for joining today. Before we start, I just want to address one matter. Yesterday, we released our Q4 2024 and full-year earnings. Unfortunately, we subsequently discovered an error and reissued the release. Let me turn this over to Larry to address before we proceed with the remainder of the prepared remarks. Larry?

Thank you, Ole. Good morning. Despite our usually dependable quality controls, we had an error in our original earnings release in which we had incorrectly included $16 million of income tax expense related to a gain on the disposal of a business. As a result, our originally reported Q4 net income excluding the impact of adjustments was $49.6 million and our diluted Class A earnings per share was $0.85 per share. As corrected, those figures are $65.5 million and $1.13 per share respectively. Ole, I'll turn it back to you on Slide 3.

Thanks, Larry. And again, we apologize for this. What I usually say in-house is that we can all fail at times. When we do, I usually tell our organization, that's just a learning moment. We just learn something new, and that's something we should be happy with. As Bill mentions, next week we are hosting our Investor Day in New York City. Today, I will begin our presentation by highlighting a few key messages, which will be core to the information you will hear at our Investor Day. The half-day event will be attended by our entire executive management team, as well as each of the leaders of our new strategic business units. We highly encourage in-person attendance, which will allow you to engage with our leaders one-on-one and deeply understand the value we are creating under our Build to Last strategy. Please turn to slide 4. Over the past year, we have fundamentally changed how we operate as a company, organizing in a manner that will allow us to fully leverage our core competitive advantages and enable us to double the size of the company in the future. Going forward, we are operating and reporting results based on our four material solutions: Customized polymer solutions, durable metal solutions, sustainable fiber solutions, and integrated solutions. Making steel drums is very different from making polymer drums, which is again different from making small plastics or tube and cores. So aligning operations by material solution greatly enhances our ability to leverage our five distinct competitive advantages. First, it allows us to more efficiently utilize our robust scale and global network of facilities to be more agile in serving our customers even better. Second, it aligns operations to capitalize on our deep subject matter technology expertise within each material solution, partnering even closer with our customers to meet their unique needs. Third, it enables further innovation and growth of circular packaging solutions. Fourth, it organizes our extensive portfolio of solutions in a manner that optimizes cross-selling and margin expansion. Each of those four competitive advantages results in a fifth all-encompassing advantage: utilizing our world-class culture to deliver legendary customer service, which drives loyalty, share of wallet increase, and premium margins. Please turn to Slide 5. The key benefits of this operating model optimization for our investor community is enhanced visibility to the performance of the underlying products within our portfolio. So that ends, after the market closes today, we will be releasing fiscal year 2023 and 2024 recast financial highlights to assist you in understanding the new segments. We have strong conviction in the synergies of operating this diverse, comprehensive portfolio of products, which enables us to serve our customers more fully than other industrial packaging companies. That said, we have also made clear that the biggest growth opportunity we see from a total addressable market and end-market growth perspective is in polymer-based products. This evolution has been occurring for years, and now our polymer business is large enough to warrant individual segmentation to more clearly display the performance of those products. This informs our decision to continue deploying capital in this space. We also plan to grow further in our caps and closures business, which is a key integrated solution. While smaller at present in terms of the overall portfolio, we also expect this business to grow over time. We'll be highlighting underlying growth expectations in each of these segments next week at Investor Day. We will utilize the rest of this fourth quarter 2024 presentation to serve as a closing chapter of our global industrial packaging and paper packaging and service segments and discussing our quarterly results in the context of GIP and PPS for the final time. Please turn to slide 6. Over the past three years, we have fundamentally changed the way our business operates and have made significant strides on our Build to Last strategy. We have allocated over $1 billion of capital to margin and growth and creative acquisitions, optimized our business model, enhanced and accelerated the Greif Business System into GBS 2.0, and invested in technology and innovation. The collective impact of these changes provides us with the confidence to now announce a formal business optimization effort of at least $100 million of cost reductions to be completed by the end of fiscal 2027. This initiative, which is a combination of SG&A rationalization, network optimization, and operating efficiency gains enabled by GBS 2.0, has come as a result of the accumulated learnings of our strategic progress, acquisition integration, and business model optimization. This initiative will be supported by further investments in technology and innovation. We plan to talk more about the drivers and impact of this program at Investor Day next week. Now let's turn our attention to Q4 results on Slide 7. Our business continues to operate with excellence against the historic period of industrial contraction. Since tracking of U.S. industrial activity began in 1948, by the Institute of Supply Management, we have not seen an industrial contraction longer than the current period, which is 25 months through November. Our performance during the protracted length of this cycle has been impressive, but it is critically important to keep this soft macroeconomic environment in mind as Larry presents our 2025 guidance. In the fourth quarter, EMEA remained the strongest region, although volumes were down slightly on a sequential basis. On our Q3 call, we commented on the notable less bullish sentiment from our global customer base heading into Q4, a sentiment that has remained overall pessimistic into November and was taken into consideration when formulating our fiscal 2025 guidance. That said, we are still outperforming market expectations in EMEA, which we attribute not to any specific market, but rather to our ongoing business model optimization that is driving increased demand and cross-selling opportunities in both our polymer and metals business. Our largest market, North America, has not seen the same recovery as EMEA. In GIP, demand remains choppy, with polymer-based products continuing to offset softness in our durable metals business. Overall, GIP North America still has significant untapped operating leverage with volumes down almost 18% on a two-year basis in the quarter. We fully anticipate a recovery of those volumes, which we believe are the result of this extended demand contraction cycle. In PPS, demand has been okay, although it is still down over 4% on a two-year basis in the quarter. Containerboard has shown a few consecutive quarters of year-over-year growth on the same-store basis and is running at over 90% operating rates, while our URB business is still mixed and is currently operating at over 80% operating rates through November. As a reminder, APAC and LATAM are small pieces of our portfolio. LATAM is improving while APAC has continued to be soft, but the overall offset of those regional demand factors is about neutral on a year-over-year basis in the quarter. And with that, I will turn things over to Larry on Slide 8 to walk through our financial results. Larry?

Thank you, Ole, and thank you all for joining our call this morning. Our fourth quarter results demonstrate our consistent ability to execute regardless of the operating environment. Fourth quarter adjusted EBITDA was $198 million compared to $202 million last year. However, our business also experienced an unplanned $2 million headwind from Hurricane Helene. Fourth quarter adjusted free cash flow was $145 million compared to $136 million last year as our teams acted decisively on the bearish demand sentiment that we identified exiting Q3 and reduced working capital to appropriate levels. While managing results in the presence, we continue to take steps towards the future. As Ole mentioned, we finalized our operating model optimization effort, which unlocks significant new value levers for Greif, and we are excited to talk about more next week at Investor Day. This quarter, we completed our 14th Net Promoter Survey, resulting in a score of 69. This rating is well above 51, which is considered the benchmark for world-class in the manufacturing industry. The level of customer engagement is proof of our significant competitive advantage of legendary customer service. At Investor Day next week, we will provide information that shows the high correlation between NPS and financial performance to clearly outline the significance of our continually increasing customer loyalty and advocacy. Lastly, we are now over eight months into our ownership of Ipackchem and have made significant progress on integration and synergy capture. As we have noted in the previous few quarters, the ag sector was impacted by significant de-stocking in the year and has continued to operate at low volume since then. While we have high conviction in our business case financials, we anticipate that overall EBITDA contribution in the first full year of ownership will be less than that business case, which I will touch on in guidance. Please turn to Slide 9 to walk through the GIP results. As Ole stated in his global market overview, we are very proud of the results our GIP team provided given the uncertain bearish demand environment we experienced in Q4. We finished the quarter up $4 million on adjusted EBITDA dollars, but down 70 basis points on EBITDA margins. Pricing competition has been intense in our GIP business, but our team is finding ways to win and sticking to our value over volume philosophy resulting in resilience. Exiting Q4, sentiment is generally pessimistic. Please turn to Slide 10 for PPS results. Our paper business experienced an adjusted EBITDA dollar decline of $8 million and adjusted EBITDA margin decline of 240 basis points year-over-year. However, EBITDA margin improved sequentially by 220 basis points as a result of some recovery of the price-cost imbalance that our business has endured throughout the year. Underlying demand in our paper business remains mixed. Containerboard and corrugated volumes are solid and operating rates of 90-plus percent, while URB in tube and core volumes have continued to lag due to soft paper core demand. This is driven by the overall boxboard industry, which is generally less positive than Containerboard. We anticipate that margins in the new sustainable Fiber Solutions segment will continue to improve heading into fiscal '25 due to the continued flow-through of recognized paper pricing and the recent favorable OCC changes, which is contemplated in our guidance. Please turn to Slide 11 to discuss capital allocation. Now three years into our build-to-last strategy, we have deployed capital exactly according to the priorities we laid out in our 2022 Investor Day. Next week, I will provide an update on our go-forward capital allocation framework, which will fuel the next evolution of growth for Greif. Our top near-term priority is debt reduction. Our recent acquisitions, coupled with a low EBITDA denominator in our leverage ratio calculation, resulted in a 3.53 leverage at the end of fiscal 2024 relative to our target range of 2 times to 2.5 times. When demand recovers, the EBITDA denominator will quickly scale down our ratio. However, in the intermediate time, we will focus on paying down debt to get within our target range. In 2019, we made an acquisition at the beginning of an industrial recession, and we were still able to pay down debt in advance of our externally stated target, and we'll utilize that same playbook now to manage leverage during this industrial recession. Please turn to Slide 12 to discuss our fiscal 2025 outlook. Given the continued market uncertainty and mixed demand trends, which we have commented on throughout prepared remarks today, and in previous quarters, we feel it is most prudent to again present low-end only guidance to start fiscal 2025. We have yet to see any significant inflections positive or negative that give confidence in presenting a range. It is important also to remember that we are changing our fiscal year in 2025. Next fiscal year will be 11 months long and end on September 30 with a 2-month long fourth quarter. For that reason, our guidance was calculated on an 11-month basis to help you understand our low-end guidance. I'd like to provide you with a few key drivers, which can bridge you from 2024 on an 11-month basis to fiscal '25's 11-month guidance. Fiscal '24 did not have any significant seasonality impact at year-end. So a fair comparative starting point is simply taking year-end adjusted EBITDA for fiscal '24 of $694 million, dividing it by 12, and multiplying it by 11. That gets you to a $636 million starting point for an 11-month '24. From there, we have assumed a few key tailwinds heading into fiscal '25. First, $83 million of price-cost uplift, most of which is coming from RISI recognized paper pricing and OCC change as of the date of this call with price-cost in polymers, metals, and integrated, largely neutral year-over-year. Second, a $19 million incremental uplift from M&A, which represents the incremental ownership period of Ipackchem less the fiscal year EBITDA contribution from our disposed of Delta U.S. business. Third, an organic volume uplift of $76 million based on the continuation of exit rate trends in each of our new segments. That volume tailwind is primarily driven by an assumption of mid-single-digit growth in Polymers & Fiber Solutions, despite low single-digit headwinds in Metals and integrated. Those tailwinds bring you from $636 up to $814. We also have several headwinds assumed in guidance. Let me take you through those to help you understand how we end up at $675 million as our low-end guidance number. First, a $19 million headwind from unfavorable year-over-year FX driven by the strengthening U.S. dollar. Second, $34 million headwind from items such as a $10 million shift from cost of goods sold into SG&A in our new operating model, which is also reflected in the operating business elements, a $10 million increase from medical and other benefits and additional headwinds from increased IT costs due to license fees, cybersecurity investments, and investments in customer digitization, which we refer to as Greif+. In addition to these headwinds to SG&A, our fiscal year-end change creates a headwind of 12-month contractual fees as applied to 11-month fiscal years. For example, your audit fees and tax fees don't change because you have an 11-month year. The final headwind is considered in this low-end guidance. We also assume an incremental $86 million in manufacturing and transportation cost headwind, partially attributable to the increased volume assumption, but also factoring in incremental inflationary costs. Those factors offset our tailwinds and bring us to the $675 million. Remember, this is low-end guidance. So it assumes the full impact of all potential headwinds, but only explicitly known tailwinds. With that, I'll turn things back to Ole on Slide 13 to provide you with a preview of our upcoming Investor Day.

Thank you all for dialing in today and for your continued interest in Greif. Next week at Investor Day, we will demonstrate to you that Greif is a global market leader for essential industries, well-positioned to deliver continually stronger earnings power and proactively allocating capital for the highest shareholder return. I'm proud of the work our global teams have done since our last Investor Day to accelerate our Build to Last strategy, and we anticipate our event next week will be compelling, insightful, and a valuable use of your time. Registration is still open, and so please e-mail our team at [email protected] if you are interested in attending. And that is [email protected]. Thank you for your time today. Operator, will you please open the lines for Q&A.

Our first question will be coming from Daniel Harriman of Sidoti & Company. Your line is open.

Thank you. Hi, guys. Good morning. Thanks for taking my questions. I don't want to steal too much from next week's Investor Day, but looking out for the future of the company, obviously, customized Polymer Solutions is going to be the focus. But where else could we expect to see some incremental investment if it's not solely in the polymer solutions? And then, Larry just regarding where you are from a leverage perspective, if you could just provide a little bit more commentary regarding how you feel about that level, given what you've been able to accomplish in the past after acquisitions in a difficult environment. Thanks.

Hi, Daniel, thanks for the question. Obviously, Polymer Solutions is one of the primary places where we invest for growth, and that's because we can achieve margins well in excess of 18%. In that business, we can also achieve a free cash flow conversion in excess of 50%. So that's why it's so attractive to us to invest in that market. The runway that we will also demonstrate at Investor Day is very, very long in those markets. But saying that, we still have a fiber-based and a metals-based business. Primary investments we will do there, especially in metals, will be automation. It will be maintaining the cash machine that generates automation. And I would be remiss if I don't mention caps and closures as well, which is also volumes. It's a relatively small part of our overall business, but it's a very, very attractive business that we intend to expand in.

Yes. I would add that we will continue to explore highly profitable downstream integrated businesses for our paper operation, similar to the successful coal pack transaction we completed. While these opportunities are not our main focus, we will remain open to them. Regarding the leverage ratio, we are very comfortable with our current position, especially considering the effects of this industrial recession. We expect to improve that ratio rapidly as recovery takes place, given a $160 million volume gap at normal margin rates due to volume reductions. If we can replace that volume, it would quickly lower our ratio below three, and further cash pay down would improve it even more. We are satisfied with where we stand, but addressing the debt ratio is a priority for us.

Okay guys. Thanks so much and best of luck in the coming year.

Thank you very much, Daniel.

Thanks, Daniel.

Thank you. One moment for our next question. Our next question will be coming from Ghansham Panjabi of Baird. Your line is open.

Thank you. Good morning everyone. Regarding the Caraustar program, which is targeted at $100 million by 2027, could you provide more details on how this was determined? Is this related to your new operating structure that enables you to pursue such a significant goal, considering it is quite large in relation to your EBITDA? Additionally, how should we anticipate the timing of this realization over the next three years? Lastly, how will the savings be distributed across the different areas you mentioned, including SG&A, network, and productivity? Thank you.

Thank you, Ghansham. I want to clarify that we are not addressing any significant issues here. We are performing well but aim to improve further. This drive for improvement is the foundation of the program we initiated. Our current organization and the high standards we've set for our business operations, along with our Lean Six Sigma approach, have enabled us to pursue these goals. There are three areas of focus. The first is SG&A, the second pertains to our network organization—operating 254 facilities globally, where we see further optimization opportunities—and the third is the operating efficiencies we gain from our effective business systems. Paddy will discuss the advantages of our network optimization in the new structure at Investor Day, and Kim will elaborate on GBS 2.0 and our acceleration efforts in the new structure. As for the timing, it’s hard to pinpoint. We certainly hope to see the $100 million in savings sooner rather than later, but we expect to achieve the full savings outlined within the next three fiscal years.

Yes, great. Regarding your outlook for next year, you're starting at the low end. We can calculate adjustments for 12 months versus 11 based on your guidance. What is your base volume assumption? Larry, you mentioned several factors, and I want to clarify the starting point for volumes across your legacy businesses, if possible. What gives you confidence in achieving that number? It seems significant, with a projected $76 million EBITDA improvement tied to volume.

Yes, we have noticed an increase in our containerboard and corrugated business for some time now, Ghansham. A significant part of that growth comes from the Paper segment and Polymer Solutions as well. We are confident that our investments in the intermediate bulk container business will lead to further growth. Additionally, we opened our Dallas sheet feeder business in June of this year, and it is ramping up. We also secured a significant contract recently that will make a considerable contribution. Ole, what was the...

Yes. We won the business from the U.S. Postal Service, and that's 55,000 tons, that was the effect of that. And just to give you an idea, Ghansham, down the sheet feeders total capacity is around 120,000 tons. So that's a major win for us, and that's a multiple year contract.

Yes. The contract will be fulfilled not only from Dallas but also from our other sheet feeder facilities. It was a significant achievement, and we have strong confidence in the fiber side of our business. The investments we've made in IBC have great growth potential. Overall, we expect about $68 million to $70 million in our fiber business and approximately $27 million in our Polymer Solutions business across all three platforms. However, in our metal solutions sector, we anticipate a volume decline of around $19 million to $20 million. I hope this information is helpful.

Okay. Thank you so much.

Our next question will be coming from Matt Roberts of Raymond James. Your line is open.

Larry, good morning everybody and thank you for having me on the call. Larry, I appreciate the very thorough color that you gave on the low-end 2025 EBITDA bridge. But maybe if you could help me kind of frame what a high-end scenario could look like without speculating on price. Some of your peers in the containerboard space have recently announced price increases, and given your independent mix and early read-throughs on demand, what are you hearing from customers in regard to that passing through and ultimately, what kind of price-cost range could be reasonable pending any further price increases or further decrease in OCC?

Thanks, Matt. So obviously, if we had real confidence in a high-end range, we’d put a range together. But I'll give you some things that could happen. And look, the biggest driver for us at going with following guidance is just the uncertainty of when is this industrial recession going to turn. And that can just create such a wide variety of things. You put any high-end number, then everybody is going to focus on a midpoint. So it's folly, I think, to put something up. But that said, we also just rolled out this week to our customers a price increase in the containerboard space, $70 on liner and $100 on medium effective January 1. Obviously, the demand dynamics in that space are very strong right now and we believe supports that price increase. We still have about $160 million in potential gains that will materialize when the industrial economy returns to the volume levels we saw in 2021. Those factors are strong incentives for growth. Additionally, we are expecting benefits from the $100 million initiative we outlined this year. There are many factors that could lead to positive outcomes, and as we've mentioned, we have accounted for all the negatives while not factoring in the positives. This gives us hope for a pretty good year ahead.

Hi, Matt, if I can just interject that you promise as well. So if we look at sort of the length of this volume contraction that we had and how the market operates in terms of what will drive recovery. So if you look at the underlying end markets, they remain historically low. Existing home sales over the last two years have been at the lowest since 1995, I believe, and that drives a lot. Home sales or housing impacts chemicals and loops, and people buying fewer durable goods. And then also, when you look at U.S. order sales, that's been below the long-term average for three years now. And you look at the PMI, the comments I made earlier, they are still below 50. Most of these things are interest-rate driven. And so when the interest rates hopefully keep going down, that will start opening up existing home sales, and that will have a major effect on not only our business but our customers' businesses as well. So that's one to watch.

Ole and Larry, very helpful. And maybe if I could ask on the polymer side of the business. So you recently opened up the IBC plant in Malaysia. Maybe if you could discuss how initial demand is trending for that incremental capacity? And speaking more broadly on those polymer products, I mean you've grown both organically and inorganically. Are you having to give any price share gains on that space? Or on the contrary, is competitive price pressure still lingering in that business that you discussed last quarter? Thank you again for taking the questions.

First of all, I don't comment on individual plans. But if you look at the overall polymer space that we operate in, our chosen end segment is the premium end of that market where we can achieve margins in excess of 18%, in fact well into the 20s. That's an important factor to mention. The other drivers in that market are, in particular, in the AgChem market. With the acquisitions we made, we are now the global leader in packaging for agro-chemicals. That market is growing, and it's driven by the population growth that we see in the world, but also there is less arable land to farm food on. That means that there's a demand for higher yield on the land that's available, which sort of ties into why we have focused on really getting into becoming a leader in that market. So I'm confident we will continue to grow in that market, and we will continue to enjoy and yield good margins and help our customers grow as well.

Certainly, fair, thank you all again.

Thank you. One moment for our next question. And our next question will be coming from George Staphos of Bank of America Securities. Your line is open.

Hi, everyone good morning. Hope you're doing well? Thanks for taking my question.

Hi, George.

So I know you covered it a little bit just now, but can you talk a little bit about the variance in Ipackchem relative to the deal model? Can you talk about some of the underlying drivers? Obviously, you've covered a little bit. Can you quantify kind of where you are with that and why you remain confident going forward? Secondly, I want to push back a little bit on the cost optimization. Obviously, you spent a lot of time developing this. You quantified it, and you gave us a target of $100 million that would suggest you have some window in terms of the cadence. So tell us what might be able to hit the numbers for fiscal '25 and what is giving you the biggest pause in outlining the goal? I had a couple of follow-ons.

I'll let Larry answer the first question. But before I do that, George, let me just say that when we closed the deal on Ipackchem, after that we saw this contraction in the agrochemical markets, and that obviously played into our business case a little bit there. But that's going the right way now. And Larry go through the numbers.

We had an $8 million impact from an inventory cost adjustment. Our uplift from Ipack compared to 2024 is $26 million. However, this will still leave us below our business case, which we estimated to be around $57 million plus an additional $7 million in synergies due to the volume decreases. Currently, we are running at about $4 million on synergies that depend entirely on volume as we move out of this year. We are very confident in achieving that once volumes return, as farmers are doing everything possible to manage their bottom lines right now by using fewer dilutive products. Ultimately, things will bounce back. Additionally, it's important to purchase items when they're available, and this was a strategic buy. We are optimistic about the long-term profitability of that business. In terms of your other question, George, to put this in context, I mean, we literally just arrived at our decision to initiate this cost takeout effort in the last couple of weeks. We announced it to our colleagues yesterday. We have ranges on each of those three elements that Ole mentioned, but we have not identified how much we're going to be able to get done in '25, how much will get done in '26 and '27. We're extremely confident of the $100 million number over that three-year period; we are not confident about how much in each year or how much in each bucket at this point in time.

This is not a target we will achieve in 2027. And it's one we have been working on for a while. And so as Larry said, it's difficult to tell you that the next quarter will be this or that. But it's definitely not back-loaded, I can tell you that as well.

Yes. Understood. Listen, you're fair to say, right, we don't run a business, but we do advocate for your investors, and that's what we're trying to do here. Can you talk a little bit about your tariffs and what some of the positives or negatives might be in terms of how you evaluate the volume outlook for 2025 and beyond? I know it's difficult, but what do you know right now that you can share?

Yes. I mean, we obviously had experiences from the last time tariffs were imposed. You have to remember that we, by and large, source our raw materials locally. We produce locally and we sell to our customers locally. That means tariffs won't really play into our business. If it does play into our business, it would probably be from a positive point of view. If, for instance, steel tariffs mean that steel prices go up, which happened last time, we saw that – that benefits us. So that's something we don't calculate with that it benefits us. So that's the net effect of tariffs.

Okay. Net of whatever it might do for trade and obviously, more trade would be better for you than worse at this juncture.

Yes.

Last thing, and I'll turn it over again, appreciate all the thoughtfulness on the guidance and the buildup. Any help you can give us in terms of how the first portion of the year, first quarter of the year will look relative to the latter quarters? I'm guessing it will be a slower ramp. It builds in terms of earnings power over the rest of the year, but anything there would be helpful. Thank you, guys.

Yes. I mean, George, usually our first quarter tends to be a slower ramp. And obviously, with what we just announced on paper pricing, although not built into our guidance, we would clearly expect that to be recognized at some point and then would play through on a longer basis. Also, we do have a little bit of a drag in our metals business in the first quarter because steel prices have been decreasing since about July. And what that tends to do is lowers our margins because as the index price changes on our price adjustment mechanism contracts, we're bleeding through slightly higher-priced inventory. So you have a little bit of that impact in the early part of the year that will then play out positively through the rest of the year.

Larry, forgive me. Did you say your price increases were effective February 1 or January 1? I'm sorry about that.

January 1, but they tend to roll through on a delayed basis through the contract mechanisms.

Thank you. I’ll turn it over.

Thank you. One moment for our next question. And our next question will be coming from Gabe Hajde of Wells Fargo. Your line is open.

Ole, Larry, good morning.

Good morning, Gabe.

I'm confident I understand the question. Larry, you've mentioned the $160 million in under-absorbed fixed overhead a couple of times now. Given the $100 million savings opportunity you've outlined, which includes actions like rooftop consolidation, does this affect your ability to leverage or generate revenue from the under-absorbed fixed overhead due to volume constraints?

No.

And then, of course, you may have a different opinion. To your point, after 25 months in what feels like a downturn in the industry, have you begun any initiatives, and is this $100 million somewhat of a reactive measure? Are you observing any fundamental changes in demand from your customers related to the transition to electric vehicles, which means less need for lubricants and additives for internal combustion engines? Could there be a lasting shift in consumer preferences toward experiences rather than physical goods, and perhaps a trend towards multi-family living situations over single-family homes due to affordability issues?

Yes, let me address those points in reverse. Housing demand is at an all-time high in the country, with Columbus, Ohio being the most under-housed market in the United States. I don’t believe there is a permanent shift towards multi-family housing. There’s significant pent-up demand from people currently in multi-family units who want to move into single-family homes. However, it's important to note that our main focus is less on new home construction and more on existing home sales, which have dropped to their lowest levels since 1995. When people sell their homes, they often update them, making improvements to attract buyers, which leads to increased product sales, especially in the lubricant sector. Regarding consumer demand, the trend towards prioritizing experiences over material goods might be a long-term macro change, but I haven't seen anything that suggests people view it as a lasting shift. On EVs, the third element you mentioned, the analysis we did a number of years ago is that the vast demand for our lubricants is not in the vehicles or is really in machinery and industrial plants. Ironically, within the EVs themselves, a lot of the axles and all the things that actually need lubricants are actually as much in an EV as there is in a historical combustion engine car.

The CAGR, if you look at oil quarts, the CAGR on that towards 2030 is actually over 5% and it's driven by people who run their cars longer. And EV has plateaued out. What you see grow is hybrids, which still require lube. So we don't see any effect of that.

Understood. We would like to see you successfully achieve that $160 million. However, we are somewhat puzzled as to what the barriers have been regarding the volume.

I'm just going to say, in terms of putting more color to that $100 million, we will be doing that at Investor Day next week, actually. Both Kim Kellermann and Paddy Mullaney will cover that in their presentations.

Well, I was going to go there. I mean, I know George kind of tried to dissect the different pieces and maybe gone from. But is any of this also in response to things maybe your customers are doing in terms of consolidating your own footprint and trying to be proactive there? I'll leave it there.

No, it is not related to that. If our customers did something that resulted in us not needing a particular plant, we would address that, but this is not connected in any way.

Okay. Last question, maybe putting a little bit too fine a point, but you gave some data points, so I want to try to use them appropriately. The diligence or math or EBITDA associated with Ipackchem was $57 million and the $7 million of synergies. I think you said $26 million was the contribution in fiscal '24. And then you told us $19 million in fiscal '25, but that was Ipackchem less delta. I'm seeing a $94 million inflow of cash from the sale of Delta. Maybe that's $10 million or so of EBITDA that goes away. So I mean, you guys are pretty close on Ipackchem? Or is that not the right math?

Yes. So on Delta, we sold Delta for about $90 million, which was 8.5 times. The headwind in Q4 was about $4 million. So the net of that is $7 million. They were a little back-ended on the results for Delta. On Ipackchem, the lift year-over-year is $26 million from last year. I think we get to a $42 million run rate in our low-end guidance for the year for Ipack this coming year. So it's still 20-some million short of our business plan, which is all demand trend driven, Gabe. So hopefully, that helps you.

And that $42 million is an 11.

Yes, I'm sorry, yes, it's 11 months, obviously.

Yeah, okay. Thank you guys.

And one moment for our next question. Our next question will be coming from Brian Butler of Stifel. Your line is open.

Hi guys. Thanks for taking my question. Maybe since you're kind of going down the path of re-segmenting and you have a low-end guidance for '25. Can you give some color around the new segments and maybe what organic growth is kind of built into that low-end guidance?

Yes. When we analyze our corrugated business, much of the growth is linked to our investment in the Dallas sheet feeder operations. We have observed an approximate 8% growth trend in URB and CRB, while tubes and cores are around 4%. Containerboard and corrugated sheets show a growth range of 2% to 5%. Our plastics are growing at roughly 3%, and in our Metal Solutions, the growth is in the low single digits decline.

Okay. And then on the $100 million in savings, I know we've kind of gone over this a couple of times, but I'm going to just maybe ask it another way. It's not $100 million all coming in 2027. So there's something in '25. You don't know what that is, but you have zero in your low-end guidance. Is that a fair statement?

That's accurate.

Okay. So there's something other than zero, whether it's $5 million or $20 million, I don't know.

We'll get something in this fiscal year. And just to remind you, Brian, it's '24, is our baseline, the '24 fiscal year.

'24 for what, the $100 million?

The $100 million savings is from a 2024 baseline.

Right. So starting this year, but you're going to get the savings over the next 3 years. There wasn't any savings in '24.

Right. Yes. I think all my other questions have been asked. Thank you very much.

One moment for our next question. Our next question will be coming from Michael Roxland of Truist. Your line is open.

Hi everyone. Thank you for taking my questions. This is on for Mike Roxland today. I apologize if I missed it earlier in the call, but does your guidance assume full implementation of the containerboard price increase?

No, has none of it in.

Got it. And then just, I guess, switching to URB. What are you seeing there? And what are your thoughts on where pricing might go for URB?

We do not discuss future pricing increases. As we have mentioned, the demand in that segment has shown stable operating rates in the 80s, but there hasn't been a significant increase. The main issue is in paper cores for most boxboard paper grades, and we have not experienced a strong lift or any notable change in that business across our entire portfolio, with the exception of containerboard.

Understood. Lastly, can you share if there have been any discussions or considerations about moving away from index pricing to a value-added pricing model in paper?

Away from the RISI model?

Exactly, yes.

I mean we're not part of that. We don't discuss that. We are in containerboard, a small player. So to my knowledge, there's been no developments.

Okay, understood thank you.

And one moment for our next question. Our next question is a follow-up from George Staphos of Bank of America Securities. Your line is open.

Hi everyone. Thank you for the follow-up. Could you provide more insight into what you're observing in the boxboard markets? I was curious if I heard you right regarding your earlier comments about expecting growth in URB and CRB, which I thought you mentioned might be around 8%. Please correct me if I'm wrong. Additionally, in tube and core, you mentioned an increase of 4%, but based on your response to Meco's earlier question, it seems that aside from containerboard, there’s not much improvement in other paper markets. Could you help me understand how all these factors fit together? Thank you.

If we look at the corrugated markets, our demand is up 2% year-over-year, excluding Dallas. In contrast, the industry as a whole is down 2% according to the APA numbers, indicating our growth in this area. For tube and core, we're experiencing a slight year-over-year decline and are flat compared to Q3. However, our small product lines have seen a 2% increase, which is countered by softness in specialty products like end protectors and adhesives. Improvements in the North American market are helping to boost paper tube demand, though starting from a low base.

Okay, thank you.

One moment for our next question. Our next question will go up from Gabe Hajde of Wells Fargo. Your line is open.

Thank you for taking the question. As it relates to the $100 million, you called out $86 million of inflationary headwinds this year, Larry. And then $34 million of sort of what I see is discrete items, medical technology, things like that. So the question is, is that $86 million sort of a new inflation treadmill that we should think about for Greif on a go-forward basis? And then secondarily, are you incurring any cost, whether it's through OpEx or CapEx to implement this $100 million? And again, I appreciate we're kind of feeling some thunder from next week.

Yes, the overall increase in our manufacturing costs was primarily due to inflationary cost increases. Some of this is related to the impact of volume, as we have indicated. We are integrating all these cost increases into our lower guidance. There are costs associated with acquisitions occurring during a time of low demand, which adds to manufacturing costs while volume pressure is reduced due to demand dynamics. This has resulted in squeezed margins. This situation ties back to the potential $160 million increase if we see a recovery in volume. You may recall from our previous discussion that in our earlier segments, approximately $90 million was from the GIP category, around $56 million from PPS, and about $20 million related to acquisitions, totaling roughly $160 million to $170 million. While there are inflationary labor costs and similar factors contributing to this, it all factors into the overall lift in manufacturing costs, which we plan to address through operational efficiencies. Kim and Patty will provide more details on this next week.

Okay. And are there any costs, whether discrete costs this year in fiscal '25, with implementing this $100 million in savings?

Yes, there will likely be some costs associated with this. If we proceed with any plant consolidations or make any changes to headcount, there will be severance-related expenses that can lead to long-term benefits. This is an important aspect to consider when evaluating such decisions.

Okay, thank you.

And I would now like to turn the call back to Ole Rosgaard for closing remarks.

Thank you. And thank you once more for your interest in Greif, and we all hope to see you next week at Investor Day. Thank you.

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