Greif, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Greif First Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you would like to withdraw your question, press the pound key. Please be advised that today's conference is being recorded. If you require further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Matt Eichmann. Thank you. You may begin.

Thank you, Dorothy. Good morning, everyone. Welcome to Grice First Quarter Fiscal 2021 Earnings Conference Call. This is Matt Eichmann. I'm joined by Pete Watson, Grice President and Chief Executive Officer, and Larry Hillsheimer, Grice Chief Financial Officer. Pete and Larry will take questions at the end of today's call. In accordance with Regulation Fair Disclosure, we encourage you to ask questions regarding issues you prohibited from discussing material, non-public information with you on an individual basis. Please limit yourself to one question and one follow-up before returning to the queue. Please turn to slide two. As a reminder, 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'll be referencing certain non-GAAP financial measures, and reconciliation to the most directly comparable GAAP metrics can be found in the appendix of today's presentation. And now I turn the presentation over to Pete on slide three.

Hey, thanks, Matt, and good morning, everyone. Greif delivered solid first quarter results and we're well positioned for longer-term success as the world recovers from the COVID-19 pandemic. Our performance is being delivered despite continued challenging circumstances due to the pandemic. I want to thank the Greif Global team for their resilience and dedication over the last three months. From an operational standpoint, we generated strong year-over-year volume growth across most of our packaging substrates and saw continued robust demand in our container board and corrugated sheet feeder network. We're experiencing inflationary cost headwinds across our portfolio and will overcome them through commercial activities, contractual arrangements, and a continued laser focus on performance levers that are within our control. We also continue to make strong progress across our strategic priorities. We reduced our net debt by approximately $279 million for the prior year quarter, and were once again recognized for our sustainability leadership by several well-respected third parties. We also formed a new reporting segment, Global Industrial Packaging, to align our leadership and our organizational structure to common end market segments, which I'll discuss more in a moment. Finally, we decided to take advantage of favorable market dynamics to address the COVID-related shortfall in our leveraging plans by entering into an agreement to divest 69,200 acres of timberlands in Alabama to Weyerhaeuser Company for approximately $149 million. Proceeds from that sale will be applied to debt repayment. I'd ask if you'd please turn to slide four. We recently combined our rigid industrial packaging and flexible products and services business into a new reporting segment called Global Industrial Packaging. This new business, led by Ole Rosgaard, will build upon the considerable improvement we've made to our global portfolio over the last several years. Combining our rigid and flexible business into global industrial packaging aligns operational practices, and procedures as well as go-to-market strategies under a single global leadership team. This results in a business with unmatched product offering capable of exceeding customer needs throughout the world. It also enhances cross-selling and service offering to customers in common end-use markets and enhances great business system effectiveness. To assist with the modeling, we recast our 2020 financial performance for certain segment information and filed an 8K with DATI yesterday. If I could ask you to please turn to slide five. First quarter volumes are strong across much of the global industrial traction business. Global rigid IVC volumes rose by roughly 6% on a per-day basis versus the prior year, while global flexible IVCs rose by more than 15%. Global steel drum volumes declined by roughly 1% on a per-day basis versus the prior year. Product demand was strongest in APAC, where steel drums rose by 3.5% on a per-day basis versus the prior year, and benefited from improved industrial trends and a favorable comp in China. Demand conditions also showed improvement throughout most of Europe. Specifically, we experienced strong demand throughout Eastern Europe, where steel drums and rigid IBCs rose by roughly 9% and 11%, respectively. Volume demand was most challenged in North America, where COVID impact was present in this year's volumes that were not in the prior year. We're seeing broad-based improvement in many of our key end markets, but their pace of recovery varies. For example, sales to lubricant and bulk chemical customers rose by single digits globally versus the prior year quarter due to better auto demand and generally improving industrial conditions worldwide. Paints and coating sales were up low double digits versus the prior year, did better auto and construction demand, while sales to pharma and personal care markets remain robust. Juice and beverage sales were weaker versus the prior year, as COVID-19 continues to constrain restaurants and other similar entertainment venues. GIP's stronger volumes and higher average selling prices drove higher segment sales, First quarter adjusted it and it rose by roughly $13 million versus the prior year quarter, primarily due to higher sales, partially offset by higher transportation expenses. The business did benefit from $3.5 million FX tailwind and opportunistic sourcing behind roughly $1.5 million. Similar to last quarter, we're closely monitoring steel and resin prices as tight supply conditions exist for our key raw materials. The majority of our business is covered by price adjustment mechanisms which pass along raw material inflation, albeit at a lag. While supply conditions remain tight, to date we have not experienced any material financial impact relative to sourcing raw materials in the current market. If I could ask you to please turn to slide six. Paper packaging's first quarter sales rose by roughly $7 million versus the prior year quarter, despite the divestiture of a consumer packaging group due to stronger vines in our mill network, corrugated sheet, and tubing core business. Paper packaging's first quarter adjusted EBITDA fell by roughly $22 million versus the prior year, primarily due to a significant $30 million OCC transport and chemical cost headwind. We recently announced a new set of price increases for container board and uncoated recycled box board grades in response to strong demand and expect full realization of those in our fiscal Q3. Our converting operations continue to experience robust demand. Volumes in Core Choice, our coordinated sheep feeder system, were up nearly 36% per day versus the prior year quarter due to strong durables, e-commerce growth, auto supply chain, and food and beverage demand. Backlogs in that business continue to grow, and specialty product backlogs are especially long. Findings in our tube and core business were up roughly 5% per day versus the prior year quarter, with strong demand seen specifically in film and construction and market segments. Demand for paper mill cores improved sequentially, while textile demand remained soft versus the prior year quarter. I'd like to now turn over the presentation to our Chief Financial Officer, Larry Hilsheimer.