Greif, Inc.

and thank you for standing by. Welcome to the Grice Q2 2021 earnings call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. 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. I would now like to turn the call over to your speaker today. Matt Eichmann, please go ahead.

Thanks a lot, Amy. Good morning, everyone. Welcome to Grice's second quarter fiscal 2021 earnings conference call. This is Matt Eichmann. I'm joined by Pete Watson, Grice President and Chief Executive Officer, and Larry Hilsheimer, 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 consider important because we're 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 will be referencing certain non-GAAP financial measures, and reconciliations of 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.

Thank you, Matt, and good morning, everyone. We really appreciate your interest in Greif. Our purpose at Greif is to safely package and protect our customers' goods and materials to serve the essential needs of communities all around the world. And that common purpose, combined with our vision to excel in customer service, binds our global colleagues and motivates us to perform at our best. And I want to make sure I thank the global Greif team for these efforts. In the second quarter, we generated strong year-over-year volume growth in most of our key global industrial packaging substrates. We also experienced robust demand in our corrugated sheet feeder network and significant demand improvement in our tube and cores business. While inflation remains challenging, we are executing strategic pricing decisions and contractual price increases to recover costs and stay ahead of the inflation curve. This discipline focus is helping us deliver solid financial results and reduce our leverage. Our second quarter adjusted free cash flow grew by more than $47 million versus the prior year, and we were paid $235 million in debt. With improved visibility into the back half of the year, we are reintroducing fiscal 2021 annual guidance and anticipate generating adjusted Class A earnings per share of $4.70 at the midpoint. Finally, we continue to make meaningful progress against our strategic priorities. We recently completed our fourth annual colleague engagement survey, which ranks us in the top decile of all manufacturers. In addition, we published our 12th Annual Sustainability Report, reflecting the progress we've made around ESG and enhanced our customer service capabilities in line with our stated vision. I'd ask you now to turn to slide four. The global industrial packaging business delivered strong second quarter results. Global steel drum volumes increased by roughly 3% on a per-day basis versus the prior year, while global rigid IBCs and large plastic drum volumes rose by nearly 8% on a per-day basis. And our global IBC volumes were a quarterly record. Average selling prices were up across all key global substrates year over year due to raw material pass-through arrangements and strategic pricing decisions. Product demand was strongest in APAC, where steel drum and rigid IBC and FIBC buy-ins rose by 14 and 11% respectively on a per-day basis versus the prior year and benefited from improved industrial trends. Demand conditions were solid throughout most of Europe, where steel drum, rigid IBCs and FIBCs rose by mid-single digits on a per-day basis. In North America, which features our most diverse product portfolio mix, steel drum volumes were down single digits, while rigid IVCs, fiber drums, and FIVCs displayed mid-single-digit growth on a per-day basis first prior year. We continue to see improvement across many of our key end markets. For example, sales into petrol products and lubricant end markets improved sequentially and were higher year over year. Paint and coating sales also rose due to better auto and construction demand. And sales in the bulk and specially chemical markets were negatively impacted by ongoing customer force majeure actions and supply chain constraints, but underlying demand still remained solid. We see little indication of customers rebuilding inventory, and while supply chain conditions remain tight, we have not experienced any negative material impact related to sourcing raw materials. GIP's stronger buy-ins and higher average selling prices drove higher segment sales and gross profit year over year. GIP's second quarter adjustability arose by roughly $7 million due to higher sales, partially offset by higher SG&A expense, mainly attributed to a $13.5 million of higher incentive accruals for this segment. The business also benefited from a $7 million FX tailwind. And for comparison purposes, please keep in mind that GIP had a very strong Q2020 when the segment benefited from panic buying and opportunistic sourcing benefits. GIP's strong second quarter performance carried over in May, the start of our fiscal third quarter. Global steel drum and rigid IBC buy-ins both grew by low to mid-double digits on a per-day basis versus the prior year due to stronger market demand and an easier prior year comparison. And sequentially versus April, we're basically flat. May buy-ins in our filling business improved notably from early in Q2, which is one indication that conditions in the U.S. Gulf Coast are starting to pick back up. I please ask you to turn to slide five. Paper packaging second quarter sales rose by roughly $55 million versus the prior year due to stronger vines in our corrugated sheet and tube and core businesses and higher published container board and box board prices. For comparison purposes, the prior year included $35 million in sales attributed to the divested CPG business. Paper-patching second quarter adjusted EBITDA fell by roughly $11 million versus the prior year, primarily due to a significant $24 million recovered fiber and transport cost headwind. SG&A expenses also increased year over year, primarily due to the $11.5 million of higher incentive accruals. In March, we announced a new set of price increases for recycled boxboard grades with immediate effect in response to strong demand and cost inflation. And we have fully implemented increases on all non-RISI-tied customer contracts and will benefit from this in the fiscal third quarter. Similar to quarter one, demand in our converting operations remain robust. Second quarter volumes in core choice, our corrugated sheet feeder system, were up roughly 37% per day versus prior year quarter. As demand for durables, e-commerce growth, the auto supply chain, and food and beverage remained very strong. Specialty sales, which includes litho-laminate bulk packaging and coatings, were up more than 31% versus prior year quarter. Volumes in our tube and core business accelerated through the second quarter and were up nearly 6% versus the prior year. In addition to continued strong demand in construction and fill-in market segments, demand for textiles picked up this quarter and reflects a double-digit increase year-over-year in this business. Paper Faction's fiscal third quarter is off to a strong start. In May, our volumes in core choice and our tubes in core business were up both double digits on a per-day basis versus the prior year and reflect flat to single-digit growth sequentially versus April. I'd ask you now to turn to slide six. I'd also like to take a moment to highlight our ongoing ESG efforts that are embedded into our strategy. In April, we published our latest sustainability report outlining the ESG achievements we made in 2020, as well as the outcomes from our second materiality assessment, which helped to shape our future priorities. We also recently announced a new greenhouse gas reduction target and continue to advance projects to improve our product circularity. Finally, we are deploying an inclusive leadership program to all global managers throughout the remainder of 2021 to further enhance Christ's already strong engagement culture. I encourage all of you to visit our website to review our sustainability progress and become more familiar with our strategy. I'd like to now turn it over to our Chief Financial Officer, Larry Hillshine.