Greif, Inc.

Have a good day and thank you for standing by. Welcome to the GRIEF First Quarter 2025 earnings call. At this time, all participants are in a listen-only mode. 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 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bill D'Onofrio of Investor Relations and Corporate Development. Please go ahead.

Thank you and good day, everyone. Welcome to GRIEF's First Quarter 2025 earnings conference call. During the call today, our Chief Executive Officer, Oli Rosgaard, will provide a recap of our recent investor day and an update on our announced optimization initiative. He will then discuss an additional key strategic announcement before providing an overview of current markets within our new reporting segments. Afterward, our Chief Financial Officer, Larry Hilsheimer, will provide an overview of our First Quarter financial results as well as 2025 guidance. Please turn to slide 2. In accordance with regulation fair disclosure, please ask questions regarding topics you consider important because we are prohibited from discussing material nonpublic information with you on an individual basis. 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 Oli on slide 3.

Thank you, Bill. And hello, everyone. I was pleased to meet so many of you at our investor day last December. As a reminder, at that event, we announced our new 2027 financial commitments of 1 billion EBITDA and 500 million free cash flow. Our bridge to 1 billion is very simple. First, over 100 million of known positive discrete items which will impact EBITDA in 2025 and beyond, notably the run rate impact of index paper pricing as of December 2024. Second, volume recovery, which as discussed at investor day, will be accelerated by our enhanced business model once the industrial economy begins to recover. And finally, we announced a $100 million cost optimization effort we are undertaking, which I will touch on in just a moment. We have high conviction in these three levers, and we are confident in meeting or exceeding the commitments we laid out. Please turn to slide 4. At investor day, we demonstrated how we lead with our packaging solutions in essential industries and how we are well-precisions to grow through capitalizing on our new business model, leveraging our deep competitive advantages and continuously improving our business through the GRIFE Business Systems 2.0 and our 100 million cost optimization program. We combined this earning growth with responsible capital allocation designed to maximize return on invested capital and drive profitability towards our long-term target of 18% plus EBITDA margin and 50% plus free cash flow conversion. While current industrial economics provide some uncertainty on near-term volume growth, we demonstrated in 2023 and again in 2024 that we can produce solid financial results regardless of the negative macroeconomic cycle. Today, I'd like to highlight the strength of our business in the context of a timely topic making headlines, tariffs. As you know, our supply channels are generally local to local. Additionally, thanks to our restructured business model, we have embedded flexibility and adaptability into our global supply chain, allowing us to seamlessly navigate disruptions without any material impacts. At GRIFE, we view our key suppliers as critical partners and by fostering strong collaborative partnerships, we respond swiftly and effectively to volatility. Our supply chain team has conducted a thorough impact assessment across multiple tariff scenarios and developed a robust action plan to effectively mitigate any E&L exposure. Regardless of potential tariff changes, our global scale, operational agility, and supplier relationships ensure we continue delivering legendary customer service while driving sustainable, profitable growth. Please turn to slide five. At our invest today, only two months ago, by the way, with the holiday season in between, Larry announced our commitment of at least 15 to 25 million of run rate savings identified by the end of fiscal 2025. Today, I'm pleased to update you that we have already identified five million of savings on a run rate basis and reaffirm our expectation to achieve at least 15 to 25 million on a run rate basis by the end of this year. These savings, which are primarily SG&A related, will fully benefit full year 2026 results and will also provide an incremental impact to the remainder of this year, which Larry will touch on in guidance. You may also have noticed we referenced 13 million achieved within our press release. That incremental eight million is related to our recently announced mill closures. However, we did not want to include that in our full year 2026 runway yet as we are still assessing the timing of closure costs, which may offset that benefit in short term. Larry will touch on that in a moment. We favor a bias by action and so expect to continue making good progress while also planning for near term accelerated growth. As we refine our roadmap to realize the full 100 million, we will continue to provide you with updates. Let's now turn to slide six to discuss another recent decision. The organizational realignment we executed in 2024, resulting in our new seven SBUs provided us the opportunity to step back and visualize how each piece of our portfolio fits into the greater drive enterprise and how that translates into meeting our aspirational growth objectives. This work also expands beyond our SBUs and focuses on what is core to the long term growth of GRIFE, including our capital deployment strategy. As such, while we have a long history with our land holding business, Sotera, it has also become clear to us that this is better suited on the new ownership. As such, we are announcing today our intention to sell the entire timber portfolio of approximately 176 acres and use the proceeds to reduce debt. We sincerely thank our Sotera colleagues for their years of dedicated service and for their world class execution mindsets. We are fully committed to supporting the business and our colleagues during this transitionary period. We will provide updates when available on this process. Let's now turn to slide seven to discuss current quarter trends. In our first quarter of 2025, we continue to see changing demand trends in every product and region. However, as with the past 24 months, the products we are investing in continue to outperform our legacy business. Polymers was up .7% driven by small containers and IPC demands in the ag and food sectors, particularly in AMIA. Integrated solutions likewise saw volume growth with both of our key product groups, caps and closures, and paints, linings, and adhesives, experiencing low double digit growth. A reminder that these volume figures are presented on the same store basis. In other words, agnostic of recent acquisitions. Fiber was the next strongest solution with volumes slightly up and operating rates in both paper and paper. The As you may have seen in some of our key customers earnings reports earlier this February, those customers continue to suffer from this extended industrial contraction. It was encouraging to see January BMI bump slightly above 50. However, we still feel the underlying demand in those sectors is uncertain. While we greatly appreciate our relationships with these important customers, it's important for us to balance out the cyclical nature of their needs by continuing our focus on growing in pharma, flavors and frequencies, foods, and agrochemical segments. Although we are shifting towards discussing our business on a solutions basis as opposed to a regional basis, I know a regional view is helpful to our investors, and so I will offer some brief comments. AMIA continues to demonstrate the highest level of resilience followed by APAC. LATAM has started to trend slightly downwards, which is something we are monitoring, but the clear outlier remains North America, where demand sentiment continues to be the most bearish. With that, I will turn things over to Larry to discuss our first quarter results on slide eight.

Thank you, Oli. Following up on Oli's comments on taking strategic actions towards our long-term goals, I'd first like to briefly touch on another strategic announcement. In late January, we announced the plant closure of our A1 paperboard machine in Hostel, Georgia, as well as our container board and URB flex machine in Fitchburg, Massachusetts. At Investor Day, our Chief Operations Officer, Kim Kellerman, talked about our quadrant analysis to assess plants as either invest to grow, protect the core, transform or fix, and invest or close. Despite the continued excellent work by our colleagues, at the end of the day, these two facilities fell into the lower quadrant and did not achieve the level of earnings necessary to support continued operations. The two closures will reduce our container board mill capacity by 100,000 tons and our URB capacity by 90,000 tons. In the short term, this action will be an EBITDA headwind of 3 million in fiscal 25 versus our prior guidance due to one-time closure costs and the timing of shifting tons to other facilities. We expect this closure to be EBITDA positive of 8 million by 2027 due to the increased efficiency of those tons being redeployed into our remaining mill network. As we are still working through the closure and not certain of the exact timing of the benefits, we have not yet included it in the run rate cost optimization achievement that Oli touched on earlier. While building for the future, we have also remained resilient in our -to-day execution. Adjusted EBITDA for the quarter was 145 million, an improvement of 7 million over the prior year quarter and in line with our expectations for Q1. Adjusted EPS for the quarter was 39 cents which was lower than prior year due primarily to the non-recurrence of a one-time tax benefit of 48 million dollars as well as 14 million dollars of higher interest expense this year due to higher debt from recent acquisitions. Working capital management was solid in the quarter. However, adjusted free cash flow was a net use of 62 million, slightly higher of a use than prior year due primarily to the higher interest expense. Please turn to slide 9 where I'll provide some additional context to our performance at a segment level. Gross profit margins in three of our four segments increased year over year due to effective cost management and GBS 2.0 gains despite the stagnant demand environment that Oli touched on earlier. Integrated solutions gross profit margins were year over year primarily due to product mix. Note also that Q1 results for our now divested Delta filling business are presented in integrated solutions prior year results and was an EBITDA contributor of 2.8 million. While the overall gross profit improvement did drive 7 million positive EBITDA year over year, EBITDA margins were also impacted by higher year over year SGA costs. As we discussed throughout 2024, we anticipated short-term SGA cost inflation as we reallocate and invest resources to areas of maximum long-term value creation. Right now, we are at the peak of that curve. We have completed our business reorganization in 2024. Our new structure and SBUs are in place and now is when we will start aggressively pursuing streamlining of those processes. This short-term divergence between gross profit and EBITDA margin percentage is mostly due to higher SGA costs, which is one of the key opportunities listed in our $100 billion cost optimization initiative, which Oli discussed earlier. Please turn to slide 10 to discuss 2025 guidance. As a reminder, this fiscal year is only 11 months and will conclude September 30th, following a two-month fourth quarter. In Q4, we presented a low-end only view of guidance, which incorporates only known upsides year over year, but all downsides of which we have visibility. Given the lack of any compelling demand inflections, we concluded that low-end guidance continues to be appropriate. However, we also feel it is warranted to raise the low end for specific known upsides. First, an additional $27 million of positive price cost, which reflects the $40 per ton container board pricing increase announced by RISC last Friday, as well as our lower four-year OCC assumption of $85 per ton. It additionally factors in better price cost in our polymers and metals business, which is trending better than our original low-end guidance assumed. As I mentioned during our Q4 call, we anticipated a short-term headwind in Q1 related to the flow through of high-price steel in our balance sheet. Our supply chain team did a good job of neutralizing that impact. Additionally, our metals team has had great success with value over volume discipline in the quarter. Those two factors drove the metals price cost tailwind in the quarter. Second, $8 million of lower transport and manufacturing costs, which are actualizing lower than assumed in our original low-end guidance due to continued solid -to-day management by our GBS group. Lastly, we are including $3 million, which reflects the portion of run rate impact of the cost initiative savings Olli touched on earlier, which will be beneficial to fiscal 25. However, that is offset by the $3 million headwind from the recent mill closures I discussed earlier. This net change results in a new low-end EBITDA guidance of $710 million for fiscal 25. Our low-end free cash flow guidance is also raised by $20 million to $245 million for the full year. Partially offsetting our EBITDA increase of $35 million is an assumption of $20 million higher working capital costs, which reflects the working capital impact of improving paper price costs, but additionally being low-end guidance, we have contemplated some downside for further cost inflation without the benefit of offsetting mitigating actions. Separately, we assume a small $6 million incremental tailwind in other operating costs, which balances to the $20 million free cash flow guidance increase. This is a low-end view, and so our expectations is not that the business will end the year at this performance, but is the only data point which we have conviction in sharing at this point. In subsequent quarters, we will reassess returning to the range guidance for our usual approach. With that, let me turn it over to Ole to close on slide 11.

Thanks, Larry. As demonstrated at our recent investor day, we continue optimizing and fine-tuning our business. We are transitioning from good to great. We are a market leader in our chosen markets. We have strong track records and are very disciplined in the way we execute our strategies. In other words, we are well-positioned for growth. We are helping ourselves to grow in a very depressed market, and when that market just returns even the slightest, we are in an ideal situation to take off. Thank you for taking the time to listen in today. Operator, please open the lines for questions.

Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. One moment for our first question, which will be coming from Gansham, Punjabi. Your line is open.

Yeah, thanks, Operator. Good morning, everybody. I just want to go back to the first quarter results specific to fiber. Just your view as it relates to whether that came in on an operating profit basis or whichever way you want to look at it in line with your plan, because it was quite a bit below our expectation in context of your price increases, et cetera. Thank you.

Yeah, Gansham, thanks for the question. Let me go to that. It came in line with our expectations, actually a little bit slightly better. Here's the issue that's confusing the matter. We have a protocol for allocating SG&A across the businesses. We'd ask all of your patients as we transition to this new business model, because it's having impacts. The way that we allocate our SG&A is based on value add, which is just our price versus less raw material. I would tell you that gross profit is a really good proxy. What happens is as margins are expanding in the fiber business, it gets allocated a bigger portion of our SG&A. Somebody might say, well, why do you do that? Well, if you talk to virtually any CFO or controller and you talk about getting into allocations among your internal businesses, it is a rabbit hole you'd go down forever. I mean, people argue about how you allocate. So we have a basic protocol for how we've done it. In our former operating model, you really didn't see it because it'd go across geographies and you had all of the different segments going into those geographies. So again, I'd ask you to bear your patience, but yes, fiber was good for us. It's picked up a higher allocation of SG&A and then SG&A was higher than what most of you build in your models. We thought we had done a good job of articulating the fact that we were going to have SG&A costs, for example, from IPEC Chem in this first quarter since we didn't have it last year. We thought we'd explain, we'd make some investments that we're going to turn around. Obviously, we didn't explain it enough. So that one falls on us. We weren't doing as well as we'd hoped relative to all of you as our customers slash investors.

Okay. That's very helpful, Larry. Thank you for that. And then, Oli, your comments on the global businesses, EMEA being the most resilient and North America maybe at the other extreme in terms of being the weakest. Is it a difference in terms of end market exposure that would explain the two because that's certainly counterintuitive relative to the macroeconomic strength between the two regions? And then related to that, what is your expectation in terms of

as we laid out even in 2022 and then at our recent investor day, which end segments and end markets we are targeting for growth and all of those are GDP plus growth markets. One of those is the agrochemical markets. And that's really where you have seen significant growth here recently coming out of both EMEA but also North America for starters. And we continue to focusing on those markets. And just to remind you, it's food and beverage, it's pharma and medical and it's flavor and fragrance in addition to agrochemicals. As to your second question, just remind me again, Gunsham. Yeah,

the embedded volume assumptions as you kind of think about the portfolio for fiscal year 25.

Yeah. So we have seen obviously in some of these markets I just mentioned, especially in polymer markets, we have seen some sequential improvements. But I would say our caution being too optimistic. Generally, we don't see any difference from the previous quarter sequentially. So I haven't seen any inflection point yet. Yeah, you could call this green shoes, but it's too early to say anything on that. So I'm cautiously optimistic about the future. Thanks so much.

One moment for our next question. And our next question will be coming from Matt Roberts of Raymond James. Matt, your line is open.

Hey, good morning, everybody. Thank you for taking the questions. Maybe Larry, to that point on the SG&A that some of us might have missed in there, could you just help us frame the margin expectation going into 2Q and maybe how that progresses through the year and any lingering impacts we should expect in the next quarter? I just want to be caught off guard on my own internal model there.

Yeah, good question, Matt. Thanks. So if you look just to give some perspective and a little more color back on some of this element, when we look at SG&A sort of year over year, in IPAC chem is $11 million, which $5 million was amortization related to purchase price allocations on the first of all items, goodwill, that kind of stuff, intangibles. You've got another element that's a little bit less clear, but when we went to this new structure, re-looking at all of our enabling functions and where costs presided, we ended up moving some people out of what were manufacturing channels into enabling functions like into Kim Kellerman's group or into supply chain out of, you know, backers. That ended up us just doing a shift of 3 million of cost of goods sold into SG&A levels on a full year basis. It's like 10 million. So I'm just talking about quarter right now. And so you've got those two items. As we go through the year, obviously, once we get to we bought IPAC chem, you're going to have not that year over year increment. And just generally, our EBITDA margins are going to steadily improve through the year, which is typical for us. You get volume lifts, which leverages our fixed cost leverage and those kind of things. So a steady increase to margins through the remainder of the year and then that year over year comparison matching on IPAC chem.

Very helpful. Appreciate all the detail there, Larry. And then secondly, maybe if I could ask on the Timberland sale, do you have any additional color? I know it's early in the process, but any additional color on this asset and how may it compare to the Timberland that was sold in 2021? I believe Sotero was 9 million in EBITDA last year versus I think less than 2 million of what you sold in 2021. So what are any differences that we should consider when thinking about proceeds there in terms of either age or productivity of the timber there or any other business considerations of this asset that make it different? Thanks again for taking the questions.

Yeah, totally. Yeah, I mean, we can't comment on timing or value at this time. And 2021 is a long time ago. And when you look at the different tracks of Timberland and so on, it's very different. You can't really compare them. We are highly confident in both interest and value. And in fact, we on an ongoing basis receive unsalisted offers for Timberland. And we know we can get a very good price for it, but we can't comment on it at this moment in time.

That's certainly fair, Oli. But maybe if I could kind of a different angle on that. We talked recently about that increase in polymer mix and even getting to 30% organically. So maybe once land is gone and some of the fiber closures, maybe talk about what the polymer mix will be or what the remaining gap to get that level will be. Is it largely due to higher growth and markets from polymers or just where you see that shaking out? Thanks again.

Well, yeah, but as we explained that, both Invest Today in 2022 and last year, we are shaping our portfolio and we have identified the end segment markets like I mentioned before, Ag Chem, Food and Pharma and so on as GDP plus growth end segments. Those end segments are serviced with basically polymer solutions. And that's why we talk so much about polymer solutions. The sale of our land is not linked to that. The sale of our land, the proceeds will be used to pay down debt basically. That's it. And they will take our leverage down and give us more firepower for the future. But we will continue to focus on those end segments I mentioned and grow our customized polymer business.

Yeah, man. I'll what Oli said earlier just a little bit is, while the prior sale was so long ago, it's not indicative in all pieces of land are different. It's like buy pieces of city downtown properties different than out in the suburbs, but everything's different. That said, a lot of things have been happening in land management and our team is really good at what they do. So things like carbon sequentration, solar farms, all of those things have actually been increasing the value of timberland. Does that mean every one of our acres is going to be worth more than the last time? We don't know. But like Oli said, we've gotten a lot of just inbound calls with broad offers. Most of the time, there are higher values than what we got, we sold before, but that doesn't guarantee anything. The other part of that is that we will have a tax haircut. We've said before, we always have low tax bases. And just as a perspective of time, the last time it took us about eight months to do the transaction, whether it's eight months, 10 months, six months, we don't know. But what we're going to do is maximize value. And that's the primary focus of this.

Larry and Oli, thank you both again.

And one moment for our next question. And our next question will be coming from Adit Shrestha of Stiefel. Your line is open.

Hi, good morning. Thanks for taking my questions. Just going back to the guide, maybe could you help us also bridge sort of the $27 million price cost spread? How much of that is actually within fiber versus polymer and metals? And just so that I'm understanding clearly, the $15 million to $25 million run rate savings, that's actually not built into the guidance. So that creates some sort of upside. I think you've captured $3 million of that. Is that correct?

Yeah, that's correct. So just to bridge, so you're going from the $675 guide, the price cost element of it is about $27 million. We have roughly 800 million tons of container board, $40 bucks, that'd be $32 million a year, half a year, $16. Pick up another $3 million on our OCC cost assumption going down for the full year, average $87 to $82 gets you $3 million. So 19 of that $27. The other is split across the remaining substrates, a little bit actually price increase in integrated products and benefit in both polymers and steel at relatively small levels.

Okay, great. Thank you. And in terms of volume, so that we get it right, how should we think about the cadence for going to QQ and into sort of the second half and for the full year, how should we think about long year over year? Yeah, I think the way to look

at it, I mean, first of all, you got to build in IPAC chem because we acquired it last April. So that impacts things for the next month and a half, February, March, part in April. You then have, I would say, we don't have a clear picture of what we think is going to happen on volumes. If we did, we'd have a range. I mean, that's the whole constraint here. We don't know when the inflection is going to come. But I would say the best guide to use is just look at the same path that we've had for the past two years. I mean, that's what we've got built in and that's what I'd say you should utilize in yours. So slight pick up in Q2, Q3, and slight fall off in Q4. Generally, that's the high level stuff.

All right, thank you.

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

Hi, guys. This is Nico for Mike. Thanks for taking my questions. First off, can you maybe elaborate on some of the demand trends in Boxport, specifically as your closure announcement for Ostel, I think it includes commentary that specific sub-segments of demand were declining. And then maybe an early read on trends you're seeing right now in Boxport and Canobor.

Hi, Nico. It's Oli here. So total Boxport, especially flat year on year. And when you look at the URB business, then the edge protection is softest. But the tube and cords themselves, like spiral bound products, they're actually off year on year. Until we see a paper market inflection, we don't really see a big drive off demand. And the biggest product we have is actually core for paper. So we're selling that to paper mills. So when we see a demand inflection there, then that business will take off as well.

Got it. Thank you. And then I guess covering all your strategic actions and in the framework of the quadrant analysis you had at the investor day. I mean, are there, if you can answer, more mills that fall into that kind of correction or invest to grow, invest to close buckets? Yeah,

Nico, we couldn't comment on that right now. We're looking at all of our footprint. Obviously, that impacts human beings and jobs. So we're not going to talk about what's on a list at this point in time. But everything we have is under review as part of this cost optimization.

No, completely understand. Thank you very much for the call.

One moment for our next question. Our next question will be coming from Richard Carlson of Wells Fargo. Your line is open, Richard.

Good morning, guys. So just wanted to revisit the timberland sale and wonder if that is an indication that you have a full pipeline and some capital that you can redeploy there. And then secondly, I also wanted to ask about the competitive landscapes specifically to polymers and metals. Just wonder if you're seeing any signs of stress in some of your smaller competitors.

I'll address the first part. Oli said it before. We're selling the timberland because we looked at our portfolio. We had these incoming calls. We think it's the decision that it's a better asset for somebody else than us. And we're going to use the proceeds to pay down debt. And Oli's also said before, our M&A pipeline always is robust, but that doesn't mean you're going to spend it tomorrow either. It means we're analyzing a lot of things and looking at a lot of things. Our first priority right now is always paying down debt.

And with that, Richard, we continue to work on our pipeline and the sledge that is solid. I spent a lot of time with, you know, with Target and all that. And we're not going to let up on that, but we don't always decide the timing of these things. And with regard to competition, basically, we focus on value over volume. And that's served us well in times like this when you have more macroeconomic parameters in the market, then that competition tends to be more hungry for volume. And if we can't get a fair price for what we do and the service we provide, we walk away. Those customers, you know, tends to come back to us because our service and our product quality is very, very high compared to a local player who, you know, who wants some volume. So we don't see that as an issue. And you'll probably ask, have we lost market shares? And answer to that is a big no, we haven't. So in other words, we're confident in our ability to maintain our market position due to our differentiated value proposition.

Very helpful. Thank you very much.

And as a reminder, to ask a question, please press star 111 and wait for your name to be announced. Our next question will be coming from Daniel Harriman of Sedotian Company. Daniel, your line is open.

Thank you. Hey, guys. Good morning. Thank you for taking my questions. Kind of following up from an earlier question with the kind of shift in focus now towards end markets over geographies and all the announcements from the investor day, I was hoping maybe you could talk a little bit about the end markets in which you're most excited about and have the greatest level of confidence, you know, as we go out through 2025. And then on the flip side, you know, where you have the most concerns and then with your ability to continue to execute and operate in a difficult environment, and the increase in the low end of the guide, I'd just be curious to hear your thoughts about where you are, you know, how you feel about your net leverage ratio.

I'll take the first question and hand you over to Larry. So just talking about the end markets, the one we are most excited about is agrochemical. That's the one we went into agrochemical in a big way when we acquired Reliance Lee and IPAC Chem and basically became the global leader in that market, providing, you know, very special solutions to customers. Another one that we have grown in is food and beverage, where we have some very large global customers as well, we provide solutions to the end market that excites us as well, where, but which takes a fair amount of time to get into is the farmer space. We do have some solutions that we provide to some farmer customers, but the runway there is very, very long. And it takes time, but obviously that end market excites us as well.

And Daniel, relative to our leverage ratio, you know, first of all, I mean, obviously, we were thrilled that our board was wholeheartedly supportive of us moving forward on selling our land business. Although it's hard to part ways with our colleagues that are so wonderful and great down there, but it's the right thing for us. Obviously those net proceeds are going to help us lower our debt ratio quite significantly. That said, even if we weren't, I have not been at a discomfort level at all because we're operating well in a very difficult environment. And as we've said before, if we recover to just normal volume levels out of this industrial recession, whenever this happens, I mean, we're looking at $150 million of EBITDA lift from just that. And that doesn't even take into impact our cost optimization efforts. And even that billion dollar bridge we showed at investor day didn't include the most recent price increase. So we've got lots of factors here that are driving EBITDA up. So that debt leverage ratio is going to come down very rapidly as the industrial economy improves.

That's really helpful. I really appreciate it guys. And best of luck in the quarter.

Thank you, Daniel. Thanks.

Thank you. And I'm showing no further questions at this time. I would now like to turn the call back to Ole Rosgaard for closing remarks.

Thank you. And I would like to thank our analysts and our investors for your time today and for your continued interest and investment in GRIF. We remain committed to delivering exceptional results and are focused on accelerating our performance towards our 2027 commitments of 1 billion EBITDA and 500 million in free cash flow. We are confident that our relentless pursuit of operational excellence and our customer-centric growth will create enduring value for all our stakeholders. Thank you.

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