Greif, Inc.

Good day, and thank you for standing by. Welcome to the Greif Fourth 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 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Bill D'Onofrio, Vice President of Investor Relations and Corporate Development. Please go ahead.

Good morning, everyone, and thank you for joining Grice Fiscal Fourth Quarter 2025 Earnings Conference Call. Today, our CEO, Oli Rosgaard, will provide a strategy and market update, followed by our CFO, Larry Hilshimer, with a review of our financial results and 2026 guidance. Please turn to slide two. 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. 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. Two important reporting clarifications for this quarter. First, our container board business was sold on August 31st. As such, that business is presented as discontinued operations for its one month contribution to the quarter. Unless otherwise noted, all financial results and commentary discussed today will relate to continuing operations only. Second, due to our fiscal year end change, Q4 reflects a two-month reporting period, August and September. For consistency, all prior year comparatives in today's presentation are also shown on a two-month basis for August and September. I'll now hand the call over to Olli on slide three.

Thanks, Bill. And thank you all for listening in today and for your interest in GRIF. With the short 2025 fiscal year, Due to our fiscal year change, the two-month fourth quarter, the sale of our container board business this quarter, and the ongoing cost optimization program, we know there's significant amount of change and noise for this quarter. This shows up in our tax results, which Larry will be discussing in a moment. Thank you for bearing with us. We are excited for the long-term earnings growth and value creation our strategy is unlocking. We closed fiscal 25 as a more focused, more agile, and more strategically aligned company than at any time in our history. Our transformation is accelerating and the results are beginning to show. On October 1st, we finalized the sale of our land management business, generating 462 millions in proceeds. Those funds were used immediately to reduce debt and our performer leverage ratio is now under one times. We have entered fiscal 2026 with a meaningfully stronger balance sheet with enhanced capital efficiency built for resilience. Together with the divestiture of our container board business in the fourth quarter, we have reshaped Rive's portfolio to concentrate our efforts where we have the greatest opportunity to grow EBITDA, expand margins, generate cash, reduce cyclability, and deliver durable returns for our shareholders. We are pleased to report our latest Net Promoter Score Survey result of 72, an improvement of three points from last year, and further extending our world-class customer service performance. That improvement is a direct reflection of the trust our customers place in us and our ability to deliver for them. The best companies build stronger relationships when things are difficult, and our NPS reflects our conviction that we will capture significant value when demand returns. As Larry will touch on in a moment, our full year 26 guidance, despite being low-end, reflects continued earnings growth and a free cash flow conversion rate of 50%, demonstrating our progress towards the long-term objectives laid out at Investor Day in December. We are proud of how we ended fiscal 2025, but even more energized by what lies ahead. Our Build to Last strategy is firmly embedded in our organization. We are shaping and sharpening our portfolio, strengthening our balance sheet, and investing for sustainable growth. Please turn to slide four. Our commitment to value creation shows in how we manage cost. In fiscal 25, we achieved 50 million in run rate savings from our cost optimization program, more than double our stated full year 25 commitments. To date, we have achieved approximately 15 million in savings related to network design and operating efficiency. This is not limited to strategic footprint actions. It also includes deploying AI solutions to reduce scrap and improve OEE, strategic planning actions to minimize freight and maximize on-time deliveries, and structural improvements to our global procurement strategy. The remaining run rate savings are related to SG&A. Our updated business model has enabled much more efficient decision making. It has also led to difficult but necessary decisions to eliminate areas of redundant cost in the updated model. As of quarter end, we have eliminated approximately 8% of professional roles within the company or 190 positions. These changes have been carefully considered over this past year and were acted on in Q4 in a manner which allowed us to communicate to impacted colleagues our heartfelt appreciation for their contributions to GRIFE. These actions drove the significant acceleration beyond our previous full year 25 commitments. Due to our progress to date, we are raising our anticipated fiscal 26 cumulative cost saving run rate commitments from 50 to 60 million to 80 to 90 million. We will also expand our anticipated full year 27 cumulative run rate commitment from 100 million to 120 million. Our cost optimization program has continued to evolve since the start of the year. What began as a top-down initiative is now being fueled from the ground up. Across the organization, our colleagues are embracing the challenge, identifying new opportunities, driving local action, and creating meaningful change. This work is making GRIFE a more focused and agile organization, better positioned to capture value as demand returns. Importantly, this isn't just about taking costs out. It's about building an agile next-generation Greif. The Greif business system enables repeatable excellence across more than 250 sites in 40 countries, allowing us to do more with fewer resources. We're removing unnecessary layers to empower local leaders and speed up decision-making. And we are embedding a mindset of efficiency, responsiveness, and value creation across every function and facility. This isn't a one-time initiative. It's a structural shift in how we operate, compete, and grow. Excuse me. Please turn to slide five. A significant finding from our cost optimization program, which is now realizable as the divestment of container boards, are the clear and meaningful synergies in operating adhesives and recycled fiber as part of sustainable fiber solutions. Therefore, beginning in fiscal 26, those products will be reported within our fiber segment results. These changes are designed to enhance our go-to-market approach while also benefiting our cost optimization program. This leaves the integrated solution segment primarily closures effective October 1st we are renaming that segments to innovative closure solutions which is a highly profitable and critical growth focus force please turn to slide 6 our Q4 results reinforce our strategic focus on four target end markets in customized polymer solutions Volumes were flat year over year. However, small containers continued positive volume momentum driven by the agrochemicals in markets. This is an area where we have been investing to grow both organically and through M&A. Mid single digit declines in both IVC and large polymer drums driven by softness in industrial markets in EMEA during the quarter. offset the positive growth in small containers. In durable metals, volumes declined 6.6%, reflecting softness across industrial end markets. Our team remains focused on managing the business for cash flow and optimizing cost, while maintaining a strong position that will capitalize on growth as demand returns. Sustainable fiber volumes declined 7.7%, reflecting approximately 1.7 million tons of URB economic downtime during September. Converting was also negatively impacted by continued soft fiber drum demands. Integrated solutions continues to see volume improvements driven by closures. These products, generating 30% plus gross margin, continue to win new business through innovation and cross-selling, including on our DrivePlus digital platform. In wrapping up my section, I'll close by pointing to a few items which clearly demonstrate, through the noisiness of Fulia 25, the value creation occurring under our strategy. Our polymers and closure business are growing. Our cost optimization is well ahead of plan and it has expanded to 120 million of anticipated total commitments. Our free cash conversion was nearly 50% in 2025 and expected to be at 50% in 2026. Our performer leverage is below one times. is a strong, doable company, and we're accelerating our value creation. I'll now turn it over to Larry for the financials on slide seven.

Thank you, everyone. Or thank you, Ollie. Hello, everyone. As a reminder, our results are presented excluding the container board divestment, except the free cash flow, which compares total operations to the prior year. Additionally, due to our fiscal year change, Q4 reflects a two-month reporting period August and September. For consistency, all prior year comparatives in today's presentation are also shown on a two-month basis. Adjusted EBITDA for the quarter was $99 million, which was 7.4% above the prior year. EBITDA margins also expanded year-over-year by 140 basis points due to better price costs across all segments and the building momentum of our cost optimization. Adjusted free Free cash flow also improved year-over-year by over 24.3% due to the increase in EBITDA and our team's strong working capital management to close the year. As noted in our presentation, SG&A includes $28 million of operating costs specifically related to the container board divestment, which are excluded from EBITDA. Excluding these costs, SG&A was slightly above the prior year quarter due primarily to the two-month quarter, including certain annual or quarterly costs which occurred over a shorter year. Adjusted EPS for the quarter was one cent relative to 59 cents in the prior year quarter. Our Q4 tax expense was impacted by non-recurring items affecting pre-tax income and the residual nature of continuing operations after removing discontinued operations. Tax expense also includes various taxes either not based on income or not directly correlated to current period income, the impact of which is magnified due to the lower income reported in this two-month period. Finally, the tax expense was also influenced by the mix of earnings across the jurisdictions in which we do business. Please turn to slide eight. In polymers, growth was led by small containers consistent with our long-term strategic focus on less cyclical, margin accretive, and markets. Sales and gross profit were both up year over year, with margin tailwinds from mixed pricing and operational discipline. In metals, results reflected volume softness in industrial and markets. Sales and volume declined, but we continued to generate healthy cash flow and remained focused on cost reduction and enhancing agility to react as demand recovered. In fiber, the decline in sales was tied to volume, with URB mill downtime late in the quarter. Despite that, gross profit dollars and margin improved year-over-year due to continued benefits from price cost and tight cost management. Integrated solutions, sales, and gross profit dollars declined year-over-year primarily due to lower published OCC prices in our recycled fiber group. Volumes in recycled fiber enclosures were both solid, and the products make impact of closures led to higher gross margins year-over-year. Please turn to slide nine. Given the continued demand environment we are operating in, we believe it is prudent to present low-end guidance to begin fiscal 26. Our low-end scenario assumes flat to low single-digit volume declines in metals and fiber. It also assumes low single-digit volume improvement in polymers and closures from growth in our target end markets. The net impact of these volumes assumption is flat volume-related EBITDA performance to prior year. Transportation and manufacturing costs were also assumed flat, representing cost savings on our cost optimization offsetting normal inflationary cost increases. The two major positive drivers in our bridge are SG&A and price costs, both of which reflect the accelerated progress on our cost optimization program. SG&A of $45 million reflects $39 million of incremental cost optimization, of which $17 million is within the fiscal year 25 run rate and 19 million is within the fiscal 26 run rate both of which are expected to benefit fiscal 26. the additional 9 million represents lower variable costs including incentives price cost reflects 12 million of incremental cost optimization this is primarily in the form of sourcing benefits in polymers and closures while metals cost base is assumed flat price cost also reflects an $18 million incremental benefit of URB pricing recognized in fiscal 25 and lower expected OCC costs. Lastly, to round out our bridge, a $10 million EBITDA headwind from the lack of land management and a benefit of a $7 million positive FX driven by the weakening of the U.S. dollar. Our free cash flow Low-end guidance is $315 million, a 50% conversion ratio, demonstrating our progress towards our long-term objectives. We expect to spend approximately $155 million on CapEx this year. Our lower cash interest cost reflects our strong balance sheet, and our other cash use includes approximately $40 million of cash restructuring related to the cost optimization, as well as pension costs. Working capital assumes a source of $50 million driven by both low end volume assumptions and optimization gains. Please turn to slide 10. With our pro forma leverage below 1.0 and strong cash flow guidance of $315 million, we anticipate minimal cash needs for debt service costs in the year ahead. Similarly, after divesting our most capital intensive business earlier this year, Our maintenance CapEx needs are approximately $25 million lower. Given the strength of our balance sheet and strong and durable free cash flow generation, our capital allocation outlook demonstrates the value creation driven by our business model. As a result of our fiscal year-end change, our scheduled Board of Directors meeting is now one month following each quarterly earnings release, still aligned to the previous fiscal calendar. As such, our dividend payments will be considered as usual by the Board on that same cadence, with the next meeting occurring on December 9th. Further, based on our strong conviction and our own ability to meet our long-term commitments and our belief that our stock currently presents compelling value, we plan to execute as quickly as possible on an approximately $150 million open market repurchase plan utilizing our available authorization of approximately 2.5 million shares. Additionally, we intend to seek board approval of a new stock report purchase authorization that will enable continued repurchases as part of our go-forward capital allocation strategy, which we expect to include regular stock repurchases of up to 2% per year of our outstanding equity value. While that leaves ample capacity for growth capital, we're going to be prudent in allocating it while maintaining our strong balance sheet. Where we do deploy growth capital, we will prioritize thoughtful and focused organic investments which drive high returns on capital. Please turn to slide 11 for closing remotely.

Thank you again for your interest in GRIFE. We acknowledge that the last 11 months have been bumpy, given all the change occurring, and that showed up in this quarter in our tax results. As always, my commitment to you is transparency and candor. We are proud of how we finished fiscal 2025, more focused, more efficient, and more aligned with our long-term strategy. We are also excited for a clean-up outlook in full year 26 and will continue to communicate progress on our strategy with as much clarity as possible. The divestments of Container Board and Land Management have meaningfully reshaped our business. We are now positioned with a sharper portfolio, lower capital intensity and stronger financial flexibility than ever before. Our cost optimization program is ahead of plan and with an expanded 120 million commitments by the end of 2027. We are building a stronger business, one that creates value in any environment and delivers accelerating performance as volumes return. Thank you for your continued support. Operator, please open the lines for questions.

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

Hey, guys. Good morning. Morning, Gansham. Morning. So I guess first off on, you know, polymers and your comments about growth in some of the target markets that you've realigned towards. Can you just give us some more color on that, Ole? I mean, you know, many of these end markets you referenced, ag and, you know, flavors, et cetera, are still quite challenged just based on what's happening, you know, at the CPG level, et cetera. So what is driving that improvement? Is it share gains? Is it just commercial, you know, success? What's going on there?

Yeah, let me first give you some general comments. So our macro environment is, as you know, in a prolonged down cycle, right? And that's amplified by trade and tariffs uncertainties. Demand softness remains a major driver for our customers' demands. And for example, weekend markets in construction and manufacturing are hurting volumes. In terms of the ag sector, we decided as part of our Build to Last strategy to go into or invest in end segments that grows faster than GDP. One of them was the agrochemicals market that is serviced by small containers and jerry cans and we consolidated that market to become a global leader and that has really paid off and it's in that market particularly we have seen significant growth. But when you look at these factors, our operational excellence, cost discipline, cost our program and all the actions we just mentioned That means that that portfolio has become even more valuable to us in the near term.

Got it. And then in terms of fiscal year 26 guidance, you know, specific to EBITDA, how should we think about the sequencing of that, you know, on a year-over-year basis? Is it sort of flat to down in the first half and then an improvement in the back half? What's your baseline assumption at this point?

As usual, the first quarter will be the weakest, and let's talk about roughly 20% of the year, and then the rest of the quarters will be 25% to 30% each, sort of modeled the same way after prior year.

Got it. And then just one final one, Larry, as it relates to the low-end, if you will, guidance characterization, is it just purely volumes that would be determined as it relates to maybe the upper end bandwidth? Is that how we should think about that?

I think volumes would be the big driver for certain, but also we have found acceleration in our cost optimization program. As Ole mentioned in his prepared remarks, this is really catching fire among our colleagues, and we have a program of identifying ideas from the ground up So we also think there's upside in our cost optimization numbers for the year as well. Good. Thanks so much.

And our next question will be coming from Mike Roxland of Truist Securities. Your line is open.

Thank you, Ola, Larry, Bill, Dan, for taking my questions, and congrats on all the progress. Thanks, Michael. Just wanted to follow up on Gansham's question in terms of the 26th guide. So Larry, if volumes come in weaker, because certainly we've heard about weaker volumes from a majority of our companies this earnings season thus far, is cost the leverage that you have available to pull to offset incremental volume weakness to meet your guide for 2026?

Yeah, I would say two things. The bottom line answer to your question is yes. We can always pull back further on shifts and temporary furloughs and those kind of things. However, this is what we said. It's low-end guidance. This is pretty pessimistic on the volume assumptions already. So we don't anticipate that being an item, Michael. But yes, we still could pull incremental levels on a variable cost basis if we needed to.

Hey, Michael. Just to remind you that throughout the year, pricing has been under pressure. that's due to oversupply and weak demand and despite of that we have increased our margins and performed solidly and you know i don't think that would change going into 2026. got it very helpful um in terms of the cost optimization programs you guys raised that for 27 by 20 million dollars um as you've gone through the portfolio do you

Can you comment on whether there's even more upside to be had or additional cost opportunities that you've come across that maybe you haven't specified right now, but you're very scrutinized and you think that even there is an additional amount above and beyond the incremental 20?

Obviously, our sights are much further and much higher, but we use the word commitment here. And at the moment, we are very, very comfortable committing to the 120 million we talked about. But obviously, as Larry just alluded to, that number could go up as we go through the year. But we want to get a little bit closer before we would be able to increase our commitments. But we are very bullish about that.

Yeah, Mike, we have a stage gate process that we're There's a lot of discipline before we get to something we classify in stage gate three and four, which is where we're more certain. But, yeah, we believe there's potential upside.

Got it. And then final questions before turning it over. Last quarter, you mentioned a few times on the call that some of your larger chemicals companies, or customers, excuse me, We're not doing so well. You see that through even in earnings. Your IBC volumes declined mid-single days this quarter. They were down mid-single days last quarter and had been weak for some time now. Now, realizing the chemicals of the cyclical business, have any of those customers indicated to you that they intend to maybe close capacity permanently or right-size their businesses? And if so, what does that ultimately mean for your IBC business longer term?

I mean, as I said, demand softness is out there as a major driver for our customers. They have adjusted their business, and a lot of them are relying in terms of chemicals on construction and manufacturing as end markets. I don't think that it'll get any worse. That's my personal opinion when I speak to customers and see the numbers. The big question is when will it get better? And we're not sitting here waiting for it to get better. As you've seen, we are acting. We are highly focused on organic growth. We're deploying capital for organic growth in the specific segments that we have alluded to. We are taking costs out of our business and our business is generating a lot of cash and we're doing our share buyback of 150 million. So we're helping ourselves. We're controlling what we can control. And we're not in a waiting position. Of course, when volumes return, that would be nice, and we will take that as an extra benefit.

Yeah, Michael, I would supplement all these comments, if this makes sense. We're hearing less bad comments. Less bad than they were. And the other thing that's somewhat encouraging is the trending down of mortgage rates. You know, as most housing industry analysts, investors, believe that if you get with a five-something interest rate, pent-up demand in existing homes, sales will take off. That's a big driver for the chemical companies and therefore for us.

We're encouraged by the two times rate cuts we've seen. But it's not going to change anything overnight. But if we see more rate cuts, you know, it will have a positive effect on demand, we believe.

Got it. Very clear. Appreciate the call and good luck in fiscal 26. Thank you, Michael. Thanks.

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

Hey, Oli, Larry, good morning. Appreciate the call. Can you hear me okay?

Yes, yes.

Okay, great. Yeah, thanks for all the color. It's good to see the cost coming through and all your color on capital allocation. And on capital allocation, so balance sheets in a great spot. You initiated the open market repurchase for $150 million. So given that low leverage and the now newly discussed long-term repurchasing intentions of I believe it was 2% per year, Does that change how much capacity remains for M&A or has the hurdle rate for M&A changed versus your view of, I think what you said, stock offering compelling value? In all those things considered, where do you expect leverage to shake out by year end 26?

Let me just answer the first one and then let Larry deal with the leverage one. So on M&A, First of all, our focus is on growing much faster organically, and we are deploying CapEx for that. We have a number of areas we have invested in for organic growth. In terms of M&A, we've said many times we have a very solid pipeline. We keep working on the pipeline. We don't expect any transformational M&A to happen. We have our focus on what we call target M&A to complement what we're doing organically. And our criteria, they remain the same. We are looking at M&A with EBITDA margins in the 20s, 50% free cash flow conversion and primarily within polymers and primarily within the closure segments. yeah you might want to supplement that or maybe talk to him about talk to the group about hunters and farmers and also about ironcraft yeah so we have uh reorganized our entire commercial organization globally and everything from being we've been we've been we've been farmers in the past and taking really good care of our existing customers, but we've changed that to become more hunters now. We've changed the incentive program, we've changed the way we operate commercially, and we are targeting around 8% organic growth. That part is securing additional volume, extra share of wallet, but it's also deploying CapEx in terms of new capacity where we see that. We have also invested in a new, it started off as a startup out of a university in Germany. We created a partnership with this startup and we are now investing in that and we are deploying a very unique proprietary form of barrier technology that only we have. And we're just ramping that up right now. We have three lines on order, and we are negotiating further lines. And this is something that's exclusive to us. And we will see that start to come through towards the end of 26 and really ramping up in 27.

Yeah, and Matt, the purpose of that, obviously, is to focus that we are really driving a different growth pattern than we have in the past. But relative to our leverage ratio, we're obviously in a really good place. And with the free cash flow generation that we're talking about, you know, I think it's very highly likely, even with our stock repurchase and things we do, very highly likely we'll remain under one and a half times by the end of next year. It's possible if some things came up that were attractive, we'd be higher than that, but I don't see any scenario where we'd be over two at any chance. So really, we'll remain in that range for the foreseeable future.

very helpful thank you both for all the color there um secondly on the uh the closures so isolating that as a standalone segment only i know you did touch on this for the prepared remarks so i apologize apologize if i missed any of that but are there operational changes here or more of a symbolic shift as closures have been a growth focus and um Now with the lower recycled fiber has been a drag on the margins and integrated solutions. How should we think about the margin profile and growth of that segment going forward? Thank you again for taking the questions.

The closure has always been very attractive for us. It's a unique part of our business that comes with very high and attractive margins. There's a lot of growth opportunities out in the market for closures. And for example, with the three acquisitions we made in Polymos, most of them were using closures from other companies that are own. So that was a big synergy that we will be executing on. Closures, we separated that out now in a separate segment really to put extreme focus on this segment. We have a new leader in that business as well, and his focus will be growth. M&A growth, but importantly also organic growth, and we'll deploy CapEx accordingly to that. So hopefully you will see us in the many quarters to come growing that segment significantly.

Excellent. Thank you all again.

And our next question will be coming from George Staffos of Bank of America Securities, Inc. Your line is open, George.

Thanks so much. Hi, everyone. Good morning. Thanks for your help, guys. Hey, I also just want to give you some credit here. Buy, sell, or hold. The company has really done a wonderful job transforming itself over the last 10 years and moving to a more, if you will, common fiscal quarter end, I think really helps everybody on the street. So we thank you for that, guys. We know it wasn't an easy undertaking. So thanks so much for that. I guess my first question is, Can you talk about, Larry and Ole, the growth rates that you saw relative to your guidance entering fiscal 26? I assume your assumptions are consistent with what the exit rates are, but were there any exit rates that were maybe trending below what's embedded in your guidance, recognizing you've got a lot of levers to pull, et cetera, as was talked about earlier on the call? Sure.

Yeah, I mean, when you look across our portfolio within the fiber segment, probably one of the weakest lines that we had is our fiber drums. So fiber drums were down double digits, which was more than we expected them to be down. We expected them to be down less than that, high single digits. So that was a trend that was worse. On the other hand, small polymers did better than we expected. So, those were the two primary ones that were different than our expectations going into the quarter, George. And our guidance going forward is essentially aligned to what we started to see. So, in our low-end guidance, as we said, we've got low single-digit up on polymers and on closures with more in the small polymers than in the large polymers. And then within metals and fiber, we've got low single-digit declines just as a low-end guidance assumption.

Understood. Okay. Thanks for that. And you're saying drums at this juncture, fiber drums – those have gotten back to kind of your guidance range, even though they started pretty weak. Would that be fair?

No, they're just really off right now, and it's all tied to the whole chemical industry sector. So, yeah, we're not bullish on any kind of significant growth in that one right now.

Okay. Thanks for that, Larry. I was hoping you could go a little bit further into the SG&A uh pick up that you're expecting here again thanks thank you for the for the bridge uh and the discussion on the 45 million can you talk about what's in sort of the activity that you took in from fiscal 25 into fiscal 26 what if anything is different about what's in for this year on the fiscal 26 actions and just any other color on the 45 would be great

Yeah, the predominance of our SG&A takeouts are related to the headcount numbers that Ole gave on the 8% of our overall professional headcount. And the majority of those actions were taken in the fourth quarter, so they play out into the entire year going forward. We also have a lot of things where we've moved more things to low-cost countries. We've also taken in where we had contractors in our IT organization that you think are temporary, and then all of a sudden they're around eight years. Well, you're better off to hire them as employees, and then you're better off to offshore things. Our IT group has also done a fabulous job of rationalizing our IT licenses, which is a significant cost. We've restructured how we're doing our AI activities and going to a model that's basically pay for what you eat instead of a basic core per person license. So there's a whole bunch of elements that go into those cost saves. But those are the predominant ones that are driving the major numbers.

Okay. And on that point, Larry and Oli, you know, you talk about changing the incentives and the approach to organic growth in the organization, and that sounds exciting. And at the same time, you know, for understandable reasons and to benefit because you're getting savings from it, you're cutting headcount. Are there any areas where you're maybe a little bit more – but you've got to stretch a little bit further to get everything done on the front end of the business while you're re-engineering the back end. Any tension points there?

Not really, George. I mean, we decided not to do the SG&A as like a thousand needles. That's why we took the actions in Q4 to get most of that behind us. In terms of the commercial organization, We have by and large protected that because we're really focusing on organic growth, although we have been rearranging that, as you say, with the incentive program. But we're doing a lot of other things there as well in terms of how we manage performance in sales. And we have a – I mean, Tim Bergwall – who's our chief commercial officer. He's just doing a fantastic job with his team to do that, and it doesn't happen overnight, and we've still got a long way to go in that area.

My last question, a couple parts, and I'll turn it over out of courtesy. Sorry, I've gone long here. One, I assume the pricing change in integrated slash closure is just the effect of OCC, but, you know, can you talk about what the pricing change was actually within closures? You know, given you've done a lot of other things to simplify the organization, any thought perhaps at some point to simplifying the share structure, you know, between the Class A and Class B? And then lastly, you know, with great resources and everything you've done to have the balance sheet where it is, you know, comes great responsibility. Um, where are your customers telling you they'd like you to most sort of grow in organically from an end market standpoint so that you get the highest return going forward? Thanks guys. Good luck in the quarter. Appreciate all the details again. That's a lot of questions. We've been doing this a while, you know?

Yeah.

Um, I don't know. Yeah. The first one was, um, the price impacts on the integrated segment between RG and closures.

First of all, the reason for why we put the recycled fiber group and adhesives into the fiber solutions group was that they're serving that group. It's the same customer and the adhesive is going into fiber also amongst customers. And to have that managed by the same leader made sense. And that was part of that, you know, as part of that, we could take out at leadership level. And that left sort of integrated as a standalone closure business.

Yeah, Oli, what was the price change in closures, really, what I'm asking?

Well, yeah, the price change in closures, George, was basically $12 million of benefit from procurement activities. And that was in the polymers enclosure. That's the segment. It's not the OCC side of it.

Okay, thank you.

And then with respect to share structure, I mean, you know, that's something that we continue to dialogue and look at, but nothing in the near term on anything like that. And then what was the third question?

Where are your customers selling you to?

Yeah, if we have a non-organic, you know, basically, I mean, our customers, you know, like us to serve them in any of their needs that they have. So us getting... broader enclosures where we might be able to serve more of their needs. Clearly, they've enjoyed us getting more into like the small plastics that we didn't use to serve on a global basis. That's been a positive. there's nothing else that they're out there asking us to get into right now other than the one only went over on ioncraft which is just a a brand new technology knowledge technology that is more highly recyclable very favorable environmentally and and we just had un approval on the first container with this stuff in it's a very unique opportunity for us just this

Just to remind that our NPS of 72 is just unheard of in our industry and that gives you an idea of how close we are to our customers. I'll mention an unnamed customer who has been establishing new plants in several countries and every time they do that, and this is a multinational, They come to us and ask if we could provide capacity on that particular location. And we go in, we do a long-term agreement, and then we add lines or build a plan to service them. And that's an example of what customers ask us for and how close we are to them.

Thank you, guys. See you next quarter. Thanks, sir.

And as a reminder, to ask a question, please press star 11 on your phone and wait for your name to be announced. Our next question will be coming from Gabe Haiti of Wells Fargo. Your line is open, Gabe.

Thank you. Good morning, gentlemen. I had a question about the durable metals business, which is now going to be your largest. If memory serves, I don't know, 40% to 45% of that sits in Europe. Not to put you guys on the spot, but looking at a decent list of chemical plant closures across Europe, continental Europe, Eastern Europe, et cetera. I know you're talking about volumes being down, I think flat to down low single digits. Can you talk about just maybe, I know by region, historically you kind of gave us performance in the legacy segments. Things have been changed around a little bit, but I think you mentioned in your prepared remarks, Europe slowed down. And so maybe just by region, sort of what your expectations are in that

Yeah, you know, it's interesting.

It's actually been a little bit of astounding to us. So, for example, you know, the North American steel business has been down similar levels to EMEA quarter by quarter, but on a two-year stack, EMEA Steel was actually up every quarter this year.

Every single quarter. They've consistently performed better than North America. Yeah. And then we have also, as and when customers reduce capacity, you know, we do the same. I mean, plants where we have been operating a two shift, we now have gone down to one shift as an example. And we do that because we're managing that business for cash, basically. So the closures that have happened, they have already been factored into our production capacity.

Okay. I guess the second question is kind of revisiting a little bit on the M&A front. Is there a scenario where maybe there are just kind of some tuck-ins along the way? And I think, Larry, you said you don't really envision a situation where you're above two times levered. And so between now and 2027, I didn't see the billion dollars reiterated. And again, I know it's tough when you're moving assets around, but is that still explicitly sort of the target given sort of what you know about the M&A environment right now?

Yeah, I mean, for us, you know, on that, Gabe, I mean, it's still our – objective to get there but we're not going to similarly deploy capital to get there but if you if you just walk through you know we gave low-end guidance so obviously our our hope is to that we do better than our low-end guidance so if you take the 630 and you then look at our our 120 commitment that's a net another 45 so you're already up to 675 you know We're hoping you see industrial volume recovery. Obviously, that's a big component. It's been a component of our original stack was 140. I mean, those things get up to 815. We do some tuck-in acquisitions. We invest in organic capex and ioncraft and other opportunities. We still think there's a path to get there. But it's not like, okay, we're going to go chase M&A to get there and risk doing bad deals. We're just not going to do that.

But the 140 are largely intact in terms of going back to the 2022 volumes.

Yep.

All right. Thank you.

All right, Gabe. Thank you.

And this concludes our Q&A session. I would now like to turn the call back over to Olli Rosgaard for closing remarks.

Thank you. Thank you for joining us today. Our disciplined focus on margin expansion, cash generation, and reducing cyclability is delivering meaningful, high-quality returns for our shareholders, further validating your investment and confidence in drive. We really appreciate your time and your partnership. Thank you.

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