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GEF Greif

Participants
Matt Eichmann VP, IR & Corporate Communications
Pete Watson President & CEO
Larry Hilsheimer CFO
Ghansham Panjabi Robert W. Baird
Chris Manuel Wells Fargo
Adam Josephson KeyBanc
George Staphos Bank of America
Justin Bergner Gabelli & Company
Ketan Mamtora BMO Capital Markets
Dan Jacome Sidoti & Company
Call transcript
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Operator

Good morning. My name is Kelly and I will be your conference operator today. At this time, I would like to welcome everyone to the Greif's Fourth Quarter and Fiscal 2017 Earnings Conference Call. [Operator Instructions] Matt Eichmann, you may begin your conference.

Matt Eichmann

Thank you, Kelly, good morning everyone. quarter XXXX fourth conference Greif's to and earnings fiscal Call. Welcome

Financial because are on to and an Greif's questions Chief the Larry items we end the accordance questions us you call. regulation basis. to you Pete be regarding material are non-public to on X. Larry consider discussing Pete available returning to yourself will call one Greif's with from limit of Officer; allow the Joining you and queue encourage at question. the to Executive of follow-up today Watson, individual Please ask before fair prohibited ask Please answer Slide I significant question and Chief President to Hilsheimer, In today's issues one to Officer. with turn and others question disclosure,

discussed. a forward-looking during materially to events. make Actual As results beliefs statements involving those call, will differ related today's expectations, and future reminder, could we plans, from

certain and Additionally, the be financial GAAP presentation. of as Pete contained Slide the over on reconciliation directly most to And we comparable today's presentation referencing to appendix I in the X. turn metrics will non-GAAP now, measures

Pete Watson

and Matt, morning, you, good to everyone, and call. our Thank welcome

XX%, $XXX X% XX% operating strategic special of and year Fourth benefited fiscal respectively year-over-year X% to XXXX businesses. headwind resulting profit $X supply items in grew to chain. fourth prior sales quarter special Harvey up operating impacted profit benefited earnings-per-share the A $X.XX to and million sustained the our more to higher improvement items versus was lower and and across portfolio. decisions, the quarter items in million and quarterly XXXX Fourth performance Our year. quarter of prior Strong Fourth Hilsheimer per from a higher detail negatively moment. before related Net selling quarter prices, fiscal expense up grew X% XXXX Earnings the its fiscal and interest Class up due and XXXX downstream before billion fiscal greater profit, operating versus million share volumes prior and $X.X and our before in SG&A reflect respectively year. stronger special most tax $XX and entire lower year. million fourth for effects sales discuss quarter versus respectively Larry by pricing were grew expense share that significant XX% and reduction will Hurricane in from than and $X.XX to expense, per year-over-year $XXX

million cash million and grew quarter to and free of year We're Please X% turn X. year. $XXX fourth progress last fiscal and prior our to Each the and made quarter flow respectively toward vision XXXX reported years. the several Slide versus steady Finally $XXX up versus making businesses XX% of we excellence. our customer year over improvements the index satisfaction achieving gains notable customer prior service

turn our levels We of satisfaction to that will of differentiate Please Slide the in of forward, customer segments a us greater. service with operate Going or XX% is level our believe expectation market. X. index unparalleled each

Before performance over our want segment, briefly last I the highlight I years. review by to Greif's portfolios three improvement

or foundation with performance. in scores. our index transformation optimized our achieving As upgraded operations, our and Greif in financial or value we’ve we've satisfaction volumes by underperforming organization, XXXX. investing and financial service toward Please we significant improvements changes we've Slide customer system we've through those our our enterprise X. in This the global non-core improving on to we've turn of have over you slide resulted the reenergized overlaid team's a margin then, initiative business performance reoriented XX across embarked Since embedded know, capabilities, excellence strong portfolio a closing customer

with the review selling decisions. relating index year-over-year price stemming linking to delivered results of segment, Greif's increases conditions to dollars weather raw negatively adverse fourth to material rigid packaging were pleased million service due customer prices due quarter is and turn from profit service Slide earlier, headwind and $XX raw million inflation fourth gross pricing strategic Fourth lower result profit increases profit. Please by the to timing America. As In raw quarter rapid margin impacted material the mentioned quarter emerging foundation in performance. RIPS to prices I'll and contractual quarter our year was relationship a gross we prices. we're segment the success of that sales X and higher pass-throughs. lower North greater adverse in versus were of were material prior year-over-year RIPS services volatility weather as in or and those and $X

versus Gulf the and in services America Coast delivered versus Latin our Southern more during profit improve in fourth where for Europe. year-over-year expect items which much better quarter the sequentially drum stronger share outages, to lower fourth impact to factors our were customer same one in drums million substrates volume gross were was steel demand by than than In steel of Brazil. RIPS drum growth the operating RIPS gross which profit Harvey resulted that discipline due the the as profit chemical are Hurricane X.X% prior-year America, a across lower business plan year-over-year. in primarily XXXX in by and while prior X% were season, Brazilian drum volumes juice price realized. particularly that SG&A filling versus special drum related increases QX to quarter volumes of quarter operating customer and decreased containers year impacted $X steel impacted XX% North quarter. expenses. adjustment prior-year the demand thanks margin quarter up up all for mechanisms quarter customer partially consolidation were rooftop by unplanned followed strong to were before We the lower quarter. much the solid a more by in plastic North up demand bulk fiber EMEA flat offset growth volumes volumes Intermediate America

bulk growth experienced volumes. also container in We intermediate

steel on over value drum quarter to container a buying competitive and plastic decisions. year-over-year due fourth ongoing and APAC proactive intermediate market margin fell bulk and conditions volume Finally decisions

fiscal drum volumes the digits. steel low Looking to grow to XXXX in in a we and mid-single expect plastic

We also to global of anticipate turn IBC strategy. Please X. Slide our acceleration further

Our results XXXX fourth despite delivered a paper solid input packaging and by quarter challenging services rising marked segment cost.

solid the outpaced growth Our network, volume revenue container both feeder quarter. before special Revenue $X for increases of items year operating the profit fiscal by growth ongoing highest all at fourth grew the of our price fiscal quarter million sales of price sales enhancement and containerboard our Fourth volumes quarter was mill versus the accelerated quarter. by strong versus CorrChoice throughout businesses margin increases. mix X% million quarter Specialty year. at CorrChoice in year this system, prior industry sales XX% growth X% tied which realized its $XXX growth. aided from unit year, sheet benefited to of implemented and delivered impact improving prior our quarter specialty

eased our the during a While remained quarter, fourth they substantial OCC year for headwind. fiscal pressures

the November, sales. Looking of paper packaging will December fiscal benefit realized fiscal of specialty throughout $XXX ton before in we've XXXX, XXXX the a implemented guidance, prices higher into from anticipated seen year. and January index rising course and increases our containerboard XXXX In price over

entire blended for a OCC assumption $XXX is the cost for ton. a Our year

fiscal before to Given PPS's XXXX's our increase current versus results. assumptions $XX special million profit actual items we by operating expect

expansion margin X. on I Kentucky in Slide for wall project to our higher overall please grow bulk Louisville, Finally triple increase to remains level. will mid-XXXX increase you and This turn our ask packaging our track ability startup. in products integration

products We as discipline and to APAC. pace sales continue in change be performance demand improvement better Europe with more of team. the services FPS generated year, and a improved XX% pleased result in $XX of fourth execution and million by Western a prior the operational the flexible the of versus displayed and quarter,

a gross of On points. the negatively by year quarter claims. basis fourth were it face reserve ago gross dollars XXX million margin Lower was profit declined impacted to for legacy by while FPS's $X.X profit flat

This as Excluding that before still well. fourth greater obviously profit $X.X operating was their million to FPS impacted Despite item gross during FPS's year-over-year. occurrence than margin before that the XX% profit special our items special profit expense, operating quarter. increased headwind

in We items to more $XX benefits SG&A In will of more initiatives a optimized be from rate business. $XX manufacturing third-party continue and confident achieve on commitment will million XXXX, business FPS This to grow million run greater footprint. more special this fiscal its before track and to profit exiting achieving towards operating XXXX.

phased-in. Officer, Larry much towards that our turn Hilsheimer. will be as that presentation like backend Although are I’d enhancements now to over of to Financial improvement Chief weighted the plan the of

Larry Hilsheimer

our Pete, to Thank fourth morning you, XX Slide Please quarter turn to everyone. review financial results. good

outstanding noise some cost like well price accrual business. of would sales Recall decisions, to up claims contractual most should higher however quarter pass-through lowered These specifics, due detail cost the we benefit. weather There's big efforts million we headwind a in reduced divestitures raw excluding and with inventory a material related and we volume We initially gross the the the conditions it in cash Before XX% supply Rigid's, flexibles impacted Onto Rigid's $X.X burden, provisions believe million multiple I in to for and on million higher we while not during QX significantly our we in consolidated as clearly exchange first. adjustments adverse efficiency through extremely million strategic business. the I items A its of inventory in get foreign net more excess a a legacy a businesses. related positioned flat hurricane are of to when our costs index headwind year-over-year flow, free centralized the improvements estimated on prices parts Fourth parts and paper a to reported inventory was the year XX. picture into improve in rate delivered $X.X squeeze relocating the and financing August ago quarter overcoming XXXX. to outweighing pricing price that repeat. profit $X.X were that quarter our results timing discovered level to take and results business our of $X.X of tax chain quarter, the the management quarter result changes

conservative. days and was However that initial Harvey estimate was hit made just after too Houston

availability assessment SG&A special before related The of SG&A quarter declined by separately February related expense and year-over-year by information, modified was higher Rigid to businesses quarter business price land extent some part despite tax by a most well before treated original Gulf previous and relative experienced special million also profit goodwill. $X expense margin I planning was experienced rose higher trucking lesser year-over-year $X.X Operating of challenges of Below prior negatively our reporting Coast as the Rigid filling as reps a activity helped challenges headwind paper been Latin balances. items fees purchase suffered of segments has for our GAAP unplanned million among stands. as lower X.X% the segment and a debt operating goodwill a customer combined business sales a items to of million in our value million the but Gulf described our it recovered structures million unrelated efforts. Coast in Fourth targeted the $XXX,XXX we require is recovery by debt to internal costs of flooded result result our the in lower in was impacted to in for segment related completed especially Today line caps American transportation basis our on year of business loss fourth related headwind goodwill to reduction to which $X.X threshold. slower gross the timber versus below a closures quarter. of and $X.X XXXX impairment expense Specifically, by outages, business cases profit tax Florida. to but because rules our and same then be some apportionment impacted reporting financing our the Also has purposes. was profit business. unbudgeted resulted our percentage $X or interest

fourth operations $X.XX fact application GAAP appropriate A the per required a versus quarter share, the have combined was before lower Class despite quarter. Latin to prior year result that tax in through goodwill impairment interest with our earnings-per-share a Higher operating As been improvement drove American improving, special $X.XX expense profit a rules. items of

quarter such of and non-GAAP's implementation and XX.X% result significantly XX% quarter and rate GAAP tax $X efforts largely of U.S. that I than of efficiencies of local fourth and were tax reducing our taxes working planning pay they both aggressive to the eliminating clear at of fiscal prior federal to Our U.S. previously and the tax strategy incremental year respectively off. the state as changes. reform result Day. tax dollars or lower involve be a increasing expect right tax described as 'XX the don't also we the those beginning pending basics get Investor any In accelerated To maneuvers the credits. efforts million are execution rather income in further and effort Clearly fee U.S. is our help us reducing to to of professional outside strategy spend address leading-edge

QX term provisions for liability Let me pay anticipate based cash perhaps provisions severe. earnings repatriation for taxes as of will will investors. legislation rates, rate GAAP year taxes be provides the short-term would benefit those reassessment period less would provide eight create U.S. for to proposed be XXXX. require as impact tax repatriation the and so for to volatility. impactful come Thus highlight lower effective due. significant tax Currently of the corporate rate current provisions related finally Offsetting a an while could soon a Greif upside that The the that proposed as with enacted long be the we well. structures the tax is important upon deferred U.S. new tax current the date us record If dependent we effective impact a factor the the will the foreign deferred when legislation an upon liabilities determined liabilities

in and professional of translates To estimate compliance. related tax advisory tax for have this not for incremental and rates clear million be reform. to at assessment, benefits guidance we point on fees. of $X short-term All adjusted next our our year's That's long-term planning cost to this

largely and versus flow cash income delivered CapEx Fourth generated on We during we was $XXX are improvement increase prior quarter free commitment. other higher our cash the fourth versus spend inflation we the the prior critical $XX flow in also Working area. of cash million almost flow very $XX improvement that to capital due capital and higher of key communicated about Consistent with year liabilities generating higher in lot partially working from cash you. and to higher up raw ended sales. use this as in quarter. improve capital and I than XXXX in by quarter year. still cash assets pleased quarter million stable material to a a capital calls flow have decrease fiscal have free management million offset free to and due our previously expectation We working working spoken is a previous and cash room

we dollar across capital in challenged Although making notable terms working are portfolio. the efficiency improvements

For our cash year-over-year, from a XX percentage XX.X%. fair, by XX as free working decreased example, growth flow delivery our To delays This XX result these be investment cycle of to was conversion equipment it improved while disappointment projects. points capital because basis generating sales cash of to unfortunately projects. operating days frustrating us delay our our capital to improved a amounted $XX of million. The on to because several of

confident fiscal flow XX. XXXX prospects. XXXX our to cash our generation very Slide fiscal provide about of now I’ll the also are highlights Please guidance. free We turn

realized our include generate Key margin We improvement A help $X.XX between explain results. represents before XXXX's from in execution At to management, expect our and interest the recurring in the balances expense our lower over per execution annual and improved earnings price in midpoint, a growth result lower items benefits earnings $X.XX continued - to containment ratio, leverage and interest discipline. overall increases, share on containerboard tax related realized to of drivers actual XX% mix planning debt higher underperforming XXXX. and tax fiscal special as of the cost strategies. anticipated specialty XXXX that fiscal Class sales, tiered product Further improvement benefits focus operations from containerboard reduced

other We $XXX million while sort $XXX of flow It million to of expect $XXX are include the our XXXX to will between we fiscal an accretive of seek $XXX M&A may oriented deployment increase opportunities. elect those be CapEx to free CapEx given flow cash spend actively our extent position. requirements range to expenditures cash leaders provide also we encouraging leverage growth free stringent CapEx business are our our meet warranted opportunities I the the to of If to to and develop they asterisks our capital the they and we in capital compelling explore anticipated range, million. strong process million.

the expect range million of million $XX our we Finally, year. used next in a capital be cash working $XX

generally of Greif, and for customer the is to agricultural case financial be half first stronger second as our results XXXX activities. the Lastly half in consolidated fiscal the due will

exchange of sensitivities foreign appendix the presentation. located updated are Finally, in today's

to to which discipline shareholders. XX. Slide growth give strong include portfolio and Operational move capital in our and investing priorities platform capital us the returning to please execution, now priorities, on and global to Turning profitable capital execute diverse cash

Our return targeted capital the our priorities provided opportunities also include standard. advancing inorganic investment growth exceeds minimum

ratio Our in at ratio balance times debt our to At below stood X.XX our year-end net great slightly of sheet EBITDA. X targeted is leverage shape. leverage X.X to

Although targeted exceeding his Pete temporally even that, to comments if the consider back we before opportunity growth our intend emerge. closing turn compelling our I'll ratio, Q&A. maintain would for it we to it With

Pete Watson

global Larry you, a give portfolio in is final few please Greif to brief easily closing that leading to and possesses comments. not the a slide product replicated. you turn shares well Thank diversified

stronger focus get Our can business. customer operating centric as to financial in We're philosophy performance. a we improvement acknowledge fundamentals continuous always will committed and drive sharp and better

in the interest remain questions. into for appreciate shareholders. create greater for focused we our our Greif. open Kelly, you participating for priorities value this move strategic will on customers fiscal line that Thank and we'll we morning, your XXXX, please As our executing

Operator

ahead. from Please question comes first Panjabi go Ghansham R.W. Baird. Our Instructions] [Operator from

Ghansham Panjabi

hurricane operating cost segment did impact than RIPS, you the for the also inventory for it mix it worse Or in thought So first charge profit where the initially you for perhaps if price off, quarter? come in and you adjust or was that would thought?

Larry Hilsheimer

X.X% from slightly end that if up pick do relative percentage margin the just would about I has items you makes you came margin That increase combine rising the the the and but up Ghansham, between two and X.X% it lower, I price not X.X%. up in on to I'm to of you costs mean those decrement up very write-down years the picking X.X% hurricane say, up another about with gap. sorry, on pick much. -

there just and as the by not it just opportunistic that the The other these items of are drove are group many timing really down, drivers. opportunities then provisions fast

We some that resin also margin that had in price anticipated was impacted spike Europe slightly. not

than anticipated, So lower we I'd slightly Ghansham. say

Ghansham Panjabi

then us volumes so your guidance? can packaging for embedded a basis of also for XXXX. for you of help And much. between for my year-over-year second EBITDA a on as give improvement in a years? bridge And sort question, company the us the What's can outlook the two just you sense better industrial whole as Thanks

Pete Watson

Yes, let question. in Larry we some and address of let the XXXX see second me for Ghansham, the assumptions the and I’ll that rationale talk volume about

as [end in look you toward Rigid big our weighted our steel. at factor chemical all positive their producer. The chemical of advantaged got if in X% environment So because in globally, a America low-cost assumptions the better use] planned Industrial [ph] growth more and in position expansions segments Packaging North of industry business we’ve is

a relates structures sector which X% capital plastic got growth portfolio we capacity that our global we Russia, little expansions drums. small IBC we build-outs also that market broadened plastic in we advantaged are what packaging around The is that than have have are IBCs, our expansions IBCs, America have at what think X% see a macroeconomic little We’ve we small performed, volumes North in in the to running is EMEA. assuming is have at predominantly higher paper in drums second growth so and traditionally we larger have and have done, X% Plastics, business. again we we North we’ll bit we in assumption our also is to and to products. see to, predominant large In plastic perform the and and growth We growth less capacities. growth XX% APAC accelerated of chemical X% our than where America I several That there. we in growth, both X% that and assuming then where in new of centered an see half.

majority frankly loop challenge And having North out growth critical operations. we nice business build we downstream both growth commercially degrees is we in our the to our more so beyond. us which where we And to will big products, there's play that four XXXX products. see there in of starting have then The for vertical be importance is strategically integration and expanded in of going two forward to in will more and and opportunity in our FPS. opportunities benefit FPS loop have think one that the that we've converting in capacity, we’re said APAC X% our from. important underperformed X% a quite We and be a And is best-performing America in operations greater

our that’s we assumptions have year XXXX I'll on on ask budget. to XXXX. this in to from the our Larry bridge And So volume comment

Larry Hilsheimer

of further November, products a for In of in PPS, discrete XXX gross are our just December. budget whole is no X%. anticipating in relative in PPS Ghansham, our is to actually assumption shy specialty roughly as things business basically price of a our what's across our except profit maybe index Rigid we’re OCC improvement some increases

that guidance be put year. earnings but blends didn't through more because maybe that It were the January. entire XXX don't the know, looking When XXX. jeez, change we XXX our to actually it sort in than will we remainder up have we also we delayed, like does it of up spike spike it that together ton thinking of a at It's the we For budget budget January year. in like things maybe over

was. it we it just left as So

roughly in stable, $XX the $XX pretty or pricing in of that the X% margin restate, another XXX PPS's a December, flat land. or in the and rest million ton FPS me, increased about margin. much amounts gross so That’s million excuse fairly and year to in - in November gross XXX to So area,

you SG&A, going SG&A we’re for reasons. up a If go to of go couple anticipating to is

we in taxes relatively above finally $X the related in line sales, Although That Latin things on the settled this staying because million million had back flat courts roughly a XXXXs in the a increase basis in $X Brazilian to won't repeat. got item America guy percentage that good went into that but some year. some

be would it’s on to And an at relatively to a where is our system that level equivalent So going increase. roughly We time. got for $X implementation got depreciation to our to higher be we’ve another salaries, of going enterprise be headcount beginning stable million. short some because

So element XX incentive increase. we to the process. payouts of reflect improvement just then And the transformation to anticipated million some of some related increases have in drove some the incentive through longer-term that’s a the we

$XX somewhere up our to $XX be million all roughly that to anticipating roughly. we’re cost So SG&A between million in,

to So that the enough EBITDA. do walk your on elements hopefully gives well you

Operator

next Our question comes from ahead. Wells Chris Manuel go Fargo. Please from

Chris Manuel

Good business questions. morning years past better here of shape. a couple on lot the progress of and gentlemen Couple over of a getting in much congratulations the

I today that having sit in start. when the for sets kind at you of business look when up better First, we where shape,

than X.X leverage is times. less Your

X where being target to us with Help from here. we talk go X.X. You about

there? wanted you to then focus how XX, know of really return capital look? the pipeline I thought in does got shareholders. about you talk to kind process the I point think What’s that on a shows, acquisition four So And here where Slide slide I

like So that the absent next well about such think repurchase acquisition it dividends either XX over more or months? sounds as how or you

Larry Hilsheimer

turn on that about side. just over let numbers we me Yes maybe Chris, talk Pete then I’ll M&A some comment where on to are first,

first to business. As cyclicality level our in our go there’s little you of know as - bit quarter will relative generally debt up

So, where things see we’re one. in go watching,

both transactions first a as at depending are are any. we if And if then desirable. mentioned we We’re going do And projects M&A we confident we potential identify actions what in believe we’re to on quarter. good that we’ll re-examining also CapEx other be have highly I where take

to comes about first time So I to something up say in in us M&A something more plans. from would the in call quarter the likely not probably side, more unless timeframe but hear second quarter

Pete Watson

and to we it we’ve our just relates got paths in growing strategic Chris, and production have increases so businesses. we’re as to capital been in of in IBCs as increases plans paper In said who got core in plastic packaging two communicated our allocation, integration, the capital and operations well, reiterate, And to as process those market, we capabilities and expansion have executing.

this I year. mid by think

seeing start some will that. We evidence of

follow that’s acquisitive we’ll core. expansions talked of forward, reliant businesses core and to and process Going Rigid in be packaging we also the to going a blend opportunities strategic within both the capital about paper our

Greif and write we’re excited opportunities for the So of Greif the we’re about how how following the we’re and to chapter three next going or process, we’re very active in the of future years. we’re for pursuing next process that five the

Chris Manuel

that, in I release maybe follow you in used in sounded I some million you little on you seeing that - growth we’re little material think to some the of given it but say I and pretty color heard of how I little again have know raw that? a use maybe question, do about a there or stuffs, up Larry year, think sounded conservative bit the bit you a working numbers you of sounded bit the something million big and $XX think say side, this year next those $XX I My heard capital about were like

Larry Hilsheimer

hold relative to to would on our will we our reducing focus Chris. ourselves we cost increase continue went Clearly year. we receivables of little material That’s up year, because I maybe cycle sale, probably gun to want days in and a to if didn’t this because our higher how see fair, shy material over any price mean rapid raw the to raw expectations sales. percentage

somewhat pretty there yes a has sort there, on raw increased But But and could on conservatism I So mean clearly would is year working some be of fair. maybe with I Pete pressure comment we your flat think this capital. saying sales up dramatically. in be burden then little going and I got

Operator

question [Operator Instructions] from from Please Adam KeyBanc. next comes Our Josephson ahead. go

Adam Josephson

the whatever for we Analyst in right, go Larry tax so think tax implementing rate I were planning rate questions was June, to you I similarly despite planning of three called guided related you third that thought there, a you’re called and months aware you Day planning these gave to dramatically what that incurred XX%, you expecting, about of to? just implementing guess couple lower ago just you’re so rate, be guidance the what were you was strategies tax so back the a last and that you I what know tax these just strategies when also tax XX% tax than costs you, understand was additional of if would me tax how talking obviously quarter, it you’re help about these out,

Larry Hilsheimer

didn’t at to and So we to don’t we annual so effective fourth guidance, like but likely. getting clear, give not in just is was and give tax part at everything say prospects - given guidance it other knew quarterly that QX where we that be so would rate be the the that quarter even the of at appear this very point all did executed I time the time of that call,

because able things be being got some us if proud arrangements before these hard told to that team together that internally is things these to of end of amount had I our by legal that us the troops the we and that tax extremely on and group year really the get amount me inter-company our accomplish of all Subsequent get enormous. executed year information could the restructuring internal had things restructuring, and gather really elimination, they a to diligent help time, and not get I’m that got way entity all external and anticipate the boards, that came we of done stuff extremely and the So potentially to did came execute done end. thought to rallied work done to to massive lot done.

to level the fees year that and planning to I So more which what continue savings thrilled couldn’t from point a to did would generate $X.X at every of that pleased, I time benefits of more by call, be we’ll everybody have they think year crystal I get to done. than that QX million could better we I this and in I accomplished, had can’t - did now way spend this drive not was on, the we the able wish I’m ball I be tell on willing to but had

if I And bit, SG&A drive it a value the I’m line. up our shareholders we and more up to more bottom did all than drive we the little on the obviously to can so happy SG&A our pleased time I’m drove did,

that’s the situation. So

Adam Josephson

And the year? taxes us cash your booked followed were be fiscal compared $XX perhaps tell extent then your haven’t free thought cash was taxes I to you were you with what tax what but cash flow in you can your rate and million, fiscal your K ’XX and 'XX what would they know for in that your in boosted what

Larry Hilsheimer

rate, make, about that what our obviously we because tax so taxes cash is I decided think we cash don’t I down roughly that we not pay the to million. Adam can improved went payments $XX tell didn’t have you

Adam Josephson

From fiscal you 'XX mean?

Larry Hilsheimer

it’s the be we and I had QX we where to guidance the From roughly it improvement. anticipated ’XX same think year-over-year for when

Adam Josephson

the part lower had, taxes? was So than that higher of and why free CapEx cash what was you lower the so

Larry Hilsheimer

cash and the to pleased with range been anyway have you would flow all but things bottom the close very it we mean free I I’m still very look combined so our even without of end it. obviously generation our Yes, at that

Operator

go next from comes George Staphos ahead. of Our Please Bank America. question from

George Staphos

yesterday? expect missing call wanted of what factors a Ghansham's of about it XX on on XXX with basically ultimately you EBIT range, be those you're maybe anything talked in said range that if question, terms note guidance, we're today guidance we the know the and take had your somewhere in that I guidance - to XXX some slide we XXX what getting and to our guess I I different EBITDA here to so and approach I don’t in obviously to calculus EPS take should

Larry Hilsheimer

said to XXX on… You XXX

George Staphos

grown but around a there $X EBITDA D&A million EBIT giving has well. that XXX I’m around Yes, XXX you considering range as up roughly with around in roughly

Larry Hilsheimer

on a range that low EBITDA. maybe in Probably little

George Staphos

a little so I low, that? Meaning presented the number higher would be was than

Larry Hilsheimer

slightly Yes, up.

George Staphos

of in that mentioning guys. and guide and that here, did was the you��re actually million Brazil, knit quarter? largely good question, which Couple over of earlier of the that quarter year closed million was that type other what million, you, Thank segment your the somewhat earlier OCC I in XX tax impairment in the one the or turn And sort fourth benefit things in and will come was $XX back. that $X was the

Larry Hilsheimer

the came of thing it goodwill is vast fourth was of America in and Most that then the minor the in everything. amount benefit the OCC majority some in SG&A one-time was Latin benefit So that third quarter. quarter the Brazil was vast, primarily in of

Pete Watson

bucks. X About million

Larry Hilsheimer

$X million.

Operator

comes from & Company. next ahead. Justin Our question Please Gabelli from Bergner go

Justin Bergner

to I make sure, just two wanted I quick one-offs. understood

completed year that mostly America tax this quarter, repeat aided Latin fourth seeing in benefit the that you’re won’t quarter’s in next was the so just that So that results?

Pete Watson

there in that’s Yes, element but about and to talking SG&A it through tax. be in tax flow because clear that primarily is was was not the tax type are tax the an a Justin we line of bad line

Justin Bergner

And that again to Hurricane referring you’re Rigid clarify related. then was in that how just not was Could large? what you and charge that the

Pete Watson

that supply warehousing the looked that manage efficiently centralizing inventories we we’re end than times to cost use do the - off, gains. often to okay look move So $X.X up businesses got worth more it go to our inventory majority these long-term we’ve transport even and and need at no you’re million places. doing on if it by of and some the and had as we identified write conclude Is it. by you I’ve when centralize our going got manage to able not be inventory were efficiency chain of more But our supply in it I write-down it in related the different all I’ve to benefiting

Justin Bergner

that But results? was from adjusted the Okay. removed

Pete Watson

No.

Justin Bergner

than over picture to strategy And without away aggregate results? seems walking volume range, big from it in business guide Okay. to which that the the the to XXXX, of that of how X% sort away given the walking view to high economies, view would then given sort the help sort adjusted that global to I sort you it maybe gels top-down some was volume goal still presumably sort volume wondering top-down just one world? sort for if X% That Rigid, was X% question, of of your even of could me if of X%, you’re seems of value your would just pursue of higher be understand I I like guess a volume for very at suggest look

Pete Watson

quick see you overview we a economy to the so how volume first and Yes, a assumptions. then related of I’ll global give

low global growth, very So and is there credit macroeconomic very is access favorable. is obviously positive there to pretty volatility

Rigid to chemical chemical and Our business those end-used related in the Industrial is specialty packaging markets. focused very

growth the infrastructure equipment macro-economically of growth. to purchases, and transformation construction, Some really big tied capital are

the next implemented includes I next in making year higher So Gulf of as capital to have it in for investments and potential we will growth Coast growth mid-year. by be will that chemical expansion be this years, factors the see the industry, the have implementing and potential U.S. for they’re the because also we the in think two our business, year that significant in three we we see macroeconomic

plastics some so capital is economy think we will initiatives layered you going we mid-XXXX remind made driven plastics, some America growth favorable And into we North of steel and have and North are profits targeted or for capital to it’s volume not to from a a customer sake. to business think investments you by our see that by a complete evidence American their is volume are XX% in rate just we XX% either see our growth chase completed which for our improvement but indicative some starting think small in initiatives, performance customer the relation service of because or customer is those to I capacity economy relating is is trend. performance at growth the have if globally. you this And to again growth IBC there so more drum of APAC example service in can a in direct growth expansions share in in their gone also and track of we that to which of and FPS, improvement rate And service. they’ve customer of I look to

please any So that’s your other delve issues you let into that question if answers you know? me further Justin, to hope have wanted

Justin Bergner

little in was X% of sort environment of in bridge? by Yes the you IP seems step-up the to impacted because hurricane in global I sort just a fourth difficult much follow-up volume Rigid's quick do mean, know how X% strong to the quarter still the X.X%

Pete Watson

was quarter was supply volume Coast you up Gulf the had operations. so the that steel which just Rigid our of that is the X.X% drum if than chain North Yes downtime by look America Gulf our and hurricane and for Coast, biggest in little in is in more hurricane in businesses our of business America low and North that throughout impacted our impact and one so the

and of we product how in that is years. we’re markets we again very and growth be manage in America going through the in all initiatives to selective and again I the feel very outside we strength go end Latin target business are how in in being look feel and winning customers put business use back very but our in we've the last our we're comfortable we the capabilities both So fairly to are in what customer price and APAC we two - that segments that substrates of discipline America, and service if and is you in mix good in confident actually discipline North doing which very in a different EMEA, think story I we're customers

Operator

Mamtora Capital Markets. question Please next from comes Ketan go ahead. BMO Our from

Ketan Mamtora

more this So at size interesting and are point? you this first do question larger agnostic type find are on you on acquisitions perhaps bolt-on or point most at acquisitions What of M&A. businesses more focused or you areas

Pete Watson

set packaging business In spaces Investor steel In concentration we our operations acquisitive how expansion and higher and is capital in increase our a with our integrated a IBC Rigid of and vertical with do paper regions growth. the entirely to system. currently that core integration really gross combination be focus some we opportunities be going our we emphasis of in on white or don't on have on would plastic Day

do since box that more realm plants businesses that's increasingly have not think I is to strategy. not that we our acquire in difficult and

can feeding products Our sheet be feeders. inside put that of strategy and corrugated sheet one our specialty is

heavily So weighted the capital and be customers acquisitive committed blend more but a that might expansion capital expansion. it's with

pretty again we to but report. we stages early big We in acquisition or and it pursuing are those inside core the this. and about as clearly is things the do talked that afraid if in any we This at will are not defined to will Day be do Investor and initiatives we're we're long-term of But know have a process. you process let active we

how going we core. it to and again discipline and stay approach have great our We’re within

Ketan Mamtora

let’s get have, say other And special absent on regular to do options versus the returning both leverage dividend perhaps shareholders quarter repurchases Larry you M&A and you might think shareholders. second any a you X.X have if dividends then just follow-up say about about this, times A, the cash my on let's on if about to think but that to do might cash more you you you versus have you question, in said you returning share it basis think to might sorry and say

us give high a about how you think it. Just at level

Larry Hilsheimer

we repeat the to that don't our to our and about with that examine capital our that that we be I've ultimately of just shareholders of would other something best see said way determined higher them which the what needs point recommendations. will review to return capital we approved been Board our by at talking are is we I'd priority, this uses We've - is, that

way regular the know decide it that of that we making the dividend, but the to of decision at make to a it view decision it shareholders. we something situation this time be or could to on will repurchase stock a return do we don't our distribution could dividend capital well decide to so a and based time you're do as made the a be or if to examine something at I at special such on be point So combination

Operator

ahead. from [Operator Instructions] Dan Company. Jacome next question from Sidoti comes Our Please & go

Dan Jacome

can the board this us my at questions, differently was the do more of XQ little wall progress second triple you're question learn versus Kentucky. What did quick and you you IDC. give expansion quarter two then with on a or Just just making flavor

to putting data capital to you're but there it's that of hard which industry industry. know part a You I on encouraging get work lot in is the think of

to I’m it. to Just is give right understand demand XXXX underlying demand is and - that's coming supply us characteristics demand please of just better little now and the looking there, a trying sense how entire online. capacity what's much in marketplace a

Pete Watson

it capacity. question X% that's gap and that are growth growth we suppliers that confident very, a American packaging probably up data shows major We curves will that very, are doubling fill are growth comments service first operations, from major customers comes the in at highest a regard on packaging to our we in our the us growth positive mid-XXXX. So markets, meet on the if positioned think business North and you other Rigid because targets, The have rates. In held that feel global but and market X of well year IBCs your the online come China. look customer I potential I based growth Kentucky to EMEA, of a know global the quality. on lot IBC very Louisville when bulk to we privately largest will to two you'd to markets in facility see speed X perspective, very you that two prospective for is are capability for and stream that don't very companies, been good and X% on

desperate able to and in their our we we and to We steel, and that related America that. making This plays that both - supply and will investments chemical we have now, regions growth. broad in in an a us and move chemical in in IBC from them plastic, products are are customers. but good are and coming future online be element bit that process into North fiber feel the EMEA we and our right offering capacity forward quite about XXXX as the we demands to needs But confident of feel to do execution we

Dan Jacome

or - I you a new capacity that Is how do is saying. Greenfield that was machines - it, is opportunities know you’re mean what it

Pete Watson

new existing it It's it because build-outs technology needs acquisitive our growth all us see be in capital customers Greenfield requirements. capacities more and our and will to and our probably for either as you facilities product expanding in won't IBCs facilities relates or of

Operator

Adam from Our Please next go question Josephson from ahead. KeyBanc. comes

Adam Josephson

and and the business. Pete follow-ups, one taking one Larry just two on reconditioning OCC for Thanks on

you may January – think OCC OCC OCC on costs. this huge happen. have quite and earlier you're If particularly and what year many very you've Just do well you prices that assume for is may expect prices well obviously the between on containerboard do - which year, raise lower in a what OCC not that on higher may companies or were the happen impact if indeed guided OCC to than what any high much here your prices that obviously not relationship still containerboard given so assuming spike you and stays based what inventories

Larry Hilsheimer

of our we or did the stated. of in layered Adam, OCC guidance when in in Larry inflation so what timing budget was things, so in we prices the couple the have of

in to won't you $XXX probably trying it the we feel XX of forecast upside February and are and any potential in in price it we don't have an increases, comment how different comfortable obviously maybe months we future low if see XXXX, comfortable to rate fairly stays relates agree, us here it's the of as to commodity advance. price our our one can for upsides price a maybe guidance ton that to timing that just all but step the be markets. activity in of we as think blended regardless one the potential - relates packaging, of to So How OCC the we on offers in I paper increase

Adam Josephson

is? you costs what of terms the between in in that do it business, and think But prices relationship

Pete Watson

always actually starts same but it know is last there's the that it's we've industry healthy demand two seen for the with path on as now, think in think I I very our projecting combination mean the demand I very, a you busy very system quarters. and right it's

as to it don't factor a linear drives first pricing factor have what secondary of then biggest combination my to two market but think I I I can the I and it's in the that's input So think opinion. a relates factor, a is think you costs so demand think equation

Adam Josephson

three EPA And has of several issued facilities, update what's so Thank liability had us just on with if just and on the obviously a situation going what the reconditioning business your with violation facilities, you notice of Milwaukee reconditioning to result? business Journal potential written related of expecting articles as on can you. reconditioning the some the on your you're any those a

Pete Watson

of health I the to do not obvious update So received, and safety for we both all to but I'll we've operate. we around ensure of communities are in have that that met do negative commented notices. provide that's record addressing track and week, issues been I in has I'll environment to of it's priority frame, environmental came some to when become this time we local out by are our politicized. our process is during have said and we company nine with with ago we're situations and nine month residents a perfect that media that That recognized with number which global representatives On month one but good a in the are record so invited been basis, a a U.S. has particularly current our but we regulators local the politicians we to just safety delay on notices you by with first in the of colleagues conditions the facilities I state the make that the and very nine since we EPA and global result recently been I issues. regulatory third federal highest stewards think our ensure as will our portrayed statement the state and couple to our tour and world agencies, federal operations most is it visitors And I when have again it discuss it facilities received a anyway excellent an parties the started the and and community become the view, our all so and that and think the have think the a highly of compliance, get originally of inconsistent basis on know said month quarters newspaper from conditions the environmental the got voluntary are of

So in notices significant previously we regard process a requirements are the to of in standards not U.S. and facilities doing notices applied to the what those reconditioning apply have been that portion with the

is they're So making what existing process. rule following formal regulations means this without changing

in agencies also appropriate On requirements. very with we with conjunction the And we’re in SEC improvements the I'll as current financial all are disclosures working said X-K our that we point the other as and state making we’re in speak. those we fully that our regulatory issues, comply we’re confident very, addressing operations

Operator

question Staphos of go last from Bank Please George from America. comes Our ahead.

George Staphos

Thank pricing I affecting would pricing point, but comment looking a the more a we first two detail to value had think can don't a pricing again of too this on you get obvious that had comparison that of level comparisons bit within initiatives to maybe the and about follow regarding a within and on getting given get questions or on specifically to for would that been you reckon I have higher reconditioning? RIPS from see I to report challenging like financials while. pricing some more terms you Pete RIPS us the expect for My volume When at in you've bit reasons you forward, difficult would at we forward very much. extent comparison the in

Pete Watson

George. thanks good that's No

of And cost see will our we journey. saw four So that plus in talked at month QX, in it's XX of recovery we as Rigid only last this some as look not XX, businesses, markets not gross of last about when remain, squeeze we our margins we in margin. to them raw but normalization we've a more our and the material all remain quarter price recovery recover project but in

volume. guidance margin look XXXX So to to XXXX our value of at see of over and to if XXXX you in our margins that strategy XXXX our in you trajectory

I because we materials, saw don't our raw times squeeze high volatility view raw have business be materials, because tell market margin like you and we to do look we higher see I how when I as we think think is margin rate uneven there margins will have inflationary there especially will results. in of as the there when will and months you conditions conditions when last be four quarter-to-quarter in we

we are our and regions. in range look at more leading we longer a more the look commercial employ executing how indicators we processes are and So the and how we acting and we

last challenging it's the months. four how at And that's it, we so look been

global if more we view less business. is are you Also raw true. material field. next see A coming lower some a a and raw our in America world, to expected operators in onstream is happy of going on the the see we I'm see for think regions We think haven't I happened prices period but comes industry think in we'll the I normalized what's the because year, market of with and volatile in forward more a more very reasons standpoint part discipline the been what capacity of how the happy will our North feedstock a executing lot inflationary basis around in steel prices of certain resin the material what resin and environment from some project margin a China relates of that gradual in on steel big we some

We we grinded-out all also excellence not markets have journey, and think business we and is we But how so there's our of in now, this will go hanging say operate win I’ll that how face. I customer fruit businesses. compete service to in many customers the combination through some in again operating low cost opportunities our margin it's drive improvement, a so market

George Staphos

That way last that. comment more initially, answered it or thank I less question for the in going the was with you

way reconditioning, comment can't and Perhaps you that The other a on what one are had on I why would incorrect? you understand can, question could think the forum. I you is there just allegations perhaps given you

back this investment way in of you in good a luck sure. business as have mind hard Thank but that change and you this total be it's this are might and was the amount changed the to reconditioning either that for regulators processes policy or what Secondly to wrapped have to you about think sort that that rest if understand additional extent the liability the standard mean would required would us know previously, level, hadn’t you from from are your process ultimately that know or to the guys you lot, of be stated any or in up expense was sort that applied there that that perhaps used to process? coming of is I us I in or there quarter. if with talk capital would a any been about need a

Pete Watson

disclose by any allegations knowledge. the or public released said stand to what and can’t whistleblower. the X-K and any not comments we on we We make that we of that's by - So we’re going

regulations been valuable for may important the the that facilities that and it's you indicated so mean, reconditioning regulatory, industry politicians applied not reconditioning and previously professionals of have the very environmental business had that Some what very, a the to performs everybody, service.

create our the cleaning sustainability at regulatory could some viability but us So, in challenging regulatory the those going could changes reuse, that and containers U.S. not proposed by and industry containers customers. and for forward changes issues for chain supply compromise the keep those that's empty landfills but not empty final entire EPA refurbishing sought just for

we're So with that already cost have overall we're the but where significant would we're not tell requirements. some or to at cooperating actions a may on SEC again very, incur company and comfortable said we any you disclosures doing is our agencies capital made and be to very together may point in time working not decisions would I what the with or regulatory I we're now and

Operator

further are will Eichmann closing at the call turn time. questions this no remarks. for I now to There back Matt

Matt Eichmann

good lot for have you season everyone your a this Thank holiday appreciate Thanks us We ahead. morning. a joining and Kelly. time

Operator

This concludes conference call. today's

disconnect. may You now