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    GEF
    Earnings call· Mar 2026(Q2 FY26)

    GREIF Q2 FY26 earnings call GEF

    Apr 29, 2026 Source

    Executive summary

    Greif Q2 FY26 — Strong Balance Sheet and Cost Optimization Amidst Soft Demand

    Greif delivered strong financial results in Q2 FY26, driven by robust cost optimization and productivity gains, leading to significant margin and free cash flow improvement. Despite a soft industrial demand environment and disruptive impacts from the Middle East conflict, the company maintains a historically strong balance sheet and is focused on disciplined capital allocation, including organic growth, dividends, and share repurchases, while navigating market volatility.

    Highlights

    5

    • Achieved $75 million in savings, on track for the full year target range of $80 million to $90 million.

    • Ended the quarter with a leverage ratio of 1.1x, representing the strongest balance sheet in nearly 150 years.

    • EBITDA dollars improved 7.5% year-over-year, with margins up 110 basis points YoY and 230 basis points sequentially.

    • Adjusted EPS improved over 60% year-over-year.

    • Adjusted free cash flow improved 107% or $90 million compared to Q2 2025 (over 200% excluding divested business).

    Concerns

    4

    • Adjusted EBITDA guidance revised down to $610 million due to the disruptive impact of the Middle East conflict.

    • Experienced an EBITDA loss of less than $5 million in Q2 due to intermittent facility shutdowns in the Middle East region.

    • Revised volume assumptions for Metal, Fiber, and Closures to be down mid-singles, and Polymers flat.

    • Rising input costs due to supply chain constraints caused by the Middle East conflict.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year Adjusted EBITDA
    $610M
    high materiality
    High
    Full-year Adjusted Free Cash Flow
    $315M
    high materiality
    High
    Cost Optimization Program Savings
    $120M
    medium materiality
    High
    Full-year Cost Savings
    $80M-$90M
    medium materiality
    High
    Leverage Ratio
    Below 2x
    high materiality
    High
    Volume Assumptions (Metal, Fiber, Closures)
    Down mid-singles
    medium materiality
    Medium
    Volume Assumptions (Polymers)
    Flat
    medium materiality
    Medium
    URB Price Increase Benefit
    $9M net lift
    low materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Polymer Solutions
    Gross profit was slightly down year-over-year due primarily to product and geographic sales mix, despite improved volumes.
    		———Slightly down YoY
    Metal Solutions
    Gross profit dollar and percent both improved year-over-year due to continued cost optimization and variable cost management.
    		———Improved YoY
    Fiber Solutions
    Net sales were lower year-over-year due to volumes and mill closures in 2025. Despite lower volumes, positive year-over-year pricing and cost management helped gross profit margins improve by 50 basis points.
    		Lower YoY——Improved 50 bps
    Closures
    Third-party volumes declined to low single digits, while total volumes were flat year-over-year. Gross profit dollars and margin both increased on an absolute basis, reflecting strong price/mix and continued operational improvements.
    Third-party volumes: declined low single digits
    		—Flat YoY (total volumes)—Increased

    Operational metrics

    4
    Adjusted EBITDA margin
    110up YoY
    Q2 FY26

    Result of value-based pricing and continued benefits of cost optimization program.

    Professional Workforce Reduction
    12
    Ongoing

    A structural reduction as part of cost measures.

    Gallup Engagement Score
    91st
    Latest

    Evidence of an engaged and agile workforce.

    Weighted Average Interest Rate
    3.14
    Current

    Result of refinancing debt facilities, providing a competitive advantage in lending.

    Industry KPIs

    7
    MetricValueDetails
    DividendsContinuing to grow
    Share buyback$150MUSD
    Net debt leverage1.1x
    CAPEX capital program$85MUSD
    Volume production growthMixed
    End market demand driversConsistent with past 12 months
    Adjusted underlying EBITDA$610MUSD

    Capital programs

    1
    Cost Optimization Programunderway$120M
    Period spend: $75M achieved in Q2 FY26
    Spent to date: $75M

    Benefit: Margin improvements, structural cost reductions, enhanced operating leverage

    Broader program with a total commitment by fiscal year-end 2027. Represents only defined actions with full confidence, with potential for upside beyond this figure.

    Risks & headwinds

    3
    Middle East ConflictQ2 FY26 and through year-end

    Less than $5M EBITDA loss in Q2 FY26; potential for continued disruption factored into revised guidance.

    Mitigation: Monitoring price/cost, taking pricing actions, constant communication with suppliers, ensuring continuity of supply for customers.

    Soft Industrial Recessionary EnvironmentOngoing

    Underlying industrial end market demand consistent with past 12 months; volumes mixed with no inflection point.

    Mitigation: Focus on pricing, cost management, productivity, and shifting portfolio mix towards less cyclical end markets. Structural cost reductions are permanent.

    Rising Input CostsOngoing

    Due to supply chain constraints caused by the Middle East conflict.

    Mitigation: Exhibiting action bias, taking pricing actions, and maintaining constant communication with suppliers.

    What to watch in Q3 FY26

    5

    Middle East Conflict Impact

    Next quarter
    CurrentLess than $5M EBITDA loss in Q2
    TargetResolution or stabilization of impact

    Why it matters

    The conflict directly impacted Q2 results and led to a downward revision of full-year EBITDA guidance, making its evolution critical for future performance.

    While we sincerely hope for a resolution soon, we also recognize the risks the conflict presents on broader demand and industrial sentiment. As such, we are adjusting our full year EBITDA guidance to reflect the disruptive impact experienced in Q2 and continued softness related to the conflict through year-end.

    Q&A highlights

    7

    What is the plan for the remaining $300M share repurchase authorization, and what does the M&A pipeline look like in terms of segment mix and size?

    The focus is on organic growth, with M&A being secondary and targeted to complement organic efforts. The company intends to be a regular buyer of its stock and will discuss specific executions with the board.

    “our focus is on organic growth, and we're deploying CapEx to support organic growth. And then secondly, M&A is -- our focus there is really secondary. We have a very healthy pipeline. We continue to focus on that. But the M&A we will be doing will be targeted M&A to, let's say, complement our organic growth efforts.”

    asked by Unknown Analyst · answered by Ole Rosgaard

    2 min read6 chapters

    Detailed Narrative

    01

    Cost Optimization & Productivity

    Greif achieved $75 million in savings in Q2 FY26, putting the company on track for its full-year target range of $80 million to $90 million. The broader cost optimization program aims for $120 million in savings by fiscal year-end 2027, focusing on defined actions with potential for upside. These measures are structural, including a 12% reduction in the professional workforce, positioning the company to capitalize on future volume recovery.

    02

    Balance Sheet Strength & Capital Allocation

    The company reported a leverage ratio of 1.1x at quarter-end, marking its strongest balance sheet in nearly 150 years. Greif completed its $150 million share repurchase program shortly after Q2 and retains an additional $300 million authorization. Capital allocation priorities remain unchanged: investing in high-return organic growth, maintaining a strong balance sheet with leverage below 2x, growing dividends, and consistent share repurchases. Debt facilities were refinanced, extending term loans to 2031 at a current weighted average interest rate of 3.14%.

    03

    Middle East Conflict Impact

    The Middle East conflict resulted in an EBITDA loss of less than $5 million in Q2 due to intermittent facility shutdowns. The potential for continued disruption from this conflict is factored into the revised full-year guidance. Management is actively monitoring price/cost dynamics, implementing pricing actions to stay ahead of inflation, and maintaining constant communication with suppliers to ensure continuity of supply amidst supply chain constraints.

    04

    Volume Trends & End Markets

    Underlying industrial end market demand remained consistent with the past 12 months, with no significant inflection points observed. Notable volume bright spots included resilient small containers due to a solid Ag season and improving tube and core volumes in North American paper and film industries. Closure volumes were flat year-over-year. The company's strategy to shift towards a less cyclical end market mix is validated by these trends, and management expects significant operating leverage and earnings growth when demand meaningfully inflects.

    05

    Pricing Actions & URB Market

    Greif announced a $60 to $70 URB (Uncoated Recycled Board) price increase, which was recognized at $60 a ton in April by RISI. This is expected to benefit the P&L starting in July, with a net lift of $9 million (after offsetting a $2 million increase in OCC costs). The majority of the company's contracts with global customers include monthly price adjustment mechanisms tied to indices, allowing them to stay ahead of raw material volatility and protect margins.

    06

    Sustainability Initiatives

    Greif issued its 17th annual sustainability report, available on its website. The report highlights the sustainable and durable nature of its products as a distinct competitive advantage, which also drives value creation for the company. This initiative underscores the company's commitment to environmental responsibility and its role in essential industries.

    AI-generated summary of the company’s earnings call. Not investment advice.