Greif improved profitability despite muted industrial demand: adjusted EBITDA rose 24% year-over-year and adjusted EBITDA margin expanded 260 basis points to 12.3%, driven by structural cost optimization with run-rate savings of $65 million and a fiscal-year target of $80–$90 million.
Management reaffirmed the low end of fiscal 2026 guidance — $630 million in adjusted EBITDA and $315 million in adjusted free cash flow — and expects roughly 50% free-cash-flow conversion, noting Q1 is seasonally the weakest quarter for cash flow.
Capital allocation prioritizes shareholder returns and balance-sheet strength: leverage sits at about 1.2x, the company completed $130 million of a $150 million buyback and approved an incremental $300 million repurchase authorization, targeting up to 2% of shares repurchased annually.
Greif (NYSE:GEF) reported fiscal first-quarter 2026 results that management said were consistent with expectations despite continued softness in industrial demand, while highlighting margin improvement driven by structural cost actions and a significant step-up in shareholder returns through share repurchases.
Chief Executive Officer Ole Rosgaard said the company entered 2026 “from a position of strength” even as the industrial environment remained “muted.” Volumes in the quarter tracked as anticipated, with demand pressure persisting across several end markets, but Greif’s profitability improved materially due to cost optimization and price/mix performance.
Rosgaard said the company’s EBITDA margin profile improved meaningfully, rising 260 basis points year-over-year. He attributed the expansion to “decisive actions taken on our cost optimization,” adding that the work is “not cyclical, it’s structural.”
Chief Financial Officer Larry Hilsheimer said adjusted EBITDA increased 24% year-over-year and adjusted EBITDA margin improved 260 basis points to 12.3%, reflecting improved price-cost dynamics and “significant benefit of structural cost optimization.”
Hilsheimer noted that adjusted free cash flow in the first quarter was lower than the prior year primarily because the prior-year period included cash flow from businesses that have since been divested. Excluding that factor, he said Greif’s “core cash engine and continuing operations improved year-over-year,” supported by EBITDA growth, lower interest expense after deleveraging, and reduced maintenance capital following the company’s containerboard sale.
Management reaffirmed the low end of its fiscal 2026 guidance, citing Q1 performance that aligned with internal expectations. Hilsheimer said the company is reaffirming:
He added that the company expects approximately 50% free cash flow conversion for the year and emphasized that the first quarter is typically the seasonally lowest quarter for free cash flow.
On the guidance bridge, Hilsheimer said price and raw material costs were “slightly better than planned,” while volumes and manufacturing costs were “slightly behind,” with SG&A in line. He said no individual item changed materially and the net result supported the decision to reaffirm guidance.
Rosgaard detailed end-market trends, noting that performance reflected “broader economic conditions remaining soft.” In Customized Polymer Solutions, demand was “essentially flat overall,” with intermediate bulk container (IBC) volumes up low single digits, small containers down low single digits, and large containers down mid-single digits. He said Greif expects small containers to improve sequentially in the second quarter as agricultural seasonality picks up.
Durable Metal Solutions remained under pressure, with softness across regions and particularly among chemical customers. Rosgaard said the company is focusing that business on “cost discipline and cash generation.”
In Sustainable Fiber Solutions, Rosgaard said converting volumes declined due to North American industrial softness, but mills operated at solid rates. In Innovative Closure Solutions, he said volumes declined high single digits as both metal and polymer closure demand weakened in the soft industrial environment.
Despite volume headwinds, Greif cited resilience in pricing and mix. Rosgaard said total sales in Innovative Closure Solutions—defined to include both direct third-party sales and sales routed through Greif’s polymer and metal businesses—were approximately flat, supported by strong price/mix, with volume down only mid-single digits. He said this reflected the relative resilience of the company’s highest-performing products.
Hilsheimer added additional segment color. In customized polymers, gross profit declined on approximately flat volumes due primarily to product mix, despite cost optimization gains. Durable metals gross profit was slightly higher year-over-year, which he attributed primarily to structural cost optimization. Fiber sales reflected demand softness discussed previously, while margins expanded year-over-year due to cost discipline and favorable pricing and OCC (old corrugated containers) costs. Innovative closure gross profit increased due to strong mix and cost optimization benefits, even as total sales were roughly flat.
Rosgaard said Greif’s run-rate cost optimization reached $65 million, primarily reflecting SG&A actions taken early in fiscal 2026. He reiterated a fiscal year-end run-rate commitment of $80 million to $90 million.
In Q&A, management discussed the demand environment and the company’s approach to winning volume. Rosgaard said customer conversations indicated conditions remain muted, but he emphasized Greif is pushing forward commercially, including transforming its commercial organization “from farmers to hunters” and adjusting incentives. Hilsheimer added that the company has seen a “very positive” start to Q2 volume trajectory in small plastics.
Management also addressed polymers margins. Hilsheimer said the quarter’s polymers performance was largely a mix issue, with lower volumes in small plastics and large plastic drums—products he described as among the higher-margin polymer offerings—while IBC volumes were up. He added that manufacturing costs across the network were higher and said the company is “actively addressing manufacturing costs” with expectations for improvement as the year progresses. On a question about EBITDA margin versus gross margin, Hilsheimer pointed to overhead allocation as a key driver and reiterated why the company has emphasized gross profit in its discussion.
On fiber price-cost timing, Hilsheimer said the price-cost benefit would annualize in the “later part of the second half” of fiscal 2026, with more of the timing coming in the last quarter due to contractual pass-through mechanics.
On capital allocation, management emphasized historically low leverage and a focus on organic, margin-accretive growth investments. Rosgaard said leverage is now “historically low,” and in closing remarks he cited leverage at 1.2x. He also said the company expects to remain well below 2x leverage, supported by its free cash flow outlook.
Greif has been active with buybacks. Rosgaard said the company completed $130 million of a $150 million share repurchase program announced three months earlier. Management said approximately $20 million remained and is expected to be completed “up to the summer.” Hilsheimer added that in December the board approved a new $300 million share repurchase authorization incremental to the $150 million program, and the company’s goal is to repurchase up to 2% of shares outstanding annually, subject to board approval and balanced against other capital needs.
Management also discussed growth investments and specific end-market opportunities. Rosgaard pointed to capacity additions where the company sees strong business cases, including deployments in Europe, India, and prior additions in Singapore tied to specific customers and long-term contracts. He also cited mining-related demand in Southern Africa as an area of increased activity. Separately, Rosgaard said Greif’s SiOx barrier technology is operational on its first machine in France, with three additional machines in production to be deployed during the year. He said Greif has received orders, though management noted the financial impact in fiscal 2026 is not expected to be significant.
Greif, Inc is a global leader in industrial packaging products and services, with a history dating back to its founding in 1877. Headquartered in Cleveland, Ohio, the company has evolved from a regional barrel and drum manufacturer into a diversified packaging provider serving a wide range of end markets. Greif’s longstanding heritage in container solutions has positioned it as a trusted partner for customers seeking reliable, high-quality packaging options.
The company’s core business revolves around the design, manufacture and sale of industrial packaging products, including steel, plastic and fiber drums; intermediate bulk containers (IBCs); safety closures; rigid, flexible and reconditioned packaging; containerboard and protective packaging.
