Greif Posts 12% EPS Gain in Fiscal Q3

Key Points

• Diluted adjusted earnings per share rose 11.6% to $1.03, despite lower revenue and significant restructuring charges.

• Adjusted free cash flow surged to $170.7 million compared to $34.3 million a year ago, supporting further debt reduction and dividend growth.

• Dividends were raised for both share classes and portfolio divestitures are set to reshape operations and financial results in upcoming quarters.

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Greif (NYSE:GEF), a leading global supplier of industrial packaging products and services, reported results for the quarter ended August 29, 2025. The earnings release highlighted a mixed performance, with revenue (GAAP) slipped to $1,134.7 million—down 2.6% from the prior year—but with notable improvements in adjusted earnings, cash generation, and debt reduction. Adjusted diluted earnings per share (EPS) climbed 11.6% year over year to $1.03, benefiting from effective cost control, while Adjusted free cash flow (non-GAAP) increased to $170.7 million compared to $34.3 million a year ago. While results tracked close to management targets set earlier in the year, ongoing volume pressures and increased restructuring costs weighed on overall quarterly profitability. The announcement confirmed the company is deepening its restructuring efforts as it moves to reshape its business through strategic divestitures and operational changes.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.

Understanding the Business and Its Recent Focus

Greif provides a wide range of industrial packaging solutions, including steel and plastic drums, intermediate bulk containers, fiber containers, and related products that serve industries like chemicals, food, pharmaceuticals, and agriculture. Its business is divided into four core segments: Customized Polymer Solutions, Durable Metal Solutions, Sustainable Fiber Solutions, and Integrated Solutions.

The company's recent focus has been on operational efficiency, disciplined cash management, and portfolio reshaping. It has undertaken cost optimization measures, including facility closures and restructuring moves, to remain competitive in cost-sensitive global markets. Key success factors include agile management of raw material costs, a shift toward higher-margin offerings, and compliance with evolving sustainability standards.

Quarter in Review: Financial and Strategic Developments

In the third quarter, Greif's consolidated revenue (GAAP) declined by 2.6%, primarily reflecting lower sales volumes in Durable Metal Solutions and Sustainable Fiber Solutions. The Customized Polymer Solutions division recorded higher net sales, helped by increased volumes and improved pricing. Volume improvements contributed a 2.2% lift, and pricing added 3.3% in this segment.

Durable Metal Solutions saw net sales fall due to sharply reduced demand—down 5.8% from last year—yet managed a modest gain in adjusted EBITDA. Lower raw material costs cushioned the impact of weak sales. Sustainable Fiber Solutions also reported a drop in sales but posted a meaningful increase in adjusted EBITDA—a measure of operating profit before non-core items—due primarily to lower input and manufacturing costs. Still, further restructuring and plant closure charges offset a portion of these gains, increasing overall expenses.

The smallest division, Integrated Solutions, posted lower revenue and earnings, due chiefly to the divestiture of the Delta Petroleum business in Q3 FY2024. Overall, SG&A expenses and restructuring charges, however, were notably higher year over year, with restructuring costs rising from $2.7 million in Q3 FY2024 to $25.2 million.

Cash flow was a highlight for the quarter. Adjusted free cash flow soared from $34.3 million a year ago to $170.7 million, driven by strong cash generation. Net debt fell from $2,715.3 million a year ago to $2,431.8 million, improving leverage as measured by the ratio of net debt to trailing 12-month adjusted EBITDA from 3.6x to 3.1x. At quarter-end, cash and cash equivalents totaled $285.2 million. The company raised its quarterly dividends by $0.02 per share for Class A stock and $0.03 for Class B stock, marking an increased return to shareholders.

Major strategic moves included signing definitive agreements to divest its Containerboard and Timberlands businesses for a total cash value of over $2.3 billion. The Containerboard sale is scheduled to close at the end of August 2025 and the Timberlands deal in October 2025. These transactions are expected to further reduce debt and support investments in core, higher-margin offerings moving forward.

Greif’s Product Segments: Definitions and Developments This Quarter

Customized Polymer Solutions produces industrial packaging made from plastics and resins, including drums and intermediate bulk containers primarily used for chemicals, food ingredients, and pharmaceuticals. Durable Metal Solutions encompasses packaging products such as steel drums and metal containers, which serve heavy-duty applications in the chemical and lubricant industries.

Sustainable Fiber Solutions involves packaging based on paperboard such as corrugated boxes and fiber drums, with customer demand sensitive to trends in transport and environmental regulation. Customized Polymer Solutions grew on the back of improved demand and pricing. Durable Metal Solutions experienced volume erosion but improved profits thanks to favorable raw material costs. The Sustainable Fiber Solutions division benefited from cost management, while Integrated Solutions faced lower demand following the Delta Petroleum divestiture.

Looking Ahead: Guidance and Areas to Watch

Management issued updated guidance, now expecting combined adjusted EBITDA (non-GAAP) to be in the range of $725–$735 million, reflecting a modest increase. Adjusted free cash flow (non-GAAP) is anticipated at $305–$315 million, an upward revision from earlier in the year following strong execution. No guidance was provided for GAAP net income due to uncertainty from ongoing transactions and restructuring.

With the closing of major divestitures on the horizon, Greif’s business mix will change significantly in coming quarters. Investors should track the impact of the Containerboard and Timberlands sales on debt levels, ongoing restructuring costs, and the company’s shift towards higher-margin products. Management has reaffirmed its intent to provide steady shareholder returns—evident with the latest dividend hike—while balancing the costs and opportunities of portfolio reshaping and operational transformation.

The quarterly dividend was raised to $0.56 per Class A share and $0.84 per Class B share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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