Portfolio Transformation and Divestment of Containerboard Business
Greif is in the process of divesting its containerboard business, with the transaction expected to close at the end of September 2025.
The company plans to generate approximately $1.75 billion in cash proceeds from divestments, which will reduce leverage below 1.2x.
These divestitures are part of a strategic portfolio sharpening to focus on markets with higher growth and margin potential.
The containerboard divestment's contribution to EBITDA for the last 11 months is estimated at $122 million, indicating its significance in the company's financials.
Management emphasized that the divestments are aimed at enhancing capital efficiency and shareholder returns.
Portfolio Restructuring and Debt Reduction Achievements
Hillenbrand completed the divestiture of MIME, generating approximately $265 million in net proceeds, which was a key part of their portfolio simplification strategy.
The company also sold its minority interest in TerraSource, raising about $115 million, further strengthening its balance sheet.
Proceeds from these transactions were used to reduce total debt by over $300 million during fiscal 2025, significantly improving financial stability.
Management emphasized that these moves are part of a broader effort to focus on higher-margin, higher-growth businesses in Performance Materials and Food, Health and Nutrition markets.
The company highlighted that these strategic divestitures have contributed to a lower net leverage ratio, moving from 3.9x to approximately 3.7x after the TerraSource sale.
Adjusted EBITDA was $112 million, slightly down from $116 million in Q1 due to higher dry dock costs and idle rig.
Cash and cash equivalents stood at $156 million with undrawn credit lines of $49 million, and 15 unencumbered vessels valued at $192 million.
Net proceeds of approximately $20 million from vessel sales during the quarter, with further $150 million proceeds post-quarter from vessel deliveries.
Net profit of approximately $1.5 million or $0.01 per share compared to a net loss of $32 million or $0.24 per share in the previous quarter.
Operating revenues were approximately $192 million, up from $187 million in Q1 2025.
Reported revenues of $194 million in Q2 2025, with EBITDA equivalent cash flow of $112 million for the quarter and $526 million over the last 12 months.
Rig operating expenses were $19 million, slightly up from $18 million in Q1.
Vessel operating expenses increased to $67 million including $16 million related to scheduled dry dockings, up from $58 million in Q1.
EPS for Q4 was $2.80, up 5.9% year-over-year and beating guidance by nearly 5%.
Fiscal 2025 achieved record sales, EBITDA, and EPS with full year EPS growth of 4%, exceeding high-end guidance.
Fourth quarter sales increased 5.5% year-over-year, with organic daily sales up 0.2%, reversing prior declines.
Free cash flow reached a record $465 million, up 34% year-over-year, supporting $560 million in capital deployment including acquisitions and share buybacks.
Gross margins expanded nearly 50 basis points, surpassing 30% for the first time in company history.
Net leverage ended at 0.3x EBITDA, slightly higher than prior year but stable.
Reported EBITDA margin declined 73 basis points year-over-year to 12.5%, impacted by higher AR provisioning and LIFO expense.
Service Center segment sales declined 0.4% organically, while Engineered Solutions segment sales grew 1.8% organically.
Adjusted diluted EPS rose 13% to $0.87 from $0.77 in the prior year, reflecting higher net income and share repurchases.
Adjusted EBITDA increased 4% to $266 million, but adjusted EBITDA margin declined 40 basis points to 12.7% due to higher SG&A as a percentage of sales.
Gross margin improved to 26.8%, up 10 basis points sequentially and 40 basis points year over year, driven by private label and sourcing initiatives.
Net debt stood at $2.3 billion with a leverage ratio of 2.4x, and total liquidity was $1.1 billion.
Net sales grew nearly 7% to $2.1 billion in Q2 2025, with approximately 5% organic growth and the remainder from acquisitions.
Operating cash flow was $34 million, down from $48 million last year, mainly due to higher working capital investment.
SG&A expenses increased 13% to $302 million, impacted by acquisitions, inflation, and one-time costs.
Dafinchi