Greif Profit More Than Doubles as Margins Widen, Debt Shrinks
Greif posted a 156.7% jump in net income to $78.8 million as gross margin expanded 650 basis points and leverage fell to 1.1x from 3.1x a year earlier.
Greif (GEF) reported net income attributable to the company rose 156.7% year over year to $78.8 million, or $1.37 a diluted Class A share, in its fiscal third quarter, up from $30.7 million, or $0.53 a share, a year earlier. Adjusted EBITDA growth accelerated to 24.7% year over year, reaching $183.4 million, up from 7.5% growth to $156.8 million in the prior quarter, marking a sequential acceleration in profitability.
Total net sales grew 3.5% to $1,165.6 million from $1,125.9 million a year earlier. Gross profit margin expanded to 34.0% from 27.5%, a 650-basis-point improvement, and operating profit nearly doubled to $107.9 million from $63.7 million. On an adjusted basis, net income rose 87.0% to $93.3 million, or $1.61 a share, from $49.9 million, or $0.86 a share — a slower growth rate than the GAAP figure, reflecting the scale of one-time items embedded in the reported result.
Segment performance diverged sharply. Customized Polymer Solutions net sales rose 12.8%, led by an 8.8-percentage-point pricing and mix contribution, with operating profit nearly quadrupling to $32.8 million from $8.4 million. Innovative Closure Solutions posted the strongest volume growth of any segment, up 5.5 percentage points, lifting total net sales 19.0% and Adjusted EBITDA by $5.0 million to $12.6 million. Sustainable Fiber Solutions was the outlier, with net sales down 2.0% on a 4.0-point volume decline and Adjusted EBITDA falling $6.3 million to $42.5 million, even as operating profit improved to $13.9 million from $5.0 million on lower restructuring and impairment charges. Durable Metal Solutions net sales rose 3.4% to $405.6 million as pricing and currency gains offset a 3.1-point volume decline.
Cash generation moved in the opposite direction of earnings. Net cash from operating activities fell to $77.8 million from $147.1 million, a $69.3 million decline that reversed the prior quarter's trend, when operating cash flow slipped only $5.8 million to $116.6 million. Adjusted free cash flow swung to an $86.7 million year-over-year decrease, reaching $57.7 million, after posting a $92.7 million increase to $179.3 million in the second quarter.
Greif continued to deleverage. Total debt fell to $1,030.4 million, down $1,686.6 million from a year earlier, pushing the leverage ratio to 1.1x from 3.1x, roughly flat with the 1.1x reported at the end of the second quarter. The reduction reflects proceeds from the prior sale of Containerboard and timberlands assets. Nine-month operating profit surged to $399.9 million from $158.5 million, aided by a $217.2 million gain on disposal of properties, plant and equipment, largely booked within Sustainable Fiber Solutions, whose nine-month operating profit jumped to $222.2 million from $3.9 million.
The company's cost optimization program reached $90 million in cumulative run-rate savings, up from $75.0 million at the end of the second quarter, hitting the high end of its fiscal-year commitment range. Greif reaffirmed its full-year target of at least $120 million in run-rate savings by the end of fiscal 2027.
Greif reiterated full-year fiscal 2026 guidance of $615 million to $635 million in Adjusted EBITDA and $305 million to $325 million in Adjusted free cash flow, unchanged from its prior outlook.
The company raised its quarterly dividend 10.7%, a move not included in its second-quarter release, and intends to begin a new share repurchase program following the April 15, 2026 completion of its prior $150.0 million buyback. Greif also disclosed the completion of its bolt-on acquisition of Envaplast, serving agrochemical end markets, on June 2, 2026, which carries above-average EBITDA margins and free cash flow conversion.