Prepared remarks
Good day, and thank you for standing by. Welcome to the Greif Fourth Quarter 2025 Earnings Call. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Bill D'Onofrio, Vice President of Investor Relations and Corporate Development. Please go ahead.
Good morning, everyone, and thank you for joining Greif's Fiscal Fourth Quarter 2025 Earnings Conference Call. Today, our CEO, Ole Rosgaard, will provide a strategy and market update, followed by our CFO, Larry Hilsheimer, with a review of our financial results and 2026 guidance. Please turn to Slide 2. In accordance with Regulation Fair Disclosure, please ask questions regarding topics you consider important because we are prohibited from discussing material nonpublic information with you on an individual basis. During today's call, we will make forward-looking statements involving plans, expectations, and beliefs related to future events. Actual results could differ materially from those discussed. Additionally, we will be referencing certain non-GAAP financial measures and the reconciliation to the most directly comparable GAAP metrics that can be found in the appendix of today's presentation.
Two important reporting clarifications for this quarter. First, our containerboard business was sold on August 31. As such, that business is presented as discontinued operations for its 1-month contribution to the quarter. Unless otherwise noted, all financial results and commentary discussed today will relate to continuing operations only. Second, due to our fiscal year-end change, Q4 reflects a 2-month reporting period, August and September. For consistency, all prior year comparatives in today's presentation are also shown on a 2-month basis for August and September. I'll now hand the call over to Ole on Slide 3.
Thanks, Bill, and thank you all for listening in today and for your interest in Greif. With the short 2025 fiscal year due to our fiscal year change, the 2 months fourth quarter, the sale of our containerboard business this quarter and the ongoing cost optimization program, we know there's a significant amount of change and noise for this quarter. This shows up in our tax results, which Larry will be discussing in a moment. Thank you for bearing with us. We are excited for the long-term earnings growth and value creation our strategy is unlocking. We closed fiscal '25 as a more focused, more agile and more strategically aligned company than at any time in our history. Our transformation is accelerating and the results are beginning to show. On October 1, we finalized the sale of our land management business, generating $462 million in proceeds. Those funds were used immediately to reduce debt, and our pro forma leverage ratio is now under 1x.
We have entered fiscal 2026 with a meaningfully stronger balance sheet with enhanced capital efficiency built for resilience. Together with the divestiture of our containerboard business in the fourth quarter, we have reshaped Greif's portfolio to concentrate our efforts where we have the greatest opportunity to grow EBITDA, expand margins, generate cash, reduce cyclability and deliver durable returns for our shareholders. We are pleased to report our latest Net Promoter Score survey result of 72, an improvement of 3 points from last year and further extending our world-class customer service performance. That improvement is a direct reflection of the trust our customers place in us and our ability to deliver for them. The best companies build stronger relationships when things are difficult and our NPS reflects our conviction that we will capture significant value when demand returns. As Larry will touch on in a moment, our full year '26 guidance despite being on the low end reflects continued earnings growth and a free cash flow conversion rate of 50%, demonstrating our progress towards the long-term objectives laid out at Investor Day in December.
We are proud of how we ended fiscal 2025 but even more energized by what lies ahead. Our Build to Last Strategy is firmly embedded in our organization. We are shaping and sharpening our portfolio, strengthening our balance sheet, and investing for sustainable growth. Please turn to Slide 4. Our commitment to value creation shows in how we manage cost. In fiscal '25, we achieved $50 million in run rate savings from our cost optimization program, more than double our stated full year '25 commitments. To date, we have achieved approximately $15 million in savings related to network design and operating efficiency. This is not limited to strategic footprint actions. It also includes deploying AI solutions to reduce scrap and improve OEE, strategic planning actions to minimize freight and maximize on-time deliveries and structural improvements to our global procurement strategy. The remaining run rate savings are related to SG&A. Our updated business model has enabled much more efficient decision-making.
It has also led to difficult but necessary decisions to eliminate areas of redundant cost in the updated model. As of quarter end, we have eliminated approximately 8% of professional roles within the company or 190 positions. These changes have been carefully considered over this past year and were acted on in Q4 in a manner that allowed us to communicate to impacted colleagues our heartfelt appreciation for their contributions to Greif. These actions drove the significant acceleration beyond our previous full year '25 commitments. Due to our progress to date, we are raising our anticipated fiscal '26 cumulative cost saving run rate commitment from $50 million to $60 million to $80 million to $90 million. We will also expand our anticipated full year '27 cumulative run rate commitment from $100 million to $120 million. Our cost optimization program has continued to evolve since the start of the year.
What began as a top-down initiative is now being fueled from the ground up. Across the organization, our colleagues are embracing the challenge, identifying new opportunities, driving local action and creating meaningful change. This work is making Greif a more focused and agile organization, better positioned to capture value as demand returns. Importantly, this isn't just about taking cost out. It's about building an agile next-generation Greif. The Greif Business System enables repeatable excellence across more than 250 sites in 40 countries, allowing us to do more with fewer resources. We are removing unnecessary layers to empower local leaders and speed up decision-making and we are embedding a mindset of efficiency, responsiveness and value creation across every function and facility. This isn't a one-time initiative. It's a structural shift in how we operate, compete and grow. Please turn to Slide 5.
Significant findings from our cost optimization program, which is now realizable as the divestment of containerboard are the clear and meaningful synergies in operating adhesives and recycled fiber as part of Sustainable Fiber solutions. Therefore, beginning in fiscal '26, those products will be reported within our Fiber segment results. These changes are designed to enhance our go-to-market approach while also benefiting our cost optimization program. This leaves the Integrated Solutions segment as primarily closures. Effective October 1, we are renaming that segment to Innovative Closure Solutions, which is a highly profitable and critical growth focus for us. Please turn to Slide 6. Our Q4 results reinforce our strategic focus on 4 target end markets. In Customized Polymer Solutions, volumes were flat year-over-year. However, small containers continued positive volume momentum driven by the agrochemicals end markets.
This is an area where we have been investing to grow both organically and through M&A. Mid-single-digit declines in both IBC and large polymer drums, driven by softness in industrial markets in EMEA during the quarter offset the positive growth in small containers. In Durable Metals, volumes declined 6.6%, reflecting softness across industrial end markets. Our team remains focused on managing the business for cash flow and optimizing costs while maintaining a strong position that will capitalize on growth as demand returns. Sustainable Fiber volumes declined 7.7%, reflecting approximately 1.7 million tons of URB economic downtime during September. Converting was also negatively impacted by continued weak fiber demand. Integrated Solutions continues to see volume improvement driven by closures. These products generating 30% plus gross margin continue to win new business through innovation and cross-selling, including on our Greif+ digital platform.
In wrapping up my section, I'll close by pointing to a few items, which clearly demonstrate through the noisiness of full year '25, the value creation occurring under our strategy. Our polymers and closure business are growing. Our cost optimization is well ahead of plan and it has expanded to $120 million of anticipated total commitments. Our free cash conversion was nearly 50% in 2025 and we expect it to be at 50% in 2026. Our pro forma leverage is below 1x. Greif is a strong, durable company and we are accelerating our value creation. I'll now turn it over to Larry for the financials on Slide 7.
Thank you, everyone. Hello, everyone. As a reminder, our results are presented excluding the containerboard divestment, except for free cash flow, which compares total operations to the prior year. Additionally, due to our fiscal year change, Q4 reflects a 2-month reporting period, August and September. For consistency, all prior year comparatives in today's presentation are also shown on a 2-month basis. Adjusted EBITDA for the quarter was $99 million, which was 7.4% above the prior year. EBITDA margins expanded year-over-year by 140 basis points due to better price cost across all segments and the growing momentum of our cost optimization. Adjusted free cash flow also improved year-over-year by over 24.3% due to the increase in EBITDA and our team's effective working capital management to close the year. As noted in our presentation, SG&A includes $28 million of operating costs specifically related to the containerboard divestment, which are excluded from EBITDA.
Excluding these costs, SG&A was slightly above the prior year quarter primarily due to the 2-month quarter, including certain annual or quarterly costs, which were incurred over a shorter year. Adjusted EPS for the quarter was $0.01 compared to $0.59 in the prior year quarter. Our Q4 tax expense was influenced by nonrecurring items affecting pretax income and the residual nature of continuing operations after removing discontinued operations. Tax expense also includes various taxes that are either not based on income or not directly correlated to current period income, the impact of which is heightened due to the lower income reported in this 2-month period. Lastly, the tax expense was also affected by the mix of earnings across the jurisdictions in which we operate. In Polymers, growth was led by small containers, aligning with our long-term strategic focus on less cyclical, margin-accretive end markets.
Sales and gross profit were both up year-over-year with margin support from mix, pricing, and operational discipline. In metals, results reflected volume softness in industrial end markets. Sales and volume declined, but we continue to generate healthy cash flow and focus on cost reduction and becoming more responsive as demand recovers. In fiber, the decline in sales was tied to volume with URB mill downtime late in the quarter. Despite that, gross profit dollars and margin improved year-over-year due to continued benefits from price cost and tight cost management. Integrated Solutions sales and gross profit dollars decreased year-over-year primarily due to lower published OCC prices in our recycled fiber group. Volumes in recycled fiber and closures were both solid, and the product mix impact of closures led to higher gross margins year-over-year. Given the ongoing demand environment, we believe it's prudent to present low-end guidance for fiscal '26.
Our low-end scenario assumes flat to low single-digit volume declines in metals and fiber, as well as low single-digit volume improvement in polymers and closures from growth in our target end markets. The net impact of these volume assumptions is flat volume-related EBITDA performance compared to the prior year. Transportation and manufacturing costs were also assumed flat, representing cost savings from our cost optimization, balancing normal inflationary cost increases. The main positive drivers in our bridge are SG&A and price cost, both indicating the accelerated progress on our cost optimization program. SG&A of $45 million reflects $39 million of additional cost optimization, of which $17 million is within the fiscal year '25 run rate and $19 million is within the fiscal '26 run rate, both expected to benefit fiscal '26. The additional $9 million represents lower variable costs, including incentives.
Price/cost reflects $12 million of additional cost optimization, primarily from sourcing benefits in polymers and closures, while the metals cost base remains flat. Price/cost also reflects an $18 million incremental benefit from URB pricing recognized in fiscal '25 and lower expected OCC costs. Finally, to complete our bridge, a $10 million EBITDA headwind resulted from the lack of land management, while there was a $7 million positive impact from a weakening U.S. dollar. Our free cash flow low-end guidance is $315 million, reflecting a 50% conversion ratio, showing our progress towards long-term objectives. We expect to spend about $155 million on CapEx this year. Our lower cash interest cost highlights our strong balance sheet, and our other cash uses include around $40 million of cash restructuring related to cost optimization, as well as pension costs. Working capital is projected to be a source of $50 million, driven by both low-end volume assumptions and optimization gains.
With our pro forma leverage below 1.0x and strong cash flow guidance of $315 million, we anticipate minimal cash needs for debt service costs in the coming year. After divesting our most capital-intensive business earlier this year, our maintenance CapEx needs are about $25 million lower. Given the robustness of our balance sheet and strong free cash flow generation, our capital allocation outlook underscores the value creation driven by our business model. Due to our fiscal year-end change, our scheduled Board of Directors meeting is now one month after each quarterly earnings release, still aligned to the previous fiscal calendar. Consequently, our dividend payments will be considered as usual by the Board on that same schedule, with the next meeting occurring on December 9. Based on our strong confidence in our own ability to meet our long-term commitments and our belief that our stock currently represents compelling value, we plan to execute quickly on an open market repurchase plan of approximately $150 million, utilizing our available authorization of about 2.5 million shares.
Additionally, we will seek Board approval of a new stock repurchase authorization to enable continued repurchases as part of our ongoing capital allocation strategy, which we expect will include regular stock repurchases of up to 2% per year of our outstanding equity value. While this leaves considerable room for growth capital, we will be prudent in our allocations while maintaining a strong balance sheet.
Thank you again for your interest in Greif. We acknowledge that the last 11 months have been bumpy given all the change occurring, and that showed up in this quarter in our tax results. As always, my commitment to you is transparency and candor. We are proud of how we finished fiscal 2025, more focused, more efficient, and more aligned with our long-term strategy. We're also excited for a cleaner outlook in full year '26 and we'll continue to communicate progress on our strategy with as much clarity as possible. The divestments of containerboard and Land Management have meaningfully reshaped our business. We're now positioned with a sharper portfolio, lower capital intensity, and stronger financial flexibility than ever before. Our cost optimization program is ahead of plan and with an expanded $120 million commitment by the end of 2027. We are building a stronger business, one that creates value in any environment and delivers accelerating performance as volumes return. Thank you for your continued support. Operator, please open the lines for questions.
Questions and answers
One moment for our first question, which will be coming from Ghansham Panjabi of Baird.
So I guess, first off, on polymers and your comments about growth in some of the target markets that you've realigned towards. Can you just give us some more color on that, Ole? I mean many of these end markets you referenced, ag and flavors, etc., are still quite challenged just based on what's happening at the CPG level, etc. So what is driving that improvement? Is it share gains? Is it just commercial success? What's going on there?
Yes. Let me start with some general comments. Our macro environment is currently in a prolonged downturn, which is worsened by trade and tariff uncertainties. Demand softness continues to be a significant factor affecting our customers' needs. For instance, weak end markets in construction and manufacturing are impacting volumes. In the agriculture sector, we have chosen, as part of our Build to Last Strategy, to invest in end segments that are growing faster than GDP. One of those segments is the agrochemicals market, which is served by small containers and jerry cans, and we have consolidated that market to become a global leader. This strategy has proven beneficial, particularly in that market where we have seen substantial growth. Considering these elements, our operational excellence, cost discipline, and cost reduction initiatives, along with the previously mentioned actions, have made our portfolio even more valuable in the near term.
Got it. And then in terms of fiscal year '26 guidance specific to EBITDA, how should we think about the sequencing of that on a year-over-year basis? Is it sort of flat to down in the first half and then an improvement in the back half? What's your baseline assumption at this point?
Ghansham, it's as usual, the first quarter will be the weakest, and let's talk about it roughly 20% of the year. And then the rest of the quarters will be 25% to 30% each, sort of modeled the same way after prior year.
Got it. And then just one final one, Larry, as it relates to the low end, if you will, guidance characterization, is it just purely volumes that would be determined as it relates to maybe the upper end bandwidth? Is that how we should think about that?
I think volumes would be the big driver for certain. But also, we have found acceleration in our cost optimization program. As Ole mentioned in his prepared remarks, this is really catching fire among our colleagues and we have a program of identifying ideas from the ground up. So we also think there's upside in our cost optimization numbers for the year as well.
And our next question will be coming from Mike Roxland of Truist Securities.
Congrats on all the progress. Just wanted to follow up on Ghansham's question in terms of the '26 guide. So Larry, if volumes come in weaker because certainly we've heard about weaker volumes from the majority of our companies this earnings season thus far, is cost the leverage that you have available to pull to offset incremental volume weakness to meet your guide for '26?
Yes. I would say 2 things. The bottom line answer to your question is yes. We can always pull back further on shifts and temporary furloughs and those kinds of things. However, this is what we said, this low-end guidance. This is pretty pessimistic on the volume assumptions already. So we don't anticipate that being an item, Michael. But yes, we still could pull incremental levels on a variable cost basis if we needed to.
Michael, just remind you that throughout the year, pricing has been under pressure and that's due to oversupply and weak demand. And despite that, we have increased our margins and performed solidly. And I don't think that will change going into 2026.
Got it. Very helpful. Regarding the cost optimization programs, you've raised the target for 2027 by $20 million. As you've reviewed the portfolio, can you comment on whether there are further opportunities for savings that you haven't mentioned yet but have examined closely? Do you believe there is potential for additional savings beyond the incremental $20 million?
Obviously, our sites are much further and much higher, but we use the word commitment here. And at the moment, we are very, very comfortable committing to the $120 million we talked about. But obviously, as Larry just alluded to, that number could go up as we go through the year but we want to get a little bit closer before we would be able to increase our commitments. But we are very bullish about that.
Mike, we have a stage-gate process where there's a lot of discipline before we get to something we classify in stage-gate 3 and 4, which is where we're more certain. But yes, we believe there's potential upside.
Got it. And then final question before turning it over. Last quarter, you mentioned a few times on the call that some of your larger chemicals customers were not doing so well. We see that reflected in earnings. Your IBC volumes declined mid-single digits this quarter, after a similar decline last quarter, and have been weak for some time now. Understanding that chemicals is a cyclical business, have any of those customers indicated an intention to possibly close capacity permanently or resize their businesses? If so, what does that ultimately mean for your IBC business in the long term?
The demand softness is significant and is driving adjustments in our customers' businesses. Many are focusing on chemicals related to construction and manufacturing as their primary markets. I don't anticipate a further decline, based on my conversations with customers and the data we have. However, the big question remains when things will improve. We're not just waiting for that change; as you can see, we're taking action. Our focus is on organic growth and we are investing in specific segments we mentioned earlier. We're also reducing costs and generating substantial cash, facilitating a $150 million share buyback. We're managing what we can control and not remaining passive. When volumes do improve, it will be an added benefit for us.
Yes, Michael, I would supplement Ole's comments, if this makes sense, we're hearing less bad comments, less bad than they were. And the other thing that's somewhat encouraging is the trending down of mortgage rates. As most housing industry analysts, investors believe that if you get with a 5-something interest rate, pent-up demand in existing homes sales will take off. That's a big driver for the chemical companies and therefore, for us.
We're encouraged by the 2x rate cuts we've seen, but it's not going to change anything overnight. But if we see more rate cuts, it will have a positive effect on demand, we believe.
And our next question will be coming from Matt Roberts of Raymond James.
I appreciate all the color. Can you hear me okay?
Yes, yes.
Okay. Great. Good to see the cost coming through and all your color on capital allocation. And on capital allocation, so balance sheet is in a great spot. You initiated the open market repurchase for $150 million. So given that low leverage and the now newly discussed long-term repurchasing intentions of, I believe, it was 2% per year. Does that change how much capacity remains for M&A? Or has the hurdle rate for M&A changed versus your view of, I think, what you said stock offering compelling value? And all those things considered, where do you expect leverage to shake out by year-end '26?
Let me just answer the first one and let Larry deal with the leverage one. So on M&A, I mean, first of all, our focus is on growing much faster organically and we are deploying CapEx for that. We have a number of areas we have invested in for organic growth. In terms of M&A, we've said many times, we have a very solid pipeline. We keep working on the pipeline. We don't expect any transformational M&A to happen. We have our focus on what we would call tuck-in M&A to complement what we're doing organically. And our criteria remain the same. We are looking at M&A with EBITDA margins in the 20s, 50% free cash flow conversion and primarily within Polymers and primarily within the closures segments.
Yes. Ole, could you add to that by discussing the hunters and farmers concept and also provide some insights about IonKraft?
We have reorganized our entire global commercial organization. In the past, we focused on nurturing our existing customers, but now we are taking a more proactive approach. We have revised our incentive program and changed our commercial operations to become more aggressive in pursuing new business. Our goal is to achieve around 8% organic growth, which involves gaining additional volume and increasing our share of wallet. This strategy also includes investing in new capacity where opportunities arise. We have partnered with a start-up from a German university and are investing in a unique proprietary barrier technology that we exclusively own. We are currently ramping this up, with three production lines on order and negotiations for additional lines underway. We expect to see progress on this front towards the end of 2026 and significant growth in 2027.
Yes. And Matt, purpose that, obviously, the focus that we are really driving a different growth pattern than we have in the past. But relative to our leverage ratio, we're obviously in a really good place. And with the free cash flow generation that we're talking about, I think it's very highly likely, even with our stock repurchase and things we do, very highly likely, we'll remain under 1.5x by the end of next year. It's possible if some things came up that were attractive, we'd be higher than that, but I don't see any scenario where we'd be over 2x at any chance. So really, we'll remain in that range for the foreseeable future.
Very helpful. Secondly, regarding the closures. Ole, I know you mentioned this in your prepared remarks, so I apologize if I missed anything. Are there operational changes here or more of a symbolic shift since closures have been a focus for growth? Given that lower recycled fiber has impacted margins in Integrated Solutions, how should we view the margin profile and growth of that segment moving forward?
The closure has always been very attractive for us. It's a unique part of our business that comes with very high and attractive margins. There's a lot of growth opportunities out in the market for closures. And for example, with the 3 acquisitions we made in Polymers, most of them were using closures from other companies than our own. So there was a big synergy there we'll be executing on. Closures, we separated that out now in a separate segment really to put extreme focus on this segment. We have a new leader in that business as well. And his focus will be growth, M&A growth but importantly, also organic growth. And we'll deploy CapEx accordingly to that. So hopefully, you will see us in the many quarters to come growing that segment significantly.
And our next question will be coming from George Staphos of Bank of America Securities, Inc.
I want to acknowledge the company's impressive transformation over the past decade, especially in aligning with a more standard fiscal quarter end, which benefits everyone involved. Thank you for that effort; it was not an easy task. My first question is for Larry and Ole regarding the growth rates you experienced compared to your guidance for fiscal '26. I assume your assumptions align with the exit rates, but were there any exit rates that fell short of what is included in your guidance, considering you have various strategies at your disposal, as discussed earlier in the call?
Yes. I mean when you look across our portfolio within the fiber segment, probably one of the weakest lines that we had is our fiber drums. So fiber drums were down double digits, which was more than we expected them to be down. We expected them to be down less than that, high single digits. So that was a trend that was worse. On the other hand, small polymers did better than we expected. So those were the 2 primary ones that were different than our expectations going into the quarter, George. Our guidance going forward is essentially aligned to what we started to see. So in our low-end guidance, as we said, we've got low single-digit up on polymers and on closures with more in the small polymers than in the large polymers. And then within metals and fiber, we've got low single-digit declines just as a low-end guidance assumption.
Understood. Okay. And you're saying drums at this juncture, fiber drums, those have gotten back to kind of your guidance range or even though they started pretty weak. Would that be fair?
No, they're just really off right now. And it's all tied to the whole chemical industry sector. So yes, we're not bullish on any kind of significant growth in that one right now.
Okay. I was hoping you could go a little bit further into the SG&A pickup that you're expecting this year. Thank you for the bridge and the discussion on the $45 million. Can you talk about what's in sort of the activity that you took in from fiscal '25 into fiscal '26, What, if anything, is different about what's in for this year on the fiscal '26 actions? And just any other color on the $45 million would be great.
Yes. The predominance of our SG&A takeouts are related to the headcount numbers that Ole gave on the 8% of our overall professional headcount. And the majority of those actions were taken in the fourth quarter. So they play out into the entire year going forward. We also have a lot of things where we've moved more things to low-cost countries. We've also taken in where we had contractors in our IT organization that you think are temporary and then all of a sudden, they're around 8 years. Well, you're better off to hire them as employees, and then you're better off to offshore things. Our IT group has also done a fabulous job of rationalizing our IT licenses, which is a significant cost. We've restructured how we're doing our AI activities and going to a model that's basically pay for what you eat instead of a basic core per-person license. So there's a whole bunch of elements that go into those cost saves. But those are the predominant ones that are driving the major numbers.
Okay. Regarding the changes in incentives and the approach to organic growth in the organization, that sounds promising. However, for understandable reasons and to benefit from savings, there are reductions in headcount. Are there any areas where you might need to put in a little more effort to accomplish everything on the front end of the business while you are reengineering the back end? Any challenges there?
Not really, George. We chose not to pursue the SG&A like thousand needles, which is why we took measures in Q4 to address that. Regarding the commercial organization, we have largely protected it because our focus is on organic growth, although we have been realigning it with the incentive program. We're implementing many other strategies to manage sales performance as well. Tim Bergwall, our Chief Commercial Officer, is doing an excellent job with his team. Progress doesn't happen overnight, and we still have a long way to go in that area.
Okay. My last question, a couple of parts, and I'll turn it over out of courtesy. Sorry, I've gone long here. One, I assume the pricing change in integrated/closures is just the effect of OCC, but can you talk about what the pricing change was actually within closures? Given you've done a lot of other things to simplify the organization, any thought perhaps at some point to simplifying the share structure between the Class A and Class B? And then lastly, with great resources and everything you've done to have the balance sheet where it is, comes great responsibility. Where are your customers telling you they'd like you to most sort of grow inorganically from an end market standpoint so that you get the highest return going forward?
That was a lot of questions.
The price impacts on the Integrated segment between RFG and Closures.
The reason we integrated the recycled fiber group and adhesives into the fiber solutions group is that they serve the same customer base. Adhesives are also being utilized in fiber among customers. It made sense to have them managed by the same leader, which allowed us to eliminate a leadership level. This restructuring left Integrated as a separate closure business.
Ole, what was the price change in closures, really what I'm asking?
The price change in Closures was primarily a $12 million benefit from procurement activities related to polymers and closures, not the OCC side. Regarding share structure, we are still discussing it and looking into options, but there's nothing expected in the near term. What was the third question?
Where are your customers telling you to...
Yes, on nonorganic, basically, I mean, our customers like us to serve them in any of their needs that they have. So us getting broader in closures where we might be able to serve more of their needs. Clearly, they've enjoyed us getting more into like the small plastics that we didn't use to serve on a global basis. That's been a positive. But there's nothing else that they're out there asking us to get into right now other than the one Ole went over on IonKraft which is just a brand-new technology that is more highly recyclable, very favorable environmentally. And we just had UN approval on the first container with this step in. It's a very unique opportunity for us.
Just to remind you, our NPS of 72 is unprecedented in our industry, which shows how close we are to our customers. I will mention a customer who has been setting up new plants in several countries. Each time they do this, as a multinational company, they come to us to ask if we can provide capacity at that specific location. We then establish a long-term agreement and either add production lines or build a new plant to meet their needs. This example illustrates how responsive we are to customer requests and our strong relationship with them.
Our next question will be coming from Gabe Hajde of Wells Fargo.
I had a question about the Durable Metals business, which is now your largest segment. If I recall correctly, about 40% to 45% of that business is in Europe. Without putting you on the spot, I've noticed a number of chemical plant closures across Continental Europe and Eastern Europe. I know you're mentioning that volumes are down, likely flat to down in low single digits. Can you provide some insights on your expectations by region, especially regarding Europe, as you mentioned in your prepared remarks that there has been a slowdown?
It's been quite surprising to us. For instance, the North American steel business has been down at levels similar to EMEA on a quarterly basis. However, when looking at a two-year perspective, EMEA steel has actually increased every quarter this year.
They have consistently outperformed North America. When customers reduce capacity, we respond accordingly. For instance, in plants where we previously operated two shifts, we have now reduced it to one shift. This is part of our strategy to manage the business for cash flow. The closures that have occurred have already been incorporated into our production capacity.
Okay. I guess the second question is kind of revisiting a little bit on the M&A front. Is there a scenario where maybe there are just kind of some tuck-ins along the way? And I think, Larry, you said you don't really envision a situation where you're above 2x levered. And so between now and 2027, I didn't see the $1 billion reiterated. And again, I know it's tough when you're moving assets around. But is that still explicitly sort of the target given sort of what you know about the M&A environment right now?
Yes. I mean, for us, on that, Gabe, I mean, it's still our objective to get there but we're not going to slowly deploy capital to get there. But if you just walk through, we gave low-end guidance. So obviously, our hope is that we do better than our low-end guidance. So if you take the $630 million and you then look at our $120 million commitment, that's a net another $45 million. So you're already up to $675 million. We're hoping you see industrial volume recovery. Obviously, that's a big component. It's been a component of our original stack was $140 million. I mean those things get you up to $815 million. We do some tuck-in acquisitions. We invest in organic CapEx and IonKraft and other opportunities. We still think there's a path to get there. But it's not like, okay, we're going to go chase M&A to get there and risk doing bad deals. We're just not going to do that.
But the $140 million are largely intact in terms of going back to the 2022 volumes.
And this concludes our Q&A session. I would now like to turn the call back over to Ole Rosgaard for closing remarks.
Thank you. Thank you for joining us today. Our disciplined focus on margin expansion, cash generation and reducing cyclability is delivering meaningful high-quality returns for our shareholders, further validating your investment and confidence in Greif. We really appreciate your time and your partnership. Thank you.
And this concludes today's program. Thank you for participating. You may now disconnect.