Scott Griffin - IR David Fischer - President and CEO Pete Watson - COO Larry Hilsheimer - EVP and CFO David Lloyd - VP and Corporate Financial Controller Chris Luffler - VP Business Managerial Controller.

Mark Wilde - Bank of Montreal Chris Manuel - Wells Fargo Alex Wong - Bank of America Merrill Lynch Mark Heilweil - Spectrum Advisory Justin Bergner - Gabelli & Company Chris Manuel - Wells Fargo.

Greeting, and welcome to Greif’s First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr.

Scott Griffin..

Thank you. Good morning everyone and welcome. As a reminder, you may follow this presentation on the web at Greif.com in the investor center under conference calls. On the call today in order speaking are David Fischer, President and CEO; Pete Watson, Chief Operating Officer; and Larry Hilsheimer, Executive Vice President and CFO.

David Lloyd Vice President and Corporate Financial Controller and Chris Luffler, Vice President Business Managerial Controller, also present in the room today. We issued our 2015 first quarter earnings release after the market closed yesterday and it is posted on the website at Greif.com.

We have prepared slides to supplement or comments which are posted in the Investor’s section of our Web site under conference calls. The information provided during this morning’s call contains forward-looking statements. Actual results or outcomes may differ materially from those that are expressed or implied.

Please review our filings with the Security & Exchange Commission for more information regarding the factors that could cause actual results to differ materially from these projections or expectations.

This presentation uses certain non-GAAP financial measures including those that exclude the impacts of acquisition and divestment, special items such as restructuring charges gains or acquisitions impairment charges and acquisition related costs.

Management believes the non-GAAP measures provided better indication of operating performance and a more stable platform on which to compare the historical performance of the Company than the most nearly equivalent GAAP data. All non-GAAP data in the presentation are indicated by footnotes.

Tables showing the reconciliation between GAAP and non-GAAP measures are available at the end of this presentation and in the 2014 first quarter earnings release. I’ll now turn the call over to our CEO, David Fischer..

Thank you, Scott. Please turn to Slide Three. Overall first quarter 2015 results were disappointing as macroeconomic headwinds and weak business performance precede the realization of benefits from our transformation efforts.

These poor results both strength our results and increased our extensive urgency to implement the necessary steps to improve our profitability. First quarter 2015 net sales were similar to a year ago excluding the impact of divestitures, plant closings and particularly negative foreign currency translation.

Volumes were flat versus a year ago despite a double digit decline in our Greif Latin American operations.

Our financial results were below last year principally due to the adverse impact of currency matters, product and geographic mix issues resulting in lower gross profit, a higher effective tax rate and negative performance in our flexible product segment. Please turn to slide four.

Oil prices have fallen significantly during the past six months which is having a direct impact on the energy sector’s consumption of industrial packaging. A number of energy producers had cut exploration and production activities in response to sharply lower prices of oil especially, the smaller companies engaged in tracking in North America.

Lower oil prices have also started to impact our raw material prices. Raw material cost are declining for polyethylene and polypropylene in response to the sharp decline in oil prices.

Rapid drop in energy and raw material cost has disrupted the overall supply chain and motivated some customers throughout the value chain to destock their inventories and delay ordering to benefit from anticipated lower cost. Today in the first quarter U.S.

dollar continued to strengthen currencies declined relative to the dollar in a number of countries around the globe especially where oil is a key export. The stronger dollar, adverse impact of net sales and total gross profit dollars in the short term requiring us to emphasize re-pricing efforts. I'm now on slide five.

The 2015 first quarter operating loss and our flexible products business was approximately $9 million versus the operating profit of 1 million for the same period last year.

Three key factors were increased freight cost, an inventory write-down due to falling resin costs, and a change in the labor model prompted by local regulatory environment contributed in the lower first quarter results, which Larry will cover in his remarks.

The management team is working diligently to address control of our item, increased sales and restore profitability in this segment. The flexible product SG&A expenses benefited from previous actions and are declining and issues related to our sourcing are being resolved.

I previously stated the in-depth strategic review of this business we completed by the end of this month and we'll establish foundation for future direction of this business. We are not in a position today to discuss the recommendations or possible outcomes.

Please turn to slide 6, our number one priority for improving our profitability is implementing an enterprise wide transformation process. This initiative included an interconnected work stream that cover all aspects of our business. Key elements of our transformation process have now moved from the planning phase to the implementation phase.

This is especially true for our portfolio optimization work. One example of these and pending actions was the network consolidation moves we announced earlier this week. I'll now turn call over to Pete Watson our Chief Operating Officer, who will provide additional details regarding the progress being made on our transformation..

Thank you David, I'm on slide 7. Further progress has been made optimize the great portfolio through select strategic actions we divested additional amount non-core assets. Examples include the sale of Nordics and wood cover business in the Flexible Products and Services segment, and we completed the investment of the U.S. water bottle business.

the approximate aggregate annual revenue of this business was just over $25 million in which we realize the small gain on these transaction. Earlier this week, we announced the consolidation of four facilities which address this capacity issues and also enables us to benefit from previous productivity and operational excellence achievement.

These actions resulted in the permanent reduction of 141 jobs and they're expected to contribute more than $4 million of operating profit on an annual run rate basis.

Additional actions will be implemented during the rest fiscal 2015 and beyond, our comprehensive global footprint enables us to adopt these changes by continue to serve our customers through plants in our network.

Our announcement earlier this week concerning the consolidation of steel drum plants in Fenton, Missouri and will New Orleans, Louisiana represents one step toward our steel drum capacity reduction and the elimination of underperforming facilities in North America as we discussed on our investor day at January 21.

These transactions are examples of the types of actions we identified within the transform and fix quadrant in our transformation which involves approximately $750 million of revenue. There are 45 manufacturing plants that are represented in the 16 value cells inside this quadrant.

Each plant was in these 16 value cells has a specific and aggressive improvement plan. I'll now turn to slide 8 on growth initiatives. While we continue to optimize and reshape our global footprint we're also moving forward with growth initiatives.

For example solid progress is being achieved on the $45 million modernization and debottlenecking investments at the Riverville, Virginia, -- mill. It is on track and full installation will take place in the third quarter. This project along with annual maintenance will require 21 day outage the semi-chem medium machine.

This project will add an incremental 55,000 ton of annual container work capacity at Riverville. As previously announced the sixth corrugator is also being installed to further strengthen our sheet feeder network, this project is on time on budget with volume commitments input.

We're also adding an additional litho lamination converting line in – Michigan that offers customers a wider range of Greif packaging options a specialty coating line is also being added in Massillon, Ohio.

This innovative process enables us to offer our customers unique coating applications on containerboard these are above expansions in our differentiated product offering. That concludes my remarks. I’ll now turn the call over to Larry Hilsheimer..

Thank you, Pete. This morning I will discuss a few key factors that impacted our 2015 first quarter financial results compared to the same quarter a year ago then I will briefly review market condition as we head into second quarter.

Our first quarter results were as David indicated disappointing year-over-year they are not significantly different than we anticipate.

The high level summary of the relative performance comparison comes down to four primary factors with other minor positive and negative factors netting out; first, we experienced $4.7 million of operating income impact from dollar strengthening; second, our flexible business with a difficult year-over-year comparison to the first quarter of 2014 which was pre-occupancy continued to drag on our overall earnings; third, we experienced drops in various European countries, most notably Sweden related to the impact of economic sanctions on new business in Russia as well as worldwide margin compression as a result of raw material cost decreases and the related pass through contract provisions combined with product mix issues with drove a decrease of $4.5 million of operating profit in our RIPS North American and EMEA businesses when netted with other improvements; four, we had an unusual spike in our medical claims experience and an expected pension expense increase due to changes in discount rates which has opened in $4.2 million of additional cost in the quarter over the same quarter a year previous.

Now let me cover more details. I am on slide nine. Net sales for the 2015 first quarter excluding acquisitions and divestitures were 6% below the same period last year due to the impact of foreign currency changes that David mentioned previously. As you can see on the slide, the strengthening of the U.S.

dollar reduced sales by approximately $58 million. On a segment basis, currency issues significantly impacted net sales in our rigid industrial packaging segment but experienced a 6.3% decrease in net sales excluding divestitures when compared to the first quarter of 2014.

Segment selling prices and volume were slightly positive versus a year ago with volume up 3.7% in North America, 1.8% in EMEA and 2.7% in the APAC region but down 17.1% in Latin America. The net price in volume positives were offset by 7.1% negative currency impact.

In paper packaging, net sales excluding divestitures decreased 3.5% to 159 million for the first quarter of 2015 compared to a year ago. Selling prices were modestly higher than a year ago while volume decreased 3.6% principally due to having one less shipping day and softness in demand in targeted markets as we approach the very end of the quarter.

Net sales for our flexible product segment decreased nearly 9% excluding divestitures compared to first quarter 2014 which was almost entirely attributable to currency impacts, a 2.8% decrease in volume was nearly offset by higher selling prices of 2.2% compared to a year ago.

There were $5 million of net sales in our timber segment for the 2015 first quarter this was nearly $1 million below the first quarter 2014 due to lower planned timber sales.

Please note from a sales perspective that we have included in the appendix there this slide to correct an in burdened netted adjustment to our projected sales that appeared in the materials used for our first quarter earnings call and investor day related to operating profit adjustments that we made just before those discussions.

Please turn to slide 10. Gross profit decreased approximately $32 million to $154 million for the first quarter of 2015 versus last year.

Approximately $14 million of this decrease was attributable to contractual pass through of declining raw materials in steel and resin in the rigid industrial packaging segment and the flexible packaging segment also the negative impact of foreign currency translation and divestitures during the past year.

Gross profit decreased approximately $15 million in the flexible product segment due to several factors. First, there was a carryover impact related to the Hadimkoy occupation last year that resulted in higher cost incurred related to alternative supply sources to meet customer needs.

Maintaining these high third party inventory levels also led to an inventory write down due to rapidly declining resin prices and higher inventory levels that Hadimkoy transitions back to full capacity. This third party sourcing ended last month. Second, we incurred higher freight costs to meet lead times for our customers.

And third, there were higher costs related to the change that we previously discussed to an in house labor force crafted primarily by conditions in the local regulatory environment and some insufficiencies related to this change.

We expect these costs will be offset in the future by efficiency and productivity gains made possible by ongoing initiatives. Consolidated gross profit margin decreased to 17.1% of net sales for the first quarter of this year from 18.6 a year ago due to the impact of strong dollar, raw material pass through provisions and product mix issues.

I'm now on slide 11, operating profit decreased to $65 million for the first quarter of this year from $71 million a year ago. The final phase of the multi-phase timberland transaction was completed in the 2015 first quarter and totaled approximately $24 million compared to $8 million for the same period last year.

Therefore operating profit before special items decreased from $65 million to $42 million. That was comprised of the margin expression previously discussed, foreign currency divestment and increased medical and increased pension cost.

Lower first quarter results in rigid industrial packaging and flexible product segment contributed to the year-over-year decline. Please turn to slide 12, the effective tax rate for the first quarter of 2015 was 38.3% compared to 34.2% for the same period a year ago.

The higher percentage is due to the lower first quarter pre-tax income and geographic mix variance compared to the same period last year. The proportion of the year-over-year income reduction is disproportionally cued to lower tax rate jurisdictions thereby increasing our effective tax rates.

Net income attributable to grade excluding the impact of special items was $17 million or $0.30 per Class A share for the first quarter of 2015 compared to 27 million or $0.46 per Class A share for the same period last year. Working capital was 343 million at January 31, 2015 or approximately 39 million below the first quarter of 2014.

Excluding the benefit of the strengthening U.S. dollar of first quarter working capital increase this year was $59 million versus $95 million last year. We are actively monitoring working capital in each of our businesses and expected to be at least neutral for fiscal 2015 compared to 2014.

I'm now moving to slide 13, as we entered the second quarter market conditions were mixed across our global footprint. Overall, product demand remains favorable in North America.

However, the recent charge decline in oil prices is adversely impacting companies in the energy sector as some of them adjust their activity levels to the current pricing environment.

Latin America reflecting the regional political and economic issues they faced is experiencing double digit climbs and volume and foreign currency translation impact, which we've been able to fully offset by substantial price increases.

In the EMEA region, market conditions vary considerably, the Middle East and Africa are performing well, Eastern Europe is also performing well. However, there is considerable volatility in Russia particularly related to currency and supply chain issues.

Western Europe continues to be challenged by market competitive pressures particularly in Germany and Scandinavia there we continue to hear optimism about the impact of the strengthening dollar and monitory policy.

The Asia-Pacific region remains stable in terms of the volume growth although lower selling prices and foreign currency translation offset most of those gains the first quarter. In paper packaging, our leased markets remain strong year-over-year. We will benefit beginning later this year from investments in this business.

Market conditions in the flexible product segment are gradually improving as we continue to raise, reshape our network. During the quarter, we sold operations in the Nordic region for a gain and continue to reduce SG&A expenses consistent with our plan.

We anticipate benefits in the second quarter particularly on a year-over-year basis excluding currency impacts. Market conditions for timber sales in the South East U.S. or firm as buyers are selective in their purchases, principally due to higher inventories following strong activity levels in the first quarter.

There is increased interest in real estate for certain properties we owned in the U.S. and Canada. Please to turn to slide 14, turning to our outlook we continue to anticipate that the global economy will reflect the modest recovery in fiscal 2015 with the positive aspects improving the United States being offset by negative trend in other regions.

One thing I will point out is that we've not factored into our guidance further strengthening of the dollar from this point forward against other currencies in the maker markets in which operate.

We will continue to execute on our restructuring plans related to transformation, network consolidation and pursuing the sale of select non-core assets as part of our overall strategic transformation which may result in significant impairment and restructuring charges as we've move through the remainder of 2015.

We will also continue to implement our SG&A cost savings activities.

Based on these factors, our fiscal 2015 adjusted Class A earnings per share remains in the 2.25 to 2.35 range excluding gains and losses on the sales of businesses, timberland and property, planned equipment and acquisition related cost as well as restructuring and impairment charges. That concludes my remarks.

We will now be pleased to answer your questions..

At this time, we’ll be conducting a question-and-answer session (Operator Instructions). Our first question comes from the line of Mark Wilde with Bank of Montreal. Please proceed with your question..

Larry you anticipated one of them with some comments you made near the end and that’s around FX because if you look at the January numbers that are in your appendix for FX pertain quite the euro and the Brazilian real.

We have had a lot of strengthening of the dollar in both of those currencies since January, so I am just kind of curious about why you haven’t tried factor that in at this point we’re in early March there has been big moves here you would think that this would affect sort of your targets for the full year..

We’ve been monitoring it and there have been significant further strengthening of certain currencies. There has also been other currencies moving the other way that impact us as well.

On an overall basis I would say it still been a bit of a negative but we still believe the other activities that we have in front of us allow us to maintain the earnings range that we provided.

We’ll continue to monitor it and as I’ve mentioned at the end of my comments if there are further significant moves in the strengthening of dollar it would obviously impact our earnings for the year..

Particularly queued on the comparisons between kind of current euro and current Brazilian real versus the numbers in that appendix.

So what other currencies have actually strengthened against the dollar? And which one should we really be watching?.

Well I think watching Brazil is important, watching the ruble is important, watching the euro is important some of the Middle Eastern and Asian currencies and our as well.

But I think those are the key ones and the euro movements from I think January to the end of February was $0.06, is that right?.

Yes it’s about right..

And the other thing to keep in mind Mark is that it impacts our margin it also tough has a corresponding benefit on the SG&A side so by the time you net it was not material to the bottom line to a point where it would cause us to modify our guidance..

Next question I have is if margins in rigid packaging and just in the short term what I have a hard time understanding is you got price in rigid packaging, cost went down in rigid packaging and volume one of in rigid packaging yet your margins are down both quarter-to-quarter and year-over-year so I am trying to understand that reconcile the pieces?.

Mark this is Pete Watson I’ll make some comments on that it’s a little different based on each region in the globe but really if you look at it the internal and the things that we are actions we’re taking and the issues that we’re addressing and some underperforming operations which we’re going to address and are addressing the portfolio optimization strategy and transform and fix that loss makers performing worse some due to market actions or market differences and some are just underperforming business as they are not achieving what their expected plans are.

The actions we’re doing really falls into transform and fixed plans really aggressively specific improvement plans over that 12 to 36 months period we’re really going to fix some or we can consolidate those plans in other operations. I’d say at this stage in the first four months we’re making good progress on those plans.

The second area and part of that is consolidation efforts.

We’ve got some plans in certain regions that are operating at very low utilization and capacity rates which creates the higher cost basis so we’re again taking actions and we have already and will be the rooftop consolidations where we have less facilities operating at higher capacities to satisfy our customer needs.

And lastly, we do have some plans that are just operating efficiently whether it’s process inefficiency or maintenance inefficiency and so the things we’re driving are some of the operational excellence improvements at that point and also some will require some tailored capital improvements once some process efficiencies has been achieved.

Along with that as you will see us achieving the transform and fix we’ll be taking much more disciplined commercial actions in order so we can achieve a fair return in our businesses that are not performing well..

Okay, and on that score just if we go back kind of the three to four years ago you guys were running about an 11% EBIT margin in rigid packaging and now we're down to just a little bit over 3.

What really has changed here and how much of this is just a fundamental change is there a track back to sort of double-digit margins in this business?.

There's just not one answer to or one lever to answer that, but it's a part of it is some of the operating issues I talked about.

Some of them are shift in certain regions we participate for example in Europe going back from 2010 to now things have changed dramatically, some of the economic conditions have shifted some of the competitive profiles have shifted. And certainly recently we've had some FX challenges, but there's always been some FX advantages.

In further path and now that's reversed, but what I would tell you Mark is the things that we can control are those areas where we've been underperforming operations that we have to fix. We've got too many facilities operating utilization rates that are too low and we need to do network consolidation to drive lower cost to sort of our market needs.

And lastly we need to in certain markets be more disciplined in our commercial process in our segmentation as who we sell to and how we tailor our value propositions and just got to make sure we get a fair return on the business and capital we've employed. I wish I could tell you it's one lever, it's a multitude of leverage in each region Mark and..

Yes let me maybe supplement a little bit around this too Mark and yes you've mentioned in your initial question the margin compression related to year-over-year and then a longer-term one as well.

So first the FX impact does have a compressing measure to our margin in addition the low raw material or the lowering raw material prices as we work to those contract pasture provisions as you all know because you followed us so long as that occurs, we also suffer that margin compression related to raw material pricing decrease.

The last item that's contributing to it for this year is just a mix of our volumes. We have more decreases in some of our higher margin businesses relative to our substrate than we do in some of our lower margin substrates. So it's a combination of all of those factors..

And then just as a my final question for kind of Dave Fischer you have covered the company for a long time and for many-many years we've heard a lot about the great business system and focus on continuous improvement.

And I guess I just I stand here today and I'm trying to figure out how we ended up in this situation with if this continuous improvement is really part of the corporate culture, how do we get so far out of kilter?.

Yes it's a fair question Mark I'll point a couple of things about the GBS.

First of all its enabling us to do some of this network consolidation that we're doing today, without it we wouldn’t have the free capacity and on the roof tops to be able to consolidate those without losing or having a dramatic negative impact on our sales, because we're going to move that production to other capacities and lower our total fixed cost, number one.

I would also point to the fact that it is also the very same GBS that even when you look past the consolidation of the paper industry, it is also that which benefited us over the last few years also, it is the GBS that helped us debottleneck and drive our paper business profitability up dramatically over the last few years.

As far as how -- your broader question about how did we get into the current situation, I think we have in our transform and fixed bucket unfortunately a large cache of our business that has fundamentally changed and not producing return it is masking what's going very well in the organization and some of our growth initiatives that I've just mentioned.

And also the protector core we got a little over 2 billion of our revenue making very fine return.

Some of those markets we've made some mistakes in ourselves in terms of trying to do too much or hang on too long, when our customers don’t reward us for being in those areas and we've been too slow I think in consolidating those roof tops and getting let's say our capacity utilization back up to a point where we can have some ability to reward our shareholders for participating in some of those markets.

So we're taking those actions as we speak, but the GBS is alive and well there's big swap of our company which are operating well at this one specific section isn’t just a matter of being efficient in lean manufacturing or efficient in our operations, it involves the marketplace and the competitive dynamics of certain market have changed dramatically for us.

And that's what's gotten us in to our current. And back to your question about margins.

We're going through unlike the past a very unique period of time where currencies -- have dramatically fallen at about at the same time and there is a time period where we go through this compression before we can actually re-price, before we can actually run out some of our existing inventory that are in our system.

But that I think will also play itself out over the coming quarter and you will see that make progress on that..

Our next question comes from the line of Ghansham Panjabi with Robert W. Baird. Please proceed with your question..

Is there any change to your free cash flow guidance for 2015 that you guys gave last quarter?.

We still anticipate that we will produce cash flow when adjusting out for the tax payment related to our gain on sales transactions last year that will be more than the dividend that we pay and so that I mean I think that was the primary focus and the question that we received previously as I mentioned in my comments about working capital our expectation is that our working capital to be flat and not be a drain on cash over the year and so yes we’re still in that range that we discussed in our investor day..

It seems like there is a price increase announced in the containerboard market.

How successful do you think that would be and can you remind us how many tons of containerboard Greif will be using annually from just pro forma for all the investing that you do in the business?.

This is Pete Watson thanks for the question. So, the total number of tons we’ll have in our systems it’s a conclusion of the modernization plan over 780,000 tons and that’s a combination predominantly medium semi ton and recycle medium and also recycled liner.

In regard to the announcement all I can say is that one company that’s made an announcement and we’ll make decision going forward in the market base tons that’s in our best interest but at this point I believe only one company has made an announcement..

And just one last one can you talk about how you expect margins in flexible to progress throughout this year? Are there any additional impacts from Hadimkoy or anything else that we should be aware of just going forward?.

Could you repeat that again, I am sorry you broke up..

Sorry about that. I was just asking, how do you expect margins in flexible to progress throughout fiscal year ’15, the first quarter was a lot weaker than we were expecting.

So just wondering if there is any other additional impact from Hadimkoy or else that we should be aware of for the rest of the year?.

Thank you. We do expect margin to expand we’ve had a lot of supply chain inefficiencies and we achieve that out it’s over third party products that we will start in-housing and manufacturing ourselves. So we do feel that there is upside on that margin question..

Our next question comes from the line of Chris Manuel with Wells Fargo. Please proceed with your question..

I got couple of questions for you first if I can start with from the restructuring component I think at investor day I remember with the memory service it was something in that 25 million to 30 million that you had earmark issued for restructuring. And now it sounds like you’ve taken a chunk of the actions.

Can you give us a sense as you shift there today; A, what exactly was that number or is that number you have tapped in for 2015; and then how we would anticipate seeing returns from that, what sort of savings, what sort of time frame would those come over?.

Chris thanks for your question, it’s Larry.

We continue to expect that we will incur restructuring charges and even think that may end up falling into the impairment bucket as we go forward and just remind some people if we end up deciding that we’re going to held something per se all then we have to look at it in a different manner than we do under an operating condition method over last quarter it ends up some time as getting classified as an impairment rather than a loss on sale and that’s why you see some of that language in our guidance and our company outlook.

Right now we’ve had things that have happened after the quarter you will see this in our trends that in the Q an filed where we’re indicating there is $10 million to $15 million of things that we’re looking at right now but I’d say the discussion that we had on the investor day remains consistent as does our point about other than what Pete mentioned about the announcements that we had this week of $4 million plus of run rate from those actions we’re still in the process of pulling together so that we can provide you all on our June earnings call exactly what we’re going to achieve over the next few years out of our transformation efforts.

Part of it is as Pete -- as you know we have a lot of these transform and fixed planned and done but what we’re still in the process of doing is prioritization which actions that we take when what the impact when is it going to fall and so it’d be premature to tell you that we have clarity of that kind of that how much it will impact this year, next year, and the following years..

Maybe switch gears for a second I mean I guess well if you kind of -- for here when you talked about significant impairments or other elements within the outlook section.

I don't recollect seen that before so may be just as a point of reference or clarification, are you suggesting that we could see further sizable write-downs across a couple of business?.

And that's what I was trying to clarify their Chris was that, when we talk about that language, we use the term significant impairment band restructuring on a relative basis of what people might consider significant as they develop out of these transformation efforts because again if we decide that we're going to exit this business and we have to then listed as help-for-sale, if we have help-for-sale at the end of the quarter we have to then assess it from – in a different manner than we would as an operating, running business and future cash flows and that kind of thing.

So we could end up with something that ends up getting classified as an impairment when in fact in very short order flip-around and just be a gain or loss on sales but that will not flow through because it would have already been recognized and we're just putting that caution in there because we're going through major efforts as we go through all these spans and we look at our divest, we look at our fixed and transform and our SG&A actions I mean we are looking aggressive the way at how we run this company and so that there we don't have quantifiable information for you yet, but we we'd anticipate that we have charges that are still in line with what we talk about back at Investor Day it could increase as we get further into this..

I also want to add one other thing Chris, our demeanor our expectation for the portfolio work and the cost cutting remained the same as to what we try to describe and maybe we used a different word here or there at the Investor Meeting.

We took some criticism for having a companywide initiative described but no tangible concrete commitments by business. We are actively taking and restoring all of those plans – rolled up by business so that we can fulfill our commitment saying the June timeframe. Here is the goals for each individual business and we're committed to doing that.

However, this process has left the game in terms of actions being taken and also we have to make earlier this week because of necessary people notifications and moves we want to make within the consolidation plan.

So as we make those individual ones up until the point where we can paint the entire picture for you, we're going to be as quantitative as we can in those chunk and we will not double capital as we will cap, our callers out are articulate those in the upcoming conference call when we have a little bit more structure business by business on how each one of those moves between now and then fits into the overall picture.

So, that's something that should anticipate, there will be more of those types of an answers and we're going to do our level best before we have the whole framework – to tell you exactly what it means for us..

Okay, so let me switch gears one more time and ask a little bit about the pay per business if I could.

You spoke about I think in the press release about I think the softness towards the end of the quarter and I think if in earlier prepared remarks I heard correctly it was down about 3.5% in the quarter, when we look at industry data for those last few months it would have composer quarter I think November, December, January it would have suggest that volumes were up low single digits or better.

Can you may be talk a little bit about perhaps why you feel you felt softness as anything change with that trajectory I do appreciate there has been or – industry charters are being some discounting some places in the market is that perhaps part of and you need to participate or didn't participate in some of that, could you maybe give us a little color there as to why you were so significantly below the market and whether that will continue or you envision that changing?.

Markets is peak, so let me answer that from a container board side first and from a corrugated converting second. Our production in the quarter in the mill side was up 2% and our selling prices were moderately higher than our plan.

Our target market and – broad basis some of that major four integrated in terms of a national – but in our targeted markets we started seeing softer demand both in our container board side and in our corrugated chip side in January.

There are competitive pressure has been well documented publically on the recycle products but we again our margins are good we're making conscious decisions in the market from a discipline standpoint to ensure that long term our margins are good an strong and we've seen now a change in that regard.

One more comment on the container board side market that Riverville shut down is built in our plan as forecast, also I’m really bullish about our ability to perform in a containerboard side.

Regardless of what happens around as we've a variety of levers to pull and regardless of our volumes whether those are slightly up or down I still feel that we can manage that business -- corrugated sheet side compared to prior year we are under what the call again the FPA numbers are one we're operating at our near capacity in that system and we will be so until Q4.

Again there has been targeted softness in our markets in the Mid-West and particularly some of that through some competitive entrance and some of it just through the some of that due to the markets we participate in Chris.

Again in the corrugated cheap environment we had one less shipping day, but I would tell you the -- we again have made some conscious decisions in the market and not to participate due to pricing discipline and commercial discipline to preserve longer-term value on margins..

Our next question is from George Staphos with Bank of America Merrill Lynch. Please proceed with your question..

It's actually Alex Wong sitting in for George. From the press release, it appears that overall volumes were down modestly.

Can you just give us a sense of how volumes have trended even by segment or geography in February?.

Yes Alex this is Pete Watson. Overall our volumes in the rigid packaging have been modestly higher; it's a different answer in each region.

Latin America we've seen double-digit decline in volumes really related to the Brazilian economy and a little slow start in our ag markets and the juice markets, but our prices are up double-digits to offset inflation and currency issues.

If you look at North America, EMEA and APAC in the rigid business, our volumes are actually up North America's up 3.7%, EMEA is up 1.8 and APAC is 2.7% by substrate it's a little different but again our rigid packaging business Latin America really changes the perspective.

If you look at the biggest impact we've had in regard to pricing has been raw material deflation on both our steel and resin packaging as context published steel pricing index in EMEA is down 8% versus prior year and APAC is down 9%, so that's impacting the overall sales along with FX impact, but our volumes in those two regions are up.

Paper packaging I think I just commented on the unit volume differences there, so I don’t know if that gives you a clear enough view Alex of regions and our volumes..

That's helpful I appreciate and I appreciate the breakout as well on the slide deck. Switching gears a bit, you talked in your formal remarks around several implications around declining oil prices.

Can you just describe the dynamic between or perhaps lower demand on the IBC side and lower input cost be it raw materials or NOG, would you characterize this as a net positive or negative for Greif? And then you also talked about some re-pricing efforts, if you can touch on that as well?.

Yes I think in terms of oil prices I think there is a positive impact because many of our customers will have lower input cost specifically some of the chemical companies and then also some lower transportation cost based on some of those cost components we are seeing some companies -- global companies transform production capabilities to be more balanced.

Again David indicated that we believe we're much more bullish on how we view EMEA in the second half of our fiscal year.

The negative side in some of the businesses that these oil derivatives and especially in oil patch in North America we are seeing some slowness in some of those smaller segments, but I think overall it will create some import or export opportunities it could be of our advantage in EMEA particularly in the second half..

Yes and the raw material price decrease as we talked about in my comments it really has a margin compression impact as we work through that because of our significant level of contract pass through arrangements and those work off of percentage adjust and it ends up squeezing margin dollars on the bottom-line and doesn’t get you to leverage your fixed or semi-fixed labor and plant cost..

And then just two more quick ones one on flexible and one on the tax rate on flexible understanding you're not in a position to be really sharing the outcome of the review today, but if you could help provide any color on maybe what's changed in the market between Investor Day and today or what you know today that you didn’t know then which was helping to in former decisions? That'd be part one and then on the tax rate, certainly there's quite a bit of variance in the quarter.

Should we still be expecting the book tax rate to be around the 31% to 32% range for the balance of the year? Thanks very much..

On the flexible piece I would say there hasn’t been anything that significantly has changed from the investor day other than at that point we hadn’t really offset the amount of inventory that we have and the impact of resin prices would have that led to the inventory write down at the end of the quarter we had hoped to be able to work through that inventory.

Outside of that, we had discussed at the investor day the move to the in house labor model we had talked about the impact of some of the currency matters and our supply chain issues and FPS that we were focused on so outside of just that inventory write down item that’s probably the only item that changed since then.

I don't know if you have anything on that? The tax rate issue is one that becomes complex with us in 45 countries it really ends up being a that’s the side of rolling up every one of those countries projection of the income for the year and then reassessing that each quarter and looking at how you think it’s going to play out over the year which then can change again if currency matters change if operations shift during those years.

So right now that effective tax rate is what we anticipated to be for the year is what we’re utilizing for the quarter, that’s the way it works for generally accepted accounting principles, as you try to look at that assessment.

What had shifted is just the prices where income has been earned or losses are being incurred and it shifted to a situation where the earnings are happening in higher tax rate countries and the losses are going more against those in low rate countries as adjustment. And it’s not just all U.S.

I mean it’s when I get at the high level about 80% of the decrease in income going against countries that had rates between 15% and 25% and 20% of the reduction in income going against tax countries with rates in excess of 30%.

So it’s just that the mechanics of it as you walk through it and the shift and where we’re having or success in others and then currency impacts probably into that as well just because of the translation impact on the tax rate..

Our next question is from Mark Heilweil Spectrum Advisory. Please proceed with your question..

I want to pursue the prints you’ve used a number of times in the presentation in answer to one or two questions. The competitive dynamics in the marketplace have closed.

Could you get us a little into that aspect is it that there is just low cost producers who has entered marketplace that you can’t that will be hard to compete with or these more temporary factors and so what are the causes of the changes in the competitive dynamic side certain as referred to both for rigid and flexible?.

Mark this is Pete Watson.

So to help clarify your question, are you referring to the rigid business, the paper business? Because there is little bit answer to things?.

Well, I was really just referring to both rigid and flexible, it’s not the paper so much, because I think we all know more about the paper business. But those other two are less obvious to those of us who are not analysts in the field..

So I think if you look at the rigid marketing landscape over the last three to four years you’re really talking at different story in region I think some of the factors that we’ve talked about were FX changes and economic changes in Europe that are from 2010 to now.

And there has not been a significant change in who our competitors are of the landscape but as market construct to the economy you have more competitive environment than you were in some markets where they’re expanding so I think the answer lies in what the economic activity growth or non-growth in each specific region in the rigid business it dictates the competitive nature and that expanse in contract..

Okay, so there are no new entrances or lower cost competitors or excess well obviously there is some excess capacity.

But I know excess capacity has been added over the last two years and it’s going to turn this -- the profitability at this division in the long term?.

No, on the rigid side that’s fair as a general statement yes..

And in the flexible packaging has there been -- any comments you want to make about the dynamics that are in marketplace other than of course some economic weakness in certain areas..

Yes, so the biggest impact I think are difference in the last several years and the flexible side is the addition of some very low cost manufacturing capabilities on flexible bags in India. .

Our next question is from Justin Bergner with Gabelli & Company; please proceed with your question..

I just wanted to holding on a few questions that were sort of asked earlier, is it possible to quantify the effect on margins from FX headwinds this quarter?.

Yes, just one moment. The overall impact on our operating profit was about 4.7 million for the quarter.

If I try to break it down into on the gross profit level before SG&A is approximately $16.6 million on margin and a squeeze on this from -- we were at a 18.7% gross margin in '14 after adjusting for divestures and we had a slight impact on that just from -- closure carry over into this year and the rest of that gross margin decrement is a – of the impact of the currency changes and then the margin compression related to raw material that we discussed earlier..

Okay, and on the raw material side, is there actually a timing mismatch that hurt you in this recently completed quarter and if so how large was that timing mismatch between the -- ?.

Justin, this is Pete. So, where we have declining raw materials specifically in residence work drop very-very fast this quarter.

If you look at our percentage across rigid or overall material margins have not been by percentage basis or not negative not impacted significantly but what you do is you have an aggregate material margin dollar significantly lower and as you know when then happens less material margin dollars -- fixed and variable cost and so that had an impact and at the same time when you have reducing that raw material input cost and prices go down what it does? This create a much more competitive market environment, because there is less dollars to cover your cost as we mentioned.

Most of our contracts that do have lag up and down so there is a part of that is created impacting the first quarter that we'll see change going forward as long as – stabilize raw material cost..

Okay, thank you and on the volume side, how much of a negative impact was there from closures?.

Our closures volume, unit volume was flat for the quarter, first prior quarter..

No, I guess I'm referring to the closures of plants?.

Okay, I'm sorry..

I think you – volume number --?.

That's correct. So, the volume figures we compare our same store sales we exclude acquisitions and divestitures..

Okay, and this quarter I guess you also excluded facility closures, how much of it impact with the facility closures?.

Very minor..

Okay, that's good to hear.

And then finally as you evaluate asset that you might potentially sell is the effort mainly on underperforming assets or would you consider monetizing better performing free cash flow producing assets as well?.

Justin, when we talked in our Investor Day presentation, divestitures could be underperforming businesses but they could also be very good performing businesses that either not a good fit for us or not the natural owner where we think peak earnings ability and a good example that was we sold them to our pay per business back in Q4, well performing business that was not core to us for investing in it and we thought it was at the hike of it potential earnings power so that's not example of one that was a good performing business that we divested..

Okay, thank you and then are you anticipating if you do some underperforming businesses that you'll be I guess eliminating some loss making businesses and that will help you meet your current guidance for the fiscal year?.

-- divest or transforming fix plans that we're executing very aggressively that will impact loss makers which should improve our forward looking performance outlook..

Our next question is from Mark Wilde with Bank of Montreal. Please proceed with your question..

Yes just wanted to follow up a little bit on the paper packaging business.

Pete is it possible to quantify for us the financial impact from those 21 days of shutdown at Riverville?.

We do and it's in our plan Mark. What I would tell you the impact for those 21 days it's just on the medium -- semi-chem medium machine and then the offset relates to the increase volume we'll get in Q4. So what I believe is 24,000 tons of downtime that will occur during that period and the offset is what we'll gain in the end of Q4..

Yes I guess what I'm thinking about the is if we look forward into 2016 you won't have that 21 days, so how much financially will we get back from that all of the things being equal?.

Yes 55,000 tons of incremental output from that investment..

And then just going downstream from that I think most of what you're selling now really is corrugated sheet so I wondered that A if you can give us a sense of what Greif integration level will be post the Riverville upgrade? And then just how we should think about sort of pricing in that business because I know sheet pricing is often kind of separate from open market containerboard pricing or even box prices for that pack?.

That's correct Mark so if you look at once the Riverville Mill monetization is completed and uniquely we're expanding corrugator in Charlotte at the same time that from a capacity standpoint we'll consume even and trade a direct sale all of that added capacity plus some, so when we have the sixth corrugator in place and the Riverville monetization done our integration levels will be in the low 80s.

And I think we stated in our growth plan one of our objectives is to become over integrated and we will continue down the path to achieve that.

Second question regarding our converting downstream it is 95% of it is core sheet feeders I think it's a different story in each region I think there's a little more competitive active in the upper Midwest because of a new entrance to that market.

What I would tell you is we focus very-very strongly on highly differentiated products and services really high service orientation and we select and choose the segments we participate in that reward us for those.

What I will tell you and one of our strategies is we are now CorrChoice as a system 20% of our volume is on differentiated specialty products that's grown quarter over prior year by 12% we'll continue to drive our involvement on those differentiated products which has higher margins. That answers all your questions Mark or if you have a follow up..

Just one, Pete. So you're essentially, you're long a lot of medium, and you're short linerboard for CorrChoice. So you've got a situation now where we've seen a couple of down-ticks in pulp and paper weak price on medium and the liner price at least the reported liner price it held steady.

Do you get any kind of a just a mismatch in your business because of that?.

We trade liner from medium obviously so we don’t get hurt on the trading into our system and as you said what you are seeing is a little mismatch on published prices for medium it's gone down $20 a ton over a six month period and liner has stayed the same..

Right..

So when you consider our – we have more of our volume in our mills in medium, that impacts us greater than it would a company that has higher percentage of output on liner and I think the thing we have to do and we are doing as we choose where we participate in and how we best segment our markets to get the fairest return but the new entrants have created some turmoil in certain markets in and so again we feel pretty bullish on how we go to market and who we choose to do business with and some of our growth initiatives to become over integrated insulated from some of that noise..

Yes I guess Pete just a one other question about the sheet market. It does seem like you've got at least two competitors who continue to add a lot of sheet capacity one is in Indianapolis and you got another one that has a pretty big footprint around the country.

Do we have to worry about just the corrugated sheet market getting oversupply then kind of pushing down margins overtime?.

We don’t consider that a problem because I think we have a very specific strategy and niche which we fill. We've a lot of respect for those two companies who you're talking about, but I don’t see that as a problem for us.

Again I will tell you we are driving very, very hard on niche products to sort actuating commodity sheet products and we gave examples we’re adding another also try to with laminating coatings, we’re putting a unique code here in Massillon, Ohio sheet feeder facility and we are expanding our [Triple L] operations in Louisville again to try to drive a higher percentage of our business and volume on higher margin niche products in addition to sheets.

So we don’t in our business we don’t see and have any concern in that regard Mark..

Our following question comes from the line of Chris Manuel with Wells Fargo. Please proceed with your question..

Just a couple of quick ones, if I could understand maybe a little bit of the mix issue so couple of base questions one within RIPS and then one on raw materials and different elements and maybe start with the raw material.

I mean as you pointed out you seen steel down 8% to 10% depending on the region and resin and some of the other OCC and such have been off too.

Have you seen any benefit? Traditionally, when raw materials go up you end up being a little bit behind and you get hard on the way down you usually benefit for a period of time usually 30 day, 60 days a quarter or so. Can you talk about have you seen any of that thus far is that something that could helping the next quarter or two.

I do appreciate by the way in flexible as you talked about having a write off from selected inventory and it had been mark to market.

But maybe aside from that could you talk to us about how that process is feeding through the system?.

Chris thanks for the question. I must add traditionally if you look at our model over time you see more gradual time lanes if you will or movements up and down and you are right in your description of how that benefits or doesn’t benefit us over time.

What’s happened more recently with some of the currency moves and coupled with the raw material moves is that they’ve come on top of each other in a little bit more let’s say aggressive or disruptive to our overall value chain when you get product with inventory then you have to mark to market it if you will during different periods of time.

And it varies around the world I am just giving you a couple of examples there. But as you know our past contracts allow us some protection but the spot markets don’t and when things change dramatically that is disruptive. So I think we’re going through an unusual period not one that’s been let’s say in recent times been repeated.

And I think you’re going to see us recover those margins as pricing initiatives adjusting currency issues and adjust the raw material changes that are pretty dramatic in nature, and as we run out our inventories..

So just to clarify sounds like as these materials move lower it’s actually hurting you not helping you, am I kind of interpreting that right?.

In the very short term that coupled with currencies, yes. But then that will play out to more positive or gradual improvement of stabilization of our margin going forward..

And then I guess my second question was and in the sense it fits into some of that is and I think it was kind of asked earlier and maybe little different way.

But if we specifically look to RIPS business you’ve got profit down well over 30% on volumes that are flat to up and I guess and I am trying to understand and I appreciate there is some different mix I think back to your analyst day talked specifically about seeing 40%-50% off or so with the big number volumes in some of the components within RIPS due to I think the big FIBCs and such and NIBC.

But -- and could you maybe help us with the big differential and what’s going to reverse itself out as we go through the rest of the year is it more a function of mix, if some of it these material issues that are I would presume been a benefit but sounds like are hurting you.

And I am really kind of talking ex-currency but just base business?.

Yes, and I think one of the problems we struggle with and obviously evident here, is that our mix and production size is wide and covers a multitude of countries. What we have is more of a bimodal distribution of profitability by plant, where we have some that have gotten a lot worse and some that have kind of stayed pretty positive.

And our job is to clean up the mix issues particularly on the drags if you will and that really allowed -- kind of goes back to the previous question I think it was Mark Wilde’s question earlier about what has changed and when that coupled with steel and resin are much higher pricing steel is over $1000 a ton generate the different margin profile for us than steel at couple [indiscernible] $100 a ton same for resin.

So that is coupling those are some of the key factors of what’s causing the decoupling of these plants and their profitability one they get worse and some of them are also stuck in the wrong geographies around the world so you’re going to see take action against those loss makes for whatever reason is they're in unsustainable markets or they're just not being rewarded for being following our customers around the world.

So, the other thing that's coming to this is startup of some of our new rigid industrial packaging lines which we're confident it as we feel that was up, they start out with kind of the margin drag overall as they sell up they get better and then also on the reconditioning business, when we got into the reconditioning business steel was at a 1,000 bucks of ton or -- higher, that gives you a completely different profile for that reconditioning business.

Reconditioning I believe is here to stay, sustainability is here to stay with our largest customers but that business is certainly not performing like when we got into it because of the difference in just raw material much more efficient, cheaper for customers to buy version of brand new unit.

So, you see a cadre of effects that are impacting those general overview aggregated margins and performance and our job is to fix the boat anchor that's holding us back from the better performing business in the rest of our portfolio..

At this I'd like to turn the conference back over to your host Scott Griffin for closing remarks..

Well thank you, David Fischer will be making closing remarks..

As previously discussed, the companies at the beginning of a transformation to increase productivity and operational excellence throughout the network. We have a well-defined plan and are working diligently to successfully execute those.

As we continue to implement our portfolio optimization initiative, we will quantify each step of our progress along the way including our growth initiative. Accelerating value creation is a high priority across the enterprise as we perceive with this transformation initiative to optimize our business and increase our financial performance.

Thanks for joining us today..

Thank you, David. The replay of this conference will be available later today on a Website at greif.com. We appreciate your interest and participation in this conference call. Have a good day, thank you..

This concludes today's teleconference. We thank you for your participation. You may disconnect your lines at this time..