Greetings, and welcome to the Greif First Quarter 2014 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to the turn the conference over to your host, Ms. Deb Strohmaier, Vice President of Corporate Communications. Thank you, Ms. Strohmaier. You may begin.

Thank you, Manny, and good morning. As a reminder, you may follow this presentation on the web at greif.com in the Investor Center under Conference Calls. If you don't already have the earnings release, it is also available on our website. We are on Slide 2. The information provided during this morning's call contains forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause the results or outcomes to differ are on Slide 2 of this presentation, in the company's 2013 Form 10-K and in other company SEC filings, as well as the company's earnings news releases. This presentation uses certain non-GAAP financial measures, including those that exclude special items such as restructuring, timberland gains, noncash long-lived asset impairment charges and other unusual charges and EBITDA. EBITDA is defined as net income plus interest expense net, plus income tax expense, less equity earnings of unconsolidated subsidiaries net of tax, plus depreciation, depletion and amortization expense. Management of the company uses the non-GAAP measures to evaluate ongoing operations and believes that these non-GAAP measures are useful to enable investors to perform a meaningful comparison of current and historical performance of the company. 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 first quarter 2014 earnings release. Giving prepared remarks today are, in order of speaking, David Fischer, President and CEO; and Chris Luffler, Assistant Corporate Controller. Pete Watson, Chief Operating Officer, is also with us today and will be available to answer questions. I will now turn the call over to David.

Thank you, Deb, and good morning. I'm now on Slide 3. Our business fundamentals benefited from the slow-motion global recovery in the first quarter of 2014. I am particularly pleased to report that we achieved higher selling prices across all segments. Rigid Industrial Packaging in the Middle East, Africa and Asia Pacific made further progress during the 3 months ended January 31, and we achieved mid-single-digit volume improvement in Europe. Ivan Signorelli, his managers and the entire team are making an impressive stride in a continuing challenging environment by improving volumes and in controlling costs. Additionally, our Flexible Products business showed sequential quarter sales improvement in volume and in price. Paper Packaging achieved record first quarter sales on increased volumes and record first quarter operating profit. However, during the quarter, we were hampered by the headwinds of increased costs and production outages in our businesses in North America due to the winter storms and separately, currency volatility in certain emerging markets. As we continue to manage through these external challenges, our primary focus is on those things we can address within our control to improve our businesses. This includes our continuous commitment to achieve a safer work environment in all of our facilities and work-related activities. Also, the Greif Business System continues to drive cost savings through ongoing diagnostics that identify specific opportunities to achieve further efficiencies. The capabilities of our GBS supply chain remain integral to our ability to properly service our customers, as demonstrated during the series of severe winter storms that affected most of North America. Because of these storms, a number of our customers had to temporarily close their facilities. We lost 39 shifts due to our own plant closures in Rigid Packaging. Rigid and Paper Packaging combined incurred increased utility and transportation costs totaling approximately…

Thank you, David, and good morning, everyone. Positive contributions from the slow-motion recovery in the global economy and record first quarter results from our Paper Packaging segment contributed to increased sales and operating profit compared to the same period last year. These increases were partially overshadowed by the adverse impact of weather-related conditions in North America and currency devaluations in a number of our emerging markets that affected our first quarter results. These factors particularly affected our performance during the first month of the first quarter. To put each of these factors in perspective, the combined impact from weather-related costs included production downtime, higher transportation costs, increased energy costs, supply chain disruption, increased input costs and delayed and potentially lost sales. These factors impacted our North American Rigid Industrial Packaging and Paper Packaging businesses by approximately $6.8 million or $0.05 per Class A share for the quarter. We also experienced a number of currency devaluations during the first quarter of 2014 which impacted several of our Latin American operations in Brazil, Argentina and Venezuela. We also experienced currency declines in our Middle East and South Africa operations. For the first quarter 2014, foreign currency devaluation had a negative below-the-line impact of $2 million or $0.02 per Class A share. I am now on Slide 8. Net sales were $1,034,000,000 for the first 3 months of fiscal 2014 compared to $1,009,000,000 for the same period last year, an increase of 2.6%. The primary driver of this increase in net sales was from our Paper Packaging segment, which benefited from a containerboard price increase that was realized during the second half of 2013. Net sales were also impacted by higher selling prices across all segments. Consolidated volumes were flat compared to the first quarter of 2013. However, specific regions such as our…

[Operator Instructions] The first question comes from Chris Manuel of Wells Fargo.

A couple of questions for you. First, could you maybe address a little bit of the volume trajectory through the quarter? It sounded like things were pretty choppy for you in January with days down and things of that nature. Maybe if you can give us some sense of how it progressed and maybe how the whole quarter was looking at the different segments. And then I'm assuming that with polar vortex has continued into February, and it was an ugly commute again this morning. So just maybe and update us to what you're thinking thus far if that's continued or not?

Thanks, Chris. I'll take the opportunity to answer your questions and also give some flavor of volumes around the world. Let me start by saying that in general, and let's talk about North America first, we saw a typical November, December going into the holidays-type volume pattern, where it was soft. We also saw that Christmas and New Year's fell poorly in the middle of normal shipping or work weeks. So we saw a little bit of a decline in January -- or sorry, November, December. In January, we were -- we welcomed a resurgence of volume pretty much around the world, but particularly in North America, order patterns were fairly good. Packaging accessories orders were pretty good. The polar vortex that hit in January was something that we haven't well experienced in the recent past anyway, losing that many shifts. And we can document 39 lost shifts. It's very difficult to say exactly how many orders were lost or pushed off, but it's fair to say that several days' worth of impact hampered our North American operations. I generally feel, and this is a comment again for not only just North America, but around the world, that we're seeing it in our numbers, and we're hearing it in our customers' voices that the slight improvement of volumes is real and tangible. I have been cautious in past years with the press talking about volumes and GDPs improving in the first half of the year, only to kind of get wiped out in the second half of the year. But this one seems more real, more fungible, and you can hear it in their voices. So as we exited the impact of the weather in January, we saw a more typical volume trend continue in North America. As we look…

Okay, that's very helpful. And one last question, and I'll jump back in the queue. Acquisitions, divestitures, some different things along those lines. You had discussed a couple of lines in the press release that you are looking at select businesses, areas. Can you maybe give us a little color as to what types of areas, whether that's -- I'm assuming that's in the Rigid business or in the Flexible business as well where you're looking there. And then the second, the acquisitions that you did. That's a -- $50 million is a pretty good chunk. Could you give us some parameters as to maybe multiples pay, how you would anticipate contribution from those, returns you're looking for, et cetera?

Yes. Let me start with the latter, but if you don't mind, Chris, out of order. On the acquisition front, several years ago, we had bought an option at a time when the economy was struggling to buy a business in the Midwest. Our Midwest business is very strong, particularly around the Chicagoland area. That option was within the historic range of how we buy companies in that 5 to 7x EBITDA multiple. It's a very strong business that we're delighted to add to our capabilities. It was a new drum and reconditioning operation. A new drum operation has already been absorbed within our capacities elsewhere. And the reconditioning is being integrated into our reconditioning network. We're very bullish about the accretive nature of this second half of 2014 and going into '15. The second acquisition, to be honest and transparent, by GAAP regulations, we called it an acquisition. It was much more of an equipment buy. That equipment happened to come with some customer lists, and there was -- due to accounting regulations, we had to classify it as an acquisition. But it was very small in nature. And that is targeted at our Paper business to increase our differentiation and service capabilities for some of our Midwest customers in an area that we have only been small and in the past, we're trying to grow. So we're favorably disposed about adding that capabilities. That addition to our network really won't have a material impact on the Paper business until second half of 2014 as we get the equipment installed. And it will be small relative to the size of our overall business. As far as divestitures, you're accurate in saying that some of these markets around the world have been, in my mind, permanently impaired or at least…

The next question is from Ghansham Panjabi of Robert W. Baird. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: David, on the EMEA volume improvement, I think you said up 6%, 7% during the quarter. How much of that was market improvement versus maybe your commercialization initiatives or market share gain?

Well, I would say the preponderance of that would be market coming back. We don't -- we haven't gained a lot of share of wallet in a depressed market over there at this juncture. I would say I can't give you the exact split, but the preponderance of it would be a market recovery driven-type approach. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Okay. And just given the context, maybe some pricing flareups in the region, has that changed in any material way across the EMEA region?

Devaluations in certain economies has, let's say, unsettled some of the participations we have when you look across places like Turkey, specifically South Africa. But I think that has played its course, if you will, and is behind us at this point. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then going back to your guidance, just kind of given where 1Q came in relative to certainly the street and very likely your internal expectation just given the disruptions, the fact that you have not cut the top end of the range on EBITDA or EPS even with 1Q on -- I guess what would it take for you to sort of get towards the high end? Would it be sort of a resurgence in terms of the volume side? Is that what's driving that optimism?

I would say the continue of the resurgence of volume around the world, number one, is a critical factor. Us continuing to control our cost is obviously another one. I don't want to state the obvious, but that's critical when you're running at low volumes in some of these markets. The other one is, quite frankly, the business that's performing the best and running hard is paper. And going through our annual shutdowns and coming out of those like we have for the last number of years is really important to us as well. But it doesn't take a big stretch to be well within our range, as previously discussed. I don't -- even at marking minimum $7 million of weather impact in Q1 in North America. And that's what we're able to document. We still anticipate there's ways to make that up in the remaining 3 quarters.

The next question is from Adam Josephson of KeyBanc Capital Markets.

David, a couple of questions for you. On -- I think you said you expect to achieve 12% EBITDA margins in Flexible by the fourth quarter of 2015, if I heard correctly. Can I assume that, that implies annualized EBIT of roughly $25 million to $30 million based on what you expect your sales and D&A to be at that point?

It would be. I just want to make sure you were on a comparison of a run rate versus a full annualization.

Right, yes. Annual guidance, yes. $25 million, $30 million is reasonable.

Yes.

Okay. In terms of cash flow, obviously, there was a drag in the first quarter just as there's been in most of the first quarters of the past several years. Was your cash flow performance in line with your expectations or appreciably different?

Well, let me comment real quick. It was below our expectations largely due to some inventory build. And I'll ask Chris Luffler to give a little color commentary on that for you, Adam.

Yes, Adam, it was consistent. Quarter 1 is usually a drag on cash flows. And that's been historical, I think, over the last couple of years. We did have 1 year that was maybe a blip. But I think in terms of Q1 cash flow, I think it was pretty consistent, which I think is what we were trying to show. I mean, CapEx is a little bit higher in the first quarter, and we had some cash tax payments that were maybe a benefit that we had last year compared to this year. So really, that difference came when you kind of look at working capital and really that inventory build situation. And as you think about the inventory increase from the end of the year, October, as you think about the adverse weather impact that we had in North America had a play on that. You also had inventory pre-buys that were a little bit higher in our Asian Pacific operations, specifically in China. And we also had some impact in our Latin America region, specifically to Brazil and Chile, where we had maybe some production disruptions or let's say, slowdowns in sales within our plastic businesses. So we did -- which is somewhat seasonal-driven. And maybe we had a little bit of a higher seasonal impact on those businesses, which was a little bit unexpected. But I think on an overall quarter basis, it was pretty consistent with where we thought it was going to come in at.

And David, just one more for you on OCC. What's your view of OCC at this point aside from any short-term weather-related impacts? And is there anything different about the U.S. or Chinese economies this year compared to last year that leads you to believe that OCC will be appreciably higher this year than last?

No, I don't think they will be appreciably higher. We have our expert here with Pete Watson, who's, for years, run our paper business. I'll ask Pete to give you the color on that.

Adam, yes, so RISI just came out in January with their forecast, and what they're projecting is very consistent with what they projected for 2014 back in October, which is $40 to $48 increase. I would say our view is a bit more conservative than that, but we do believe there's going to be increases in OCC throughout the year, and one shortly -- short term because of some of the issues with weather-related generation problems we see. And we're also seeing higher export prices at the port as a trend.

The next question is from Steve Chercover of D.A. Davidson. Steven Chercover - D.A. Davidson & Co., Research Division: Yes. So if I understood you correctly, you're trying to get your SG&A in the Flexible business down to 10% from 17%. But is there not a bigger corporate initiative to get SG&A down from 12% to 10% and how's that going?

Yes, thanks for the question. So there's 2. I'll take, again, the latter one first, if you don't mind. Going into this year, we budgeted $10 million less on our corporate SG&A burden to the business than previous years. And we're executing well on that. That is separate, and in addition to the effort on our global ERP system, which is now in about its 14th or 15th month and progressing very well. We've had, since the last time we spoke, 3 more implementations in Europe. So that's going well. Those 2 combined are -- constitute our plan to reduce corporate SG&A longer term down to that 8%, 8.5% range. As far as FPS, because that business has been underperforming for a long period of time here, and it's been disappointing to us, we called out a special line item about what is happening more near term to FPS independent of the global ERP implementations. Steven Chercover - D.A. Davidson & Co., Research Division: Okay. And I don't know if this is a fair question or not, but why has it been so difficult to attract a CFO? I mean, it just seems inordinately long. Is it the culture is -- somehow makes it more difficult than within other industries? I just can't remember a kind of...

Well, I think -- well, yes. So the -- I think the major factor was that when went after -- when we decided to go after a new CFO candidate, we were adamant. We wanted a sitting CFO with extensive experience with the street. When you go after somebody like that, and it's, let's say, July or August and you formulate the plan and start interviewing, it should be -- it should have been obvious to us, but it wasn't at that time that you're not going to unseat one of those during their late stages of a fiscal year roll-up. And these folks that closed fiscal year-type books have until January, mid-February often to get all their papers filed. So it isn't until just about now where people truly become available. And we've been patiently waiting for the right candidate rather than trying to rush out and just fill any slot.

[Operator Instructions] And the next question is from Chris Manuel with Wells Fargo.

I just wanted to follow up on the Flexible side because I think maybe I'm -- there's a couple elements of math maybe I'm missing here. But -- so first, originally, you were targeting that to be a billion-ish sort of business, and you're talking about sizing it now to be about 10% smaller. So is that -- am I doing the math right suggesting that you're sizing the business to be a, call it, $900-ish million business? Or maybe a little color around that would be helpful, one. And then two, what -- when you're looking forward in 2015, if I did the math on the 12% EBITDA margin, I think you have about $15 million of D&A. That kind of suggests to me if the EBIT dollars you just mentioned of $20 million to $30 million, that suggests something like $350 million of revenue. And I think I might be missing something there. So maybe if you could kind of help us with a few of those pieces?

Well, let me help with the first one on the capacity, and then I'll try to triangulate your other. As far as the capacity, a couple of things to mention. One is when we bought this business at the timing we did, we weren't expecting the second downturn of Europe. And I'm not making excuses for what's happened years ago, but we did that. And we launched a capacity increase initiative with a couple of new facilities. That initiative left us with underutilized, in fact, unused capacity. So when we talk about eliminating some extruder or weaving capabilities within the production base, it doesn't really affect us in terms of the volume of bags we can get out of our other operations. Some of those operations are integrated. Some are standalone. So what's really critical here is to cut the underutilized capacity drag on the performance of that business. As I've said in previous calls, the base businesses have -- the base business, excluding the greenfield plant builds, have been actually improving to mid to upper single-digit EBITDA margins. So we think with the right type of sizing, we will unleash the profitability potential of the business under its current levels. The second thing that's happened is that through the Greif Business System, we've increased the capacity of our production houses in the extruding and fabricating. In fact, we have a couple of new processes we're putting in place. And that capacity increase is exceeding what we originally thought it was. But we don't have a need or we don't have an opportunity to fill up that underutilized capacity from existing operations just now. So the -- as far as sizing the business, it's not as clear-cut, if you will, from a capacity standpoint. I would say as the current business stands, we have much more capacity than we need to achieve our production that we need to achieve $1 billion goal longer term. The real challenge is getting the business healthy and right-sized so that we expand it into the markets that we need to, to fill up that extra growth. So I hope that...

That helps a lot. And then kind of the second part of the question being as the business sits today, you're at a $450-ish million run-rate basis. I'm assuming that you talked about some potential divestitures, some more consolidation elements there. So -- and you've also targeted going into some new markets. But kind of 2 elements to it. One, what's the progression, I guess, between here and over the next, call it, 18 to 24 months? Your target to get to 12%, I mean, is -- the revenue stay basically flat? Do you think it can accelerate going into new markets? Or do you think it actually shrinks...

I think the -- well, 2 things. First of all, I think the illegal occupation of our plant notwithstanding for our Q2 event, I think the revenue that we're seeing and the expansion with our customer base will accelerate. I think that the cost structure will decline and perhaps precipitously, so as we make a few strategic decisions here. And then as you take that cost burden off of the network, I think it's quite easy to see our path over 18 to 24 months to the 12% or even higher EBITDA-type margin. We stuck with 12% because we've overpromised, it appears over the past few years, with what we have been dealt. And we wanted to make sure we have an achievable conservative goal.

Okay, that's helpful. And then the last question I wanted to ask regarding within the Flexibles business here is what -- obviously, there's going to be some cost to move down this path, and you've got a -- if you've got a pretty clear picture here of where you're going to get to. What would you anticipate would cost you to do this? I mean, is there a further restructuring over the next 12, 24 months, another $10 million, $20 million? Or how would you think about either cash element of that or -- and noncash element if it sounds like maybe writing it down or closing some assets?

Well, I would say out of our $25 million, the restructuring plan for FPS are earmarked, if you will, is less than half. It all depends upon whether or not a few of these satellite operations, which are standalone in nonstrategic markets for us are sellable to another person, which is part of our negotiations as we are on -- currently have, whether they're sellable. But if they are not, they will be closed and shuttered. And that expense curve, or when you forecast that, is quite a bit different between those 2 different options. So all I can say is that we've planned for what we think the most practical outcome is, but we still have to execute on that in the quarter 2, quarter 3. And it remains to be seen whether or not those transactions go through or if we end up shuttering them on our own dime. But I can tell you we have a very clear path to right-size, and this is something we know how to do pretty well. And in parallel to that, enter these other markets at the right time. And I think entering some of the North American opportunities, Far East, Latin America are every bit as critical as to right-sizing the footprint. And -- but like I've said many times, when it's healthy and when it's right, it's quite easy for us to enter at a fairly cheap rate through distribution into those bigger markets.

The next question is from Adam Josephson with KeyBanc.

This is another one for Pete. Yes, Pete, there's been a significant amount of containerboard capacity added, as you know, in the Northeast over the past year. To what extent are you feeling the impact of that capacity? RISI has talked about some producers that have added capacity, that are offering significant discounts to take business from others. I mean, are you feeling any of that? What are your expectations along those lines in the months and quarters ahead?

Yes. I'll make a couple of comments on that, Adam. And obviously, it's been much publicized on new capacity coming into those markets and some of the activity. I think one of the big pressures, and it refers back to the question on OCC, you've got pretty substantial recycled capacity coming online, and in that fiber basket, put some additional pressure on both demand, supply and pricing. So I think in that region, you could see higher-than-index level pressure on OCC, which had certainly could have an impact going forward. It has not as of yet. The other thing what I would say, it's obvious there's some competitive pressure in that market, but how we approach the market is more to how we differentiate. We can integrate higher levels. So at this point, Adam, we have had no material impact to our business as it relates to some of the activity in the Northeast. And I'm not a good prognosticator. So I'm just not going to forecast and predict what might happen in the future. I'm just more concerned about in our system, in our strategy how we move forward to try to bring the most value to our system. As you know, we're a smaller system. So we're not really driven by value and scale -- or excuse me, volume and scale, really driven to how we can create value within our system and to our customers.

We have no further questions in queue at this time. I would like to turn the floor back over to Mr. Fischer for any closing remarks.

Please turn to Slide 12. Notwithstanding the external challenges we face, especially during the final month of the first quarter, we remain on track to achieve our full year guidance for EBITDA and earnings per Class A share in fiscal 2014. At this time, it appears there may be carryover impacts from the recent adverse weather-related conditions and currency volatility. We are encouraged by the gradual improvement in the fundamentals across our business portfolio. The fix I discussed today concerning the polywoven business will take some time before we achieve the full benefits, but we are confident in the steps we are taking and the anticipated financial outcomes. They are primarily based on internal initiatives rather than external macroeconomic factors that we cannot control. We look forward to updating you on our progress during the next quarter's conference call. Before I go, I want to mention that Deb Strohmaier provides final instructions for the call, and I want to thank her publicly for 10 years of support and service as Vice President of Communications for Greif. She'll be retiring from Greif in April and sorely missed. We wish her well and safety in all of her retirement years. Deb?

Thank you, David. Back to business, a replay of this conference call will be available at approximately 1 hour at the company's website at www.greif.com in the Investor Center. We appreciate your interest and participating this morning. This concludes our call, and you may now disconnect your line. Goodbye.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.