Greetings, and welcome to the Greif, Inc. Second Quarter 2014 Earnings Call. At this time all participants are in listen-only mode. (Operator Instructions). As a reminder this conference is being recorded. I would now like to the turn the conference over to your host, Scott Griffin, Thank you. You may begin.

Thank you, Kevin. 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. Presenting remarks today are David Fischer, President and Chief Executive Officer and Larry Hilsheimer, Executive Vice President and CFO. Also joining the call and available for comment include Pete Watson, Chief Operating Officer, David Lloyd, Vice President and Corporate Financial Controller and Chris Luffler, Vice President, Business Managerial Controller. On March 1st we lost a dear friend and colleague Ken Andre, Vice President and Corporate Controller. Ken was a generous dedicated and committed leader. During this 26 years at Greif Ken had a positive impact on the company and the people who had the good fortune of working with him. He is missed. We send our condolences to Ken's family for their loss. We have prepared slides to supplement our comments. The slides are also posted on our website through the link on our webcast. We are now on slide two. 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. Please review our filings with the Securities and Exchange Commission as well as our second quarter earnings release 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 special items such as restructuring charges and acquisition-related costs and EBITDA before and after special items; EBITDA, defined as net income plus interest expense, net -- plus income tax expense plus equity earnings of unconsolidated subsidiaries, net of tax plus depreciation depletion and amortization expense. Management of the company uses the non-GAAP measure to evaluate ongoing operations and believes that these GAAP measures are useful to enable investors to perform meaningful comparisons of current and historical performance of the company. Management of the company also believes that the non-GAAP measures provide a more stable platform on which to compare the historical performance of the company within 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 second quarter 2014 earnings release. I will now turn the call over to Mr. Fischer.

Thank you, Scott. Please turn to slide three. I want to begin my remarks this morning by stating how pleased I am to have Larry Hilsheimer join the company in May as Executive Vice President and Chief Financial Officer. Larry has all the qualifications we were looking for in terms of financial experience, leadership skills and is also a perfect fit within our culture. I am confident that as you meet Larry and get to know him over the coming weeks and months that you will share my enthusiasm for what he brings to Greif. Larry is the cornerstone of our new financial group and his appointment underscores our commitment to a strong financial team going forward. During the quarter we also announced the appointment of David Lloyd as Corporate Finance Controller and Chris Luffler as Business Managerial Controller. Most recently David was the PwC Lead Audit Partner for a large multinational company and was a partner at PwC for nearly ten years. In this new position David will serve as our Principal Accounting Officer and be responsible for the company’s external reporting, regulatory matters, budget and global financial consolidation activities. Chris Luffler has been in the Corporate Controllers department at Greif for the past four years and has over ten years of public accounting experience with a big four accounting firm. He will interface between the Corporate Controllers Department and the businesses to ensure financial best practices over the international accounting topics, compliance and internal controls. He will also oversee capital spending in Shared Services Americas. We welcome these three leaders into their new roles. As we enter the second half of fiscal 2014 I want to restate my priorities beyond our ongoing commitment to safety for this year. First, address capacity utilization issues in the Flexible Products and…

Please turn to slide 12. Thank you, David and good morning everyone. I want to personally state just how proud I am to be at Greif. The exceptional quality and character of the Board, management and associates at Greif and their commitment to the Greif Way make this a truly special opportunity for me. Before reviewing our financial performance I want to briefly discuss key factors that influenced our results for the second quarter. As previously announced, the EBITDA impact of the illegal occupation at our Hadimkoy, Turkey facility and adverse weather totaled $20 million. The EPS impact was $0.14 per class A share. The 2014 second quarter impact of the illegal occupation was approximately $13 million, made up of the earnings impact of $13.5 million in lost sales, increased cost of alternative supply sources, costs approximately $3 million of direct costs and $3 million of restructuring charges related to this facility for the 2014 second quarter. Weather impacts included approximately $4 million of higher energy, additional input and logistics cost in the Paper Packaging segment plus approximately $2 million of higher energy and labor expenses. These and other weather-related items totaled approximately $7 million for the 2014 second quarter. Please turn to slide 13. Despite losing an estimated $13.5 million of sales related to the illegal occupation second quarter net sales improved 1.1% versus the same period last year as a result of higher prices partially related to the pass-through of raw material costs in the rigid Industrial Packaging segment and higher container board prices in the Paper Packaging segment. Volumes were essentially unchanged with 2Q of '13 with favorable comparisons in the rigid industrial packaging business in Europe offset by lower comparisons in the flexible product segment and the rigid industrial packaging business in the Americas, particularly Latin…

Thank you. (Operator Instructions). Our first question today is coming from Adam Josephson from KeyBanc Capital Markets. Please proceed with your question.

Thanks, good morning everyone.

Good morning Adam.

David, a couple of questions for you, the non-core assets you mentioned, how much of an EBITDA benefit do you expect from the sale of those assets? What are these assets? And why are including the benefit of these expected sales in your guidance this year?

Let me try to describe how we think about non-core assets first, Adam and thanks for the question and then I’ll turn it to Larry to talk about the specific dollar amounts. The previous definition that we’ve used is still valid for non-core assets. If we are not going to be number one or number two in our market place long term then those facilities or those businesses are not essentially core for the long run. In addition to that there are certain geographies around the world that have been under stress since the global downturn and they have not recovered. There are also a handful of small discrete product lines which do not fit into our portfolio long term. Those also are non-core. What I can tell you also is what non-core does not include. So don’t expect for us to make a major move on timber, paper, flexibles or rigids as a holistic trade. But there are some geographies and discrete product lines we think fall into that definition and in terms of that exact dollar amount I’ll let Larry comment on that and his view on why we included it in the guidance.

Right, thanks David. Hi Adam, I look forward to meeting you and everybody else that's on the call. Relative to our guidance that I just stated on EBITDA $475 million to $505 million, if we look at our forecast and back out gains on sales that are already completed or are under firm contracts it's roughly $6 million and it would take you from where we are forecasting right now, where we would be in our best forecast down to the bottom end of that range. The reason that we are including it in our EBITDA guidance is frankly we’ve had sales historically at a relative low level that they always end up in our EBITDA. And one of the things that I said is look we need to just be completely transparent about what’s in and what’s out particularly as we are looking at maybe some more major dispositions of the non-core assets as David described them. We are currently looking at transactions that could occur; now they could not, but our best estimate of the range currently is from $30 million to $50 million of gains in this second half of the year. Obviously if it was a $50 million and it even stretched our guidance beyond what we are, so our best estimate is sort of at that $30 million range which is why we communicated what we did because it will obviously fall into our EBITDA. But again I’ll emphasize we don’t know that these transactions are going to occur. It is our best judgment as to what will probably occur at this point in time.

Got it. Larry, thank you for that. I appreciate it. I look forward to meeting you as well. David just a couple of other ones, in terms of your land holdings, is your intention to increase or decrease your land holdings overtime and why?

Thanks for the question, Adam. Let me break those into different buckets; in Canada where we have been a long term holder of land in Quebec and Ontario, our intention is to decrease and exit Canada over time in the most value generating method. It's not going to take us 10 years to do it but it's not going to take us one quarter either. We are working on how best to do that. And the work we are doing to convert those properties in Canada that aren't better used is in the best interest of our shareholders to exit under that type of business model rather than just drawing a circle around the land holdings out there and walk away from them in one transaction. In North America -- sorry in the United States, in the Southern part we’ve made a conscious decision to reduce and consolidate our footprint in around our current major land holdings Southern Alabama, Mississippi and Louisiana. And the North Alabama transaction which is currently underway that Larry commented on is designed to do just that, take our land holdings and consolidate them around a core holding, if you will in that smaller geography rather than having a patch work of Timberland spread out that requires more foresters, more hardware, more SG&A to manage. So it will be a slight reduction with that transaction, but we are, as I’ve mentioned previously keen to hold on to our land in those core holdings and we are keen to pursue surface and the mineral capabilities for the company long term in those core holdings.

Great and just one last one, David on the container board business, obviously there has been some erosion in recycled container board prices over the past several months. But you are not -- doesn't seem like you are seeing that. Why do you think that’s the case? And more generally what conditions are you experiencing in the market these days? Obviously your results remain good. But if you can give us a little more detail about why you are not seeing any pressure, if in fact you are not seeing any pressure?

Okay. Thanks Adam and I’ll make a couple of comments and then pass it to Pete Watson, our Chief Operating Officer to make, since he's come out of that business and has a long experience curve and he may want to add some color commentary. We have -what we consider a fairly unique value preposition to customers that’s based more on differentiated service and differentiated products. And while we are small in our mill footprint we, within our sheet-feeding operations we are significant player within the regions we serve. And that value preposition and high integration levels throughout our chain has made us less susceptible, I would not call it immune, but for sure a whole lot less susceptible to the commodity pricing that you are referencing, that there has been some pressure on. So our move and you’ll see this with the announced expansion of our sheet-feeding operation and our redeployment preferentially of capital towards more attractive business. You’ll see us strengthen our value preposition based upon service and differentiated products and you’ll see us strengthen our integration levels to even beyond where they are now, because when this commodity industry one day turns we want to be in a good position to have a lot of flexibility with internal integration. Pete, want to add to that.

Yes, Adam, it's already obvious right now that there is a lot of turbulence in the Northeast due to the new container board capacity and to echo what David had indicated, two lever we pull, we are increasing our integration levels internally. Secondly we are selecting and participating in certain segments that allow our differentiation model to offset some of that turbulence. And the other thing to note is a large component of our capacity on the mill side is semi-chemical medium which is based on similar [light weighting] you are seeing in the corrugated box plant side that becomes a very strong element to sell to. So that insulates us slightly. And to your last comment about the very little impact to our performance to-date with all that turbulence the levers that David and I just talk about we really had no degradation of our selling prices on the container board side this year.

Pete, David and Larry, thanks a lot. Really appreciate it.

Yeah, thank you.

(Operator Instructions). Our next question is coming from Ghansham Panjabi from Robert W. Baird. Please proceed with your question.

Hi good morning it's actually [Neville Dole] here sitting in for Ghansham, how are you doing?

Good, good morning.

Good morning. First I just wanted to get your thoughts on the disconnect between your expectations of a continued slow motion recovery globally, when it seems most of your chemical customers are talking about improving macro trends, especially in Europe. It seems like their outlook is a little more positive than yours?

Well, I think theirs is rather consistent with ours, actually not to be disagreeable but like in for example in Europe and I’ll come to this when I’ll talk about volumes around the world, versus last year we saw a 6% increase in our business in Europe. That’s the largest quarter versus prior year gain that we’ve had since around 2008 or 2007. So we are starting to see that as well. It was quite a bit dampen in North America primarily due to weather and as Pete will comment in a bit about volumes in recent weeks and months, so we see that same pick up. But during our second quarter those were the kind of numbers we're looking at.

Okay. Great and that's actually my second question. Can you give us some more color on the volumes trends across your major geographies in the rigid business and was there any major choppiness month-by-month in any region?

There was and I'll try to weave those in to my comments as I go through this. So in North America and I'll give you the bigger as I normally do versus last quarter sequentially and then the second figure will be versus last year, same time period. In North America sequentially quarter-to-quarter we saw 12% increase in volumes, Q2 versus Q1 versus last year we saw a 1% decline which we attribute largely to the production shifts that we lost across the February and March timeframe. In Europe it was strong in both comparative periods versus last quarter. We saw a 14% sequential improvement and versus last year a 6% improvement and that's as much life or rebounding that we've seen out of Europe, as I mentioned in the last five to six years. In Pacific versus previous quarter we saw a 2% increase and versus last year a negative 2% drop primarily to the loss of one commodity customer in a specific location, other than that, the other areas where we're either flat to slightly up. In Latin America we saw a downturn versus the previous quarter, 8% versus last year a drop of 11%. We attribute that to the struggles international chemical companies are having in the region or their exit from that region in addition to that the drought conditions in the agro chemical season. Our polywoven business versus the same, sequential quarter was up 1% and versus the same time period last year down 1%. In our PPS or Paper segment our mill versus the previous quarter was essentially even but keep in mind we had two effects there weather and logistics keeping that even versus the same time period last year was essentially flat as well. Our backlog to our paper business still remains quite strong to Pete's previous comments. In recent weeks and in the month of May we have seen some changes in that choppiness if you will so back to your question about that clearly within North America we saw the choppiness from the weather, everybody knows that story. I'll ask Pete to comment on his view of May in and around the world.

Yes, thank you. From a rigid side, from North America if you look at discretely into April we had our highest month or highest daily volumes in all three substrates. And while May is not in the books overall we're seeing similar trends in our May volumes relative to what we experienced in April. I think in the EMEA region our outlook again is very similar to what we see trending positively towards the end of the quarter. Latin America while we struggled volume wise due to the drought conditions and some of our chemical customers being weaker we are showing some improvements in May in those areas -- in certain regions within Latin America. And again APAC as Dave indicated, all regions in APAC with exception of one area are up and the one area being down really as due to competitive pressure from a source but I will say that our profits in APAC are up regardless. One other comment on the rigid side is that we are going into an ag season both in North America and EMEA and we're very, very optimistic about what we're going to experience from that segment of the business.

Okay. Thanks for all the details

Thank you. Our next question today is coming from Chris Manuel from Wells Fargo. Please proceed with your question.

Good morning gentlemen [inaudible] on the loss and welcome on the new team members.

Thank you.

A couple pieces, I want to just, if I can go back and fine tune a couple of pieces. I think in earlier, to Adam's question just to help us Larry, kind of button this up within the $475 million to $505 million that you've outlined here for the balance of '14, or for fiscal '14 there is $25 million earmarked for restructuring, that's I guess embedded within there. What is the number that you do have embedded in there for some of these sales? I think you mentioned six but you had some numbers, 30, some 50 just so we have a sense of I mean at the end of the day what gets confusing is we're just trying to understand what's happening in the core-base business without sort of private equity shop buying, selling assets that might go on. But how would you help us fine-tune that, can you?

Yeah I will do my best to and that's actually why I had added the slide in the deck on pages 21 and 22 at least for year-to-date to try to get rid of all that noise and just show and will continue to present things in that fashion. But with respect to the guidance and let me just comment on why we'll be moving earnings per share away from EBITDA and not what we won't talk about EBITDA on the call but I think it has the potential to become very confusing because the number of joint ventures we're in. And so for example let's say flexible packaging goes off the road -- we blow it out in the next five years and make tons of money we'll be sitting here explaining every time why half of the EBITDA goes to our joint venture partner and I guess that gets to be a little bit too hard to deal with every time. So we'll focus on earnings per share guidance and we'll talk about things in terms of the way that I started to disclose it in today's call. Relative to $475 million to $505 million after we landed on what the impacts were that we covered in our special release when we became aware and could nail down that and obviously we had the obligation to then disclose we were in the process of doing our forecast for the remainder of the year to help us establish what our guidance range would be. We did that and as you know that's not an exact science and so we're trying to call the ranges as firmly as we can to provide you all the information you need to do your work. That sort of number comes out just on…

Yeah let me make sure I am getting this correctly. So I kind of come back as you did your analysis you got the $480 million, you've got call it round numbers 5 of gains so far so $475 million. That's really a number we should think about plus say $25 million for structuring, for $500 million for our core business. Now it could be $30 million to $50 million higher if you get some other stuff, am I kind of summarizing that correctly?

You are.

Okay, perfect that’s what I needed. Couple other questions with respect to the flexibles business. David I know in the past you’ve talked about some different objective or goals there and this is a business that we quite frankly been working on for four-five years, like may be four years under ownership but looked at options for probably even longer than that. In the past you’ve got us some different trajectories and I know you’ve added capacity, different times of business, got the hub running and now you are looking at shrinking. Is something in the $500 million range for revenue still a reasonable milestone for the next year or two? What do you think the opportunity set is there post all the puts and the takes that you are looking at?

Yeah. Thanks for the question; I think $500 million is in realm of practical expectations for the next year to 24 months. This illegal occupation was something that certainly I've never run into and I wasn’t able to find anybody else who had run into a problem this significantly. The communist workers that were in there made such demands that we were not able to continue with that facility even though we would have liked to have continued with that facility as it's a major cog in our wheel of our production. So we’ve have to shift gears in terms of meeting one of our early objectives and that is eliminate the overhang and operating rates and unutilized capacity by including the Hadimkoy shutdown as our major target. So we are in the midst of that as we speak. Now the facility is back up and running at about 15% to 20% operating. It will operate like that for the remainder of the year as we close the facility and exit, and you will hear because of that event and shifting of that in the coming short time period what our new plans are as far as closures and facility consolidation because of that event. So we are in a state of flux of that strategy due to that event, and it's not been without pain on our end and it's certainly you accurately reflected the business has struggled for a number of years here but we are committed to putting it on the right foot and making the calls necessary to right size the cost structure for that plant -- sorry that business.

Okay. As we think back of your -- that’s been the first of your five key priorities for ’14 that you’ve addressed, that capacity utilization in flexibles. Give us a rough gauge of how much capacity you are anticipating taking out if you may have in the past and I am just forgetting it. But may be that shifted around a bit now with the Turkey issues as where you may put or take. But I mean one of those objectives was I think low $500 million of revenue and high single digits margin towards 15%. Have those with some of these issues and may be some shifting of the gears as you’ve mentioned, it sounds like the revenue number is still within grasp, can you give us a sense if the profit objective is still is in grasp?

I think so. It might be a bit delayed this year because of the added cost that we’ve identified for you. I would say that our capacity reduction goals of 10% to 12% are on target. They are going to be a completely different complexion to that than what we had originally planned. And the other cost control like an SG&A reduction program are already being implemented and are on track, that will play out over the next quarter or two.

Okay, so I think the 15% target if I'm hearing you right may be delayed a bit, is that…?

I would say so for sure for the -- like I said the next, the Q3 and Q4 figures are going to be significantly dragged down because of these added cost of this unexpected move out of this facility and operating it at sub rates of around 20%.

Okay, that’s helpful. I have a few more questions, let me ask one more and I’ll jump back in the queue. Bu if we were to -- another area I know you’ve been doing some work and we are beginning this year little bit of improvement there, is that Asia Pacific, Latin America piece, historically that’s been a double digit or even at times just slightly below operating income run rate your margin run rate. It's been down obviously much less than that low single-digits. It showed a little improvement here in last quarter but what's the path of the cadence towards restoring and what you destination is, can you get back to a double-digit level or what do think the objective there is and what sort of the cadence to do that.

Let me -- I am not trying to dodge your question but let me tell what we have already accomplished. We've made a pretty significant move on our cost structure in the last two quarters in Latin America and we've also consolidated loss making facility in China during the quarter. So we are active in that realm. I would say you're going to see Asia more stabilize to a slightly higher number and move forward from there with the economy particularly China as it recovers or it does not recover. In Latin America I think the work is still ongoing, returning that business to one that produces about 2x of the EBITDA that it currently does over the next two to three years is our goal. It has gone through a major shift not only with the individual countries, with Venezuela, the downturn in Brazil, Argentina but we have we've gotten some momentum behind restructuring that footprint for what customers demand and remain in Latin America and that Latin America footprint is clearly changing where industrial people and customers are leaving that continent for lower cost areas to produce, but the agro chemical industry continues to grow and push forward. So I would say it's going to take another 18 months to 24 months for us to get back to a lower double-digit basis if I had to project it.

Okay. That's helpful. I'll jump back in the queue.

Thank you, Chris.

Thank you. Our next question today is coming from Rick D'Auteuil from Columbia Management. Please proceed with your question.

Just again going back to the EBITDA analysis with the ins and outs, one thing that wasn't included in the analysis is the current run rate of EBITDA on the targeted divestitures up to the extent I guess that it's made up of Canadian land may be there would be less of that, that needs to be adjusted out if in fact they are sold, but can you give us a sense of the run rate of EBITDA in these underperforming businesses, the non-core businesses.

Not really at this point because there are so many that are in the potential queue to try to tell you, what it would be for one or the other. It just depends on the mix of what ends up being in that group. I'm sorry I can't give you a better answer than that but until we lock-in on which things are actually happening it would be pure speculation of how that mix comes together.

So if you did $30 million this year or sort of exit and divestitures that contributed $30 million to EBITDA this year would there likely, this will be a topic for next year too, it sounds like there is going to beyond knowing…

Yeah I mean part of it as you would appreciate depends on number one, when do they close, meaning if they close the last day of our fiscal year that doesn't have any impact. It also has goes back to what David talked about earlier, a lot of things we're looking at are loss making operations. If those happen to sell that has a different impact and if we saw something that's producing income. So it would just be as I said speculation to try to give you some amount because we don't know timing and we don't know exactly which ones are going to sell.

Okay.

All right. Thank you.

Thank you. That concludes our question-and-answer session. I would like to turn the floor back over to Mr. Griffin for any further or closing comments.

I am going defer to David Fischer, who will make some closing comments.

I am now on slide 25. Business conditions are gradually improving in most of our markets. Our quarterly results benefited from record operating profit in the Paper Packaging segment. As noted in early remarks business headwinds resulting from the illegal occupation at the Hadimkoy facility and adverse weather conditions during the first half of the year totaled approximately $27 million. We anticipate an additional $14 million of impact on results during the second half of 2014 related to the Turkey occupation. We are currently pursuing sales of non-core assets that are expected to mitigate this impact. Current expectations of product demand for the agricultural season during the second half of the year are encouraging and specific plans are being implemented throughout the company to improve our financial performance. I am confident we have the right people in place and the appropriate action plans to accomplish these goals.

Thank you, David. A replay of this conference call will be available later today on our website at www.greif.com. We appreciate your interest and participation in this conference call and it's now concluded. Thank you and have a good day.

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