Greif Inc (GEF) Q1 2023 Earnings Name Transcript

Greif Inc (NYSE: GEF) Q1 2023 earnings name dated Mar. 02, 2023

Company Individuals:

Matt Leahy — Vice President, Company Growth and Investor Relations

Ole Rosgaard — President and Chief Government Officer

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

Analysts:

Ghansham Panjabi — Baird Fairness Analysis — Analyst

Gabe Hajde — Wells Fargo — Analyst

Aadit Shrestha — Stifel Monetary Corp. — Analyst

Justin Bergner — Gabelli — Analyst

Presentation:

Operator

Good day, and thanks for standing by. Welcome to the Greif First Quarter 2023 Earnings Convention Name. [Operator Instructions]. After the audio system’ presentation, there will likely be a question-and-answer session. [Operator Instructions]. I might now like at hand the convention over to your speaker right now, Matt Leahy. Please go forward.

Matt Leahy — Vice President, Company Growth & Investor Relations

Thanks, and good morning everybody. Welcome to Greif’s first fiscal quarter 2023 earnings convention name. That is Matt Leahy, Greif’s Vice President of Company Growth, Investor Relations, and I’m joined by Ole Rosgaard, Greif’s President and Chief Government Officer; and Larry Hilsheimer, Greif’s Chief Monetary Officer. We’ll take questions on the finish of right now’s name.

In accordance with Regulation Truthful Disclosure, please ask questions relating to points you contemplate vital, as a result of we’re prohibited from discussing materials private data with you on a person foundation. Please restrict your self to 1 query and one follow-up earlier than returning to the queue.

Please flip to Slide 2. As a reminder, throughout right now’s name, we are going to make forward-looking statements involving plans, expectations and beliefs associated to future occasions. Precise outcomes might differ materially from these mentioned. Moreover, we will likely be referencing sure non-GAAP monetary measures. And reconciliation to probably the most instantly comparable GAAP metrics will be discovered within the appendix of right now’s presentation.

And now, I’ll flip the presentation over to Ole on Slide 3.

Ole Rosgaard — President and Chief Government Officer

Thanks, Matt, and good morning everybody. Throughout our first quarter 2023, Greif took a number of vital steps in the direction of advancing our Construct to Final technique. We accomplished the acquisition of Lee Container in mid-December, and are quickly integrating this new development enterprise enterprise. We proudly introduced our new 2030 science alliance sustainability targets, a roadmap for attaining our targets round local weather, waste discount and circularity.

We divested one in every of our greater value CRB mills and right now introduced that we are going to be reinvesting that capital into one other development platform with a big majority possession in Centurion Container; our IBC reconditioning three way partnership. We’re rising our ownerships from roughly 9% to 80%, with a path to full possession within the subsequent few years. I’m happy with the progress made thus far in 2023, and I stay up for constructing on this new basis within the yr to come back.

Now, onto our first quarter outcomes. Our world companies clearly felt the influence of a number of headwinds within the first quarter. In our fourth quarter name, we cautioned in opposition to a weaker begin to the 2023 yr, particularly highlighting the quantity softness we have been seeing, in addition to the metal value value headwinds in GIP and their influence to first quarter margins. Precise quantity tendencies in each companies got here in under our low unique expectations and the online influence was a difficult first quarter outcome, relative to fiscal 2022, although it was the second finest first quarter in Greif’s 145-year historical past.

Additionally noting Q1 fiscal 2022 included full quarter EBITDA contribution from the FPS enterprise which was subsequently offered. Whereas the demand environments stays unsure, our groups acted swiftly on value out actions, working to match manufacturing with demand, rationalizing and optimizing our footprints and tightly managing working capital. We’ll proceed to aggressively handle prices throughout this era of quantity softness. And but, we’ll stay agile sufficient to response and help our prospects when calls for improves.

I’m happy with our crew’s capability to adapt to the altering demand environments and our dedication to taking actions to right-size our prices, whereas nonetheless specializing in development and disciplined execution of our Construct to Final technique. Please flip to Slide 4.

On Tuesday, we signed an acquisition settlement to extend our possession stake in Centurion Container to 80%, topic to customary closing situations and regulatory clearances. As I discussed a couple of months in the past relating to our acquisition technique, our most engaging targets are near our core enterprise of commercial packaging at diversification advantages and product choices or finish markets and are margin accretive. We additionally wish to develop with companies which have a powerful sustainability part. Centurion Container meets all these standards. And I’m much more enthusiastic about the way forward for our partnership that [Indecipherable] when Greif made its preliminary investments virtually three years in the past in April of 2020.

The Centurion partnership helps speed up our development in resin-based merchandise with a sustainable providing of each new and reconditioned IBCs. Since inception in 2020, the three way partnership has grown EBITDA by almost eight-fold via each natural and inorganic topline development and a scalable enterprise fashions with sturdy margins and distinctive money circulation conversion. I’m excited in regards to the continued development potential of this enterprise. And I stay up for formally welcoming the Centurion colleagues as a part of Greif after we conclude the transaction.

Let’s now flip again to our quarterly outcomes on Slide 5, please. As talked about earlier, in our fiscal first quarter, our International Industrial Packaging enterprise skilled twin headwinds in decelerating calls for and short-term margin compression from speedy metal value deflation. Metal, plastic and IBC volumes have been every down low double-digits year-over-year on a worldwide foundation. The North American market was weakest, largely resulting from decrease demand throughout the chemical and coating finish markets.

Our LATAM areas remained strong, basically flat in opposition to a powerful Q1 2022 on continued sturdy demand from the ag chem and meals markets. EMEA and APAC volumes have been weak via many of the quarter, however we noticed some remoted sequential enhancements so as patterns in February, that provides us some hope that demand could also be on a path to restoration in Q2. Within the face of those challenges, I commend our world GIP crew for his or her decisive actions taken in managing prices and sustaining our value self-discipline. Our expectation is that the mixed influence of our crew’s actions together with normalization in metal costs ought to end in sequential margin enhancements in GIP subsequent quarter.

Please flip to Slide 6, Paper Packaging’s first quarter gross sales declined by roughly $50 million within the quarter resulting from decrease mill and changing volumes all through the quarter regardless of a year-on-year pricing tailwind. First quarter volumes in our CorrChoice sheet feeder system and tube and core system have been down low-double digits per day in comparison with the very sturdy Q1 2022. Tube and core volumes suffered from significantly gradual demand within the paper, movie, core and protecting core finish markets.

Within the quarter, Greif took roughly 94,000 tons of financial downtime throughout our mill system with roughly 40,000 tons taken in containerboard, 35,000 tons in URB and the remaining in CIB. As in our GIP enterprise, our PPS crew is responding shortly to the modifications in demand, taking actions on value throughout the community with shifts and labor value reductions, short-term furloughs and advancing our footprint consolidation plans. In each companies groups stay laser-focused on working capital administration and we anticipate to capitalize on incremental alternatives to enhance margins and money circulation within the coming quarters.

I’ll now flip it over to our CFO, Larry Hilsheimer on Slide 7 to debate our Q1 monetary evaluation in addition to our 2022 steering. Larry?

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

Thanks, Ole. Good morning, everybody. As Ole talked about, our first quarter fiscal confronted a number of difficult headwinds, greater than we anticipated once we offered steering in December. I too wish to commend our groups for appearing swiftly to handle value as we confronted a more durable demand atmosphere. The primary quarter of 2023 was Greif’s second finest begin to the yr ever, bested solely by our file Q1 ’22, which included the $12 million EBITDA contribution attributable to FPS, which was offered in April of 2022.

I’m happy with our efficiency so far given the sturdy financial headwinds. Web gross sales have been down $293.3 million within the fiscal first quarter, pushed primarily by quantity declines and the influence of $89.4 million of prior yr internet gross sales attributable to the FPS enterprise, which we divested final April.

Gross revenue declined by $38.1 million, primarily resulting from decrease volumes and the impacts of the beforehand talked about metal value value headwinds in our GIP enterprise, which we anticipate will abate within the second half as value tendencies have stabilized. Adjusted EBITDA was $164.5 million within the quarter, down $32.3 million year-over-year, although solely down roughly $20 million when factoring within the prior yr contribution of FPS with consolidated EBITDA margins of 12.9%, a 30 foundation level enchancment versus Q1 ’22.

Capex got here in keeping with our plan at $48 million for the quarter, a slight enhance versus our first quarter of 2022. Our natural development plans stay intact and groups are discovering it simpler to execute on our capital tasks because the wait instances on new equipment constrict and extra engineering workers turns into accessible.

As Ole talked about, we improved our free money circulation over prior yr, which is particularly notable given the pronounced quantity weaknesses we’ve seen within the spotlight — and highlights the strong execution of our groups on lowering working capital and producing money. We’re nonetheless difficult our groups to drive additional on working capital discount initiatives even when demand improves. We imagine we are able to seize further efficiencies all through our provide chain.

Now let’s flip to Slide 8 to debate steering. Setting steering in 2023 has posed a very tough problem. In our This fall name, we offered a steering vary of $820 million to $906 million in EBITDA and $410 million to $460 million in free money circulation, admittedly a variety with quite a lot of warning given the uncertainty and demand within the macro atmosphere. We additionally tried to border Q1 weaknesses for you primarily based on the quantity tendencies we have been seeing via November and into December, that we might — we anticipate it might stage out and enhance in January, primarily based on discussions with prospects. Nonetheless, that didn’t occur. Volumes in each companies completed worse than our expectations via January, and that weak spot has continued into February in North America, whereas stabilizing in our different areas.

As we contemplated steering for the rest of the yr, we decided we have now inadequate knowledge to anticipate an inflection level within the demand tendencies, which we have now skilled up to now two quarters past regular seasonal drivers in end-markets together with agriculture and building.

Because of this, we can not set up a high-end of steering and consequently decided that we might select to both present no steering or present steering assuming the tendencies we have now been experiencing with changes for the seasonal drivers. We selected to offer low-end solely steering primarily based on that dedication together with that some steering is healthier than none. We additionally imagine that, if the demand sample continues, additional deterioration in pricing within the paper business might emerge.

On an total foundation, we have now mirrored quantity influence within the low-end steering of $42 million in our GIP enterprise and $62 million in our PPS enterprise, relative to the mid-point of our prior steering vary inclusive of 1Q outcomes. As well as, we have now included a pricing influence within the paper enterprise of $33 million. We won’t be offering the breakdown by paper grade. Whereas this strategy could seem draconian when in comparison with our prior steering and particularly our file ends in 2022, I do wish to reframe issues with a broader take a look at historical past to spotlight the enhancements we’ve made within the enterprise mannequin and our earnings energy.

Trying again at our Investor Day final yr, we offered a recession draw back case of $600 million to $700 million of EBITDA and $260 million to $320 million of free money circulation. The quantity tendencies we’re seeing at current are considerably worse than these eventualities and our earnings and money circulation outlook is healthier. This low-end information is above our fiscal 2021 outcomes excluding FPS and but once more our volumes are presently trending materially worse than throughout that yr. We have now merely raised the bar and efficiency at Greif by taking motion to right-size our prices, by sustaining our strict pricing self-discipline within the market and by utilizing our steadiness sheet to proceed to develop the enterprise.

I’ll shut by saying we’re hopeful that present quantity pressures subside and we see the demand restoration within the second half of 2023 in keeping with our view in December. We have now aggressive working capital targets in place in addition to some thrilling targets in our M&A pipeline, together with Centurion, that if closed, and relying on timing might add an extra $20 million to $40 million of EBITDA in 2023.

And even when our low-end steering is realized as a result of unfavourable financial atmosphere, we discover consolation within the energy of our steadiness sheet and money circulation era to proceed to offer development capital to fund our enterprise within the years forward.

With that closing ideas on steering, I’d prefer to share once more our capital allocation technique on Slide 9. As talked about in Ole’s opening remarks, even with the $300 million acquisition of Lee Container and a slower first quarter, we’re nonetheless in the direction of the low-end of our goal leverage ratio vary. We plan to proceed to put money into our long-term strategic goals and look to be opportunistic when engaging targets change into accessible. I’m assured given our steadiness sheet energy and money circulation era that Greif will be capable to proceed to develop our dividend and repurchase shares whereas concurrently funding our vital upkeep capex and executing on our strategic development plan.

I’m excited in regards to the strategic alternatives captured so far in 2023 and the rising listing of engaging companies in our M&A pipeline. We’ll preserve our strict self-discipline round capital allocation and acquisitions and proceed to pursue solely the best high quality companies that match our technique and tradition and elevate the breadth and aggressive positioning of the Greif portfolio.

With that, I’ll flip issues again to Ole on Slide 10.

Ole Rosgaard — President and Chief Government Officer

Thanks, Larry. To construct-off Larry’s feedback or last feedback. Construct to Final is about long-term development and a strategic imaginative and prescient to be one of the best customer support firm on the earth. Which means executing with self-discipline, no matter the place we’re within the enterprise cycle.

However it additionally doesn’t occur with out considerate and continued capital investments. Regardless of our gradual begin to 2023, we’re assured within the world Greif crew to execute properly in full yr 2023 and put up sturdy monetary outcomes to proceed fueling our development and enterprise goals. We’re excited for the yr forward, and can work to proceed to supply outcomes worthy of your investments in our Firm.

We thanks on your curiosity in Greif. Michelle, you may open the road to questions.

Questions and Solutions:

Operator

Thanks. [Operator Instructions]. Our first query comes from the road of Ghansham Panjabi with Robert W. Baird. Your line is open. Please go forward.

Ghansham Panjabi — Baird Fairness Analysis — Analyst

Thanks. Good morning, everyone. I suppose, simply constructing off your feedback on destocking, do you’ve got a way as to the place we’re in that course of? After which, because it pertains to your feedback on February, clearly China is beginning to reopen, a number of the early knowledge factors appear fairly constructive because it pertains to financial pickup, and many others. Are you beginning to see that in particular areas, together with Europe or is it simply too early at this level?

Ole Rosgaard — President and Chief Government Officer

Yeah. In all probability, a bit too early Ghansham. However what I can say is that, we do see some enhancements particularly in APAC and in North Western Europe. LATAM stays pretty sturdy, however North America is admittedly the place we don’t see any enhancements. It’s not getting worse, nevertheless it’s not getting higher both.

Ghansham Panjabi — Baird Fairness Analysis — Analyst

Bought you. After which on the destocking, the place do you suppose we’re on that?

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

Yeah. You already know, it’s been extraordinarily tough to get any readability on that, Ghansham. I imply, it’s clear via discussions with our buyer that there was an influence to destocking, nevertheless it’s not clear whether or not we’re via it but. And given what we’ve seen in February, relative to the quantity tendencies in December and January, there’s actually no indication to us that something has shifted but.

Ghansham Panjabi — Baird Fairness Analysis — Analyst

Bought it. After which only for my second query on Centurion, are you able to simply give us a way as to what’s so distinctive in regards to the asset that underlies the EBITDA margin profile of 23% and the outsized development for the reason that three way partnership was shaped?

Ole Rosgaard — President and Chief Government Officer

It’s basically — it’s a service enterprise, the place we accumulate used containers from our prospects after which both we recondition them or we put a brand new container into the metal cage. Once we recondition them or once we use the outdated plastic to fabricate new merchandise, so it’s a round merchandise, very sustainable. And since it’s a service enterprise, it comes with strong margins as properly. And it performs into our technique of excessive margin EBITDA development.

Ghansham Panjabi — Baird Fairness Analysis — Analyst

Okay. Bought it. Thanks a lot.

Operator

Thanks. [Operator Instructions]. Our subsequent query comes from the road of Gabe Hajde with Wells Fargo. Your line is open. Please go forward.

Gabe Hajde — Wells Fargo — Analyst

Sure, good morning. Needed to — I believe, Larry, in your ready remarks you talked about alternatives. I believe it was particular to PPS to take our value, in addition to improved working capital. I’m simply — in the event you might develop on that somewhat bit, I’m curious what’s your referencing. You probably did speak about some footprint consolidation, I don’t know if that’s a part of what you’re speaking about, however simply assist us there.

Ole Rosgaard — President and Chief Government Officer

Hey, Gabe. It’s Ole right here. I can discuss somewhat bit about that. We have now been planning some rooftop consolidations totally on the changing websites, and we’re dashing them up and executing them. And they’re in flight in the mean time. We’re additionally our shift construction to make — taking some shifts out, consolidating shifts, in order that we are able to maximize manufacturing once we are operating. After which, we have now furloughed two mills. We don’t know when — for a way lengthy, however we have now furloughed them till additional discover.

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

Yeah. And a part of the opposite factor that comes with that revamping of our shift construction Gabe is, on this business there was quite a lot of structural extra time construct into the way in which that the employees work. And, we’ve been addressing that to take out a few of that structural extra time prices.

Gabe Hajde — Wells Fargo — Analyst

Yeah. Understood. Okay. The opposite one is, or a second query, I suppose, on the low-end of information. Perhaps simply so we body it up appropriately or ensure that we’re listening to the whole lot correctly. You might be kind of extrapolating out down, I suppose low-double digits in GIP and name it low teenagers in PPS after which sort of holding value fixed from the place we’re at right now. I imply, you gave us the OCC assumptions. So I suppose, a, are you able to verify that? After which, b, are — is there a state of affairs that you just take a look at if you guys sort of did your re-budget or recast that might are available decrease than that and perhaps what might be the drivers there?

Ole Rosgaard — President and Chief Government Officer

Yeah. What we — we imagine that, properly to begin with, let me get to a few of your particular numbers. Simply to make clear, you’re proper, perhaps on the GIP aspect. On the PPS aspect, you’re truly proper, I imply, we’ve been — our mill volumes have been low 20% down year-over-year. So now that’s over some sturdy efficiency in significantly in Q2 of final yr. So, it’d be nonetheless fairly important quantity roll forwards on that, which might be going to be painful. Might it’s worse? I suppose, you may at all times have worse. We predict what we’ve laid out, we don’t have any indications to as to issues are going to worsen than the place they’re. We simply don’t have any indication it’s going to get higher.

And so, that’s the place — how we’ve landed the place we’re. However I do additionally wish to restate one thing I stated in my ready remarks. We imagine that if this quantity development in paper continues like this, it’s inevitable that there’ll be some value stress. And so, we did construct in relative to the midpoint of our prior information, about $33 million influence of additional value erosion from the place we have been in our assumptions, in our steering midpoint.

Gabe Hajde — Wells Fargo — Analyst

Okay. After which the final one is… [Speech Overlap]. Sure?

Matt Leahy — Vice President, Company Growth & Investor Relations

Hey. That is Matt. I simply needed to make clear your query first. Have been you asking the view on paper volumes for the complete yr or the place they have been trending presently?

Gabe Hajde — Wells Fargo — Analyst

Nicely, I suppose, in the event you supply that up, that will be nice. However it was extra simply to make clear to verify I understood what’s embedded within the $740 million quantity, which it sounds prefer it’s kind of [Phonetic] down per what you reported in fiscal Q1.

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

Yeah. I believe — so the remark is, for the complete yr, it’s not down as a lot because it was down in Q1…[Speech Overlap]

Ole Rosgaard — President and Chief Government Officer

Yeah. As a result of they’re seasonal.

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

As a result of there’s a — and the comps get simpler within the again half. So, I simply wish to be clear there that, that’s extra of what we’re referring to is — the volumes we noticed down in Q1 are off a reasonably sturdy comp, after which comps get simpler within the again half. So, issues sort of normalize all year long. So, it’s not the identical proportion decline each quarter and thru the complete yr.

Ole Rosgaard — President and Chief Government Officer

Yeah. My level was, we noticed fairly important drag in as we talked about on final name in 3Q starting after which 4Q was dangerous. So that you had total volumes for fiscal ’22 as you keep in mind down about virtually 3%. So, now in the event you then add the remainder of this yr, it’ll go even additional down.

Gabe Hajde — Wells Fargo — Analyst

Understood. Okay. And I suppose the February tendencies, it sounds prefer it — not a lot has modified, however simply to verify that.

Ole Rosgaard — President and Chief Government Officer

Yeah, that’s right.

Gabe Hajde — Wells Fargo — Analyst

Okay. And the final one, it seems like there’s — name it $45 million left on the share repo authorization. Is it — I suppose, robust query to ask, not actual — asking actual timing, however simply perhaps that will be on pause till we get somewhat extra readability on the macro?

Ole Rosgaard — President and Chief Government Officer

No. No, we’re very snug with our steadiness sheet place, we’re transferring ahead on our inventory repurchase.

Gabe Hajde — Wells Fargo — Analyst

Okay. Thanks.

Operator

Thanks. And one second for our subsequent query. Our subsequent query comes from the road of Aadit Shrestha with Stifel. Your line is open. Please go forward.

Aadit Shrestha — Stifel Monetary Corp. — Analyst

Hello. Thanks for taking the questions. So, my first query is nearly Centurion. So, when do you truly anticipate that to shut and kind of what’s the annual EBITDA for — I do know you gave $20 million to $40 million, however kind of timeline we’re fairly unsure about? And the margins sort of — are they anticipated to be in keeping with Greif’s IBC enterprise already?

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

So, we’ve received simply the set — the usual timeline to get shut — via the regulatory course of. We anticipate it to shut near-term. And simply to make clear that, $20 million to $40 million was not Centurion alone, that $20 million to $40 million was Centurion and another near-term alternatives in our M&A pipeline in the event that they materialize. So it’s all of that collectively.

And because the Centurion, the slide in our deck does a very good job of laying out what it’s on an annual foundation and the margin profile of it.

Aadit Shrestha — Stifel Monetary Corp. — Analyst

Thanks. I’ll have a look of that. And, the divestment of the CRB mill. So, how a lot kind of quantity and gross sales EBITDA, free money, can we get kind of shade on how a lot is definitely being misplaced on the divestment?

Ole Rosgaard — President and Chief Government Officer

Yeah. So, that’s of excessive value, no for us. You already know, the purchaser — it was extra helpful to them than it was to us. We had in-built for this yr a EBITDA realization for the complete yr that will make {that a} very, very engaging a number of that we offered that at given present quantity tendencies that we’ve seen, I don’t actually wish to go into actual numbers on the EBITDA on that mill, nevertheless it was a really good a number of.

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

Yeah, inside our prior steering due by the way in which, that not being within the quantity.

Aadit Shrestha — Stifel Monetary Corp. — Analyst

Okay. Thanks.

Operator

Thanks. [Operator Instructions]. Our subsequent query comes from the road of Justin Bergner with Gabelli. Your line is open. Please go forward.

Justin Bergner — Gabelli — Analyst

Hello. Good morning, Ole. Good morning, Lawrence — Larry.

Ole Rosgaard — President and Chief Government Officer

Good morning, Justin.

Justin Bergner — Gabelli — Analyst

First query simply is regarding the $600 million to $700 million of draw back EBITDA on the Investor Day, and the $740 million being kind of a brand new low-end information monitoring above that. Are you able to kind of assist handicap, I imply, the Investor Day wasn’t that way back. Are you able to assist handicap, what’s permitting the enterprise to carry out higher than that $600 million to $700 million state of affairs, regardless of you experiencing recessionary quantity situations no less than for what you are promoting this yr?

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

Yeah. You already know, Justin, it’s an entire mixture of issues such as you talked about, however its working effectivity, we’ve improved issues in provide chain. We have now performed some — we’re doing these footprint consolidation actions that Ole talked about, and it’s managing our shift constructions. It’s only a entire mixture of issues. However in all probability the largest one is even stronger and higher execution on our price over quantity technique and actually good energy on pricing self-discipline amongst our crew.

Justin Bergner — Gabelli — Analyst

Nice. That’s useful. Second query pertains to, I believe the bridge from the midpoint of the prior EBITDA information vary to the $740 million. I believe you stated $42 million in GIP quantity, $62 million in paper packaging volumes and $33 million pricing influence. That may lead me a constructive $10 million delta to get to the $740 million. Is that simply kind of value containment actions or is that one thing else?

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

Yeah. We’ve received a — yeah, you’re proper on the maths. We’ve received about over $40 million of actions, of enchancment associated to the gadgets that we talked about. After which simply received $26 million going the opposite manner of things which might be combine — product combine, margins, stuff like that, and just a few inflationary value components that offset that.

Justin Bergner — Gabelli — Analyst

Bought it. Thanks for filling that image. After which lastly, the Centurion transaction, I imply, provided that it was a JV construction, did you truly need to bid in opposition to different events or did you kind of have the correct of first refusal…[Speech Overlap]

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

It was a — once we entered into the deal to accumulate the preliminary piece, we had a buyout mechanism set forth in that, that offered the a number of on trailing EBITDA, which relies — is what we ended up paying on.

Justin Bergner — Gabelli — Analyst

Oh, okay. So, it was kind of like a put-call provision from when the JV was entered into… [Speech Overlap]

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

Yeah. Extra of a put, yeah.

Justin Bergner — Gabelli — Analyst

Okay. Thanks.

Ole Rosgaard — President and Chief Government Officer

Sure, it was not [Speech Overlap] half [Phonetic] of the method.

Justin Bergner — Gabelli — Analyst

Okay. Bought you. Thanks. Better of luck.

Operator

Thanks. And one second for our subsequent query. Our subsequent query is a follow-up query from Gabe Hajde with Wells Fargo. Your line is open. Please go forward.

Gabe Hajde — Wells Fargo — Analyst

Thanks, guys. Needed to ask one on Centurion, simply since you did sort of give us somewhat little bit of element right here on Slide 4. I suppose simply to calibrate correctly, we make our personal assumption by way of when issues may shut, let’s simply say, I don’t know, for modeling functions might or one thing like that. Is it — and I don’t wish to throw water on right here, however is it secure to say that this enterprise is probably going sort of experiencing related tendencies that you’re all seeing in your base enterprise so we may have to regulate that?

After which secondly, is a part of the magic for a way this factor has been in a position to sort of assist truly EBITDA because it seems like April 2020, if you guys made your preliminary funding, been simply the community overlap and kind of synergy with Greif, or is that what you’d anticipate kind of from a standard refurbished enterprise, if that is smart.

So, that means that the synergy quantity is kind of already baked in there on that $24 million or 23% EBITDA margin.

Ole Rosgaard — President and Chief Government Officer

Nicely, by way of the community, clearly, we’re leveraging our footprints and our buyer base within the enterprise. So, that has helped, and we are going to proceed to do this. By way of — I can’t actually touch upon, or we are able to’t touch upon their quantity, nevertheless it’s secure to imagine that it’s in keeping with the remainder of the macro deteriorations that we see within the markets.

Gabe Hajde — Wells Fargo — Analyst

Thanks, Ole.

Larry A. Hilsheimer — Government Vice President, Chief Monetary Officer

The one factor I might add to that’s there, you already know, with us now having 80% possession, assuming this closes, which we assume it’s going to, we are going to then be supplying all the bottles for his or her wants, which has not been the case so far. So, there’s some synergy pickup for us there.

Ole Rosgaard — President and Chief Government Officer

And we’ll be capable to present a full service to all our prospects instantly, somewhat than them receiving that service individually.

Gabe Hajde — Wells Fargo — Analyst

Bought it.

Operator

Thanks. I might now like to show the convention again to Matt Leahy for any closing remarks.

Matt Leahy — Vice President, Company Growth & Investor Relations

Superb. Thanks everybody for becoming a member of right now and have a pleasant day.

Operator

[Operator Closing Remarks]