Greif Inc.
07/29/2026 | Press release | Distributed by Public on 07/29/2026 13:37
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The terms "Greif," "our Company," "we," "us" and "our" as used in this discussion refer to Greif, Inc. and its subsidiaries. Our fiscal year begins on October 1 and ends on September 30 of the following year. Any references in unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q (this "Form 10-Q") to the years relates to the fiscal year ended in that year, unless otherwise stated. Our 2025 fiscal year began on November 1, 2024 and ended on September 30, 2025 (11-month period). Effective October 1, 2025, our fiscal year was changed to the 12-month period described above. Each fiscal quarter end was changed to align with the fiscal year end change, with the first fiscal quarter ended December 31, 2025.
The discussion and analysis presented below relates to the material changes in financial condition and results of operations for the interim condensed consolidated balance sheet as of June 30, 2026 and the condensed consolidated balance sheet as of September 30, 2025, and for the interim condensed consolidated statements of income for the three and nine months ended June 30, 2026 and 2025. This discussion and analysis should be read in conjunction with the interim condensed consolidated financial statements that appear elsewhere in this Form 10-Q and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Transition Report on Form 10-KT for the fiscal year ended September 30, 2025 (the "2025 Form 10-KT"). Readers are encouraged to review the entire 2025 Form 10-KT, as it includes information regarding Greif not discussed in this Form 10-Q. This information will assist in your understanding of the discussion of our current period financial results.
All statements, other than statements of historical facts, included in this Form 10-Q, including without limitation, statements regarding our future financial position, business strategy, budgets, projected costs, goals, trends, and plans and objectives of management for future operations, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "aspiration," "objective," "project," "believe," "continue," "on track" or "target" or the negative thereof or variations thereon or similar terminology. All forward-looking statements made in this Form 10-Q are based on assumptions, expectations, and other information currently available to management. Although we believe that the expectations reflected in forward-looking statements have a reasonable basis, we can give no assurance that these expectations will prove to be correct.
Forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those forecasted, projected or anticipated, whether expressed in or implied by the statements. Such risks and uncertainties that might cause a difference include, but are not limited to, the following: (i) historically, our business has been sensitive to changes in general economic or business conditions, (ii) our global operations subject us to political risks, instability and currency exchange that have affected and could continue to adversely affect our results of operations, including the impacts of ongoing conflicts such as with Iran, (iii) the current and future challenging global economy and disruption and volatility of the financial and credit markets may adversely affect our business and our access to financing and could delay or otherwise disrupt our share repurchase plan, (iv) the continuing consolidation of our customer base and suppliers may intensify pricing pressure, (v) we operate in highly competitive industries, (vi) our business is sensitive to changes in industry demands and customer preferences, (vii) raw material delays, shortages, price fluctuations, global supply chain disruptions and high inflation may adversely impact our results of operations, (viii) energy and transportation price fluctuations and shortages may adversely impact our manufacturing operations and costs, (ix) we may encounter difficulties or liabilities arising from acquisitions or divestitures, (x) we may incur additional rationalization costs and product dispositions and there is no guarantee that our efforts to reduce costs will be successful, (xi) several operations are conducted by joint ventures that we cannot operate solely for our benefit, (xii) certain of the agreements that govern our joint ventures provide our partners with put or call options, (xiii) our ability to attract, develop and retain talented and qualified employees, managers and executives is critical to our success, (xiv) our business may be adversely impacted by work stoppages and other labor relations matters, (xv) we may be subject to losses that might not be covered in whole or in part by existing insurance reserves or insurance coverage and general insurance premium and deductible increases, (xvi) our business depends on the uninterrupted operations of our facilities, systems and business functions, including our information technology and other business systems, (xvii) a cyber-attack, security breach of customer, employee, supplier or our information and data privacy risks and costs of compliance with new regulations may have a material adverse effect on our business, financial condition, results of operations and cash flows, (xviii) we have in the past been and in the future could be subject to changes in our tax rates, the adoption of new U.S. or foreign tax legislation or exposure to additional tax liabilities, (xix) we have a significant amount of goodwill and long-lived assets which, if impaired in the future, would adversely impact our results of operations, (xx) changing climate, global climate change regulations and
greenhouse gas effects may adversely affect our operations and financial performance, (xxi) we may be unable to achieve our greenhouse gas emission reduction target by 2030, (xxii) legislation/regulation related to environmental and health and safety matters could negatively impact our operations and financial performance, (xxiii) product liability claims and other legal proceedings could adversely affect our operations and financial performance, and (xxiv) we may incur fines or penalties, damage to our reputation or other adverse consequences if our employees, agents or business partners violate, or are alleged to have violated, anti-bribery, competition or other laws.
Forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those forecasted or anticipated, whether expressed in or implied by the statements. For a detailed discussion of the most significant risks and uncertainties that could cause our actual results to differ materially from those forecasted, projected, or anticipated, see "Risk Factors" in Part I, Item 1A of our 2025 Form 10-KT and our other filings with the United States Securities and Exchange Commission ("SEC").
All forward-looking statements made in this Form 10-Q are expressly qualified in their entirety by reference to such risk factors. Except to the limited extent required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
On June 30, 2025, we entered into a definitive agreement to sell our containerboard business, including our CorrChoice sheet feeder system (the "Containerboard Business"), and the equity interests in our subsidiaries that directly owned the Containerboard Business on the date of closing, for a purchase price of $1,804.7 million. The transaction was completed effective as of August 31, 2025 (the "Containerboard Divestiture"). The Containerboard Business was previously reported under the Sustainable Fiber Solutions segment. The Containerboard Divestiture qualifies as discontinued operations because it represents a strategic shift that will have a major impact on our operations and financial results. As a result, the Containerboard Business was presented as discontinued operations beginning in the third quarter of 2025. Our allocation of corporate expenses was updated to reflect how management measures performance and allocates resources with the Containerboard Business being excluded from continuing operations. We have recast data from prior periods to reflect this change to conform to the current year presentation. Unless otherwise noted, the discussion below relates only to our continuing operations.
On August 5, 2025, we entered into a definitive agreement to sell our Soterra land management assets, consisting primarily of approximately 173,000 acres of timberland (the "Soterra Assets"), for a purchase price of $462.0 million. The transaction was completed as of October 1, 2025 (the "Soterra Divestiture"). The Soterra Assets were reported under the Sustainable Fiber Solutions segment. The Soterra Divestiture does not qualify as discontinued operations.
BUSINESS SEGMENTS
As previously discussed, effective October 1, 2025, we changed the name of our Integrated Solutions reportable segment to Innovative Closure Solutions.
We are involved in the purchase and sale of recycled fiber and the production and sale of adhesives used in our paperboard products. Both of these products were previously reported under the Integrated Solutions reportable segment (now the Innovative Closure Solutions reportable segment), and effective October 1, 2025, these products are reported under the Sustainable Fiber Solutions reportable segment. We are also involved in the production and sale of complementary packaging products and services such as paints, linings and filling that are related to our steel products. Both of these products and services were previously reported under the Integrated Solutions reportable segment (now the Innovative Closure Solutions reportable segment), and effective October 1, 2025, these products and services are reported under the Durable Metal Solutions reportable segment. These adjustments position each business within its respective place in the integrated value chain and reinforce a clear emphasis on closure systems within the Innovative Closure Solutions reportable segment.
We operate in four reportable business segments: Customized Polymer Solutions; Durable Metal Solutions; Sustainable Fiber Solutions; and Innovative Closure Solutions.
In the Customized Polymer Solutions reportable segment, we produce and sell a comprehensive line of polymer-based packaging products, such as plastic drums, rigid intermediate bulk containers and small plastics. Our polymer-based packaging products and services are sold on a global basis to customers in industries such as chemicals, food and beverage, agricultural, pharmaceutical and mineral products, among others.
In the Durable Metal Solutions reportable segment, we produce and sell metal-based packaging products, including a wide variety of steel drums. We also produce and sell complementary packaging products, such as paints and linings for industrial packaging products and related services. Our metal-based packaging products are sold on a global basis to customers in industries such as chemicals, petroleum, agriculture and paints and coatings, among others.
In the Sustainable Fiber Solutions reportable segment, we produce and sell fiber-based packaging products, including fibre drums, uncoated recycled board, coated recycled board, tubes and cores and specialty partitions made from containerboard, uncoated recycled board and coated recycled board. Our fiber-based packaging products are sold in North America in industries such as packaging, automotive, construction, food and beverage and building products. In addition, this reportable segment is involved in the purchase and sale of recycled fiber and the production and sale of adhesives used in our paperboard products.
In the Innovative Closure Solutions reportable segment, we produce and sell closure systems for industrial packaging products and related services. These products and services are used internally by us and are also sold to external customers.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of operations are based upon our interim condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these interim condensed consolidated financial statements, in accordance with these principles, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities as of the date of our interim condensed consolidated financial statements.
Our critical accounting policies are discussed in Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations of the 2025 Form 10-KT. We believe that the consistent application of these policies enables us to provide readers of the interim condensed consolidated financial statements with useful and reliable information about our results of operations and financial condition. There have been no material changes to our critical accounting policies from the disclosures contained in the 2025 Form 10-KT.
Recently Issued and Newly Adopted Accounting Standards
See Note 1 to the interim condensed consolidated financial statements included in Item 1 of this Form 10-Q for a detailed description of recently issued and newly adopted accounting standards.
RESULTS OF OPERATIONS
The following comparative information is presented for the three and nine months ended June 30, 2026 and 2025. Historical revenues and earnings may or may not be representative of future operating results as a result of various economic and other factors.
Items that could have a significant impact on the financial statements include the risks and uncertainties listed in Part I, Item 1A - Risk Factors, of the 2025 Form 10-KT. Actual results could differ materially using different estimates and assumptions, or if conditions are significantly different in the future.
The non-GAAP financial measure of Adjusted EBITDA is used throughout the following discussion of our results of operations, both for our consolidated and segment results. For our consolidated results, Adjusted EBITDA is defined as net income, plus interest expense, net, plus non-cash pension settlement charges, plus debt extinguishment charges, plus other (income) expense, net, plus income tax (benefit) expense, plus depreciation, depletion and amortization expense, plus acquisition and integration related costs, plus restructuring and other charges, plus non-cash asset impairment charges, plus (gain) loss on disposal of properties, plants and equipment, net, plus (gain) loss on disposal of businesses, net, plus other costs. Since we do not calculate net income by reportable segment, Adjusted EBITDA by reportable segment is reconciled to operating profit by reportable segment. In that case, Adjusted EBITDA is defined as operating profit by reportable segment, less equity earnings of unconsolidated affiliates, net of tax, plus depreciation, depletion and amortization expense, plus acquisition and integration related costs, plus restructuring and other charges, plus non-cash asset impairment charges, plus (gain) loss on disposal of properties, plants and equipment, net, plus (gain) loss on disposal of businesses, net, plus other costs, for that reportable segment.
We use Adjusted EBITDA as a financial measure to evaluate our historical and ongoing operations and believe that this non-GAAP financial measure is useful to enable investors to perform meaningful comparisons of our historical and current performance. The foregoing non-GAAP financial measures are intended to supplement and should be read together with our financial results. These non-GAAP financial measures should not be considered an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of this financial information should not place undue reliance on the non-GAAP financial measures.
Third Quarter Results
The following table sets forth the net sales, operating profit and Adjusted EBITDA for each of our business segments for the three months ended June 30, 2026 and 2025:
|
Three Months Ended June 30, |
|||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| Net sales: | |||||||||||
| Customized Polymer Solutions | $ | 383.8 | $ | 337.9 | |||||||
| Durable Metal Solutions | 405.6 | 392.3 | |||||||||
| Sustainable Fiber Solutions | 346.5 | 370.7 | |||||||||
| Innovative Closure Solutions | 29.7 | 25.0 | |||||||||
| Total net sales | $ | 1,165.6 | $ | 1,125.9 | |||||||
| Operating profit: | |||||||||||
| Customized Polymer Solutions | $ | 32.8 | $ | 8.4 | |||||||
| Durable Metal Solutions | 52.7 | 45.8 | |||||||||
| Sustainable Fiber Solutions | 13.9 | 5.0 | |||||||||
| Innovative Closure Solutions | 8.5 | 4.5 | |||||||||
| Total operating profit | $ | 107.9 | $ | 63.7 | |||||||
| Adjusted EBITDA: | |||||||||||
| Customized Polymer Solutions | $ | 64.3 | $ | 37.1 | |||||||
| Durable Metal Solutions | 64.0 | 53.6 | |||||||||
| Sustainable Fiber Solutions | 42.5 | 48.8 | |||||||||
| Innovative Closure Solutions | 12.6 | 7.6 | |||||||||
| Total Adjusted EBITDA | $ | 183.4 | $ | 147.1 | |||||||
The following table sets forth Adjusted EBITDA, reconciled to net income and operating profit, for our consolidated results for the three months ended June 30, 2026 and 2025:
|
Three Months Ended June 30, |
|||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| Net income | $ | 82.6 | $ | 36.9 | |||||||
| Plus: interest expense, net | 7.7 | 15.8 | |||||||||
| Plus: non-cash pension settlement charges | 0.3 | - | |||||||||
| Plus: other expense, net | - | 1.4 | |||||||||
| Plus: income tax expense | 17.9 | 10.0 | |||||||||
| Plus: equity earnings of unconsolidated affiliates, net of tax | (0.6) | (0.4) | |||||||||
| Operating profit | 107.9 | 63.7 | |||||||||
| Less: equity earnings of unconsolidated affiliates, net of tax | (0.6) | (0.4) | |||||||||
| Plus: depreciation, depletion and amortization expense | 57.4 | 58.0 | |||||||||
| Plus: acquisition and integration related costs | 1.5 | 2.0 | |||||||||
| Plus: restructuring and other charges | 12.1 | 18.0 | |||||||||
| Plus: non-cash asset impairment charges | 1.4 | 7.2 | |||||||||
| Plus: loss (gain) on disposal of properties, plants and equipment, net | 0.2 | (3.5) | |||||||||
| Plus: loss on disposal of businesses, net | - | 0.3 | |||||||||
| Plus: other costs* | 2.3 | 1.0 | |||||||||
| Adjusted EBITDA | $ | 183.4 | $ | 147.1 | |||||||
| *includes fiscal year-end change costs and share-based compensation impact of disposals of businesses | |||||||||||
The following table sets forth Adjusted EBITDA for our business segments, reconciled to the operating profit for each segment, for the three months ended June 30, 2026 and 2025:
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||
| (in millions) | Customized Polymer Solutions | Durable Metal Solutions | Sustainable Fiber Solutions | Innovative Closure Solutions | Consolidated | ||||||||||||||||||||||||
| Operating profit | $ | 32.8 | $ | 52.7 | $ | 13.9 | $ | 8.5 | $ | 107.9 | |||||||||||||||||||
| Less: equity earnings of unconsolidated affiliates, net of tax | - | - | - | (0.6) | (0.6) | ||||||||||||||||||||||||
| Plus: depreciation and amortization expense | 24.9 | 7.5 | 23.3 | 1.7 | 57.4 | ||||||||||||||||||||||||
| Plus: acquisition and integration related costs | 1.5 | - | - | - | 1.5 | ||||||||||||||||||||||||
| Plus: restructuring and other charges | 3.5 | 2.9 | 4.2 | 1.5 | 12.1 | ||||||||||||||||||||||||
| Plus: non-cash asset impairment charges | 0.4 | 0.4 | 0.5 | 0.1 | 1.4 | ||||||||||||||||||||||||
| Plus: loss on disposal of properties, plants and equipment, net | - | - | 0.2 | - | 0.2 | ||||||||||||||||||||||||
| Plus: other costs* | 1.2 | 0.5 | 0.4 | 0.2 | 2.3 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 64.3 | $ | 64.0 | $ | 42.5 | $ | 12.6 | $ | 183.4 | |||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
| (in millions) | Customized Polymer Solutions | Durable Metal Solutions | Sustainable Fiber Solutions | Innovative Closure Solutions | Consolidated | ||||||||||||||||||||||||
| Operating profit | $ | 8.4 | $ | 45.8 | $ | 5.0 | $ | 4.5 | $ | 63.7 | |||||||||||||||||||
| Less: equity earnings of unconsolidated affiliates, net of tax | - | - | - | (0.4) | (0.4) | ||||||||||||||||||||||||
| Plus: depreciation and amortization expense | 24.0 | 7.3 | 25.0 | 1.7 | 58.0 | ||||||||||||||||||||||||
| Plus: acquisition and integration related costs | 2.0 | - | - | - | 2.0 | ||||||||||||||||||||||||
| Plus: restructuring and other charges | 2.6 | 2.6 | 11.9 | 0.9 | 18.0 | ||||||||||||||||||||||||
| Plus: non-cash asset impairment charges | - | 0.1 | 7.1 | - | 7.2 | ||||||||||||||||||||||||
| Plus: gain on disposal of properties, plants and equipment, net | (0.2) | (2.7) | (0.6) | - | (3.5) | ||||||||||||||||||||||||
| Plus: loss on disposal of businesses, net | - | 0.3 | - | - | 0.3 | ||||||||||||||||||||||||
| Plus: other costs* | 0.3 | 0.2 | 0.4 | 0.1 | 1.0 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 37.1 | $ | 53.6 | $ | 48.8 | $ | 7.6 | $ | 147.1 | |||||||||||||||||||
| *includes fiscal year-end change costs and share-based compensation impact of disposals of businesses | |||||||||||||||||||||||||||||
Net Sales
Net sales were $1,165.6 million for the third quarter of 2026 compared with $1,125.9 million for the third quarter of 2025. The $39.7 million increase was primarily due to $28.5 million attributable to higher average selling prices and $23.7 million positive foreign currency translation impacts, partially offset by lower volumes and impacts from the Soterra Divestiture. See "Segment Review" below for additional information on net sales by segment.
Gross Profit
Gross profit was $272.6 million for the third quarter of 2026 compared with $256.0 million for the third quarter of 2025. The $16.6 million increase was primarily due to the same factors that impacted net sales, partially offset by higher raw material costs and higher transportation costs. See "Segment Review" below for additional information on gross profit by segment. Gross profit margin was 23.4 percent and 22.7 percent for the third quarter of 2026 and 2025, respectively.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses were $149.5 million for the third quarter of 2026 compared with $168.3 million for the third quarter of 2025. The $18.8 million decrease was primarily due to lower compensation expenses
related to cost optimization. SG&A expenses were 12.8 percent and 14.9 percent of net sales for the third quarter of 2026 and 2025, respectively.
Financial Measures
Operating profit was $107.9 million for the third quarter of 2026 compared with $63.7 million for the third quarter of 2025. Net income was $82.6 million for the third quarter of 2026 compared with $36.9 million for the third quarter of 2025. The increase of net income was primarily due to the same factors that impacted operating profit. Adjusted EBITDA was $183.4 million for the third quarter of 2026 compared with $147.1 million for the third quarter of 2025. The reasons for the changes in operating profit and Adjusted EBITDA for each segment are described below in "Segment Review."
Trends
Although we are encouraged by demand patterns over the past few months, we continue to operate in a subdued industrial demand environment, with marginal demand improvement building from a low base. Recent geopolitical developments, including conflicts in the Middle East, resulted in increased volatility in customer demand and supply chain disruptions. We do not anticipate a significant inflection in overall demand patterns. The supply chain disruptions contributed to inflationary pressures on input costs, particularly for raw materials, energy and transportation, which we anticipate will persist through the remainder of the fiscal year. To date, we have been able to largely offset these inflationary cost pressures through strategic pricing actions and our enterprise-wide cost optimization.
Segment Review
Key factors influencing profitability for our segments include:
•Selling prices, product mix, customer demand, and sales volumes;
•Raw material costs, primarily steel, resin, old corrugated containers and used industrial packaging for reconditioning;
•Energy and transportation costs;
•Benefits from executing the Greif Business System 2.0;
•Restructuring charges;
•Acquisition and integration of businesses and facilities;
•Divestiture of businesses and facilities; and
•Impact of foreign currency translation.
As a result of the Containerboard Divestiture, the Containerboard Business, which was previously reported under the Sustainable Fiber Solutions segment, is presented as discontinued operations. Our allocation of corporate expenses to each continued reportable segment was updated to reflect how management measures performance and allocates resources with the Containerboard Business being excluded from continuing operations.
Customized Polymer Solutions
Our Customized Polymer Solutions segment produces and sells a comprehensive line of polymer-based packaging products, such as plastic drums, rigid intermediate bulk containers and small plastics.
Net sales were $383.8 million for the third quarter of 2026 compared with $337.9 million for the third quarter of 2025. The $45.9 million increase was primarily due to $29.9 million higher average selling prices, $8.5 million positive foreign currency translation impacts and higher volumes.
Gross profit was $91.1 million for the third quarter of 2026 compared with $70.9 million for the third quarter of 2025. The $20.2 million increase was primarily due to the same factors that impacted net sales, partially offset by higher raw material, transportation and manufacturing costs. Gross profit margin was 23.7 percent and 21.0 percent for the third quarter of 2026 and 2025, respectively.
Operating profit was $32.8 million for the third quarter of 2026 compared with $8.4 million for the third quarter of 2025. The $24.4 million increase was primarily due to the same factors that impacted gross profit and lower SG&A compensation expenses related to cost optimization. Adjusted EBITDA was $64.3 million for the third quarter of 2026 compared with $37.1 million for the third quarter of 2025. The $27.2 million increase was primarily due to the same factors that impacted operating profit.
Durable Metal Solutions
Our Durable Metal Solutions segment produces and sells metal-based packaging products, including a wide variety of steel drums. In addition, this reportable segment produces and sells complementary packaging products, such as paints and linings for industrial packaging products and related services.
Net sales were $405.6 million for the third quarter of 2026 compared with $392.3 million for the third quarter of 2025. The $13.3 million increase was primarily due to $14.0 million positive foreign currency translation impacts and $11.4 million higher average selling prices, partially offset by $12.0 million attributable to lower volumes.
Gross profit was $90.9 million for the third quarter of 2026 compared with $88.1 million for the third quarter of 2025. The $2.8 million increase was primarily due to the same factors that impacted net sales, partially offset by higher raw material costs and higher transportation costs. Gross profit margin was 22.4 percent and 22.5 percent for the third quarter of 2026 and 2025, respectively.
Operating profit was $52.7 million for the third quarter of 2026 compared with $45.8 million for the third quarter of 2025. The $6.9 million increase was primarily due to the same factors that impacted gross profit and lower SG&A compensation expenses related to cost optimization, partially offset by higher loss on disposal of properties, plants and equipment, net. Adjusted EBITDA was $64.0 million for the third quarter of 2026 compared with $53.6 million for the third quarter of 2025. The $10.4 million increase was primarily due to the same factors that impacted gross profit and lower SG&A compensation expenses related to cost optimization.
Sustainable Fiber Solutions
Our Sustainable Fiber Solutions segment produces and sells fiber-based packaging products, including fibre drums, uncoated recycled board, coated recycled board, tubes and cores and specialty partitions made from containerboard, uncoated recycled board and coated recycled board. In addition, this reportable segment participates in the purchase and sale of recycled fiber and the production and sale of adhesives, which can be used in our paperboard products.
Net sales were $346.5 million for the third quarter of 2026 compared with $370.7 million for the third quarter of 2025. The $24.2 million decrease was primarily due to $15.3 million attributable to lower average selling prices, $5.3 million impacts from the Soterra Divestiture and lower volumes.
Gross profit was $73.1 million for the third quarter of 2026 compared with $85.1 million for the third quarter of 2025. The $12.0 million decrease was primarily due to the same factors that impacted net sales, partially offset by lower raw material and manufacturing costs related to lower volumes. Gross profit margin was 21.1 percent and 23.0 percent for the third quarter of 2026 and 2025, respectively.
Operating profit was $13.9 million for the third quarter of 2026 compared with $5.0 million for the third quarter of 2025. The $8.9 million increase was primarily due to lower restructuring and other charges, lower non-cash asset impairment charges and lower SG&A compensation expenses related to cost optimization, partially offset by the same factors that impacted gross profit. Adjusted EBITDA was $42.5 million for the third quarter of 2026 compared with $48.8 million for the third quarter of 2025. The $6.3 million decrease was primarily due to the same factors that impacted gross profit, partially offset by lower SG&A compensation expenses related to cost optimization.
Innovative Closure Solutions
Our Innovative Closure Solutions segment produces and sells closure systems for industrial packaging products and related services.
Net sales were $29.7 million for the third quarter of 2026 compared with $25.0 million for the third quarter of 2025. The $4.7 million increase was primarily due to higher average selling prices, higher volumes and positive foreign currency translation impact.
Gross profit was $17.5 million for the third quarter of 2026 compared with $11.9 million for the third quarter of 2025. The $5.6 million increase was primarily due to the same factors that impacted net sales. The Innovative Closure Solutions reportable segment's total sales, including intersegment sales, was $51.4 million and $43.2 million for the third quarter of 2026 and 2025, respectively. Gross profit margin as a percentage of total sales was 34.0 percent and 27.5 percent for the third quarter of 2026 and 2025, respectively.
Operating profit was $8.5 million for the third quarter of 2026 compared with $4.5 million for the third quarter of 2025. The $4.0 million increase was primarily due to the same factors that impacted gross profit. Adjusted EBITDA was $12.6 million for the third quarter of 2026 compared with $7.6 million for the third quarter of 2025. The $5.0 million increase was primarily due to the same factors that impacted gross profit.
Income Tax Expense
Income tax expense for the third quarter of 2026 was $17.9 million compared with $10.0 million for the third quarter of 2025. The $7.9 million increase was primarily due to higher pre-tax earnings. This increase was partially offset by non-recurring discrete tax benefits recognized during the third quarter of 2026, including benefits associated with changes in tax estimates related to prior periods, internal restructuring activities and the expirations of applicable statutes of limitations in certain jurisdictions.
On July 4, 2025, H.R. 1, commonly known as the One Big Beautiful Bill Act ("OBBBA"), was enacted into law. The OBBBA permanently extends several major provisions of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation, domestic research cost expensing, enhanced business interest deductibility, and modifications to the international tax framework. We have evaluated the impact of the OBBBA as part of our fiscal year 2026 forecast, and the effects of the legislation are reflected in our income tax provision for the third quarter of 2026. We will continue to assess the application of the OBBBA and any related regulatory guidance as it becomes available.
Year-to-Date Results
The following table sets forth the net sales, operating profit and Adjusted EBITDA for each of our business segments for the nine months ended June 30, 2026 and 2025:
|
Nine Months Ended June 30, |
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| (in millions) | 2026 | 2025 | |||||||||
| Net sales: | |||||||||||
| Customized Polymer Solutions | $ | 1,033.7 | $ | 954.8 | |||||||
| Durable Metal Solutions | 1,140.8 | 1,121.1 | |||||||||
| Sustainable Fiber Solutions | 980.2 | 1,075.4 | |||||||||
| Innovative Closure Solutions | 78.5 | 69.7 | |||||||||
| Total net sales | $ | 3,233.2 | $ | 3,221.0 | |||||||
| Operating profit: | |||||||||||
| Customized Polymer Solutions | $ | 37.8 | $ | 27.3 | |||||||
| Durable Metal Solutions | 124.6 | 117.4 | |||||||||
| Sustainable Fiber Solutions | 222.2 | 3.9 | |||||||||
| Innovative Closure Solutions | 15.3 | 9.9 | |||||||||
| Total operating profit | $ | 399.9 | $ | 158.5 | |||||||
| Adjusted EBITDA: | |||||||||||
| Customized Polymer Solutions | $ | 145.6 | $ | 109.0 | |||||||
| Durable Metal Solutions | 171.4 | 140.4 | |||||||||
| Sustainable Fiber Solutions | 119.9 | 124.6 | |||||||||
| Innovative Closure Solutions | 25.8 | 17.8 | |||||||||
| Total Adjusted EBITDA | $ | 462.7 | $ | 391.8 | |||||||
The following table sets forth Adjusted EBITDA, reconciled to net income and operating profit, for our consolidated results for the nine months ended June 30, 2026 and 2025:
|
Nine Months Ended June 30, |
|||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| Net income | $ | 281.8 | $ | 73.3 | |||||||
| Plus: interest expense, net | 27.4 | 47.2 | |||||||||
| Plus: non-cash pension settlement charges | 1.9 | - | |||||||||
| Plus: debt extinguishment charges | 2.5 | - | |||||||||
| Plus: other expense, net | 4.8 | 2.5 | |||||||||
| Plus: income tax expense | 82.7 | 36.8 | |||||||||
| Plus: equity earnings of unconsolidated affiliates, net of tax | (1.2) | (1.3) | |||||||||
| Operating profit | 399.9 | 158.5 | |||||||||
| Less: equity earnings of unconsolidated affiliates, net of tax | (1.2) | (1.3) | |||||||||
| Plus: depreciation, depletion and amortization expense | 174.9 | 173.6 | |||||||||
| Plus: acquisition and integration related costs | 3.6 | 6.1 | |||||||||
| Plus: restructuring and other charges | 42.0 | 30.4 | |||||||||
| Plus: non-cash asset impairment charges | 6.1 | 24.7 | |||||||||
| Plus: gain on disposal of properties, plants and equipment, net | (217.2) | (5.8) | |||||||||
| Plus: loss on disposal of businesses, net | 0.5 | 1.6 | |||||||||
| Plus: other costs* | 51.7 | 1.4 | |||||||||
| Adjusted EBITDA | $ | 462.7 | $ | 391.8 | |||||||
| *includes fiscal year-end change costs, share-based compensation impact of disposals of businesses and special charitable contribution expenses | |||||||||||
The following table sets forth Adjusted EBITDA for our business segments, reconciled to the operating profit for each segment, for the nine months ended June 30, 2026 and 2025:
| Nine Months Ended June 30, 2026 | |||||||||||||||||||||||||||||
| (in millions) | Customized Polymer Solutions | Durable Metal Solutions | Sustainable Fiber Solutions | Innovative Closure Solutions | Consolidated | ||||||||||||||||||||||||
| Operating profit | $ | 37.8 | $ | 124.6 | $ | 222.2 | $ | 15.3 | $ | 399.9 | |||||||||||||||||||
| Less: equity earnings of unconsolidated affiliates, net of tax | - | - | - | (1.2) | (1.2) | ||||||||||||||||||||||||
| Plus: depreciation and amortization expense | 77.8 | 22.7 | 70.0 | 4.4 | 174.9 | ||||||||||||||||||||||||
| Plus: acquisition and integration related costs | 2.9 | - | - | 0.7 | 3.6 | ||||||||||||||||||||||||
| Plus: restructuring and other charges | 9.7 | 11.3 | 19.3 | 1.7 | 42.0 | ||||||||||||||||||||||||
| Plus: non-cash asset impairment charges | 0.4 | 0.4 | 5.2 | 0.1 | 6.1 | ||||||||||||||||||||||||
| Plus: loss (gain) on disposal of properties, plants and equipment, net | 0.4 | (2.5) | (215.1) | - | (217.2) | ||||||||||||||||||||||||
| Plus: loss on disposal of businesses, net | 0.5 | - | - | - | 0.5 | ||||||||||||||||||||||||
| Plus: other costs* | 16.1 | 14.9 | 18.3 | 2.4 | 51.7 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 145.6 | $ | 171.4 | $ | 119.9 | $ | 25.8 | $ | 462.7 | |||||||||||||||||||
| Nine Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
| (in millions) | Customized Polymer Solutions | Durable Metal Solutions | Sustainable Fiber Solutions | Innovative Closure Solutions | Consolidated | ||||||||||||||||||||||||
| Operating profit | $ | 27.3 | $ | 117.4 | $ | 3.9 | $ | 9.9 | $ | 158.5 | |||||||||||||||||||
| Less: equity earnings of unconsolidated affiliates, net of tax | - | - | - | (1.3) | (1.3) | ||||||||||||||||||||||||
| Plus: depreciation and amortization expense | 69.9 | 21.5 | 77.3 | 4.9 | 173.6 | ||||||||||||||||||||||||
| Plus: acquisition and integration related costs | 6.1 | - | - | - | 6.1 | ||||||||||||||||||||||||
| Plus: restructuring and other charges | 4.3 | 4.0 | 20.9 | 1.2 | 30.4 | ||||||||||||||||||||||||
| Plus: non-cash asset impairment charges | 1.0 | 2.2 | 21.1 | 0.4 | 24.7 | ||||||||||||||||||||||||
| Plus: (gain) loss on disposal of properties, plants and equipment, net | - | (6.6) | 0.8 | - | (5.8) | ||||||||||||||||||||||||
| Plus: loss on disposal of businesses, net | - | 1.6 | - | - | 1.6 | ||||||||||||||||||||||||
| Plus: other costs* | 0.4 | 0.3 | 0.6 | 0.1 | 1.4 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 109.0 | $ | 140.4 | $ | 124.6 | $ | 17.8 | $ | 391.8 | |||||||||||||||||||
| *includes fiscal year-end change costs, share-based compensation impact of disposals of businesses and special charitable contribution expenses | |||||||||||||||||||||||||||||
Net Sales
Net sales were $3,233.2 million for the first nine months of 2026 compared with $3,221.0 million for the first nine months of 2025. The $12.2 million increase was primarily due to $101.9 million of positive foreign currency translation impacts and $52.3 million from higher average selling prices, partially offset by $116.3 million attributable to lower volumes and $14.7 million impacts from the Soterra Divestiture. See "Segment Review" below for additional information on net sales by segment.
Gross Profit
Gross profit was $722.2 million for the first nine months of 2026 compared with $703.9 million for the first nine months of 2025. The $18.3 million increase was primarily due to the same factors that impacted net sales and lower raw material costs from lower volumes. See "Segment Review" below for additional information on gross profit by segment. Gross profit margin was 22.3 percent and 21.9 percent for the first nine months of 2026 and 2025, respectively.
Selling, General and Administrative Expenses
SG&A expenses were $487.3 million for the first nine months of 2026 compared with $488.4 million for the first nine months of 2025. The $1.1 million decrease was primarily due to lower compensation expenses related to cost optimization, partially offset by a special charitable contribution that was allocated among the reporting segments. SG&A expenses were 15.1 percent and 15.2 percent of net sales for the first nine months of 2026 and 2025, respectively.
Financial Measures
Operating profit was $399.9 million for the first nine months of 2026 compared with $158.5 million for the first nine months of 2025. Net income was $281.8 million for the first nine months of 2026 compared with $73.3 million for the first nine months of 2025. The increase of net income was primarily due to the Soterra Divestiture during the first quarter of 2026. Adjusted EBITDA was $462.7 million for the first nine months of 2026 compared with $391.8 million for the first nine months of 2025. The reasons for the changes in operating profit and Adjusted EBITDA for each segment are described below in "Segment Review."
Segment Review
Customized Polymer Solutions
Net sales were $1,033.7 million for the first nine months of 2026 compared with $954.8 million for the first nine months of 2025. The $78.9 million increase was primarily due to $37.4 million positive foreign currency translation impacts, $36.9 million higher average selling prices and higher volumes.
Gross profit was $223.0 million for the first nine months of 2026 compared with $206.3 million for the first nine months of 2025. The $16.7 million increase was primarily due to the same factors that impacted net sales, partially offset by higher raw material, transportation and manufacturing costs. Gross profit margin was 21.6 percent and 21.6 percent for the first nine months of 2026 and 2025, respectively.
Operating profit was $37.8 million for the first nine months of 2026 compared with $27.3 million for the first nine months of 2025. The $10.5 million increase was primarily due to the same factors that impacted gross profit, partially offset by higher SG&A expenses. Adjusted EBITDA was $145.6 million for the first nine months of 2026 compared with $109.0 million for the first nine months of 2025. The $36.6 million increase was primarily due to the same factors that impacted gross profit and lower compensation expenses related to cost optimization.
Durable Metal Solutions
Net sales were $1,140.8 million for the first nine months of 2026 compared with $1,121.1 million for the first nine months of 2025. The $19.7 million increase was primarily due to $59.8 million positive foreign currency translation impacts and $12.5 million higher average selling prices, partially offset by $52.7 million attributable to lower volumes.
Gross profit was $250.9 million for the first nine months of 2026 compared with $240.9 million for the first nine months of 2025. The $10.0 million increase was primarily due to the same factors that impacted net sales, partially offset by higher raw material and transportation costs. Gross profit margin was 22.0 percent and 21.5 percent for the first nine months of 2026 and 2025, respectively.
Operating profit was $124.6 million for the first nine months of 2026 compared with $117.4 million for the first nine months of 2025. The $7.2 million increase was primarily due to the same factors that impacted gross profit. Adjusted EBITDA was $171.4 million for the first nine months of 2026 compared with $140.4 million for the first nine months of 2025. The $31.0 million increase was primarily due to the same factors that impacted gross profit and lower compensation expenses related to cost optimization.
Sustainable Fiber Solutions
Net sales were $980.2 million for the first nine months of 2026 compared with $1,075.4 million for the first nine months of 2025. The $95.2 million decrease was primarily due to $64.6 million attributable to lower volumes, $14.7 million impacts from the Soterra Divestiture and lower average selling prices.
Gross profit was $209.6 million for the first nine months of 2026 compared with $227.5 million for the first nine months of 2025. The $17.9 million decrease was primarily due to the same factors that impacted net sales, partially offset by lower raw
material, transportation and manufacturing costs related to lower volumes. Gross profit margin was 21.4 percent and 21.2 percent for the first nine months of 2026 and 2025, respectively.
Operating profit was $222.2 million for the first nine months of 2026 compared with $3.9 million for the first nine months of 2025. The $218.3 million increase was primarily due to a $216.2 million gain from the Soterra Divestiture during the first quarter of 2026. Adjusted EBITDA was $119.9 million for the first nine months of 2026 compared with $124.6 million for the first nine months of 2025. The $4.7 million decrease was primarily due to the same factors that impacted gross profit, excluding impacts from depreciation and amortization, partially offset by lower compensation expenses related to cost optimization.
Innovative Closure Solutions
Net sales were $78.5 million for the first nine months of 2026 compared with $69.7 million for the first nine months of 2025. The $8.8 million increase was primarily due to higher average selling prices and positive foreign currency translation impacts, partially offset by lower volumes.
Gross profit was $38.7 million for the first nine months of 2026 compared with $29.2 million for the first nine months of 2025. The $9.5 million increase was primarily due to the same factors that impacted net sales. The Innovative Closure Solutions reportable segment's total sales, including intersegment sales, was $136.2 million and $121.7 million for the first nine months of 2026 and 2025, respectively. Gross profit margin as a percentage of total sales was 28.4 percent and 24.0 percent for the first nine months of 2026 and 2025, respectively.
Operating profit was $15.3 million for the first nine months of 2026 compared with $9.9 million for the first nine months of 2025. The $5.4 million increase was primarily due to the same factors that impacted gross profit, partially offset by higher SG&A expenses. Adjusted EBITDA was $25.8 million for the first nine months of 2026 compared with $17.8 million for the first nine months of 2025. The $8.0 million increase was primarily due to the same factors that impacted gross profit.
Income Tax Expense
Income tax expense for the first nine months of 2026 was $82.7 million compared with $36.8 million for the first nine months of 2025, respectively. The $45.9 million increase was primarily attributable to a one-time discrete tax expense of $49.3 million recognized in the current fiscal year related to the Soterra Divestiture and higher pre-tax earnings. This increase was partially offset by non-recurring discrete tax benefits recognized during the third quarter of fiscal year 2026, primarily related to changes in tax estimates associated with prior periods and tax benefits from internal restructuring activities, as well as releases of uncertain tax positions resulting from the completion of a tax audit and the expiration of applicable statutes of limitations in certain jurisdictions.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are operating cash flows and borrowings under our senior secured credit facilities and proceeds from our trade accounts receivable credit facilities. We use these sources to fund our working capital needs, capital expenditures, cash dividends, share repurchases, debt repayment, and acquisitions. We anticipate continuing to fund these items in a like manner. We currently expect that operating cash flows, borrowings under our senior secured credit facilities, and proceeds from our trade accounts receivable credit facilities will be sufficient to fund our anticipated working capital, capital expenditures, cash dividends, share repurchases, debt repayment, potential acquisitions of businesses, and other liquidity needs for at least 12 months.
The cash flows related to the Containerboard Business have not been segregated and are included in our Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2026 and 2025. The absence of the cash flows from the Containerboard Business in future periods is not expected to materially impact our liquidity or capital resources.
Cash Flow
|
Nine Months Ended June 30, (in millions)
|
2026 | 2025 | |||||||||
| Net cash provided by operating activities | $ | 170.0 | $ | 286.1 | |||||||
| Net cash provided by (used in) investing activities | 299.7 | (51.7) | |||||||||
| Net cash used in financing activities | (444.3) | (194.1) | |||||||||
| Effects of exchange rates on cash | 6.4 | 35.3 | |||||||||
| Net increase in cash and cash equivalents | 31.8 | 75.6 | |||||||||
| Cash and cash equivalents at beginning of year | 256.7 | 216.4 | |||||||||
| Cash and cash equivalents at end of period | $ | 288.5 | $ | 292.0 | |||||||
Operating Activities
During the first nine months of 2026 and 2025, cash (used in) provided by change in accounts receivable was $(83.3) million and $(7.0) million, respectively. The unfavorable change in accounts receivable levels was primarily due to increased net sales and timing of collections.
During the first nine months of 2026 and 2025, cash (used in) provided by change in inventories was $(38.3) million and $3.9 million, respectively. The unfavorable change in inventories was primarily due to an increase in raw material costs and increased stock levels.
During the first nine months of 2026 and 2025, cash (used in) provided by change in accounts payable was $67.8 million and $(28.7) million, respectively. The favorable change in accounts payable levels was primarily due to timing of payments.
Investing Activities
During the first nine months of 2026 and 2025, we invested $118.5 million and $92.9 million (of which $17.5 million related to the Containerboard Business), respectively, of cash in capital expenditures.
During the first nine months of 2026, we received $464.0 million of cash from sale of properties, plants and equipment and other assets, primarily from the Soterra Divestiture.
Financing Activities
During the first nine months of 2026 and 2025, we paid cash dividends to our stockholders in the amount of $97.0 million and $93.8 million, respectively.
During the first nine months of 2026 and 2025, we paid down $169.2 million and $31.0 million of debt, net of issuances and payments, respectively. The 2026 repayment was primarily from proceeds from the Soterra Divestiture.
During the first nine months of 2026, we paid $2.8 million of debt extinguishment charges and debt issuance costs related to our debt refinancing.
During the first nine months of 2026, we paid $150.1 million for share repurchases.
Stock Repurchase Programs
In 2017, our Board of Directors authorized the repurchase of up to 4,000,000 shares of our Class A Common Stock or Class B Common Stock, or any combination of the foregoing (the "2017 Authorization").
In the first quarter of 2026, we entered into two agreements for open market repurchases. One agreement provided for the repurchase of shares of Class A Common Stock up to an aggregate amount not to exceed $120.0 million in total repurchases, and the other agreement provided for the repurchase of shares of Class B Common Stock up to an aggregate amount not to exceed $30.0 million in total repurchases.
For the nine months ended June 30, 2026, 1,813,600 shares of Class A Common Stock and 371,449 shares of Class B Common Stock have been repurchased under the 2017 Authorization, which completed the two open market repurchase agreements. As of June 30, 2026, the remaining number of shares that could be repurchased under the 2017 Authorization was 319,787.
On December 9, 2025, our Board of Directors authorized the repurchase of shares of Class A Common Stock or Class B Common Stock, or any combination of the foregoing, up to an aggregate amount not to exceed $300.0 million in total purchases (the "2025 Authorization"). Repurchases of shares of Class A Common Stock or Class B Common Stock under the 2025 Authorization will not begin until after the completion of the repurchase of shares of Class A Common Stock or Class B Common Stock, as the case may be, under the 2017 Authorization.
On July 28, 2026, we announced intention to repurchase up to $150.0 million of our Class A Common Stock and/or Class B Common Stock pursuant to our existing share repurchase authorization framework. Repurchases may be made from time to time in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements and other factors. Our existing share repurchase authorization framework does not obligate us to acquire any particular amount of our common stock and may be suspended, modified or discontinued at any time.
See Note 10 to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q for additional information regarding this program and the repurchase of shares of Class A and B Common Stock.
Financial Obligations
Long-Term Debt
Long-term debt is summarized as follows:
| (in millions) |
June 30, 2026 |
September 30, 2025 |
|||||||||
| 2026 Credit Agreements - Term Loans | $ | 496.9 | $ | - | |||||||
| 2023 Credit Agreement - Term Loan | - | 135.3 | |||||||||
| 2022 Credit Agreement - Term Loan | - | 784.1 | |||||||||
| 2026 Credit Agreements - Revolving Credit Facility | 206.9 | - | |||||||||
| 703.8 | 919.4 | ||||||||||
| Less: current portion | 12.5 | - | |||||||||
| Less: deferred financing costs | 3.9 | 4.6 | |||||||||
| Long-term debt, net | $ | 687.4 | $ | 914.8 | |||||||
2026 Credit Agreements
On February 27, 2026, we and certain of our subsidiaries entered into a third amended and restated senior secured credit agreement with a syndicate of financial institutions and an amended and restated senior secured credit agreement with CoBank, ACB and other farm credit lending institutions (collectively, the "2026 Credit Agreements"). The 2026 Credit Agreements amended, restated and replaced in their entirety our previous credit agreements (collectively, the "2022 and 2023 Credit Agreements"). We used the borrowings under the 2026 Credit Agreements to repay and refinance all of the outstanding borrowings under the 2022 and 2023 Credit Agreements, and will use the borrowings thereunder to fund ongoing working capital and capital expenditure needs and for general corporate purposes, including acquisitions, and to pay related fees and expenses.
The 2026 Credit Agreements provide for (a) an $800.0 million secured revolving credit facility, consisting of a $725.0 million multicurrency facility and a $75.0 million U.S. dollar facility, maturing on February 27, 2031, (b) a $100.0 million secured term loan A-1 facility with quarterly principal installments that commenced on June 30, 2026 and continue through December 31, 2030, with any outstanding principal balance of such term loan A-1 facility being due and payable on maturity on February 27, 2031, and (c) a $400.0 million secured term loan A-2 facility with quarterly principal installments that commenced on June 30, 2026 and continue through January 31, 2031, with any outstanding principal balance of such term loan A-2 being due and payable on maturity on February 27, 2031. Subject to the terms of the 2026 Credit Agreements, we have an option to borrow additional funds under the 2026 Credit Agreements with the agreement of the lenders.
Interest accruing under the 2026 Credit Agreements is based on the Secured Overnight Financing Rate ("SOFR"), Euro Interbank Offered Rate ("EURIBOR") or a base rate that resets periodically plus, in each case, a calculated margin amount that is based on our leverage ratio. As of June 30, 2026, we had $593.1 million of available borrowing capacity under the $800.0 million secured revolving credit facility.
The repayment of all borrowings under the 2026 Credit Agreements is guaranteed by certain of our U.S. subsidiaries and is secured by a security interest in certain of our personal property and certain of the personal property of certain of our U.S. subsidiaries, including equipment and inventory and certain intangible assets, as well as a pledge of the capital stock of substantially all of our U.S. subsidiaries, and is secured, in part, by the capital stock of the non-U.S. borrowers. However, in the event that we receive and maintain an investment grade rating from either Moody's Investors Service, Inc. or Standard & Poor's Financial Services LLC, we may request the release of such collateral.
The 2026 Credit Agreements contain certain covenants, which include financial covenants that require us to maintain a certain leverage ratio and an interest coverage ratio. The leverage ratio generally requires that at the end of any fiscal quarter we will not permit the ratio of (a) our total consolidated indebtedness (less the aggregate amount of our unrestricted cash and cash equivalents), to (b) our consolidated net income plus depreciation, depletion and amortization, interest expense (including capitalized interest), income taxes, and minus certain extraordinary gains and non-recurring gains (or plus certain extraordinary losses and non-recurring losses), and plus or minus certain other items for the preceding twelve months (as used in this paragraph only "EBITDA") to be greater than 4.00 to 1.00; provided that such leverage ratio is subject to (i) a covenant step-up (as defined in the 2026 Credit Agreements) increase adjustment of 0.50 upon the consummation of, and the following three fiscal quarters after, certain specified acquisitions and (ii) a collateral release decrease adjustment of 0.25x during any collateral release period (as defined in the 2026 Credit Agreements). The interest coverage ratio generally requires that at the end of any fiscal quarter we will not permit the ratio of (a) our consolidated EBITDA, to (b) our consolidated interest expense to the extent paid or payable, to be less than 3.00 to 1.00, during the applicable preceding twelve-month period. As of June 30, 2026, we were in compliance with the covenants and other agreements in the 2026 Credit Agreements.
Short-Term Debt
Short-term debt is summarized as follows:
| (in millions) |
June 30, 2026 |
September 30, 2025 | |||||||||
| U.S. accounts receivable credit facilities | 200.0 | 179.7 | |||||||||
| European accounts receivable credit facilities | 113.8 | 95.3 | |||||||||
| Other debt | 16.7 | 12.7 | |||||||||
| 330.5 | 287.7 | ||||||||||
Accounts Receivable Credit Facilities
We have a $200.0 million U.S. Receivables Financing Facility Agreement (the "U.S. RFA") that matures on May 11, 2027. As of June 30, 2026, there was a $200.0 million ($179.7 million as of September 30, 2025) outstanding balance under the U.S. RFA. The U.S. RFA also contains events of default and covenants that are substantially the same as the covenants under the 2026 Credit Agreements. As of June 30, 2026, we were in compliance with these covenants. Proceeds of the U.S. RFA are available for working capital and general corporate purposes.
We have a €100.0 million ($113.8 million as of June 30, 2026) European Receivables Financing Agreement (the "European RFA") that matures on April 20, 2027. As of June 30, 2026, $113.8 million ($95.3 million as of September 30, 2025) was outstanding under the European RFA. As of June 30, 2026, we were in compliance with covenants contained in the European RFA. Proceeds of the European RFA are available for working capital and general corporate purposes.
See Note 5 to the interim condensed consolidated financial statements included in Item 1 of this Form 10-Q for additional disclosures regarding our financial obligations.
Financial Instruments
Interest Rate Derivatives
As of June 30, 2026, we had various interest rate swaps with a total notional amount of $370.0 million ($562.5 million as of September 30, 2025) amortizing down over the term, in which we receive variable interest rate payments based on SOFR and in return are obligated to pay interest at a weighted average fixed interest rate of 1.99%. These derivatives are designated as cash flow hedges for accounting purposes and will mature between March 1, 2027 and July 16, 2029.
Accordingly, the gain or loss on these derivative instruments is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same line item associated with the forecasted transactions and in the same period during which the hedged transaction affects earnings.
Foreign Exchange Hedges
We conduct business in international currencies and are subject to risks associated with changing foreign exchange rates. Our objective is to reduce volatility associated with foreign exchange rate changes to allow management to focus its attention on business operations. Accordingly, we enter into various contracts that change in value as foreign exchange rates change to protect the value of certain existing foreign currency assets and liabilities, commitments, and anticipated foreign currency cash flows.
As of June 30, 2026, we had outstanding foreign currency forward contracts in the notional amount of $93.6 million ($165.0 million as of September 30, 2025).
Cross Currency Swap
We have operations and investments in various international locations and are subject to risks associated with changing foreign exchange rates. As of June 30, 2026, we have cross currency interest rate swaps that synthetically swap $651.3 million ($534.9 million as of September 30, 2025) of U.S. fixed rate debt to Euro denominated fixed rate debt. We receive a weighted average rate of 1.56%. These agreements are designated either net investment hedges or cash flow hedges for accounting purposes and will mature between October 5, 2026 and May 29, 2031.
Accordingly, the gain or loss on the net investment hedge derivative instruments is included in the foreign currency translation component of other comprehensive income (loss) until the net investment is sold, diluted, or liquidated. The gain or loss on the cash flow hedge derivative instruments is included in the unrealized foreign exchange component of other expense, offset by the underlying gain or loss on the underlying cash flows that are being hedged. Interest payments received from the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense, net on the consolidated statements of income.
See Note 6 to the interim condensed consolidated financial statements included in Item 1 of this Form 10-Q for additional disclosures regarding our financial instruments.
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