Today, our CEO, Ole Rosgaard, will provide a strategy and market update, followed by our CFO, Larry Hilsheimer, with a review of our financial results and guidance. The results this quarter are another indication that those efforts are translating into higher earnings power, stronger cash generation, and a more resilient company. Across Greif, we continue to simplify the organization, structurally lower our cost base, improve commercial execution, optimize our manufacturing network, and invest behind attractive growth opportunities. As expected, the conflict in the Middle East continued to impact demand during the quarter.
Excluding last year's mill closure, underlying converting demand was close to flat, supported by improved performance in both partitions and SuperCore. Third-party demand increased mid-single digits while total volumes increased high single digits as we continued to win attractive new business. Sales were approximately in line with prior year, while adjusted EBITDA improved by approximately 25%, driven primarily by better price cost and structural cost optimization. These factors also led to adjusted EBITDA margins up over 260 basis points year-over-year and up 110 basis points sequentially from Q2 2026.
Our EBITDA improvement, as well as significantly lower interest costs due to our strong balance sheet and favorable year-over-year quarterly taxes, resulted in adjusted EPS improvement of nearly 90% year-over-year. We expect both inventory levels and cost to normalize in Q4 and to finish the year with a free cash flow conversion around 50%. We announced an additional $60 per ton price increase in June and have fully implemented that price increase with our non-RISI customer base. While RISI has not reflected that increase, we believe that conclusion is inconsistent with the underlying fundamentals we're seeing, including healthy customer demand and higher year-over-year cost environment.