PACK - Earnings call 1 2023 | Ranpak Holdings Corp.

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Operator

Hello. My name is Jean-Louis. Welcome to the Ranpak Holdings Q1 2023 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Sara Horvath, General Counsel.

Sara Horvath

morning, good and you, everyone. Thank

result risk statements XXXX. the I'd filings Before we Securities including remind those differ of release that to discuss identified we Litigation filed our other in our from with forward-looking various Act Private begin, will discussed forward-looking the of factors, SEC. our in a press and statements you under the as may factors and like as those results Form Actual Reform XX-K materially defined

Some of such and responses materially events differ our and not does statements. subject statements statements this cause conference to update to obligation future in the that from intend to your these call and to forward-looking forward-looking could results questions uncertainties statements. that may any Ranpak include actual no are assumes

should undue You of of forward-looking which only statements, to these all on as the company today. place speak reliance not

issued the earnings section this Form on call. in X-K posted morning we presentation the website. that call has are the and A been the copy Investor submitted before the included The this SEC release release of to for Relations we our of today's

company conference We a make replay on of available will via webcast this the also website. call

earnings a financial Please the today's have comparable slide For refer and non-GAAP GAAP to presented that release. information included is accompanying on presentation information. we basis, reconciliations to the table

March XX, section on XX-Q filing XX-Q or of for The our period with XXXX. be website. we'll ending be SEC our Lastly, Relations the available the will Investor the SEC through the

for results on results will will landscape, Bill have summarize our provide on the Bill call Drew, Omar operating questions. CFO. up before CEO; and additional I and commentary Asali, and today, me details the open financial Omar provide With our we the first quarter and our Chairman

turn I'll over call that, Omar. the to With

Omar Asali

us. all Thank everyone. appreciate and joining you, good morning, you I Sara,

in of fourth of quarter expected first line call line first an how were tracking our XXXX. in expectations quarter we with with and results half mostly projected back the February you be to quarter. with were We more results line subdued year update in up as finished top half we volumes Our the shared more roughly financial to the in is the that that and line top with January on XXXX, our pick

$XX.X would shy of Our were million quarter, QX of just results the from region top up characterize where macro. currency and above last line the robust is in of versus America North levels slightly a on year. not the activity decent in but sales given I quarter million $XX X% year. basis were XXXX the we constant in the last in as

The of as to slow the evidenced more manufacturing on remained to sector and side, services more sluggish related goods and the activity allocate PMI e-commerce discretionary consumer in purchases consumers as essentials. remains data

the near You trucking volumes consumer concerns data I container can rate down. environment, North higher term stresses unemployment this see environment a believe confidence where and cautious have outlook impact warrant are reflected the the in in increasing and impacted bank of and the America. in clearly

While to the the These only. positive been America momentum a only historically feel processes, we it but of are have start these longer challenge making I matter cycle can North towards reflect the many macro note, is volumes accounts that with in believe a a are in this. throughout organizations before is shifting inroads plastic on shorter-term discussions sales key we paper. time

robust a improved but I Asia I seem that has environment call outlook, from. as the pressures consumers it fairly I was last think first perspective, solid energy the Europe as there to are uncertain up environment us destocking cautious stronger through solid operate Europe would would the year to quarter versus and we prior energy it were activity inflationary the levels businesses with better-than-expected in the and than given X% the within sales regional I group, year. impacted From APAC continuing as and a reporting be characterize say confidence. and many not a would baseline

In APAC, outlook environment a but strength with nowhere some Australia really China. strong right uneven start and places pockets is there robust we somewhat a plan, weakness of in where feels had one, challenging and versus remains Japan now. and in like the The Korea,

the in second to to of geographies solid end the and pretty January start with of March I February then towards would Overall, year and activity the stronger quarter. results the and all say start softening the was levels

Our engagement activity the given the and I seeing the I'm accounts world and choppy, we some what chasing. is like consumer, term short customer the of of while trial is are do And out larger solid. state

even we with more me second leads a continue which of reminder, start. a have As comparisons year, to the in slower significantly for be the year, favorable the constructive on outlook half the to

to since pricing the more paper higher as pressure pricing outlook me remained I robust have pricing year, input America would cost than improvement in positive start but like, remains the anticipated given supply-demand have I be of continues North our our the not some to top dynamics, as on point seen circumstances, under the is favor. would as the which to favorable. plan While line the markets compared environment would a to the surprise has

the markets Europe, environment helped start improvement year. drive to paper the energy better-than-expected In the has in

energy weather how what swings seen do. have can all be We and extreme can volatile

to who the pricing. our are derisking environment are So possible we the on able monitor to remainder focused as forward year closely of in the with continue as lock and vendors much

throughout not claw globally, and year Outside energy, good spend to spend support profile. to gross provides of or the our and closer the we to our making forward commitment deferring are favorable examined getting and opportunities. margin margins adjustments in feel are to provide labor our services continuing movements targeted pressures until our about need, gross immediately revenue-generating logistics, in persist and near-term of We've areas do so of environment required our inflationary back prioritized we Overall, paper of business within to areas while clarity. operating control not the that areas better all

on We and and what to a customers in our pleased more doing possible as we headquarters I job transition I'm have for to past congratulate employees. fantastic opened the new are report years. European want few with team of doing Eygelshoven. up over productivity have we smooth our as this built making on our our laser-focused

beat. working new employees facility. a Our as operations of of missed have are that out not April, And our all

this track automation will Our help a R&D and we automation the and a open to summer, us with customers. the finally have in in center level. America is where region to on propel manufacture next game-changer region showroom providing bring to North the our in U.S. equipment this in us really the automation believe can I prospective will the for market and be ability business

the these the real commitments over course capital estate of completed few funding next We of months. the

of harvest our investing time our engine we in inception. been we and a infrastructure customers. for past that, years have efficiencies digital for are running Beyond on We're conserving physical number small capital and since the company, the state-of-the-art and on Ranpak focused to to capital tighter us for is business to being we been but has drive and while back what spend. known us serving have aid cash-generating getting now It the a in

on will and only and pipeline and activities really extremely targeted the enhancing approach We're execution taking term the and that business in the focus those results. needle. pleased product focused move deliver of believe our near a term more expansion to in and I'm team near with best rather prioritizing than a can productivity the the the quality our

with detail. let Bill it Now some for turn over that, me to financial

William Drew

performance also further our filing on XX-Q, be In Thank some deck, We'll which information Omar. summary the of operating indicators. see Ranpak's you, a provides you'll results. our of key

activity wrapping Cushioning installed X%, X.X% over Machine XXX,XXX this year-over-year. on redeploying systems X% Growth productive our efficiency, population maximize year globally. machine been the due declined back more void-fill them X% our field optimize fleet. machines and underutilized are placement to converters and increased and levels increased efforts to to lower of lower in areas. systems a to year-over-year getting has increased focused To generally capital we while combination

on was from year-over-year offset basis, volumes. the price contribution automation, Overall, quarter increased company currency and net driven X% first lower by slightly in revenue for by the constant a up

year, America increased X% revenue by fairly remained net continued prior with demand in Cushioning North offset headwinds year-over-year wrapping. the cushioning void-fill up versus and steady.

previously. more the we While pressures merchandise e-commerce activity remained have of it purchases discretionary lower relates as inflationary to discussed pull to due forward and

and constant and level In remaining given of in year-over-year, slightly on the with the pleased region revenue up activity volatility energy the in in year-over-year slightly were the X% APAC, quarter. a but region. with currency basis Volumes are of down base all Europe we inflationary up categories pressures net the was

sales represented basis our the we on approximately Automation constant space a in automated year-over-year X% traction sales of and increased to box and currency dunnage customization solutions. as get X% with continue

Our margin XX% a approximately year. the go resulting on the SAP inefficiencies, prior The year experienced constant margin. noise to currency XX% given basis, gross the had a live point X.X profit comparison prior of implying first the some drag in on increased XX.X% we in compared in quarter some where

profit a So on if up currency into you would take basis. gross be account, that X% constant approximately

profile. QX the QX expected call, We some from of in of I margin higher cost prior out the G&A in up step a to flow of beginning gross and EBITDA the the this as to we margin as see the think compared On March. absorb million, XXXX experienced again, inflection similar margin can in overhead the Obviously, the year-over-year revenue QX our margin, pricing. Adjusted helpful But environment you the XXXX as benefit gross by volumes basis, EBITDA We year lower is implying quarter we benefits declined February the see XX.X%. from shared improve driven a flow fourth in expect adjusted this pickup more in to greater input the point steadily XX.X% will absolute throughout margin XX% very through improves. as inflection benefits to better on and the it's paper profile environment be more through, disappointing. an XX.X% the to was where year. the get $XX.X and

generate of the to and EBITDA the expect we plan into up the generate of As to year, half we we second for amount adjusted make get a year. substantial the ground

be business. We expect due of the the traditional to higher should volumes seasonality that

that should be We all regions. point where also impact a be destocking in eliminated we will at expect completely the

half for particular, the XX% from back second of In contributors year. the our we half quarters second very the year. of cadence experienced Instead Typically, of but second of Last XX% smaller a a was with see year, being being and year variety contributor. revenue the in quarter for we revenue unusual the quarter to the of than up revenue up revenue the first half. usual step the highest generated of the XXXX, was less in reasons, comprising our back the deviation seeing in

Beyond we our throughout real steadily the XXXX the peaked expect top projects estate line for have as our expenditures well as million, quarter. $XX.X as of cadence, greatest the paper increased impact placement. fourth converter the driven second price Capital were the half by reductions costs the in and of in to quarter also funding

a and briefly Moving including revolving our the We completed with $XX.X quarter and end on a balance million strong facility. of to drawings cash the balance liquidity. liquidity to credit position, sheet no QX

on the quarter adjusted of based was in the definition or reported of facility. the leverage EBITDA adjusted credit LTM on net X.Xx Our based EBITDA end X.Xx the at

We the our fourth we our second want the and roughly most the robust the related from recognized expect and in maintaining to the the quarter leverage and us generation message of Xx EBITDA as of liquidity estate we cash back will last to of complete $X quarterly begin focused half growth cadence deleveraging deleveraging. year. I up go our fund contributor year, targeted of peak reiterate and cycle real Malaysia or the which leverage components near-term enabling path adjusted to capital against to facility, expecting are outside importance quarter our strong to to our ratio a on position on million, cash less. and we where QX, the focus is be to CapEx of major are returning After in

extremely and to We've paper pushing from the to accounts. underutilized to can get to so back with our stock them levels converted converters are tight We target more safety inventories CapEx lowered converted remain them and we refabricate accounts and previous cash. our productive redeploy

back mentioned, on on get best the track. year of we metrics Omar to hyper-vigilant will As costs be us put in the for profitability position our remainder to the

we before on I'll to back to move that, turn questions. it Omar With

Omar Asali

long-term Thank years trajectory. our the has continue you, to company have a sustainable with Bill. In closing, us the and improvements few on I'm investments put over believe our pleased past made growth

want have lot financially, but We right be a the we get to do to direction. work we moving back to believe to where of are in I

very are on sustainability on well elevated We focus global ahead as capitalize opportunities of the customers' the interest in positioned to automation. as from us well

various next believe void-fill, have being cold-chain establish We in developed further leaders we released wrapping, us offerings the new that XX automation in months as over and these areas. industry

get lot organization. are pleased We firmly a to team have It and filled right opportunities our spot the and be for organic believe ability the to change has existing a successful. in and our I this to the scale journey with we of growth with are and to point one right business. long tools been

XX-year-old operating level with a public brings a which requirements. operating a of company being company, being private from way transitioned to employees a different of certain obviously Our

vision. made and large is about also in basics profitable on operating. can and way underinvestment next number begin execute systems, in believe and we which a we in We At the our without finally will unlock where feel years. strategy of really also for confident people, of whole spot I distractions and a the years of new We're up the get back this meaningful company to over growth processes to point, brought

call let's questions. that, Operator? With the open for up

Operator

first Capital line the Instructions] Your Palm from question [Operator from of Craig-Hallum Greg Group. comes

Greg Palm

seen you've maybe think mentioned last and out at that that how the quarter. all. you starting maybe with to put don't relates commentary what the I little guidance more on recently bit on guess you I a it

light EBITDA So maybe of in that's and over I'm how occurred curious weeks. everything just X feeling kind revenue you're last X, of the about X,

Omar Asali

feel to about that continue good put guidance the out. we Greg, we

there. change no there's So

our typically year the of year. you As seasonality the first a cadence than of from the the know, business, softer of with half half second is standpoint the

with we've back is destocking to come Given seasonality think what this the seen again, we in given we environment, we've anomaly. an i.e., think was seen to of 'XX what last that pattern fruition year, going year,

EBITDA. Given continue as vis-à-vis line as to on well that, be same top guidance expectations our the

little macro banks with The we to we're But Frankly, bit of the bit end first quarter reading and the little think it's our a not what view. of lot a are do and here changing with headlines. softer. has softer a was I was all the environment QX what beginning in seeing it and

Our then activity, trials, activity our NPI doing pipeline to our continues that we're automation, what with and on all new with track. be products

the we So good to year. continue feel the about rest of

Greg Palm

If assumes under of assumption maybe put guess little the to risk? I dig what X, sort just or you've guidance gets macro worse, that current over trying guidance does if of a I'm get sense at just standpoint. from in bit the what environment continues a again, weeks X, seen the X a it. could the I just that that further Got last,

Omar Asali

Yes. sense, year-over-year. we from say, end more your we're yes, a less, And to an The or impact. to current weakens that's macro materially, have To flattish that guidance, just the environment if volume could going and assumes here where to I'm going think point, give weakens up. you

cushion that than our So guidance. not the a in what's COGS, continues And assume we macro be sort we get speaking, we have in guidance, frankly to more favorable. did and also, our and margins robust more our gross to environment in think of to

banks that on assume some more the guidance. not assumption. that So do or if don't if softness. where If the less base But us assume margin would will have know a consumers that and takes the impact. weakening we're our in have the more if now. course, world We I world sort issues, overall elevated robust of have from did that to our not it economy is impact further is the here. gives is of is line that on made weaker, that on will that's unemployment, going case right did seeing world thinking not recovery. of sense the a step a of top an more and assumption any we've back, start cushion that gross because you offset We have issues, the really We

Operator

of Your of line Panjabi the next comes Baird. question Ghansham from

Ghansham Panjabi

offset last the forecast, about it? sort Relative right going to be but up bit to following outlook fair it bit off, is your construct, than by First murkier? a say guidance just on maybe to changed question. to it's the Is Maybe think initially cost of input the volumes a you little the that way lower previous little that's environment. that is

Omar Asali

to way I a fair think about think that's it.

of it's the better of said I standpoint. that course, if what it And frankly, and as given lot a investments think, us. feel feel an a environment, ability could about made, better We to execution costs. have We certainly, impact about a ability a lot here, from standpoint. And sort feel our all our great input from lot earlier, we're about from volume we've seeing better on not we focus. Ghansham, the a I weakens COGS

a XXX we're that employees. has company mean, I

So execution, in we a switching I with lot. dealing state-of-the-art think the macro We're on with sharper these will to Right more that in deal issues. dealing year our technology. systems We're environment with new last and in now, way environment, technology a focused was have the which executing don't we in being putting operate, the with new help.

some line our on and the confidence numbers achieving So top volume the gives trends. us on this

a hand, one yes, the On the is environment macro challenge.

today's in plastic to environment meaningful large I our you, that globally, trial super of a about activity, strong talking switches pretty It's our paper. tell hand, with we other are and will pipeline dialogues accounts robust. from the is number On have advanced

macro it put of you will. volume robust not weakness, I And you when think, did could again, all assume all So offset if that, together, we the trends. part

Ghansham Panjabi

operating of more you're the to mind you? Or Okay. customers' a factor doing down on going it et everybody to And sort of consumer level. across check? costs terms like in just for it cetera. little would mean, kind to current, to decisions Great. supply just assume focus then your of bit in thinking as be there's maybe and at supply at issue future relates industrial that an a really in Is clearly, not for costs environment trading that chain, your the the a is keep And is I keep of risk I chain, just mix

Omar Asali

customers been costs lot number of for Honestly, reliability, for terms we and of and total sure we're helping focus to lot a of speed, in we're ownership making on And very is price about that a own has what are articulate a a customers of seeing an we're with with where doing make line. of issue we're them sure while, part specific them helping cost that. of bottom And quarters. their

environment. the continues So that trend given inflationary

down in mix, We are with Not little a now? seeing, big bit. really. cases, right some driver Is people it a trading

I and from speed customers us, think articulating cost total an how helping typically we efficiency, is we're and biggest these win. just driver for the how of that's ownership,

of that in going more price this to to expecting in that could mix on very, plastic customers very So as moves environment. pipeline are more have some from large these and paper be they're us. expect against I switch I'm dialogue do that we the our not about sensitive with drastic go

coming sure they So at a for them. not premium it's they but to make want want Ghansham, sustainability,

Operator

Sachs. Your of of line Goldman next Adam comes question from Samuelson the

Adam Samuelson

So asking of continuing something question maybe I on Ghansham guess, was about. the kind is first

do existing side declines machines and pulling machines in there and you're cushioning base the quarter. kind you see those the base installed installed proactive of that the some actually incremental base of being -- did spend utilizing from better about you it in have capital in think I limit think term? or the redeploying out more we customers installed to near sequentially the about How in the on So

Omar Asali

have Adam. in, I'll chime and then I'll Bill start, Sure.

sort commensurate continued just So as months, we've in beginning not of we the we've help. the of and invest volume sort the Today, have. and the of XX, equipment to you starting in really and that year, know, get past this and converters fleet XX been at in did on laser-focused CapEx optimizing

it to down we cases, pieces the to of opportunities another, many think we in from see move road. certain account So volume help could where one the equipment

this the Also, months term for lower we we their had than ago customers or and is in that environment expected may new a X normal be our are near what year learning ago.

So we're adjusting accordingly.

continues to investing there growth adding and here from just be CapEx we drive So new opportunity without an converters. in incrementally XXX% our new believe to

seeing fleet. that of us from optimizing part you're thing the is So the existing

that products, part increasing other mentioned, on investing as always drive and we're products, we're fleet. The focused new will in I is, new that with the

fleet to footprint to new there's of increasing So Bill? launch see, you existing we with drive still existing is maybe the bit. equipment will optimize as we have some that products a that But our room products, line. little top the

William Drew

line machines I Yes. actually account were just new of placing QX basis, so new in from would shipments right, a in we activity, accounts where were those gross say at 'XX. with and

a very still from basis, gross So activity. solid shipments

As at concerted we business getting making to some fleet, that and effort lower-margin looking been mentioned, of equipment have the back. Omar optimize a

because solid actually from demand how to Cushioning pricing in get there's the machines we area really trying brought cushioning. standpoint. competitive we've been back up really, You sector a is seeing actually where one are industrial

to trying big and to some those get of deployed of those back, refabricate out effort those a ours. is get machines So field the

back that future pick to in expect up would I the quarters. So

Adam Samuelson

Okay. No, really helpful. that's

operating the -- for year, think be, of for the think investments converter should at the some making? expenses CapEx how along And total you're this point? same both about about and what facility lines, should cash XXXX So if I -- just we and where

William Drew

Sure.

the year, in we about all $XX the beginning be said CapEx. So million for had at the of will year, CapEx that

to taking $XX given of discretionary spend, we'll what in that some we're seeing be down bit, a think million. probably just I close the little

better million little going redeploying do that, front, million investment we of of job can manage between about to to think running you be $XX $XX then $XX than estate converters. do If bit existing better around And million. converter the a the was split on equipment. spend, tighter, Maybe real that's the that

So the then and expenses related the up we're opened in majority Eygelshoven the to facility. Shelton that which operating April, currently those facility, of

expense be So end most of complete that by QX. Again, question. operating will of the the on

asking G&A operating you around of that be from about were kind a XX% perspective, cash think I should running sales. of

Operator

[Operator of from follow-up of the Capital Instructions] line A Greg question Craig-Hallum Palm Group.

Greg Palm

the in I that just on paper? these pivot it can accounts. plastic-only quantify what wanted that gives Any you might maybe to I Omar, I of you're seeing to progress was up about some follow if anything, the us commentary going at, give a confidence thought these where you know some interesting. the but But of to we're can XXX%? Is you especially just don't of commentary sense -- just be

Omar Asali

Yes.

accounts, bunch of products would look, year, over discussions, now amounts chasing is And last for these to were trials. we us equipment their but plastics. these our a are from out. is has consume, doing we facilities. number They the any tried equipment. a What not for buying pay changed meetings, bunch pushing of I It's case I in of accounts. being other think, that obviously year like we small this course, Greg, right were say a with our exactly year, a of of And number were

said bit so I've We environment, a the like, macro that trials given longer might we environment, trials. feedback prolonged. little of today's this sort trials about soft take we're before, like be than hearing bit a and these little In

these to not are the the the switch to is on the we I important that like number of switch. a would interested XXX%. However, in feedback accounts see say product. ground they going They is continue be with the

these volume. many trying how substrates, given that's we're we're executing, what driving then our other feedback be are I'm think plastic the size in pipeline accounts of we would will reduce beneficiary that incremental volume. and to that given the is on of fair of my move seeing the And trials Greg, expectation, themselves, incremental the that. and share, and to footprint I But the win

may the large accounts will the take a half of year. than year, year again, that more equipment. have of But Now see of first of saying in half half the the in lot happen, what if we I'm they will these you because second the placed first the longer, the

our We these using and trialing facilities, and warehouses are product and it. in they are

good different having this feel materially of we this where large not It in last year than is these about headed. the And So is more accounts. pretty we're were action trials I where was why some with conversation.

that this year. some we're the And in action for of half Now seeing will activity into translate business us second action. hopefully,

Operator

I'll at this the are There no closing further questions to time. now remarks. turn call over for Bill

William Drew

speaking Thank you. for today. We all to joining following And you QX. us thank look forward again

Operator

Thank This today's conference you. call. concludes

disconnect. now may You

Ranpak (PACK) 4 May 232023 Q1 Earnings call transcript