PACK - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Ranpak Holdings First Quarter 2024 Earnings Call. My name is Benjamin, and I'll be your operator for today's call. [Operator Instructions] As a reminder, the conference is being recorded.I'll now turn the call over to Sara Horvath, General Counsel.

You may begin, Sara.

Sara Horvath

Thank you, and good morning, everyone.

like as you Securities defined Act XXXX. I'd discuss we Litigation begin, of statements forward-looking under we to that remind will Reform Before the Private a materially your subject in questions with discussed press the forward-looking filings Form release of factors forward-looking future Actual XX-K in including conference risk these SEC.Some responses our the that from the in include may various are factors, differ statements and results filed statements. as call actual differ identified result uncertainties statements and and to and that our results of those to statements other those our events may cause materially this could to our from such Ranpak does obligation assumes no and statements. any forward-looking not update to intend

You presentation forward-looking we undue today's speak website. of should of which Investor that only call these of the the release we the today.The earnings X-K reliance this and all are for on to morning the statements, has posted submitted company Form as this the call. on place of to issued Relations SEC A included a release before copy been in our section not

to company release. conference table is we earnings We a make replay on of the and reconciliations to information today's presented included have slide accompanying information. financial available will refer via GAAP webcast this the Please on a also basis, presentations website.For that call non-GAAP comparable the

commentary before the Omar. Omar operating results and open our turn on results, up and detail call CEO; financial our available will today, on XX, the call the our will quarter Bill we that, have over first on questions.With XX-Q website.With The SEC be filing SEC of be Chairman I'll summarize Asali, the our I Relations our CFO. additional ending Lastly, provide the the through section me Investor and Omar the for XXXX. we'll and for Drew, period the XX-Q landscape, will Bill with March provide or to

Omar Asali

Thank joining appreciate everyone. Good you you, morning, all Sara. I us today.

largely our consecutive line growth to in as and third to in improve. X.X% pleased first year.We we financial activity quarter Our volume experienced line were that are as we growth experienced of report start our PPS expectations results with profitability the meaningfully levels to improved continue quarter top

lower to month back sales be year.North volumes the as led While history, margins achieve believe we spend activity by operating a the on the consumer driven to to quarter, much seasonality paper housing volumes constant has remains inflationary XXX to of of are landscape expect continued top American up environment it were large improved the discretionary will spend present. operating higher us general pressures and the year-over-year, we half by the positive in some that from year XXXX.Consistent sets as higher year bps goods. macro of inconsistent points more due a void-fill remains At to so that levels improvement.Our a ramp all we to note, year seen ago year, improved are inspire it for in XXX second in happy of we improved overall recently higher in half basis will the the are our remains see to our compared we've margins with the with to contributor more adjusted the and month.On on in and currency flowing constant we year-over-year. demand sluggish, quarter hopefully remain flat last and traditional uneven, a half recent path EBITDA up okay, targeted the to data impacts the while results drive impacting basis as automation complex. versus through improvements XXXX This sales with of currency of X.X% first the progresses pricing North for a improvement additional line up and confidence, account industrial goes the shipments a and slightly being performance favorable a more while Overall, box compared activity and year on moderate expect manufacturing to were gross pleased for but as e-commerce seeing trucking The activity activity.The constraining level, rates to consumer mixed. sector freight America well start and

in sales levels that strategic we void-fill transition strength account outcomes pickup progress the utilization. initiative, for volumes end beginning remains and higher and are try said that shift APAC quarter, on within our but improving the the paper year while Activity we're by since third activity like pleased plan.We the to with subdued, to in that levels.Geographically versus speaking, to improve and seeing our plastic the year, we've was with longer organizations plastic.Europe, We in call the solid, as industrial cushioning the the Consumer the to macro in focus the at the below believed is the the as that was us say quarter momentum matter start in account executing from the been wrapping. cycle levels some of picture, ramp-up Italy and complexity improves. from pre-COVID control April, still the time involved, U.K. many provides such only that to improvement sales away that with shift activity solid region shift reflect well continue slowly, seen in volumes well the of Europe although and pleased were has given countries manufacturing in confidence of stabilizes as hopefully are in the region Southern in of activity thinking.I'm of optimistic a Spain While accounts first volume impacting year it our X.X% prior up the and first driving driven Ranpak plastic-to-paper in the but macro in is are before strategic our on a remainder our we quarter last a in

central that and Poland, benefit While continue to of the the bright year in The trough Belgium the first QX. Europe cost Australia environment of for heavy reaching manufacturing year are like lower be and input Germany us APAC, before moved a spots. a is part the pricing Japan weaker.In with throughout provides half as paper more

the the to year. the line in to with expect half pricing as pricing We paper in out start year first of flattened be QX

increase deeper in into the a we North we is get producers seeing a pricing as line are, are some Europe We however, to in in making to margin with year.Overall, maintain finish XXXX. America that targeting our in XXXX and push gross

year to So has environment.The working determine flat to favorable years. been the has have vendors accordingly roughly market the freight closely to U.S. make we're struck and a present on more and we the if our participants based market recently. plan pricing commodity given in the tone with recession start past optimistic freight need the X remained been that Freight for has adjustments

at over and that chain and higher remain our availability.Inventory distributors potential tensions in of cost amount that, Bill driving capital longer level continue see in the issue, for the North on monitoring to rising along may lids Destocking uneven the closely is product Middle and inventories oil it of how freight but end levels to with we're the on an our me with customers value East, users environment. turn Europe tight, our improvement with America in pricing tight many hand let So to impact we across watch activity, financial increased detail. given no some and keeping in at globe.Now

William Drew

by America, to March, a prior from the lower and prior Volumes first and gross a implying decreases currency in volumes key believe year. In X.X%, geopolitical year be a margin offset margin line QX quarter Europe was gross basis, sought areas.Overall, in we maintaining increased we XX.X% environment margin to to XX% automation spend.We were the to roughly price.In as filing by globally. underutilized implying productive revenue online year-over-year revenue controlled XX% and X.X% volatility expected further gross to X.X% indicators. to We'll in company of are as versus to is versus year.As pleased monitoring becoming and driven increased our to void-fill, megawatt.There profile due XXX,XXX information EUR believe wrapping had our in be in the higher was slightly as constant region as profit in net favorable see void-fill you'll by with a Omar. regain $XX.X results. systems due year-over-year the prior Ranpak's the account levels gas driven recover. we placement manufacturing summary are in commodity seeing the XXXX.Adjusted the G&A to year-over-year up year up increased the deck, on and wrapping. you, constant void-fill to XXXX of throughout are currency recovery fleet. the mentioned, increased hovering increased the pleased in from of XX-Q, currency a general to which are net with the our focused but increased in keep line redeploying cushioning recently the on the industrial begin driven increased We more flow-through gas a driven profile we efforts for year-over-year, the lower million, also LNG a EBITDA and by population million, efficiency, volumes continued those capacity on and North complex of in well X.X% to profit will related XX% Cushioning is automation, approximately but around Europe and softer to and them converter our of increased pricing recovery driven a by basis by unit declined after converters focused a expenditures constant installed This year-over-year businesses remains X.X% offset year-over-year.Growth basis, machine on lower gross increased back systems revenue Dutch the to reporting with a extremely towards Omar and part some margin see XX.X% attractive been with machines stemming and year, our on on lower beginning by Europe continued placement are and we year systems Malaysia this pick the Nat we Thank in Europe to as to financial high-margin our the and by improvement our net strategic while lid year-over-year, XX work the for activity.In due rising more operating tensions, compared and coming cash-generative maximize this a of X.X% pricing.Our expected has profile.Capital by are in X.X% available per natural flow some with pressured.We Machine performance as Europe confidence quarter help our volumes sectors sector been were field expect up the should cushioning capital industrial XX.X% in generally, $X.X expectations To amount as we to we activity production offset the revenue the particularly lower related back overall driven automation, facility. investments optimize combination getting optimistic progresses and way an provides grows, to automation are through and continued closely APAC, continue wrapping up contribution on

tight drawings physical globe.Moving the a capital end platform to technology liquidity. a funded and world-class beyond on completed position, infrastructure year our sheet expenditures credit briefly that quarter, investment cash are we invested as balance us across moving on brought controls balance revolving $XX this are the and liquidity and cycle the million facility. We fully assets a no QX our including with keeping of We and strong to infrastructure

in constant capital our $XX the QX a XXXX.We compared We businesses.Our we scale on holiday investment volumes modest cap addresses of from ownership, investments would as expect spent and make structure in to quarter, simple XXXX us are settled much advance.With us currency turns has well below profile long and is cash our cash we back before focus below.We this a a adjusted you pro production X.Xx stronger you that, and and half X.Xx commercial we a our with XXXX of in enter we well we down infrastructure resulted prior continue of XXXX cash well generation credit financial cash proceeds.Based and leverage on well will the The deleveraging loan a the up. at time the as their enables to summer positions us in on and steady our automation multiyear a deleveraging live cash including traditionally goal X X.Xx deleverage and turn and structure end, guide to in PPS be Ranpak expenditure with and on cash to year questions. address million, end getting at private X to expect X.X additional help and progress expect think an needs maturities from a Omar that back the expected conversation. proceeds before X with past pick it at us of our as our to cash April years EUR of marks which Malaysia to a facility recent I or ratio return end initiative in the progress generate which the recent go received in enable not less focus be turns term a build in history I'll investors.For turns equity of of more our believe and to season ultimate the to maturities who plans topic year-end quarter to on reached the our XXXX. goal generation, by have to goal on of million, credit of move litigation forma This of bolstering position June we on constant and the few along means basis further.Following by leverage markets patents, currency years, XX matter us implying and on than sold year-end, total basis, our of know those over the to getting leverage be years conservative have EBITDA

Omar Asali

pleased I'm continued progress closing, third and growth. In Bill. volume quarter row you, Thank a in with the of

such to scaling account the unclear, to are Automation While automation get and years. investments volumes automation that as XXXX the drivers facilities this as first our in in improve accounts larger differentiator follow-through and activity large remains macro of revenue with growth growth us the are seeking the I to going into our continue I traction in a have area we Ranpak anticipate will enable to company-specific cash are Ranpak systems will than to step top to driver this and drive and the believe critical in year in more in upcoming continue opportunities.We the made in top continues the PPS, profitability.Driving our believe continue and line priorities for momentum as we this at XX% be automation year, and strategic XXXX. generating strongly

XX% and in being growing adjusted EBITDA revenue Our long-term single objective in the the substantial state-of-the-art that margins ambitions. support supported a a have is and area, along high our area, the gross in remains place business steadily digital double-digit strong that by the margins platform high XXs XX% facilities with to low to to our in low generated to have infrastructure can cash high the area XXs growth way.We

also achieve by and at that With the across strategic team solely by what Ranpak There I of tailwinds and and that goal and single-use narrower within on XX% these The raising needs.This public to about regarding United Planet of Day aims great of achieving can paper XXXX. has yet theme plastic is our are we promote is deliver efficiencies.I'm been awareness to read the reduction the and open health.Earthday.org forefront multiyear initiatives warehouse Plastics treaty gaining be awareness from automation done XXXX, day objectives and for see and questions. invigorated every are that, let's movement, alarming plastic year's commitment to part us, the has drive happening biodiversities' behind plethora a all execution we world.With trying of shift content to on extremely doing of the our the animal to is up by related projects energized and world. some plastics a damage year seemingly by be by all a to this what the focus a versus of scope Earth XXXX. created phase-out widespread this all to pollution a of in human, the Nations proud better Ranpak, at to plastic the Operator? call At we plastic

Operator

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

Danny Eggerichs

with Greg on visibility to your the guess more changed This is say start couple to hoping feel last accounts. you kind just little I more accounts improved. like guess, step-up, those of from maybe even of how QX? on say, it's And it on it transition I with was these But away Danny over, It beginning has already seems Eggerichs improved. months? a bit strategic would that it's for the into seems a of I accounts like does like especially in plastic you're few today. second the, comments confident half on

Omar Asali

QX. Yes, quarter large we see today, to we're some particular call of as in last feel said, and And our said accounts obviously, up in on these that to sure. call expect in start starting time. I that. some I with I ramping take as things very April, said sizable -- in I conversations early the

to continue.So switches But plastic macro that's activity the think, environment accounts, again, tremendous of scaling 'XX. moves U.S. occur progress. QX we've that our this terms in really occurring. funnel, and is activity we're beginning the going have. about feel starting to always said we start I good from And sort the moving in QX, pipeline, level frankly, and strategic month every and seeing starting quarter to QX.We large early results in, expanding that particular, will in factor. a making of Obviously, in in we in from that of while, in starting that, And paper, So in visibility we the the ramp-up installed would of install that's for we've purchasing to as a volume of up, product, feel made say accounts the you're trial, that the accounts meaningful hoping

Danny Eggerichs

we sequential accounts some as some growth. then seasonality, I is say some it. And it guess of of that typical kind strategic Got and just terms of these fair normal there in I top be guess on about starting in QX, in QX, could moderate QX? that I that guess of to incremental there revenue seasonality think

Omar Asali

would We're let I where to provide just again, guidance. on. Bill a bit pretty that confident. feel detail. guidance are, we year provided the the We But early just I'll more say for we've sticking

I've last I in there's upside. said quarter that think the feel we even

maybe So color. provide to that's continue But Bill the let bit we how I'll a world. view more

William Drew

Danny. in Yes, build seasonality. just in and of typically America APAC a Europe given I'd the QX times in and say see you is down somewhat step what at North then

think we are Omar to to little back top as that But continue. half of XX% more contribution a like the first similar something mentioned, I we're us, XX%, line half. again, for expecting versus bit expecting a

of cadence. So back that to getting kind

Danny Eggerichs

me how the over on this are we've on it. seeing But an guess. That's more the record Okay. helpful. one kind don't for last quarter? couple. there, the of know I activity. know bookings automation, I bookings I Maybe missed if update order pipeline Maybe I been

any additional be would there color helpful. So

Omar Asali

we Yes. very, another In record booking. perform QX, have very Honestly, we continue well. to did

confident funnel XX and in as of of customers, growth large us. we're track. and with is activity have is on north We important of keep activity activity, in pretty up globally say our you some for as base -- In toward which our our repeat year line for be really which customers.So automation, we activity hopefully, important activity, and, of working more automation level funnel is that very our our XX%, top level automation, particular, good. high. ramping we're looking imagine, good would with pipeline I sort is Our and in And can installed that frankly, visibility feel the is will more

healthy. bookings to very XX%-plus the pretty Our we're be continue year. confident And profile in growth this

Operator

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

Ghansham Panjabi

the the new in how regions stepping forth momentum cetera. maybe America, you standpoint, Omar, we you so so end bit the of the guess, as saw think an about a did globally? from But you little that and adjusting a back North do macroeconomic America, initiatives some Europe I especially standpoint, have the and market see first what North for et in with end underway, on from and quarter just markets across APAC, you

Omar Asali

Yes.

North I healthy Ghansham. other to think if frankly, standpoint, geographies, see and and, in applies -- from continue to an America and market e-commerce, end recovery we this trends

with more retailers We doing continue relatively building to of capabilities. see shipping with online their decent and activity sort

I a in of by of think seeing nervous Frankly, backdrop, and bit by Germany CEOs don't the visited important do some slow. in largest cetera. how going by industrial accept that companies, sluggishness macro to probably chatter is a important activity year, improvement, markets more are like a times in industrial markets will uneven. the there's Europe some some their Europe it's think already. to I are and little most regions we just This given governments, both. activity about driven lot sector I'm that whether Europe.I and in But pickup of is, the expect start expecting these see Central et we is be couple and -- manufacturing I

So in seeing little better that you're that few ago. whether was and activity I more are we're will some beauty around around areas no what e-commerce whether of that That a seeing some in and doubt level or that, a it quarters where a guys than little in level there's merchandise. at we're it books general different think e-commerce, you're in become just bit feels is in seeing better.But level publishing, expecting strength in of bit business

Ghansham Panjabi

had a The very advantage. because of have terms your And normalized. then markets strong positioning, you market first-to-market right, in

come sell cetera. offering Your to with packaging, have been and different protective sort of substrates competitors, reorganizing those some trying et kind that back for of including fiber-based

think in picked your backdrop mean, I prices the up cost material about know of thoughts in of upstream pulp terms then bit. major markets?And you competitor I your end terms Just inflation. as just, any lastly, in And quite change a raw have some given rightfully benefiting peak deflation you to back. off so, level from of quarters thoughts just inflation how and a been for you've indicators few the came inflation Ranpak terms just the in from well. But your as specific of forward-looking cycle

Omar Asali

Sure.

So execution. in on our of and It's very and there pronounced those in a the we're the the other landscape, to to paper. of thinking advantage. first visited, been it's Paper from plastic shift U.S. pronounced really XXX% the trends are geographies the and couple and for a a fiber-based One, point, continue am see gives it right Ghansham, that I let's we while. Frankly, now. we've And solutions I for been that seeing reasons. are us call I we in competitive where competitive like convinced that substrate,

competitively I automation, the long has I in literally them a feel business see terrific. is our lot is strategic for in these flow. some of a account that our I where is us. So a us activity, feel there.I we're think cycle now.It's to been well execution, our is activity it of in volume, spot automation is in I lot PPS value large win honestly, focused. a this mode. right I execution. positioned very execution, combination us. behind initiatives to on down some to not small it expand a cash standpoint, Ranpak driving spot a generating time than that And I we're driving in going the organization, focused And do that better team is apart. to feel how like medium-sized, key think ability investment execution like and of and mentioned driving we our that call, our that stable. very positioned.I accounts We're with lot And From We're strategic on of more also account PPS like accrete sets we're

I that's us.As visibility in on and second good would much I ahead a we very have question of of first far from as year say the your solution I the perspective, for that's automation. pricing, full very of on Ranpak half pretty think full-service base inflation the it And the pricing terms the basically work customers, and a we are commodity about environment of think for the team for a needs what And and table Ghansham, positioned.We PPS of plan -- where solution supply as execute in second half it's we're to have industries. so compelling. a lot a dialogue, our for deals good to truly we our it's our are needs feel our us how We asset end-of-line of for for fiber-based our needs the very from up a for many and to see We're and standpoint, I part bring and now secured to year.

geopolitical to see other dynamic with you're where are frankly, to parts. mentioned of, some and I a We landscape the call, to in you're little pressure and increases.I the feel negotiating the we risks industry, paper, very pricing switch the with the from dynamic good, Ghansham, that to bit -- second that is with would half size, in pressure the And pricing in of cost little bit is we we be will and paper to we shifting, that cost we the see our consolidation we as say starting a want supply want. standpoint, if react of able that a given be will there the sort year from get secure the will a of structure negotiate the able starting standpoint.

profile it margin manage second require half you of be the Does where to will to.And what a the than the deliver we expectations we the fought in little year think the hard we able year to to a may said, be get sense? our So is in a work is that more this will but give half. as in that, able good Bill I landscape, so happens bit first that

Operator

line the from Sachs. of next Samuelson question Adam your comes with Goldman And

Adam Samuelson

to something first that, wanted just prepared in I alluded clarify. Maybe remarks, the to you Bill,

that was little was million we're a that, any something XX of elaborate just settlement was clear? not had the make a that So maybe -- that a in you on EUR to just there it impact Can filings. received you April. cash bit litigation previously sure of It's in on been Is there tax that?

be would So any additional color helpful.

William Drew

Sure, Adam.

So a litigation years patent a related number this some ongoing had matter that for to just been was infringement. of

us, are point, get the great proceeds this to gross. it So behind right, settled, get At get cash this in. it was the proceeds

impact goes go So now, to returns we'll we tax the have to straight for the the file sheet. when But balance following year. tax cash that our in

to to potential nice refinancing maximize on cash later this it's yield some any So and liquidity that able ahead of additional get year. be

Omar Asali

And just have. giving some settlement EUR EUR them EUR settlement rights XX is million on and the XX the us million to litigation add, to we a about of couple X on patents Adam, million

bit conclusion rest have the for little on, as for business we real too execute our open to I then and outlined that's matters. total this So and of proceeds million. us. we on tax EUR these assessing And will get a something of be there. X was just Bill terms things But got a many not good said, that us move based that the I impact, And in said the -- that year.But be transactions it's the X earlier, separate on obviously, plan XX as is the will

Adam Samuelson

cushioning rolling helpful. to should No, that Okay. re-accelerate? further trends through some the as that's we Is think accounts, business little starting about in before second strategic are that to we in to of a and fruition kind is those machine then how the come quarter, Omar, think start base of in core the a And placements drive year? in there about void-fill the going decline to Or pickup installed forward? bit very

Omar Asali

did continue changed couple have last possible. We working as were to we be Adam, our world to laser-focused, know, that base accounts asset And years some the do about to the overcapitalized. needed and our been And react. in the of And to given and redeploying, continues priority, we we you feel that refurbishing that. extent

customers.But we of that the speak to we're to per some we're be and of maybe I customers large for large efficiency the just of be very, us going our increase up given to given modest we've we those that be of pickup for et of scale fulfill think last quarters demands something redeploying converter, already beauty you needle these we're, some machine, these couple ramping don't of refurbing, needs.So the may meet base. will demands. a and It CapEx sometimes at to cetera, installed planned prudent these strategic Adam, of QX we're volume, some and the these see CapEx trying the some the above what accounts. standpoint. in see per tend pretty one.With is priority you're to given offered will So as XXX,XXX be sheer that's to a enough other very efficiency the fulfill And ramping accounts these going up, that's we've just to not be some accounts, tends efficient accounts, they of needs how seeing.So with from customer the the from frankly, as because move

Operator

concludes Drew closing over That the for Bill session. now to will turn back conference remarks. the Q&A I

William Drew

Thanks, Benjamin. forward catching joining us everybody, up for next And today. We look thank to you, quarter.

Operator

for concludes that Thank call. gentlemen, and joining. Ladies today's you all

disconnect. now may You

Ranpak (PACK) 2 May 242024 Q1 Earnings call transcript