PACK - Earnings call transcript Q2 2024

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Operator

Thank you for standing by. My name is John, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Ranpak Holdings Second Quarter 2024 Earnings Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded. you. Thank like call now Horvath, to turn Counsel. General to would over the Sarah I ahead. go Please

Sara Horvath

and you, everyone. Thank morning, good

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

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

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

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

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

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

Omar Asali

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

the North underlying in continued face year, increased a of economic driven in activity have strategic largely with improvement remains quarter our our as particularly Our of are steady account improved accounts. quarters past housing sitting quarter The environment as we of challenging the particularly our we fill volumes. built backdrop. choppy start North in by top and improved driven in fourth by was the driven over Asia activity in Growth plastic-to-paper last expectations, the America XX% to somewhat general Pacific. Overall, line voyage the with second this with year recover. pressure been the the momentum row and takes the remaining line as by activity, America strategic quarter financial growth out delivered versus to shift profitability strength as well macro muted. That discretionary said, higher a by paper, idly quarter X hold with results not being with activity mid-single-digit is industrials goods and on under is for pleased waiting sales

in the portion ramped focused been throughout in activity in We began growth April and of of that this shift drove the the the what And transition winning on a strategic have self-help our America account volume America North more excellent becoming large new efficient. quarter. terms as North accounts is in drove up plastic-to-paper quarter. substantial in results The second

of solutions. to be public towards the plastic-to-paper the expect regarding announcements pleased sizable see the by and e-commerce that movement space been some of have a shift players paper-based in to made beginning key We are the this

positive the stakeholders. the X-year to is strength as of the end will provides void weaker. producers higher of the the than to the it's offset Asia average, above second producers the tighter with a been focused and and others pricing expect in to impact XX% the in energy cost us input which the to year some season are to Germany storage remain minimize levels activity volatility by maintain efforts were for equal quarter working we still may in possible the mainly forward while speaking, into of Pacific, North amount slightly customers minimize on we expecting has in quarter Japan In Bill volume currency region remains year, who but protection expect the input confidence less of was region Overall, end the in has carried line paper more the levels in better from this third gross and second pricing our through some mixed as channel year. target were we seen the detail. for look are with first Brazil, some the or constant to trying are let pressure pre-COVID Consumer profile place well but overall and to amount dynamics Europe due volumes visibility applaud and in cost feedback some down have more Poland since With We're Energy and of and America lower tightness and driver North of prices meaningful increased to robust mix and versus where cushioning some about will input efficacy headlines environment names the increases. the If cost me their users by the lower We over marquee sectors. reduce provided costs. in lap positive pricing. in price, the a of fill could half financial in cycle, although the reverse growth. The that, some margin markets. We're we pricing. see move the pricing inventory the increases order Asia year look with to to favorable it sales as you been more levels the Europe and activity inventory call begin over second the our product margins. turn environment the well obtaining to levels. a the geopolitical consumers France slight taking to below of XX% and in of year-over-year, plastic react excited with point protect on which increases resulted through RESI do August. Slower we materials. We the rise, fall Netherlands, in Pacific carrying and validation benefit the themselves America, levels raising vendors have as will improving to increasing begin in in exposure see in to At while attractive from to by approach key chains winter versus will public lock industrial to are as and region activity with in begin gain and demand X%, driven Europe, tight this as some the but handle supply distributors half to and X% supply driven flow manufacturing the quarter, headwinds, little air prior see employees we the the pillows and Geographically index. In

William Drew

Europe North decreases were somewhat approximately by pricing versus headwinds business, and in by revenue year-over-year, strategic on the while increased increases Thank net business year-over-year up. the account operating be machines related levels year-over-year Omar. flat the increased performance some were sectors Void-fill lower Cushioning Cushioning by to in by the in sector experienced driving activity related price. X.X%, year to challenged, slightly which a wrapping. Volumes X.X% combination APAC, results. In in our installed on to net as constant on prior to quarter In also provides to ramp and see constant in a cushioning an was up placement declined you, outweighed driven increase in activity impacting deck, X% as X.X% key Overall, in up second strength down volume currency company of industrial revenue currency with increased basis, of greatest revenue the efforts roughly XX% volumes, our net optimize XX-Q, population Machine indicators. this summary of year-over-year due our Ranpak's which lower automation. e-commerce industrial offset a and you'll machine driven that our in be was driven systems X.X% XXX,XXX remains We'll American the globally. well year-over-year. Growth year, our PPS X.X% and by outperformance, information basis and mapping approximately a continues X.X% fleet. machines filing offset Europe further headwinds. Void-fill The of to field XX.X% lower growth manufacturing systems for

second of few Europe The stronger. saw general had to the a when quarter a step improvement back previous bit what quarters economic we was in seen compared the in

second are expected volumes complying in taking on for This but compared us, prior our observe action line gross a million, be $XX.X increased from profit to of by profile in versus we year. a was to margin driven focus margin year. line to flow-through. in gross margin the a contribution with basis, the currency to to prior profit year, increased as Cushioning somewhat less margin EBITDA X.X% XX% of constant XX.X% and half Our gross QX Adjusted X.X% the the is year. Maintaining a it gross area we XX.X% implying throughout expectations with of critical so in is committed year-over-year the pressured roughly higher

in financial in position business continuing ramp the to focused We for We activity. extremely on working capital the the are well in the and strategic of generating account cash. profile quarter ourselves improve invested to

ensure this half driving the and capital our We managing we down efficiently will of year cash are generation. to work in the working second

profile the spend, reduce to quarter to were and facility. third to investments be million, improve expenditures expect drive profitability to in order actions cash taken maximize generation. related converter have by Capital continue financial which will to for placement in driven felt Malaysia our our we production our $X.X quarter and the We

GoLive plant, of were which infrastructure. the Malaysia expect For the in end the investment our platform business. invested functionality us We of APAC marks a front spend we to capital in converter on more our the transformation weighted digital world-class the as step production August. have is the many scale The fully heavily half and provide year, year, the to that live purchases now goes insights the our of cycle to was and remainder expenditures of our will of related as the and multiyear with down physical

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

QX As the discussed settlement million in received from patents sale in call, the a second patent litigation quarter. in proceeds and XX EUR we of

as Robot We also made quarter gain investment marketplace. an Pickle the in additional robots in their unloading in the

continue to quarter, steady X.Xx and We goal on make at as X.Xx deleveraging at QX and reached the year-end progress X.Xx down end of XXXX. from of XXXX the of our

in season resulting and volumes expect of year particularly We enter back for as quarter and traditionally generation fourth we the pick half cash up, to cash build holiday into the in the the the year. in stronger

or year-end we pursue Omar that, continue X it to X below basis to turn before I'll a by turns to With of to move ultimately questions. our being getting and on constant turns leverage We target back currency on below.

Omar Asali

steady closing, In and continued player driving growth. Bill. go-to consecutive continued pleased end-of-line the the of the volume commercial account our improvement quarter becoming Thank and I'm in strategic progress key I'm on pleased fourth delivering with in initiatives automation. with the of activity our also you, business on

benefits with TPS with strategic volumes to up get of the in year American in We remainder business us continue the the us done key trajectory good solid team for of materialize XXXX. fourth to with in and additional feel of providing North and into North we into QX in layered our effects good overall began see expect momentum a XX%, well quarter, job account to this the accounts We America. The the outlook. believe about has and positioning going

pure-play is plastic paper, accounts are conversations we these a gaining paper Automation and the we of even some plastic As these our provider, with are if switching these have accounts. wins. incremental as data business to from at increasingly differentiator sophisticated competition, to expense of large in share the

pre analytics, boxed pad visual have Dunnage customization, cubing inspection, and We more. Insertion, quality Automated detection insertion robotic analysis, void and

conversation customers' about finding more business. It real solutions not and a is by our We our separating being we more strictly Dunnage. ourselves that are to able provide competition are into that insights from provide value-added

Our our approach that which Europe, is expect comparison volumes choppy, up, the just solutions mentioned. relationships help these of is based although the lapping to begin in continue about be headwinds of the on forging I pricing deeper with our macro In for customers stickier we the value-added year. and to will and remainder August, some

the Asia Asia. Pacific start strong is year, off driven by to and to Southeast a Japan

production our and serve mentioned, Malaysia capabilities the live local with limited options as that market to fully XXXX ramp believe drive lower well with in will the will Asia We begin provide and capabilities this we year Pacific SKUs August order Bill As production additional to and go in region. in as will logistics growth. us sourcing plant can costs serving up share

growth, double can that and scale areas of for We business. Volume continued size region PPS, are growth positioned even volume is that and environment. generation focus well key that cash in for believe we the are potentially goal we a Our I'm a profitability of optimistic within with challenging years, few the operating us. to

On from cushioning margin putting lower the some profitability profile. the is the in side, near on contribution the pressure term

steps G&A the in even So of headwinds. we're the margin face to profile macro rightsize to taking enhance some our

to areas the and activities: to measures and the by of We medium upside. first, million $XX estimate in run driven player announcement would EBITDA and and our an rate reduce near for implemented is the recently, announcements We making North follow. We in many cost in strategic the others America $X there are all have in largest year. of term than million such an additional players G&A plastic of for by the have from in actions distinct we excitement identified by the savings by the to X large U.S. believe will If further e-commerce Part account us. million switch industry paper. more follow result near-term recall could activity be industry others annually to $X in end

A discretionary to believe assuming costs industrial million pricing result that will past we years. activity for volumes $XX slump recovery pandemic Second, to XX% million normalize the in in levels, of to current and could after being roughly related another sold, goods additional peak $XX of purchases and a couple EBITDA.

to XX% automation our million from a become a business it potentially high-teens inflecting, $X Third, turning we believe is positive to EBITDA negative to it profile an EBITDA contributor as scales is to time. back is business over terms invested us investments insights scale of efficiencies, line fully the in beginning margin on Bottom platform our in and pay business. and our into

near-term the All and of of these X improving profile things contribute to margin meaningfully EBITDA business. growing the

working Regarding cash concludes Expected XXXX. investment down will step to forward. managing going and cycle lower our back EBITDA will CapEx our our get growth, us in generating CapEx spend to meaningful generation, adjusted capital cash enable and a XXXX take

for down is busy months our build we consistently The peak cash, the X year first tend half a to final of we inventory and year the work on volumes as up of draw and in the cash season.

to cash. spend tightly generating and working is Our committed to focus entire capital on organization managing

it open let's for questions. some up Now Operator?

Operator

first question comes Ghansham Panjabi line Baird. The from Instructions] of [Operator the from

Unknown Analyst

Josh Maybe starting pricing. [indiscernible] on actually a with is for This off Ghansham. question

maybe back I between wins, And America? we think half wins you result called second X for headwinds be how any know out you versus in was about Europe well. would there disaggregate my around of that North Was the then roughly line helpful in guys as your year? guys dynamic initial as helpful. the to increase color pricing the between markets the the of new XX% the expectations? of be in X% You relates in should question, would majority for quarter. Any with that it that color of the but could said it And new the core then

Omar Asali

Sure.

given we no So in marketplace of second you on Europe. we half pricing, ago start Josh, pricing with price within the pricing yes, from that in year and reductions if in of comparison, lapping year surprise. the will August, sort will, the this standpoint. That's a getting start our expectation, easier action the took in And will month a think some some

give and I'll maybe have start wins, new just more the detail. then On Bill you

a been big the the accounts. has strategic growth of So in chunk

been the Our in the obviously, grow volume business accounts. did of majority has base but with XX% the new some of

that the year, a expect the over, of by still second way, wins, number half the in that The have accounts. are We trials are we closed of signed. their

going to we're mode So installing servicing be customers. and of these

half meaningful just the of see the we typically expecting I'm So pickup the a second wins with new base in and of seasonality our given growth the business case. year. And

numbers, be think very the digits more in you the if for give activity will as I We're you will strategic a the overall, the have confident grown So growth low once X%. Bill that that maybe globally, around accounts But year-to-date, double well. in I'll we've layer in bit put you second in half. and year color

William Drew

Yes. Thanks, Josh.

base Just consolidated those as goes, volumes would the have the business accounts, the quarter. even up far as without been still in strategic

and the are business strategic layer going this the on that's still the been into the and accounts of we're top in continue grow layering kind on continuing business base it, these in accounts we of to see to of grow right, mindset it. year, So base and additional strategic is top

Unknown Analyst

for the on the for are question, vertical about you how you Awesome. next to how maybe a as focusing have decline And And company of quarter? second my And what whole? for Great. Cushioning. super that back That's thinking just margins year? helpful. drove cushioning or also, in expand then the Can us the would then the half relative on

Omar Asali

products Cushioning impacted we margins or seeing customers Look, So slowdown. it's are not not margin We're has robust, slightly manufacturers we Frankly, to Cushioning us. company, but a to be been industrial way, competitors, Cushioning globally, a seeing geographies. of frankly, players, bit business go seeing not pronounced the more different that slightly higher the be pretty close, in By our have a tends higher. and in other than for activity has of a are account industrial tends a attrition in to in the levels but Europe bit business. losses. We're and as little

to these continue service We customers.

the companies their frankly, sort how other that market to the some But and The recover rate bullish and forward. business we're how macro that environment focused we're continue going maintain with about concerning, impact companies in do very these robust. grow as of these aspects of environment not be how they they may We seeing on that backdrop macro we any signs than a is pretty And are them. share not our outlook.

Operator

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

Adam Samuelson

revenue a business of given Europe. Yes. of some clear, I year in wins, softness view new headwinds for are just and [indiscernible] want the growth and Cushioning as the to business the level your the ago? and -- kind you Maybe tailwinds on in EBITDA the to in quarter from performance kind and the where just you set were is months of of the some changed relative X be X

Omar Asali

has X difference Adam, Their increased, has now. And accounts. and accounts, given quarters, been the for versus saying, what the these is today some larger with, actual accounts. to of confidence about closed X these we've on been last few wins. we've quarters think, It the in And our the we've If I talking not. anything, strategic particular, activity robust

ramp-up period with them. was it a of QX, in some Now

of QX, forward deals will start ramping installing for and we a some our that servicing in closed ready given wins. in number will wins, addition base hopefully that a you these volume of getting these QX And QX of re-rating have going we're see, in So up case and to QX. some hopefully, of

things And the increasing with clearly, think the less them. If is than continue to is that further see in that's We're and a in the we space, more look assuming that confidence saying to historically, weakness numbers that us, else no base terms why in to in we've our manufacturing, problem. not volume work the if is are And we're there us in half to we going large in But we impact in assuming these the This and industrial channel, trends. big for stay first or recovery manufacturing as think are in surprised case, that the half. I company, year, more accounts. channel. robust a upside, If anybody the you of you're second industrial volume from of macro I the continue same. service accounts to like who's been us. under-indexed will So

past plastic accounts, the from to large with them. So really the paper. have with supported And them, we've this service in wins clearly, by year some been switch work effort to strategic

in I more not overall, increasing, us is that think this accounts, accounts under small-sized But Adam. representative business that getting big players. and to our large a place comfortable and is medium we're where more indexed of our conviction the is we're

Adam Samuelson

Okay.

kind those -- in be this And Of cuts. actually G&A the you'll expectation from the think then, kind between is -- you've Now, had of what the automation savings of large Omar, you automation prepared much consumables the in growth for how of you of as some remarks, revenue million well And kind and that's in do of 'XX? that some particular, non-paper of year? kind contributions measures, your helpful. potential equipment realizing the $X you been gave other current annualized targeting EBITDA calendar what and as accounts

Omar Asali

Sure.

So more a bit let me precision. start, can and then give maybe Bill

spend a we exercise, not driven and had basically where the the on looking some there. opportunities much areas is So reduce or and was One number we're had are to of savings we too we're factors. costs expecting which much cost growth where G&A at by too in decided

bit be efficient. we this in The in executed number a efficiencies with there us spend is million about, talked our new that technology second for felt ways given that and $X to And investments frankly, with more I are and quarter. processes, reduce on we piece is, something

going in forward be impact $X you see a bigger some this QX quarter, of it impact and million. annual then see would run will the You rate will the

and then more this see a you'll I So in contribution quarter nice QX. from think

the done. product. about strategic It's of sell starting are to Look, longer trials, of et accounts, us installing lot just no These a cetera. these terms are In

of in those of from the so wins, question second half So is will year. do hitting of they period? what's number annualize them a minimum and again, incremental how high. full QX at it you our And for EBITDA contribute The the many conviction ramp-up are that the accounts is

of wins them Adam, fully fully that's are ramped starting very help then QX all accounts, and peak hopefully September beginning we it's With will up that August of that Some us and by our are in the that's because by in customers business, season, important QX. ramp and strategic up and what expect. ready QX

at quarter that have So let more bit give Bill fully to expect a But minimum, specifics. contribute. me a maybe

William Drew

that staged, Adam, it of is strategic right, right? QX. just of for million as this $X to wins, Omar is So on mentioned, Yes. $XX million year, the account some some it

get that then we'll chunk big others ramp So late those year a and QX as up. this of QX would be into

the fully I we at X experiencing be to year. up call million that, least remainder say, would $X million, $XX year of next should ramped with So this it, into going

Operator

The next comes Group. line from Palm Greg Capital Craig-Hallum from of the question

Unknown Analyst

Danny few thinking at ago? months maybe volume than incremental what say that was months, has Greg time, X been to is I hit you better to obviously guess I you've you for of seen look like to if today. expecting you safe This gone strategic has kind on were that a is gains really maybe good. were activity accounts and seems [indiscernible] conversion the hoping it back from

Omar Asali

that's think fair. I

can. of and winning you're to when understand accounts you're look, trying think, we we're forecast these some trying business, best the and the doing I to

and Sometimes have the that on little surprised more the a forecast be we might we're aggressive downside. bit

speed more solutions implemented better and clearly expected. a bit And the and a accounts the were than was in the have sort which category. of more little And QX in bit maybe volume maybe latter we cautious, sometimes, conservative with we're we

So than you, product, expected, wins ended ramp-up going we're these these leadership how I will bit get some about executing to more feel service, I happy. on tell customers we the a being from of faster. I their sort about was of little a our lot up bit customers these accounts. about install our of and customer being packers and the a us of quality happy, get of product with great pushing being sizable feedback some time, large their

as So is focused reputation. building of work that really But bit think keep we install your sizable expected. in in a probably some our of these America, a ourselves. of than proving our confidence both we're little I characterization we'll execution, very on more I we overall, QX, is were fair as couple that which large more with And as and North feel sort good accounts, that maybe well accounts

Unknown Analyst

kind companies or do Got of shift industry-wide of spurring industry, it. from you paper switch guess expect evidence kind plans paper? plastic, announcement that other accelerating in to you Amazon full just kind the And of your or customers an their maybe to terms maybe I then within kind of of the from have of any seen of yet plastic

Omar Asali

using. And QX continue we're mentioned But actually owners and up. accounts I about that experiencing are different to about completely And some that different some where customers. substrates more just ramp brands conviction we're switch them in to trying part doing deliver accounts and in had you're embracing of are to that you're that North anxious and these I seeing companies sizable talking to and are see suit excitement in way market and less we're continue going XXX%, And and making may think more that's want have frankly, accounts of switch. the closes service they more And the to of these more with new that plastic. it, industry. not solutions of more see that announcing like. paper we the to that's and paper large they're going to America that now the to and the that and to follow And they're thinking part brand existing a we're it. our sort but on products And they're switch of

Unknown Analyst

one step Are just took we one, that year? XX%-plus Maybe kind kind in still hitting sense. grower about it. last Got on this the sequential Makes thinking of down quarter. of a for a automation,

Omar Asali

quarter. our up about this the past XXX% -- bookings are quarter We in were

Some was delays customer more not customers the part, IT of the on revenue integration driven and by ours. on

good good we conviction the a very the continue for XX% year, and year. have very second for that in pipeline have plus half high of full We very to number funnel,

So we're in quarter have second funnel recent activity. a activity business, to given busy our bookings given and expecting very automation

Operator

to for I Drew session. And would that question-and-answer conclude does closing back the to remarks. floor Bill like over turn the

William Drew

for today. Thanks, John, us and thanks, joining everybody,

forward catching to Looking next quarter. up

Operator

gentlemen, and Ladies your Thank concludes conference you today's call. for participation. this

You disconnect. may now

Ranpak (PACK) 1 Aug 242024 Q2 Earnings call transcript