PACK - Earnings call transcript Q3 2024

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Operator

Thank you for standing by. My name is Katherine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ranpak Holdings Third Quarter Earnings Call. [Operator Instructions] And now I would like to turn the call over to Sara Horvath, General Counsel.

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 in with discussed press the filings Form release factors forward-looking Actual XX-K including risk our from the SEC. in may various factors, differ statements results filed as identified result and and of those other those our our

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

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

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

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

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

Omar Asali

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

and pleased hence, of quarter our We quarter that growth fifth adjusted EBITDA, our top line row are third driving a share to higher volumes. delivered double-digit in

driven results momentum the Our strategic come by the performance been North key unit. that initiatives account building reporting solid number our and Overall, we accelerating strategy further Pacific to many a in was are and year. areas. to American is make we believe have strategic and and out, in fruition in our performance The continued of activity playing are over continue financial key beginning quarter past the Asia to progress we Europe improved reflect of

While we an are somewhat general environment quarter a growth globally American pleased with sales remains with in as the uneven in North account-led the year, versus currency basis by driven performance constant initiatives in last and Asia fill timid strategic Pacific. of on North Europe our well increased void XX.X% in as environment the strategic America, automation. activity

as industrial Poland lower pricing, which in Germany and order companies remains consumer along lower seeing go activity activity on Asia e-commerce new Industrial businesses year-over-year. the levels X%, given struggling more Gap] goods. for typically constant Volumes The as and were see sequentially and by offset sales by than in prior which high [Audio lot suppressing with activity rates, remains mix as that quarter in home August. sluggish are smaller lap doing other currency purchases good improved remains and Pacific levels moving the year our mortgage quarter back weak while versus better, We the get to of versus still companies track. but many a the are Housing-related also second sector to lower larger discretionary capital began impacted we the of Europe business. has somewhat increased X% and European increased and cushioning well, builds.

year We is Europe the subdued. remainder be mood the in expect in region of to among the the manufacturers as choppy

the side, in as the weaker. Brazil, the and Republic, South some Africa Poland coming the in New Asia UK, reverses. global Korea In will strength Australia stronger, quarter. improvement year, rate we be Japan, and while there many was Geographically believe speaking, Czech seen South and optimistic this Germany have Zealand while were On hiking were Pacific, cycle behind

America, slight pricing RISI seen the the mid-single environment UID input expected, quarter, digits, earlier indices and to Throughout the increased through while producers of margins will less in paper North inflationary upcoming it able if cost is to is but quarter, the tighter environment costs did pressures. robust, so gain in demand the offset volume. driver, more quarters. pockets are the As the a to supply Europe, uplift of remained the in tailwind provide not edge year. in which flow trying an you're in to function the Europe to there key more commit to is In a In

paper buyer times and of stable in bad. we a good Fortunately, in are

more keen attractive with to new and vendors pricing. provide a in are topic experienced an So Energy to more tensions as and level. Middle partner the continues reached Europe volatility have in has pricing many important us be East

at third to area tied cushioning fill macro higher on performance. While this addressing focused remain XX We're cushioning to ensuring environment past. though, Overall, storage the the cry tight and floor. team impacting close in market we a EUR channel perspective, the to pricing the where reduce and in remain the the the seeking But capital remains experienced the in is into not risen with to target working second be The end our track exposure. vendors is X-year far wrapping per up and quarter has continent year. Inventory mix from our watching our actively possible and XX% Overall, would saw by the quarter, on position levels gross high XXX the on megawatt to solid closely dictate margin that persisted EUR say the pricing going distributors are into XX% level lock we users winter. from we in in gross towards we growing pie I in in to with lower and to a void shift letting limit margins. recently, and the capacity hour the for a the peak years XX%

enter the product we season, we rapid As distributors short fulfillment. seen have of needing holiday and caught a number getting

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

William Drew

lower and We'll field X.X%, driven systems activity the the void-fill related outperformance, North pricing you'll a while in America on slightly offset the by e-commerce year-over-year XXX,XXX lower in by Europe machines were sectors in on Form be and price giveback volumes, increased summary machine the growth, APAC, revenue in Omar. continues to partially to constant of related and in you, prior increased combination revenue also volume X.X% further filing In top our mix, strategic X.X% offset Ranpak's some is well up the decreases EMEA currency and a Overall, Machine X.X%. and our year-over-year on of increased plastic X.X% systems a and paper Thank net driven APAC. company indicators. in machines by activity the third to versus mix in growth a by with region, XX-Q, population up Cushioning increased by year-over-year. be as American increased placement In void-fill performance in driven and to currency which deck, year, Automation result XX.X% strength revenue information lower installed approximately the net Wrapping. and as due offset key greater XX.X% to XX.X% provides manufacturing fleet. efforts quarter up results. largely increase North driving of a the quarter line year-over-year XX.X% X% for the year levels also operating wrapping was to Volumes XX.X% from contribution net increased globally. our void-fill headwinds. to which our by to this industrial Growth Cushioning switching. contributed basis, account basis optimize a meaningfully of year-over-year, constant see void-fill

sector Europe pressured were the our drove wrapping slight up, quarter. the for a While void-fill business in decline industrial and cushioning in

second sequential given the cautious to be that are to seems improvement pleased stagnating. remain the we although environment to see economic We in quarter, the compared region

profit year-over-year finish is XXXX. with year, expectations cushioning consistent committed XX.X% constant sales taking to our that of XX.X% to currency a of as a Higher to with margin margin. implying we adjusted This so to on pressured seek preserve it contribution. drove gross throughout from we year. go of the less X.X% margin compared somewhat and focus are XXXX profile gross a an gross critical implying expected EBITDA increase us, is XX.X% basis, prior as margin and QX $XX.X for of increased XX.X% but million, was in Our XXXX to Maintaining in line actions into roughly the a volumes we area be

are continuing improve generating cash. of focused profile the We business financial extremely and the on overall to

combined This working we worked in QX. ourselves first and year, $XX higher $X.X our the well the inventory per were $X.X is to under which activity. of call, to helped account half our with the As for investments this in strategic sales, driven earlier cash the capital in for placement discussed million in invested the in improve the just down second Capital from position we position related quarter, by from the expenditures facility. converter production million for by quarter quarter quarter million, third ramp us the somewhat down We year. Malaysia

of our purchases remain heavily plant, our the more August. capital the year to converter For the of weighted which APAC primarily front is spend, remainder were as related project year, as to well expenditures as production expect went of many in which half larger the our live we lower in

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

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

as We improve, into the in resulting and the cash expect to season volumes stronger fourth the traditionally build in more year. quarter generation enter cash holiday for we

pursue back move of to I'll questions. on target getting we turn to before leverage below. turns our With Omar to continue it X We to that, or

Omar Asali

in PPS account In deepening a and growth. with Ranpak marketplace with automation. Thank of both quarter business in improvement you, our remains the key row pleased that. winning volume pleased closing, and relationships reflect We and spot, Strategic accounts, I'm the with our is steady a in continued activity in fifth Bill. these and volumes bright continued the in progress I'm believe

that PPS, and looking next is believe America. we firmly further I you differentiated by driving up space which partnering sales us the next In enables through in in efficiencies. laser-focused are automation, bookings in up drive North In taking more in recognizing and Ranpak. it are winning the our companies for, leg were business, we've and that been this third can quarter complex volumes with We on more momentum see us year. the large a are volumes to positioning well for meaningfully our player

demanding in making needs pieces come our to their believe needs. on into amount last-minute these We've invested customers has that you to the involve critical able and executing been situations really needs. together. to have resulting adapt are and itself quickly has from that and complexity equipment can of we impressing happy time We in foundation experience that providers I to and our projects Feedback deliver our time apart tremendous efficiently. need really most adapt customer Ranpak and change players to tight to as on proud typically on projects of those team keep dime, a our key solve with and are tremendous as our these support, the as quickly installs their navigate and has ability customers the business. recently kinds has been track. in I'm a changes rapidly dividends set and sets and really paying all the the able been software all automation, effort able of lines These growing well for of challenging to on gone Customer be must

the of believe As I outcomes XXXX, the drive business the and continue for are I how to think for we positioned positioned into shareholders. positive to and end about are going into we well year

and wide differentiation momentum keeps the most sustainability deep in are table. believe outcomes. sales our business, us and data with and proposition We are help in paired are the America the and to of it In well I Europe, the and the through Plastic relationships discerning made outstanding second-to-none to foot, focus they North drive forging advantage the additions on of gaining and renew on we've recognizing to effort that array back take bring we steam. players our with some best-in-class positioned process will paper is remains value offerings we its help sales strong The analytics.

of our the With Asia report combination cycle growth. to in Volume fully generation profitability of August the serving in to will I'm the to investment drive this going and Malaysia remain our our with us. Malaysia growth, went year focused to us areas enabling on us we scale This focus Pacific up completion solid region, limited cash a base us path provides live plant the growth Pacific. that pleased capabilities continues live, end platform. and and the fully serve Asia of ramping This to to show in are and putting marks prior major SKUs lower-cost on. plant invested deleveraging home is drive XXXX. for key

up the getting are phase at here on are the As have call I vision With and excited Ranpak. progress an organization, few we that, something past Operator? made I'm focused for investments. thrilled in execution back let's with open step believe these of take years, we special the the I'm Ranpak. paid we on to questions. next some building over the for the

Operator

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

Ghansham Panjabi

then negative have XQ an businesses to new curious your was prepared up I just Omar, us were as as would but just give so XQ, you expected year-over-year, leverage say, margin and the if little apologize you sequentially as more that up, is? from operating of was I'm million caught the driving Can on this. know let's standpoint. comments more color covered But not bit, volumes. why price/mix I EBITDA versus a but sales your $X were much up, I profile

Omar Asali

Yes.

it I of think mix cushioning some said, wrapping. is Ghansham, a in lot of of than of as more other you Number been fill void has part growth like and the our things. our couple one, in areas obviously, a because area.

And activity is, sort The a other of to mix point of than production strategic we the both QX. in of accounts. ramped lot business that more of And now sort installed see towards latter ramp feel should part of ramp-up, lot and these by of cetera. of et started the the we benefit honestly, some base other QX, QX, in continued we a a account fully installation, up that up is continue

accounts. grow it scaling want with of and cycle to ramp with these the just also business you So be part these is as large of where as continuing you're as driven to not things of may the evolve that efficient you some has some up and of accounts be

part So of I think factors these were it. X

will of and overall, driving business, EBITDA Now, of the it are pretty that course, margin their more driving margin be these and large discerning, terms more down confident Ghansham, very road. But accounts as continue in to win we're we of profile. profitability

Ghansham Panjabi

X then helpful. more very That's questions. And just Okay.

the volume have due load-in new America, that have effect much XX% the last that was maybe you up? debt million coming in of is on does strategy relate And more for the What sale with Bill, color the that? $X.X XXXX to to? just patents. the And business of to how picked in I then North question the that due may So also deal of growth

Omar Asali

Yes.

North up. start the America. a There Customers Let of buying the limited number are of in just me anticipation maybe very growth are just were first that loading with people in ramp-up. not

QX light. to fulfill accounts levels right is distributors would and as a have of that both now I levels to we Ghansham, today, pretty some needs paper characterize scrambling just speak of speak, And are frankly, inventory end and in witnessing number where their that we asking and quickly. of it actually we users As fulfill at sort us

So as wouldn't top-line loading look I in at growth America North that people up.

of just the given with I of you're what it won being basically some consumed lot large Bill? hearing think switch. and these plastic-to-paper paper that accounts the of that scale about is a we've is

Ghansham Panjabi

the And on then debt?

William Drew

Yes.

a for on organization. something just priority that's a talked the We've been about the that Ghansham, that's key lot. refi, So

for us, some put that in part it business, go was and get number we credit over the our operating past right, quarters the the markets with wanted right, to, of the so the foot of board, For the critical us on momentum in to points to direction we go could the access forward. best

volumes from leverage So I to $XX.X right? X we've improved peak in a So think down I the million ratio quarters, low past row. our quarters the we've a EBITDA over X.Xx X. to our that, We've now, think up got X adjusted grown from at done

us strategic performance. place. of the clear the with tangible That you We And we momentum is in top position America that just have, automation I and on taking the plastic-to-paper evidence start I credit updated. something the on, keep momentum we'll that to puts tuned shift and great stay account right? North volume wins and So access have of think, that's now, a markets impacting in think better much going

Ghansham Panjabi

on the sale? then And patent

William Drew

the with was the place same as of on sale, competitor. something at that the patent QX, that time Ghansham, Yes, took right, litigation a the settlement in

using. recall, you Those of $XX in the and from that patent we proceeds litigation settlement are got sale. a we So if combination patents about just million weren't

Operator

next the question of comes your And Greg Palm. from line

Greg Palm

Just that ramp-up some would last And kind just that the the accounts few last to one you kind strategic the either anything maybe in of kind outside of get of worse? to or additional looking months, the specifically, you quarter? on of maybe surprised commentary quarter, back Omar, better like of highlighted

Omar Asali

for for long a these to big know, decide guys. accounts. and a and on working as people months been we've takes plus accounts literally to landing of takes on It from and There you It some departments trial on Greg, these vendors. so land period. involved I lot are tremendous time would procurement operational almost, say, XX of these look, guys

I would as probably I we product has and surprise. to organization And started I as which to months, in needs, pleasantly fulfilling bigger say do volume to efficiently of So that last accounts say feel our meet bottom the more with fulfilling why our few these good down a some a of settle what of some has volume, line. size expectations, needs, of more need is more these part the are of this better have in I'm can we been of in Greg. start demand. trying would to their them, understanding that frequency which surprised I pretty they been translate with ramp-up that And more than can the the accounts the volume and we the and think some a we of pleasant bit

I So to pretty continue forecasting on volumes seen. we've the sort I'm high from and them accounts, pleased these as talk accounts XXXX. the to with into quite And what expectations work with them we're going to of of large for really that see on we have some

been I So pleasant, has pretty that Greg. think, piece,

Greg Palm

it. Got

that been beginning in Okay. on there of, still the expectation commentary you've in of a, that QX? there the you light of And are ramping, of ask but year. kind ones is of that the that also up full And kind the additional year at out guidance of sort I light put ones ramping in the

that sort it any So of as thoughts or what QX specifically? on -- to update relates

Omar Asali

our confident very in We continue to guidance. feel

about good we ramped. the few of the would with say ramp-ups guys, started them very I fully feel we done quarter The a last large we've that. So months. in number

we or we're the were still dramatic fully 'XX to in some by to just in with. know, in ramped will is an early in service you the not peak needs further we two fulfill where in key guys our we There season. we QX, now, peak up people much their maybe XXXX, is ramping But can can accounts in pretty scale do And on really that and then that want is focus hopefully October. which As season. account business, do revisit changes

looks activity around accounts to the it up. continue in as trial number question, to Our and in in robust in by of I've in think we our will serving in By is is years. now, help that the ramping focus us large particular, pipeline particular, your activity these more as our accounts, focus North now, and the seen And peak not XXXX. America, season. last But

Greg Palm

Understood.

one well? sense It on more of terms quarter, you're helping seeing. and last automation, of on having good then is like automation. ramp-up kind of of I'd And little on what on side me sounds as activity? QX both, you give PPS, terms us account in a curious what kind of in little bit terms Okay. revenue. us another customers and give you're sort I a that just bookings of combination in beyond for new guess, update But the seeing And of be bit is a in of win you kind of of the Can

Omar Asali

Sure.

one. that's a our come start with them them honestly, vision large these of also labor terrific we're that's helping consumable, up these relevant accounts, with super of become big Greg, more to equipment holistic with customers. faster, are are some very fully feedback. When these bringing and last on that winning very, to vision, we more solutions tasks, you are you pace having paper things at system, with automation, doing enterprises. me having with solutions rely how automation PPS, capabilities, these With and footprint, we more to our some and is learning certain integrated digital Let in less machine that that And getting efficient, good that seeing important accounts, with having and making data, our

XX% idea the bookings with it's just you what To are and most some business. our in the automation, are second probably us piece seeing gets So up is that we're where we excited with the really your of that piece year-to-date critical, question year-over-year. give

good a for growth year. We $XX number we're the QX. In highest record had. continue expecting to so ever be of our had quarter very the very total we've approximately hitting of bookings, We million QX, revenue for confident in

that is the as we deliver want highest to XXXX visibility and for plus it you that backlog Our whether going high it's of been. the really important we will XX%, with My customers. repeat have. expectation other growth that the backlog XX% note, confidence wins, percentage, call growth to are I in we a lot the is Greg, our are to that in a that that's with see given And XXXX. thing 'XX large

big So be existing in we we wins these existing a distribution part centers, that servicing backlog customers now started of for have customers that for is the that distribution for and will centers, they're this year next-generation repeat new that centers XXXX building.

strides the in sense? and confidence give a you'll that hit expect backlog of automation. you I in those we're And good, So to our numbers lot in see starting XXXX. is really a our Does

Operator

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

William Drew

you. you Thank update thank today. give as a well catching looking XXXX. as QX up to joining forward you, our to Kathleen, you outlook We're Thank and us all for for

Operator

Thank concludes That joining. session. all for our you

You may now disconnect.

Ranpak (PACK) 31 Oct 242024 Q3 Earnings call transcript