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Thank you for standing by. My name is Kathleen, 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. All lines have been placed on mute, to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] And now, I would like to turn the call over to Sara Horvath, General Counsel. Please go ahead.

Thank you, and good morning, everyone. Before we begin, I'd like to remind you that we will discuss forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forward-looking statements as a result of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K and our other filings filed with the SEC. Some of the statements and responses to your questions in this conference call may include forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. Ranpak assumes no obligation and does not intend to update any such forward-looking statements. You should not place undue reliance on these forward-looking statements, all of which speak to the company only as of today. The earnings release we issued this morning and the presentation for today's call are posted on the Investor Relations section of our website. A copy of the release has been included in a Form 8-K that we submitted to the SEC before this call. We will also make a replay of this conference call available via webcast on the company website. For financial information that is presented on a non-GAAP basis, we have included reconciliations to the comparable GAAP information. Please refer to the table and slide presentation accompanying today's earnings release. Lastly, we'll be filing our 10-Q with the SEC for the period ending September 30, 2024. The Form 10-Q will be available through the SEC or on the Investor Relations section of our website. With me today are Omar Asali, our Chairman and CEO; and Bill Drew, our CFO. Omar will summarize our third quarter results and provide commentary on the operating landscape, and Bill will provide additional details on the financial results before we open up the call for questions. With that, I'll turn the call over to Omar.

Thank you, Sara. Good morning everyone. I appreciate you all joining us today. We are pleased to share that our third quarter delivered double-digit top line growth and adjusted EBITDA, hence driving our fifth quarter in a row of higher volumes. Our financial results reflect that many of our key strategic initiatives, are beginning to come to fruition and are accelerating the momentum we have been building over the past year. The continued improved performance in the quarter was driven by North American strategic account activity, and solid performance in Europe and Asia Pacific reporting unit. Overall, we believe our strategy is playing out, and we continue to make further progress in a number of key areas. While we are pleased with the performance of our strategic initiatives in North America, the general environment remains somewhat timid globally, with an uneven environment in Europe and Asia Pacific. North American sales increased 15.5% in the quarter on a constant currency basis versus last year driven, by strategic account led void-fill activity as well as growth in automation. We are seeing many of the larger e-commerce companies doing better, while other smaller businesses are still struggling to get back on track. Housing related activity remains weak given high mortgage rates, suppressing a lot of the discretionary good purchases that typically go along with moving and new home builds. Industrial activity remains - lower as well which has impacted our cushioning business. Europe and Asia Pacific activity levels improved sequentially versus the second quarter, and also versus the prior year as constant currency sales increased, 7% year-over-year. Volumes increased in the quarter by more than 9%, but were offset somewhat by mix and lower pricing, which we began to lap in August. The European industrial sector remains sluggish, as companies in Germany and Poland see lower order levels for capital and consumer goods. We expect the remainder of the year to be choppy in Europe, as the mood among manufacturers in the region is subdued. On the optimistic side, many believe in the coming year there will be some improvement as the global rate hiking cycle reverses. Geographically speaking, we have seen strength in Brazil, the U.K., South Africa and Czech Republic, while Poland and Germany were weaker. In Asia Pacific, Japan, South Korea and New

Thank you Omar. In the deck, you'll see a summary of some of our key performance indicators. We'll also be filing our Form 10-Q, which provides further information on Ranpak's operating results. Machine placement increased 1.1% year-over-year to approximately 143,000 machines globally. Cushioning systems increased 0.3% while void-fill installed systems increased 1.3%, and wrapping machines increased 1.8%. Growth in the machine field population continues to be lower this year, due to a combination of lower activity levels, related to industrial and manufacturing sectors, as well as our efforts to optimize our fleet. Overall net revenue for the company in the third quarter, was up 10.5% year-over-year on a constant currency basis driven by a 14.7% increase in volumes, offset by lower price mix, which is largely a result of the strategic account activity in North America, and greater contribution from void-fill and EMEA and APAC. North American net revenue increased 15.5% year-over-year with void-fill driving the outperformance offset slightly, by decreases in cushioning and wrapping. Volumes were up 26.1% versus prior year, driven by strength in e-commerce related to plastic to paper switching. In Europe and APAC, net revenue on a constant currency basis increased 7.1% year-over-year driven by 9% volume growth, offset partially by pricing give back and void-fill mix headwinds. Automation also meaningfully contributed to the top line growth in the quarter in the region up 40.7% year-over-year. While void-fill and wrapping were up, the pressured industrial sector in Europe drove a slight decline in our cushioning business for the quarter. We were pleased to see sequential improvement in the region, compared to the second quarter, although we remain cautious given the economic environment that seems to be stagnating. Our gross profit increased 8.6% on a constant currency basis, implying a margin of 37.5%, compared to 38.2% in the prior year. This is consistent with expectations as we expected gross margin to be roughly in line with Q4 of 2023, throughout the year, but was pressured somewhat from less cushioning contribution. Maintaining our gross margin profile is a critical area of focus for us, so we are committed to taking actions that seek to preserve it, as we finish 2024 and go into 2025. Higher volumes and sales drove an adjusted EBITDA increase of 13.9% year-over-year to $20.5 million, implying a 21.6% margin. We are extremely focused on continuing to improve the overall financial profile of the business and generating cash. As we discussed in the second quarter call earlier in the year, we invested in working capital to position ourselves well for the ramp in strategic account activity. We worked this inventory down somewhat in the third quarter, which combined with the higher sales helped us improve our cash position by $4.5 million from Q2. Capital expenditures for the quarter were $5.6 million, driven by converter placement and investments related to our Malaysia production facility. This is down from just under $10 million per quarter for the first half of the year. For the remainder of the year, we expect capital expenditures to remain lower as many of our converter purchases were more heavily weighted in the front half of the year, as was our larger project spend, which is primarily related to our APAC production plant, which went live in August. Moving briefly to the balance sheet and liquidity, we completed Q3 with a strong liquidity position including a $69.5 million cash balance and no drawings on our revolving credit facility. We continue to make steady progress on our goal of deleveraging, and reached four times, net debt to adjusted EBITDA at the end of the quarter, down from 4.6 times at 2023 year-end and 5.7 times as of Q2, 2023. We expect to build more cash in the fourth quarter, as we enter into the traditionally stronger holiday season and volumes improve, resulting in cash generation for the year. We continue to pursue our leverage target of getting to three turns or below. With that, I'll turn it back to Omar before we move on to questions.

Thank you Bill. In closing, I'm pleased with the continued steady improvement in the business, and fifth quarter in a row of volume growth. Strategic account activity remains a bright spot, and I'm pleased with our continued progress deepening relationships with these key accounts both in PPS and in automation. We believe Ranpak is winning in the marketplace and our volumes reflect that. We are laser focused on driving volumes through the complex, and winning more business, which enables us to drive further efficiencies. I firmly believe we are a differentiated player in this space, and more large companies are recognizing that by partnering with Ranpak. In PPS you can see it in the volumes in North America. In automation, our sales were up meaningfully in the third quarter, and our bookings momentum is taking that next leg up. We've been looking for positioning us well for next year. We are executing really well on our key installs, and impressing our customers with our ability to deliver projects on time, and rapidly adapt to their needs. We've invested a tremendous amount in the customer experience and automation, and I believe those are paying dividends, as we have been able to navigate challenging last minute changes quickly and efficiently. These projects typically involve providers of all kinds of equipment and software support, resulting in tremendous complexity as all of these pieces need to come together. Customer needs can change on a dime, and you must be able to adapt quickly to solve their critical needs. Feedback recently from the most demanding players has been that Ranpak has really set itself apart in these situations, and has been able to keep tight timelines on track. I'm really proud of the team, and the effort that has gone into making our customers happy, as that sets the foundation for growing our business. As I think about how we are positioned going into the end of the year and into 2025, I continue to believe we are well positioned to drive positive outcomes for the business and for shareholders. We are forging deep relationships with the most discerning players in the business, and they are recognizing the value proposition and differentiation we bring to the table. The sustainability momentum in North America remains strong, and keeps gaining steam. I believe plastic is on its back foot, and we are well positioned to take advantage of it, through our wide array of best-in-class paper offerings, paired with second to none data and analytics. In Europe, we've made some additions to the sales effort that will help us renew our focus on the sales process, and help drive outstanding outcomes. Asia Pacific continues to show solid growth. I'm pleased to report our Malaysia plant went live in August, and is serving limited SKUs this year prior to fully ramping up capabilities in 2025. This plant provides us with a lower cost home base to serve the region, enabling us to drive growth, and putting us on the path to scale in Asia Pacific. Volume growth, profitability and cash generation remain the key areas of focus for us. This combination will drive the deleveraging we are focused on. With Malaysia going live that marks the end of our major investment cycle, and completion of our fully invested platform. As an organization, we are focused on getting paid back on these investments. I'm thrilled with the progress, we have made over the past few years, and I'm excited to take the next step in the execution phase of the vision for Ranpak. I believe we are building something special here at Ranpak. With that, let's open the call up for some questions. Operator?

Thank you. [Operator Instructions] And your first question comes from the line of Ghansham Panjabi of Baird. Please go ahead.

Thank you, operator. Good morning everybody. Omar, your prepared comments were caught up, so I apologize if you covered this. But sales were up, let's say $6 million sequentially, 3Q versus 2Q. And then EBITDA was, it was up a little bit, but not as much as I would have expected from an operating leverage standpoint. Can you just give us more color as to why that is? I know price mix was negative year-over-year, but I'm just more curious on the margin profile of the new businesses driving your volumes?

Yes, I think, Ghansham a couple of things. Number one, obviously as you said, mix is part of it, because a lot of our growth has been more in the void-fill area than in some of our other areas like cushioning and wrapping. The other point other than mix is honestly a lot of the strategic account activity, started towards the latter part of Q2. And in Q3, we continue to sort of ramp up, both production, ramp up, continued installation, et cetera. And now we feel by Q4, we should see, a lot of sort of the benefit of that more installed base, and a business that is fully ramped up in some of these accounts. So part of it is just the cycle of continuing, to evolve and grow and ramp up the business with some of these accounts. That also has driven things where you may not be as efficient as you want to be as you're scaling with some of these large accounts. So I think these two factors were part of it. Now, of course these large accounts are pretty discerning Ghansham in terms of margin profile. But we're very confident that, overall, as we continue to win more and more of their business, it will be driving profitability and driving EBITDA margin down the road.

Okay. That's very helpful. And then just two more questions. So the 26% volume growth in North America, how much of that was due to the load in effect of new business that you may have picked up? And then the last question I have maybe for Bill, is just the debt coming due in 2026 strategy, to deal with that and also more color on the $5.4 million sale of the patents. What does that relate to?

Yes, let me start first. Just with the growth in North America, customers are not loading up. There are a very limited number of people maybe that were buying just in anticipation of the ramp up as we speak today. Ghansham, I would actually characterize inventory levels and paper levels at both distributors, and end users as pretty light. And frankly just witnessing some of that in Q4 right now as we speak. Where we have a number of accounts that are scrambling to sort of fulfill their needs and asking us to fulfill it quickly. So I wouldn't look at that top line growth in North America as people loading up. I think a lot of it is paper that is being consumed. Just given the scale of some of these large accounts that we've won. And basically what you're hearing about with the plastic to paper switch. Bill?

And then on the debt.

Yes, yes. So Ghansham, and just on the refi, that that's something that's been a key priority for the organization. We've talked about that a lot. For us it was critical for us over the past, number of quarters to put some points on the Board, right. Get the momentum in the operating part of the business, right. To go in the direction that we wanted to so we could go and access the credit markets with our best foot forward. So I think over the number, the past five quarters, I think we've done that, right. So we've improved volumes five quarters in a row. We've grown our adjusted EBITDA from a low up to $85.5 million now, got our leverage ratio down from 5.7 times at the peak to 4. We have great strategic account momentum, with tangible wins impacting volume and performance. And I think the clear evidence of the plastic to paper shift in North America is taking place. That on top of the automation momentum that we have, I think puts us in a much better position to start going and access the credit markets now, right. So that's something that just stay tuned on and know we'll keep you updated.

And then in the patent sale?

Yes, Ghansham the patent sale. That was something that took place in Q2, right. And at the same time as the settlement of the litigation with the competitor. So if you recall we got about $20 million in proceeds from a combination of the litigation settlement and patent sale. Those are patents that we just weren't using.

Okay. Got you. Okay. Thanks so much, guys.

Sure. Thanks, Ghansham.

And your next question comes from the line of [Greg Pong]. Your line is now open.

Hi, good morning. Thanks for taking the questions. Just kind of maybe looking back for the last few months, Omar, anything that surprised you in the quarter, either better or worse, and specifically would like to get just some commentary on kind of the ramp up of, maybe additional strategic accounts outside of kind of the one that you highlighted last quarter?

Yes. Good morning, Greg. I would say, look, we've been working for almost, as you guys know liquidity for 18 months plus on landing some of these big accounts. It takes a lot of time to land these guys. It takes a long trial period. There are tremendous departments and operational and procurement people, and so on involved from these accounts to decide on vendors. So I would say in the last few months, I'm probably pleasantly surprised with the volume, Greg. I would say the size of some of these accounts as we started fulfilling them the needs, the frequency with which they need more and more product has been a pleasant surprise. And part of our organization has been trying to do what we can, to meet some of that ramp up in demand. And this is why I feel pretty good that, as we settle in and have a better understanding of their volume needs, which are bigger than our expectations. I think we can start fulfilling a bit more efficiently, to some of these accounts and translate more of that volume down to the bottom line. So on the large accounts, I'm really quite pleased with the volumes that we've seen. And I continue to sort of have pretty high expectations for what we're going to see from some of these accounts as we talk to them, and work with them on forecasting into 2025. So that piece, I think has been pretty pleasant, Greg.

Got it. Okay. And is the expectation that there are still additional ones ramping up in Q4? And I ask sort of in light of, A, the commentary on kind of the ones that you've been ramping, but also in light of kind of that full year guidance, that you put out there toward, at the beginning of the year. So what, any sort of update on that or thoughts as it relates to Q4 specifically?

We continue to feel very confident in our guidance. So, we feel very good about that. I would say we've done a number of ramp ups in the last few months. The large guys, we started the quarter with them fully ramped. As in our business, people really do not want to do dramatic changes in Q4, which is peak season, there is maybe an account or two where we were ramping up still in October. But by now pretty much, we're fully ramped on the key guys that we can service in 2024, and the focus is just to fulfill their needs in peak season. And then, we will revisit some accounts in early '25 that hopefully we can scale further with. Our pipeline and our trial activity and our activity around large accounts in particular in North America looks as robust as I've seen it in the last number of years. And we think that will continue to help us in 2025. But to your question in particular, by now the focus is not ramping up. By now the focus is more serving these accounts in peak season.

Understood. Okay. And then last one from me on automation, it sounds like, you know, another good quarter both I guess in terms of bookings and revenue. But in terms of the ramp up in Q4 and more beyond, kind of just give us a little bit of update on kind of what you're seeing and I'd be curious is having, sort of a combination of, automation, PPS, is that helping you win, customers on the new side as well? Can you give us a little bit of sense on kind of what you're seeing in terms of account activity?

Sure. Let me start with that last one. With large accounts having automation, having PPS, having also our digital footprint, our vision system, some of our machine learning capabilities, these things are super important to winning these accounts and we are seeing more and more fully integrated solutions that, we're bringing to some of these customers. And honestly, Greg, that is how you become relevant to big enterprises. When you come up with these holistic solutions that's helping them with data, with vision, with paper, consumable with automation equipment that's making them more efficient, faster, rely less on labor in certain tasks. And we are doing that at a terrific pace and getting very, very good feedback. So that second piece of your question is really critical and it's probably the piece that gets us excited the most, with what we're seeing in the business. To give you just some idea, where are we with automation? Our bookings year to date are up 60% year-over-year. We continue to be very confident in hitting our number of growth for total revenue of approximately $30 million for the year. We had a very good Q3. In Q4, we're expecting record bookings. So the highest quarter we've ever had. Our visibility and backlog for 2025 is the highest it's been. My expectation is the growth that we are going to deliver in '24 as a percentage, whether you want to call it 40%, 50% plus growth, that we will repeat that in 2025. I see that with high confidence given the backlog that we have. And the other thing that's really important to note, a lot of our wins, Greg, are with large customers. So a big part of these wins, and the backlog that we have is now existing customers that we started servicing this year that, will be repeat customers in 2025 for existing distribution centers, for new distribution centers, for next generation centers that they're building. So the confidence in our backlog is really good, and we're starting to hit our strides in automation, and I expect you'll see a lot of those numbers in 2025. Does that, does that give you a sense?

Yes, that's great. All right. I will leave it there. Best of luck. Thanks.

Thanks.

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

Thank you, Kathleen. And thank you all for joining us today. We're looking forward to catching up to give you a Q4 update, as well as our outlook for 2025. Thank you.