Ranpak Holdings Corp.

Ladies and gentlemen, thank you for standing by and welcome to the Grand Pack Holdings Corp third quarter 2020 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would like to now hand the conference over to your speaker today, David Mergeo, Chief Sustainability Officer. 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 most recent annual report on Form 10-K and our other filings with the SEC. Some of the statements in response 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 those statements. RAMPAC assumes no obligation 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, the presentation for today's call are posted on the investor relations section of our website. Copy of the release has been included in a form 8K 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. Also, as we will discuss in more detail later, due to the accounting treatment for the business combination we closed on June 3, 2019, we have also presented our results for the three and nine months ended September 30, 2019, on a combined basis, reflecting the simple arithmetic combination of the GAAP predecessor and successor periods without further adjustments. as well as any other adjustments as described. Lastly, later today, we'll be filing our 10-Q with the SEC for the period ending September 30th, 2020. The 10-Q will be available through the SEC or on the investor relations section of our website. With me today, I have Omar Asli, our chairman and CEO, and Bill Drew, our CFO. Omar will summarize our third quarter results, and Bill will provide some additional detail before opening up the call for questions. With that, I'll turn the call over to Omar.

Thank you, David, and good morning, everyone. I hope everybody listening in and their families are staying safe and healthy. This quarter, I again would like to begin by thanking everyone at RAMPAC, and in particular, those who work in our manufacturing and converting facilities across the globe. While many members of our team continue to work remotely, the foundation of our success this year amidst challenging conditions has been the women and men who show up each and every day in our factories. Because of their relentless efforts and resolve, we've been able to continue to serve our customers effectively throughout the world. At a time when many businesses are grappling with so many disruptions, our customers have been able to consistently rely on receiving their products from RAMPAC. Not only are we providing them with the solutions they already know and value, but we also have been providing our distribution partners with new and innovative products to help them grow their business. The execution and focus have been terrific in a rapidly changing environment, and I'm extremely proud of the team for their extraordinary efforts. As the number of cases is increasing in many areas of the world, we continue to encourage everyone in our organization to be vigilant. We require our team to follow proper safety measures to ensure their own health as well as those around them. Our top priorities this year have been the safety and health of our employees and customers, as well as proactively managing our global supply chain to ensure uninterrupted supply to our customers. We believe we have executed well on these goals. In addition to our essential workers at the converting facilities remaining in place, we brought back staggered groups to our offices this summer. But today, given the rising cases for our office workers, we remain largely a remote working population. We are closely monitoring conditions and will continue to adjust accordingly while not losing focus on achieving our operating objectives. We have taken a balanced approach to the business this year. We're focused on areas with the greatest near-term opportunities while continuing to drive forward initiatives that position RAMPAC well for 2021 and beyond. The strength of our core business positions us well. We are fortunate that we can pursue new and large opportunities that require investment, such as automation and cold chain, while still achieving strong results. We view this as a winning combination for creating sustained shareholder value over the long term. From an operational and supply chain perspective, COVID has had minimal delays on our equipment and has not disrupted our paper supplies. Operations at each of our global facilities continues uninterrupted, with the greatest constraints currently being labor and capacity for certain product lines to meet the strong demand we are experiencing, particularly in Europe. While we have been able to navigate successfully thus far our existing network, we are taking steps to diversify our supplier base and add additional production capacity in Europe. We're very pleased with the progress we are making. We also have been working well as a global team to satisfy demand in various parts of the world in the most efficient manner. I'm very impressed with the global collaboration I'm seeing across the company. The resilience of our business model and diversity of our portfolio served us well in the third quarter and year today. Whether it is geographic split, our diverse product offering, or the variety of end markets and customers we serve, our business is well balanced and contains many levers for us to achieve our goals. While some areas of our business, such as cushioning, have been under pressure, wrapping and void trail continue to outperform and drive growth. We're excited to have been on offense again this quarter by focusing on winning new business and rolling out new products. I'm happy with the strong results of the third quarter as the team continues to execute and advance key RAMPAC initiatives. Similar to the drivers of the second quarter performance, robust growth in Europe and Asia Pacific drove the top line. Much like it was the first area impacted by COVID, Asia Pacific continues to show signs of a normalization of trends, which is encouraging. From a product line and end market perspective, industrial activity has been slowly improving and e-commerce demand for our wrapping and voids filled products remains elevated. Areas such as beauty cosmetics, food and beverage, home furnishings, omnichannel activities for retailers, and warehousing and third-party fulfillment have been and continue to be key growth drivers for RAMPAC this year. North America delivered sequential improvement with new products such as Trident, Guardian, and new recycled paper types, driving discussions as of late and providing good momentum. Regionally, you have seen greater activity in the northeast and southeast, with the middle of the U.S. slower to return. We remain constructive on the outlook for North America going into year end and expect momentum to continue to improve given the activity as of late. Also recently, I'm pleased to share that in the cold chain market, we want a sizable account in North America in the food and beverage sector. Revenues from this cold chain customer start this month. This is a direct validation of our R&D efforts that we pivoted to at the beginning of the pandemic to focus on the cold chain market. I'm expecting a meaningful contribution from our cold chain business starting in 2021 as we invest and innovate in this important market segment. Turning the discussion now to third quarter highlights, for the quarter, Consolidated net revenue on a constant currency basis increased 8.1% to $76.1 million, driven by robust demand for void fill and wrapping, primarily in response to continued growth in e-commerce activity. North American net revenue returned to growth, increasing 1% year over year, primarily driven by growth in wrapping and offset somewhat by continued lower sales into industrial markets. Overall, North America continues its sequential improvement, but still lags what we are seeing in Europe and Asia. Best-in-class new products are driving encouraging activity. New post-consumer paper offerings, as well as new product introductions, continue to garner great feedback from customers. In the third quarter in North America, we recently launched the next generation of our AccuFill and Autofill automation technology, which I think has great potential. For some background on how this works, Our tower sensors scan the box coming down the line, determine the block size and volume of objects in the box, and then compute the amount of paper needed to fill the void. Our sensors communicate with our converters to dispense the optimal amount of paper into the box, enabling our customers to decrease their environmental footprint and supply chain costs. Our solutions range from automation equipment that reduces your labor needs, to solutions that fully automate and eliminate your end-of-line labor needs. On a constant currency basis for the quarter, net revenue in Europe and Asia Pacific was up approximately 15%, driven by growth across all product lines, with particular strength in void fill and wrapping. Performance in Europe continues to be strong, fueled by solid execution of geographic expansion initiatives, continued elevated e-commerce demand, and significant sustainability tailwinds. In Asia Pacific, we saw continuous strength in demand from e-commerce customers in places like Australia and South Korea, as well as the continued economic recovery in China. Automation has been the area of our business most impacted by COVID, as travel restrictions have made it challenging to install new equipment and conduct in-person demonstrations for new customers. To provide some context around automation's impact this quarter, If you were to look at sales excluding automation, net sales would have increased 10.4% year over year. Although COVID has presented a challenge within automation in 2020 for equipment delivery, we took decisive action to utilize this time to advance the development of our next generation box customization machine, the Evo II. This position just swell for the next phase of building automation. I'm pleased to share we have recently placed our first Evo II prototype out in the field in Europe, and it is receiving excellent feedback. Automation is going to be a key driver of growth for us going forward, so I'm really pleased that the team in Europe was able to turn this challenging period during the pandemic into a long-term foundation for innovation and advancement. Despite the near-term physical disruptive effects resulting from COVID, our activity level in automation is strong. Our current order book of business and our near-term pipeline are very healthy. The overall demand for our automation products is robust and our level of customer dialogue is hyperactive. This positions us well for outstanding growth in 2021 in automation. In addition to our in-house advancement, we completed a small acquisition in October, which broadens our product portfolio and service capability. For approximately 1 million euros, RAMPAC acquired from a manufacturer in Finland the exclusive rights to the IP and associated assets that offer automatic height reduction machines, as well as wedge and document insertion technologies. These products will be a nice bolt-on to our existing automation offering. In constant currency terms and pro forma for purchase accounting adjustments in the third quarter in 2019, Adjusted EBITDA of $23.7 million was up 7.7% year-over-year due to higher sales and lower input costs, offset slightly by increased G&A and production various costs due to investments in personnel and ramping up of newer product lines. I also would like to highlight that we streamlined our capital structure this quarter by eliminating our outstanding warrants and converting all of them to shares. We had previously communicated that our top two priorities for our capital structure are deleveraging and having a capital structure that consists simply of long-term debt and common equity. Following our deleveraging transaction in late 2019, removing the overhang from the warrants was top on our list of priorities for our capital structure. Feedback from the investment community on the exchange has been quite positive. Those are the high-level points on our strong third quarter performance. In short, we ensured employee safety, maintained our business operations at a high quality level, invested for future growth, and streamlined our capital structure. With that, let me turn the call over to Bill, who will give you further details related to the quarter.