Ranpak Holdings Corp.

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the RANPAC Holdings Corporation third quarter 2022 results conference 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press the star one. Thank you. Sarah Horvath, General Counsel, you may begin your conference.

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. RAMPAC 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 press 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. Lastly, we'll be filing our 10-Q with the SEC for the period ending September 30, 2022. 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 provide commentary on the operating landscape, and Bill will provide additional detail on the financial results before we open up the call for questions. With that, I'll turn the call over to Omar.

Thank you, Sarah, and good morning, everyone. I appreciate you all joining us this morning. As expected, the third quarter was a challenging one at RAMPAC. as the headwinds we discussed on our Q2 call impacted results and macro weakness intensified throughout the globe. The global consumer remains under pressure due to inflationary headwinds related to fuel, food, and energy impacting personal budgets and reducing disposable income. Adding to the challenges, spending patterns remain firmly in favor of experiences and travel rather than in e-commerce as many consumers pulled forward their goods purchases during the pandemic. More recently, the impact of rapidly rising rates on household net worth and rising housing costs is having an impact on confidence and reducing willingness to spend on discretionary items. Overall, we expect e-commerce and the consumer to remain under some pressure in the near term. But as we exit the year and head into 2023, we will begin to lap the short-term pattern shift from the purchase of goods to experiences and expect e-commerce to ultimately return to growth due to the share shift from brick and mortar with the timing and trajectory of a recovery impacted by the near-term macro headwinds. While the environment certainly remains challenging, We have been developing new products that are ideally suited for the e-commerce environment, which we believe can improve the velocity of our bounce back and get us back on a trajectory for growth we have been working towards. In July, we communicated that we expected the energy crisis in Europe to worsen and its impact on the economy to become more pronounced. The ramifications of skyrocketing energy prices are flowing through the economy at this time, and we expect headwinds to persist until alternative energy supplies can be firmed up and the continent has a viable path forward without Russian natural gas. While governments have been slow to take action in securing new sources of energy than we would all like, many companies in the region are taking the matter into their own hands and switching their key energy inputs from natural gas to oil and coal, which is helping to reduce demand and meet storage targets ahead of the winter. Pricing for natural gas has remained extremely volatile, moving meaningfully one way or the other based on the headline of the day. The ultimate impact this environment has on business and the consumer is difficult to forecast, so we are staying in close touch with our vendors and customers to share information and plan accordingly. We feel very confident in our paper sourcing as we have reallocated our buy and taken steps to reduce risk. Our status as a reliable size buyer of paper has helped us secure access to the tons we need. For some regional color, North American results were disappointing as lackluster e-commerce activity persisted throughout the quarter, impacting voice fill and wrapping, while cushioning was down modestly due to slower activity. New business activity continues to be solid, though, and at levels in line with Q2, which is encouraging. Biggest areas of demand continue to be in our cushioning solutions, which we are working hard on fulfilling the converter demand. In Europe and APAC, performance varied throughout the region and country by country. Fortunately, I believe a substantial portion of the destocking activity that has impacted us throughout the year has largely been worked through, although some pockets still persist in the Nordic region and Australia. The biggest detractors in the quarter were in Germany, Poland, and Australia, with Germany and Poland largely driven by the macro, and Australia impacted by lower e-commerce activity combined with destocking. Bright spots in the reporting unit can be found in Japan, which was up nicely year over year and continues to be a source of new business wins, as well as Austria, Switzerland, and Spain, which outperformed. The macro backdrop is difficult, but certain areas that have been headwinds for us all year are starting to show some signs of improvement, driven by improved availability and lower commodity costs. Freight rates for ocean containers have dramatically improved, as have tracking spot rates and availability in North America. We believe the momentum for paper pricing relief in North America continues to build as additional capacity is coming online and the lower demand for corrugated products improves availability. Pricing of a number of commodities, including OCC, pulp, and lumber, has meaningfully improved, and inflationary metrics such as service and manufacturing PMI prices, car prices, and rents have begun to roll over. Many of these should help drive improved input costs for our business going into next year. While we would welcome external factors such as these I just mentioned improving, We have been focused on helping ourselves through expense reduction, greater efficiencies, and new product development to drive demand. Our G&A expense reduction effort I discussed last call is being executed and starting to flow through. Over the past number of months, we have implemented plans to reduce headcount by approximately 10% across the globe and reduce discretionary spend where possible. Some of these benefits are yet to be realized due to local notification requirements but we should see the bulk of the savings on a run rate basis by year end. On the efficiency front, we are getting better with the new systems every day and believe it will be an important tool to support our ability to extract manufacturing efficiencies as we grow our business. Our new facilities in the Netherlands and Malaysia, which open in 2023, should also enable us to operate in a more efficient and lower cost manner. The Netherlands facility combines three facilities into one, And Malaysia provides us with the lower cost local platform to service the APAC region. What I'm most excited about, though, is the work we have been doing on the new product side. We have meaningful introductions coming in the near term on the void fill, wrapping, cold chain, and automation front. We believe the introduction of these new products will help us drive demand, gain market share, and get back on the path to growth. Now, I'll turn it to Bill for an overview on the financial results.