Ranpak Holdings Corp.

Good morning and welcome to the RANPAC Holdings Corp Fourth Quarter 2024 Earnings Call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question and answer session. To ask a question, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Sarah 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. 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 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 10K with the SEC for the period ending December 31st, 2024. The 10K will be available through the SEC or on the investor relations section of our website. With me today, I have Omar Asili, our chairman and CEO, and Bill Drew, our CFO. Omar will summarize our fourth quarter results and issue our outlook for 2025. 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. Thank you for joining us today. We finished 2024 on a really positive note as we built on the large enterprise account momentum from the third quarter and delivered our best quarter of the year and second best quarterly revenue in the history of Ramp Act. We experienced an outstanding e-commerce-led holiday season in North America, which drove double-digit volume growth across the organization in the fourth quarter and pushed us to double-digit volume growth for the year as well. I'm pleased with the way our team has executed this year and the way we have delivered on our key goals going into 2024. At this time last year, I shared a number of key developments we expected to occur in 2024 and that 2024 would be an inflection year related to our business. We said enterprise accounts, which we have been referring to as strategic accounts would ramp up beginning in Q2. They did. Driving double-digit volume growth for the year in a challenging environment. We said automation was going to have an inflection year. It did. We grew automation revenue by more than 40% and we expect it to grow another 50% in 2025. We said CapEx would step down meaningfully as our major investment cycle is behind us. It did. It declined by 40% and we got back to the mode of generating cash. We delivered by half a turn and refinanced our term loan. We plan to pay down a portion of our term loan in 2025. We opened up our Malaysia facility to start serving the APAC market, reducing our production and logistics costs to serve the region. We are in ramp up phase there and excited about what this platform can bring. We said our solution set and execution differentiated us in the marketplace. We just got validation of what we have built by the largest e-commerce company in the world choosing to economically align themselves with us. I will speak more about that later on in the call. Lastly, we hit the midpoint of our top line guide and the higher end of our adjusted EBITDA guide. Our goal is to do what we say we're going to do, and that is the state of mind of our team at RAMPAC. Overall, I believe what we have delivered in 2024 sets the foundation for a really exciting 2025 and next chapter in RAMPAC's evolution. With the noise of COVID and our major investment cycle behind us, I and the team are laser focused on execution and growth. We have a best-in-class platform in areas with major structural tailwinds in sustainability and automation. You couldn't draw it up on a piece of paper much better. Now it comes down to execution. We have to deliver. As we get into our quarterly results in more detail, I wanted to provide an update on our constant currency presentation. In our release, you saw our statement that we're moving away from the fixed rate constant currency presentation of $1.15 per euro, which we have done since the company went public in 2019. While we believe this made judging the performance of RAMPAC over a longer period of time easier for investors by removing the noise of currency fluctuations related to more than 50% of our sales from our results, we're adjusting the way we report our results and discuss our performance to be more consistent with how others report FX impact. As such, the adjusted EBITDA and constant currency changes we discuss and report today are at the reported rate of 108 rather than 115. We will do our best to bridge the gap in our new reporting to our previous guide, which was at 115, versus the reported results. In the release, we provided a table showing what our guidance going into 2024 would have been at the 108 average rate for the year, as well as what our fourth quarter results would have been at the 115 fixed rate, so folks have an apples to apples comparison. Moving on to our results, we experienced our sixth quarter in a row of volume growth and second quarter in a row of double-digit volume growth. Consolidated net revenue increased 17% on a constant currency basis for the quarter, driven by 12% volume growth as e-commerce activity drove outsized growth in North America and automation had its largest revenue quarter ever. 10% volume growth for the year drove 2024 full-year net revenue up 10% on a constant currency basis, with strong acceleration throughout the year as enterprise accounts ramped in North America and automation gained momentum. This put us just above the midpoint of our 2024 guide for top line. Our North American business was the engine that drove top line performance with sales up 36% and volumes up nearly 40%. Full-year net revenue were up 19% in North America, driven by Voightville and automation. On a positive note, the breadth in North America in the fourth quarter improved as end users in our distribution channel saw increased demand as well, which we are hopeful will continue. Topline improved in Europe and APAC, but they did not experience the same holiday season strength we saw in the US, resulting in an increase of 1% on a constant currency basis. The environment in Europe, particularly post-US election, remains challenged with the larger industrial economies remaining a drag on performance and activity muted somewhat due to uncertainty about tariffs. Cushioning there remains pressured while e-commerce and automation drove top-line expansion. On a constant currency basis, adjusted EBITDA increased 8% for the quarter and 14% for the year, resulting in us achieving the higher end of our guide coming into the year, which was for growth of 5 to 16% on a constant currency basis. While you always want good performance to be more broad-based overall, it was a strong quarter and a positive finish to the year that sets us up very well for 2025. Generally speaking, we entered 25 in a better operating environment in North America than we experienced in 24. In Europe, things are less robust from a macro standpoint, but we are gaining traction through some of our enhancements to the sales organization and cross-selling with our automation equipment to larger accounts. We expect a meaningful growth in automation again in 2025 as we look to make a dent in our goal to get to $100 million plus for automation. In Europe, recent announcements coming out of Germany and whatever it takes plan on defense and fiscal spending is encouraging. The input cost environment varies somewhat by geography. Starting late last year, pricing in the U.S. has moved up a few points given the greater demand in the marketplace for craft paper. The North American paper market became increasingly tight in the fourth quarter as the plastic-to-paper transition and strong holiday season drove longer lead times with the mills. The strength of the demand in North America market surpass our expectations, as well as I believe the mills, leading to some short-term inefficiencies in areas like freight and logistics that have extended into Q1, temporarily impacting our margin in the short term. As we get deeper into 2025, we expect to be able to improve our margin in North America as the market adjusts to the greater demand environment. We have enacted internal initiatives to improve margins as we expect to achieve the full benefit of our optimization efforts put in place at the end of 2024 and utilize longer lead times to enhance our planning and runtime. In Europe, the energy markets have been more volatile lately as winter was colder, resulting in a greater draw on reserves. Current pricing on Dutch nat gas is around 42 euros per megawatt, which although meaningfully lower than the peak of 300, has moved up from the mid-20s area from a year ago. So far, this has not impacted paper pricing meaningfully, as pricing for the first two quarters are in line with what we experienced in Q4, but if it persists, could put some upward pressure on pricing in the back half of 25. Overall, though, in EMEA and APAC, we believe we are well-positioned to maintain our attractive margin profile we clawed back post-COVID. We'll take you through our guidance for 2025 after Bill's remarks, but to summarize, we're focused on accelerating top-line growth this year, double-digit adjusted EBITDA growth, and working the investments we have made to generate cash and further de-labber. We started the year with some good momentum in January by announcing a transformational transaction agreement with our largest customer. We are excited to deepen our relationship with the largest buyer of packaging and automation solutions globally and believe this transaction aligns our interests for further growth and expansion. In January, we also announced an exclusive commercial partnership with Rabo, a leader in computer and machine vision technology, to bring AI to the pack station and provide actionable insights to improve efficiency and reduce waste for our customers. This partnership is an excellent complement to RamPack's growing suite of technology and AI-powered packaging solutions. Through our investments over the last couple of years, RAMPAC can now provide customers with cutting-edge vision, data, hardware, and robotic solutions to improve warehouse operations. Our vision offerings include Rabot and R-squared Robotics, which has internally developed the decision tower, applying a unique combination of 2D and 3D AI-supported computer vision technology for a variety of tasks, including quality assurance, throughput maximization, and precision void filling. In data, we have PreQubit, our proprietary data and cartonization software. This solution uses historical site order data to simulate machine utilization and box fill rates to help customers identify the optimal combination of a box sizes and our machines given their shipping profile. Our hardware and robotics solutions include internal offerings of the Cut-It, autofill, and pad it to reduce touches and labor, minimize waste, and offer attractive ROIs to our customers. We also have a strategic partnership with Pickle Robot, the market leader in using generative AI and machine learning to autonomously unload trucks and trailers. We believe our innovation in this area has created real differentiation for us, and that is the feedback we are getting from our customers. We believe we are the future of end-of-line packaging automation. With that, here's Bill with more info on the quarter.