Ranpak Holdings Corp.

Thank you for standing by. My name is Carly and I will be your conference operator today. At this time, I would like to welcome everyone to the RANPAC Holdings Q3 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. 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, press star one again. Thank you. I will now 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 under 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 10-Q with the SEC for the period ending September 30, 2025. 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 discuss our outlook, and they 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. I wanted to start today by discussing our third quarter announcement that we entered into a strategic and economic partnership with Walmart. This agreement has been years in the making and required the hard work and execution of many of our RAMPAC team members. The Walmart agreement is a transformational deal for RAMPAC and RAMPAC automation in particular. I'm extremely proud of the team and the solutions we have built in automation as those really drove the origination of this partnership. Our warranty agreement with Walmart can be summarized as a potential for up to $300 million in spend, excluding the cost of paper over 10 years. in exchange for warrants to purchase up to 22.5 million shares in RAMPAC with a strike price of $683 per share. We expect that over $100 million of such potential spend would be allocated towards automation equipment and services, with $200 million of such potential spend focused on PPS products. Given the requirements for vesting exclude the cost of paper, This implies roughly $600 million in potential reported spend in PPS products over the 10-year period for a total potential spend of roughly $700 million across all of our products. This is an extremely exciting transaction for us at RAMPAC, and I believe cements our place as a true leader in warehouse automation. Adding to the momentum in automation, we are pleased to share that we have entered into a multi-year enterprise sales agreement with Medline. the largest provider of medical surgical products and supply chain solutions serving all points of care, to provide them with our decision tower and right-sizing solutions for up to 14 of their distribution centers over the next several years. As the world's largest user of auto store robotic technology, Medline is on the cutting edge of implementing warehouse automation solutions. We are thrilled to collaborate with them to unlock further value in their supply chain by pairing our end of line packaging automation solutions with their storage and retrieval investments so they can maximize throughput in their facilities by picking goods quickly and optimizing shipping volume and customer experience for outbound shipments. The amount of rigor required to satisfy customers of this caliber is tremendous and our team is executing. We've made substantial investments in the team and solutions over the past years, and it is now paying off. We have marquee automation deals in North America with our two key workhorse products in the cut-it as it relates to Medline and Autofill for Walmart. The Walmart deal in particular highlights how powerful having the best-in-class automation solutions can be in driving growth opportunities in protectives. When I first got to RAMPAC, the assumption from most was that automation would detract from protective and that it was a hedge for that business. What we are actually seeing is that they work extremely well together and forge deeper relationships than either business could ever achieve on its own. In 2025, we have now partnered and economically aligned ourselves with two of the most demanding and sophisticated customers in the world, in Amazon and Walmart, and have the potential to generate well over a billion dollars in revenue from these two customers alone over the next eight to 10 years. I can't think of many companies that can say that, and I believe it is a testament to the solutions and talent we have assembled at RAMPAC. Five years ago, this would not have been a possibility at our company. Now on to the quarter. Consolidated net revenue increased 4.4% and would have increased 5.3% excluding the non-cash impact of warrants on a constant currency basis for the quarter. Enterprise accounts in North America as well as global automation continue to be the main top line growth engines in 2025. Our volume momentum in North America continued in the quarter with large accounts driving 3.7% volume growth against the solid third quarter in the prior year. In Europe and in Asia Pacific, volumes were down 2.5 points versus last year, as a more challenging operating environment weighed on top line results. Overall, consolidated volumes were down 30 basis points versus prior year. Automation increased 56% on a constant currency basis in the quarter versus last year, keeping us on track to achieve our expected full year automation revenue of 40 to 45 million. Automation continues to gain traction globally as we believe we are winning more than our fair share in box customization and are beginning to ramp up with Walmart in North America with our autofill solution. We believe our solution set of box customization, automated dunnage insertion, robotic pad insertion, data and analytics, and partnerships with cutting edge AI players such as Pickle and R Squared are a clear differentiator in the market and driving adoption of our solutions. North America was a key driver of top line performance with sales up 10.9% driven by an increase in volume and an increase in automation revenue of 140% over Q3 of last year. Enterprise accounts drove solid growth while the distribution channel improved somewhat relative to the softer Q2 that was impacted by trade and tariff uncertainty. The team continues to drive closes and focus on solution selling, highlighting our breadth as a key differentiator. Underlying demand has been really strong in Boykville throughout the year in North America, with each quarter up double digits. Wrapping had solid contribution in the quarter, up mid single digits after a softer Q2. Cushioning was the only area in North America that was down year over year, driven by softer July. August and September, cushioning revenue increased nicely, and we are expecting cushioning to get a boost from our new launches within our Guardian product line that provides us with smaller footprint and lower cost alternatives to foam in place. Although the launch is very new, the momentum we are seeing is one of the best I've seen from our new product introductions. I think there is a large opportunity in the next number of years to meaningfully grow our cushioning business in North America and Europe with these new products. This will not only boost growth, but provide favorable mix as cushioning has a better margin profile relative to void fill, given it's a robust solution that requires more engineering and know-how to effectively make cushioning pads capable of shipping heavier industrial grade items. Innovation in will remain a key area of focus for us as we look to expand globally and take further share from plastic and phone. We feel very good about the outlook for North America, where we expect our growth will be anchored by Amazon and Walmart in the upcoming years and supplemented by continued innovation. While its origins are in automation, we expect the Walmart agreement to drive growth in PPS over the upcoming years as each autofill unit placed is expected to consume over $100,000 of paper per year, which we believe should lead to a solid recurring revenue stream. We also expect to expand our PPS relationships beyond the void fill associated with the autofills in order to help Walmart maximize the vesting of their warrants. In Europe, industrial activity continues to weigh on cushioning, which was the driver of volume challenges in the quarter, as void fill and wrapping combined were close to flat year over year. The environment seems to be stable at this point and offering some glimpses of improvement as trade tensions settle, but it's choppy nonetheless. In Europe, we are very focused on what is within our control and driving outcomes through better execution. Europe is our most profitable region, so we are taking a number of steps to drive volume growth. We've put in new sales leadership and are hiring key talent to target larger accounts and focus on total solution selling. This will better position us to drive growth through cross-selling opportunities among PPS and automation solutions and develop sticky relationships with some of the largest end users in Europe. Asia Pacific production continues to ramp up, and the team is doing a good job of driving growth in the region, which has been offset somewhat this year due to destocking activity as we ramp up local production of product lines. We continue to view Asia Pacific as a really important part of our growth story in the upcoming years, as having locally sourced paper and production will enable us to be a lot more competitive in the region. We have just qualified our first local paper vendor, which is really exciting. We are looking forward to ramping up production there and produce more for the region locally than in Europe. Given it's an entirely new team there, we have gone slowly and methodically to ramp up production. As expected, we saw some sequential improvement in profitability as our margin enhancement initiatives began to have an impact throughout the quarter, driving an increase in gross margins to 34.5% compared to 31.3% in Q2. On a constant currency basis, adjusted EBITDA increased 3.5% for the quarter, or 7.6%, excluding 0.8 million non-cash foreign impact. The input cost environment remains similar to our update last quarter. In the U.S., pricing has been flat since increasing earlier in the year, and we expect it to remain that way through the remainder of the year. In Europe, the energy markets remain favorable, with Dutch nat gas in the low 30s, We expect paper pricing for the fourth quarter to be in line with Q3 and helping to maintain our attractive margin profile in the region. To summarize, our priorities remain what we shared last quarter, improve margin in North America, drive volumes in Europe, scale automation, and generate cash. We believe all of these things will contribute to a far improved financial profile and enable us to deliver to 2.5 times target that we have. We want our capital structure to not be a topic of discussion and are committed to delivery. We're executing on a plan to do all these with some early successes in key areas. With that, here is Bill with more info on the quarter.