Q4 2024 Ranpak Holdings Corp Earnings Call

Speaker Change: [music].

Operator: Thank you for watching. Good morning and welcome to the Ranpak Holdings Corp fourth quarter 2024 earnings call.

Good morning, and welcome to the Rentech Holdings Corp, fourth quarter 2024 earnings call.

Operator: 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.

All participants are in a listen only mode.

After the Speakers' remarks, we will conduct a question and answer session.

Ask a question you will need to press star followed by the number one on your telephone keypad.

Operator: As a reminder, this conference call is being recorded.

As a reminder, this conference call is being recorded.

Sara Horvath: I would now like to turn the call over to Sara Horvath, General Counsel. Please go ahead. Thank you and good morning everyone.

Speaker Change: I would now like to turn the call over to assure horvath as General Counsel. Please go ahead.

Thank you and good morning, everyone.

Sara Horvath: 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 FEC. 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.

Speaker Change: 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.

Speaker Change: And our other filings filed with the S E T.

Speaker Change: 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.

Sara Horvath: 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.

Speaker Change: <unk> 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.

Sara Horvath: 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.

Speaker Change: The earnings release, we issued this morning and the presentation for today's call are posted on the Investor Relations section of our website.

Speaker Change: A copy of the release has been included in a form 8-K that we submitted to the SEC before this call.

Sara Horvath: 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.

Speaker Change: We'll also make a replay of this conference call available via webcast on the company website.

Speaker Change: For financial information that is presented on a non-GAAP basis, we've included reconciliations to comparable GAAP information.

Speaker Change: Please refer to the tables and slide presentation accompanying today's earnings release.

Sara Horvath: Lastly, we'll be filing our 10-K with the SEC for the period ending December 31, 2024. The 10-K will be available through the SEC or on the Investor Relations section of our website.

Speaker Change: Lastly, we'll be filing our 10-K with the SEC for the period ending December 31 2024.

Speaker Change: The 10-K will be available through the SEC or on the Investor Relations section of our website.

Sara Horvath: With me today I have Omar Asali, our chairman and CEO, and Bill Drew, our CFO.

Unspecified: With me today, I have Omar <unk>, our chairman and CEO and Bill drew our CFO.

Sara Horvath: 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.

Unspecified: Omar will summarize our fourth quarter results and issue our outlook for 2025.

Unspecified: We'll 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.

Omar Asali: With that, I'll turn the call over to Omar. Thank you, Sara, 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 Rampart. 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.

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 <unk>.

Omar: 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 pushed us to double digit volume growth for the year as well.

Omar: I am pleased with the way our team has executed this year and the way we have delivered on our key goals going into 2024.

Omar Asali: 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 expected to grow another 50% in 2025. We said CapEx would step down meaningfully as our major investment cycle is behind us.

Omar: At this time last year I shared a number of key developments, we expect that to occur in 2024 and that 2024, it would be an inflection year related to our business.

Omar: We said enterprise accounts, which we have been referring to as strategic accounts would ramp up beginning in Q2 they did.

Omar: Driving double digit volume growth for the year in a challenging environment.

Omar: We said automation was going to have an inflection year did we grew automation revenue by more than 40% and we expect it to grow another 50% in 2025.

Omar: We said the Capex would step down meaningfully as our major investment cycle is behind US He did decline by 40% and we got back into the mode of generating cash.

Omar Asali: 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.

Omar: We deleveraged by half a turn and refinanced our term loan we plan to pay down a portion of our term loan in 2025.

Omar: We opened up our Malaysia facility to start serving the APAC market, reducing our production and logistics costs to serve the region.

Omar: We are in ramp up phase there and excited about what this platform can break.

Omar: We said our solution set and execution differentiated us in the marketplace. We just got validation of what we have built by the largest ecommerce company in the world choosing to economically aligned themselves with us.

Omar Asali: 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 Ranpak. Overall, I believe what we have delivered in 2024 sets the foundation for a really exciting 2025 and next chapter in Ranpak's evolution.

Omar: We'll speak more about that later on in the call.

Omar: Lastly, we hit the midpoint of our topline guide on the higher end of our adjusted EBITDA guidance.

Omar: Our goal is to do what we say, we're going to do and that is the state of mind of our team at ramp back.

Omar: Overall I believe we have delivered in 2024 sets the foundation for a really exciting 25 and <unk>.

Omar: Next chapter in <unk> evolution.

Omar Asali: 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.

Omar: With the noise of Covid in our major investment cycle behind us.

Omar: And the team are laser focused on execution and growth.

Omar: We have a best in class platform in areas with a major structural tailwind in sustainability and automation.

Omar: You Couldnt draw it up on a piece of paper much better now.

Omar: Now it comes down to execution, we have to deliver.

Omar Asali: 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 may make judging the performance of Ranpak 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 impacts.

Omar: As we get into our quarterly results in more detail I wanted to provide an update on our constant currency presentation.

Omar: In our release you saw our statement that we're moving away from the fixed rate constant currency presentation.

Omar: $115 per euro, which we have done since the company went public in 2019.

Omar: While we believe this may judging the performance of ramp back 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.

Omar: We're adjusting the way we report our results and discuss our performance to be more consistent.

Omar: How others report FX impact.

Omar Asali: As such, the adjusted EBITDA on 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 1.15 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.

Omar: As such the adjusted EBITDA in constant currency changes, we discuss and report today.

Omar: The reported rate of 108, rather than 116.

Omar: We will do our best to bridge the gap in our new reporting to our previous guide, which was at $1 15 versus their reported results.

Omar: 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.

Omar: Moving on to our results, we experienced a six quarter in a row of volume growth and second quarter in a row of double digit volume growth.

Omar Asali: 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 America business was the engine that drove top line performance with sales up 36% and volumes up nearly 40%.

Omar: Consolidated net revenue increased 17% on a constant currency basis for the quarter, driven by 12% volume growth and E. Commerce activity drove outsized growth in North America, and automation had its largest revenue quarter ever.

Omar: 10% volume growth for the year drove 2020 for full year net revenue up 10% on a constant currency basis.

Omar: With strong acceleration throughout the year as enterprise accounts ramped in North America and automation gained momentum.

Omar: This is for US just above the midpoint of our 2024 guide for top line.

Omar: Our North American business was the engine that drove topline performance with sales up 36% and volumes up nearly 40%.

Omar Asali: Full-year net revenue were up 19% in North America, driven by voyage fill 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. Top line 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 Cushioning there remains pressured while e-commerce and automation drove top line expansion.

Omar: Full year net revenue were up 19% in North America, driven by void fill and automation.

Omar: On a positive note the breath and 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.

Omar: Top line improved in Europe, and APAC, but they did not experience the same holiday season strength, we saw in the U S, resulting in an increase of 1% on a constant currency basis the.

The environment in Europe, particularly post U S election remains challenged with the larger industrial economies remaining a drag on performance and activity muted somewhat due to uncertainty about tariffs.

Omar: Cushioning, there remains pressured while e-commerce and automation drove top line expansion.

Omar Asali: 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 enter 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.

Omar: On a constant currency basis, adjusted EBITDA increased 8% for the quarter and 14% for the year.

Omar: Faulting 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.

Omar: 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.

Omar: Generally speaking, we entered 25 and a better operating environment in North America than we experienced in 'twenty four.

Omar: 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.

Omar Asali: 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 mill.

Omar: 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.

Omar: In Europe, recent announcements coming out of Germany, and whatever it takes plan on defense and fiscal spending is encouraging.

Omar: The input cost environment vary 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 Kraft paper.

Omar: The North American paper market became increasingly tight in the fourth quarter.

The plastic to paper transition and strong holiday season drove longer lead times with the mills.

Omar Asali: The strength of the demand in North America market surpassed 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 run time.

Omar: The strength of the demand in North America market surpassed 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.

Omar: Temporarily impacting our margin in the short term.

Omar: 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.

Omar: 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 utilized longer lead times to enhance our planning and runtime.

Omar Asali: 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 week load back post-COVID.

Omar: In Europe, the energy markets have been more volatile lately as winter was colder, resulting in a greater draw on reserves.

Omar: Current pricing on Dutch Nat gas is around 42, eurosport megawatt, which although meaningfully lower than the peak of 300 has moved up from the mid Twenty's area from a year ago.

Omar: 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.

Omar: It persists could put some upward pressure on pricing in the back half of 'twenty five.

Omar: Overall, though in EMEA and APAC, we believe we are well positioned to maintain our attractive margin profile, we clawed back both scope it.

Omar Asali: 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 deal-up.

Omar: We will take you through our guidance for 2025 ask our Bill's remarks, but to summarize we are focused on accelerating topline growth. This year double digit adjusted EBITDA growth and working to the investments we have made to generate cash and further de lever.

Omar Asali: 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 PAX station and provide actionable insights to improve efficiency and reduce waste for our customers. This partnership is an excellent complement to Ranpak's growing suite of technology and AI-powered packaging solutions.

Omar: 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 interest for further growth and expansion.

Omar: In January we also announced an exclusive commercial partnership with <unk>, 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.

Omar: This partnership is an excellent complement to ramp has a growing suite of technology and AI powered packaging solutions through our investments over the last couple of years ran back can now provide customers with cutting edge vision data hardware and robotic solutions to improve warehouse operations.

Omar Asali: Through our investments over the last couple of years, Ranpak can now provide customers with cutting-edge vision, data, hardware, and robotic solutions to improve warehouse operations. Our vision offerings include Rabo 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 box sizes and our machines, given their shipping profile.

Omar: Our vision offerings include Robalo and R squared robotics, which has internally develop the decision tower applying a unique combination of two D and three D. AI supported computer vision technology for a variety of tasks, including quality assurance throughput maximization and precision.

Omar: <unk>.

And data, we have <unk>, our proprietary data and carbonization software.

Omar: This solution uses historical site order data to simulate machine utilization and box fill rates to help customers identify the optimal combination of a bottle sizes and our machines given their shipping profile.

Omar Asali: Our hardware and robotic solutions include internal offerings of the Cut-It, Auto-Fill, 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.

Omar: Our hardware and robotic solutions include internal offerings of the cut it autofill and pad it could reduce touches and labor minimize waste and offer attractive ROI to our customers.

Omar: We also have a strategic partnership with Mako robot the market leader in using generative AI and machine learning to autonomously unload trucks and trailers.

Omar: We believe our innovation in this area has created real differentiation for us and that is the feedback we are getting from our customers.

Omar Asali: We believe we are the future of end-of-line packaging automation.

Omar: We believe we are the future of end of line packaging automation.

William Drew: With that, here's Bill with more info on the quarter.

Omar: With that here's your bill with more info on the quarter.

William Drew: Thank you, Omar. In the deck, you'll see a summary of some of our key performance indicators. We'll also be filing our 10-K, which provides further information on Ranpak's operating results. Overall, net revenue for the company in the fourth quarter increased 17% year-over-year on a constant currency basis, driven by exceptional volume growth in North America and increased automation sales, bringing full-year net revenue up 10% on a constant currency basis. for the quarter, and the Europe and APAC Reporting Division. Combined revenue increased 1% on a constant currency basis, driven by better automation sales, bringing full-year net revenue up 3% on a constant currency basis.

Speaker Change: Thank you Omar and the deck, you'll see a summary of some of our key performance indicators.

Speaker Change: The filing our 10-K, which provides further information on <unk> operating results.

Speaker Change: Overall net revenue for the company in the fourth quarter increased 17% year over year on a constant currency basis, driven by exceptional volume growth in North America and increased automation sales, bringing full year net revenue up 10% on a constant currency basis.

Speaker Change: For the quarter and the Europe, and APAC reporting division combined revenue increased 1% on a constant currency basis, driven by better automation sales, bringing full year net revenue up 3% on a constant currency basis.

William Drew: North America had its highest net revenue quarter ever, driven by 39% volume growth and increased contributions from automation. Net revenue for the quarter was up 36%, which brought the full-year net revenue in the region to growth of 19%. The momentum in North America is excellent as our execution with enterprise accounts continues to deliver results and positions us well for further volume growth in 2025. Gross profit increased 21% in the quarter. As reported, gross margin is 39.4% for the quarter. Improved 170 basis points versus the prior year. Improved margins were driven largely by lower COGS depreciation and improved profitability in Europe and APEC as input costs remained favorable.

Speaker Change: North America had its highest net revenue quarter ever driven by 39% volume growth and increased contributions from automation net.

Speaker Change: Net revenue for the quarter was up 36%, which brought the full year net revenue in the region to growth at 19%.

Speaker Change: <unk> in North America is excellent and our execution with enterprise accounts continues to deliver results and positions us well for further volume growth in 2025.

Speaker Change: Gross profit increased 21% in the quarter as reported gross margin of 39, 4% for the quarter improved 170 basis points versus the prior year.

Speaker Change: Improved margins were driven largely by lower Cogs, depreciation and improved profitability in Europe, and APAC as input costs remain favorable.

William Drew: excluding depreciation, gross profit increased 5.3% year over year due to the mixed impact of lower margin enterprise account revenue in North America. We believe we can improve the margin profile of this book of business in 2025 as we get more efficient with our operations. FG&A excluding RSU expense was up 1.5% versus prior year at $26.2 million. Controlling our spend and leveraging our G&A investments remains a top priority. We saw some of the savings initiatives we implemented in Q3 begin to flow in the fourth quarter, and we expect to keep our spend tight as we focus on maximizing profitability and cash flow generation.

Speaker Change: Excluding depreciation gross profit increased five 3% year over year due to the mix impact of lower margin enterprise account revenue in North America. We believe we can improve the margin profile of this book of business in 2025, as we get more efficient with our operations.

Speaker Change: SG&A, excluding <unk> expense was up one 5% versus prior year at $26 2 million.

Speaker Change: Trolling, our spend and leveraging our G&A investments remains a top priority.

Speaker Change: We saw some of the savings initiatives, we implemented in Q3 begin to flow in the fourth quarter and we expect to keep our spend tight as we focus on maximizing profitability and cash flow generation.

William Drew: We've invested a tremendous amount in personnel and additional products over the past few years, particularly as it relates to automation. We are at a point now where we expect to leverage those investments and better absorb our fixed overhead. At roughly $30 million in sales, automation remained a meaningful drag on our profitability, being a negative $7 million contribution to adjusted EBITDA for the year. We're expecting substantial growth in 2025 in automation, which would put us a little under break even by year end, which is a key milestone for us to hit. As that business scales further and gets to $60 to $100 million in top line, we expect that business to contribute a high teens to 20% adjusted EBITDA margin with minimal CapEx needs.

Speaker Change: We've invested a tremendous amount and personnel and additional products over the past few years, particularly as it relates to automation.

Speaker Change: We are at a point now where we expect to leverage those investments and better absorb our fixed overhead.

Speaker Change: At roughly $30 million in sales automation remains a meaningful drag on our profitability being a negative $7 million contribution to adjusted EBITDA for the year.

Speaker Change: We are expecting substantial growth in 2025, and automation, which would put us a little under breakeven by year end, which is a key milestone for us to hit us.

Speaker Change: As that business scales further gets to $60 million to $100 million in top line, we expect that business to contribute a high teens to 20% adjusted EBITDA margin with minimal capex needs.

William Drew: This would meaningfully improve the overall capital intensity of our financial profile and drive our adjusted EBITDA margins on a consolidated basis back to the mid to high 20% area overall, which is our goal. As a result of the improved sales volumes and improved gross profit in the fourth quarter, adjusted EBITDA improved 8% in the quarter on a constant currency basis, implying a 24.1% adjusted EBITDA margin. This brings the full year's results to up 14% on a constant currency basis and a 22.7% adjusted ETH dot margin for the year, which is a 90 BITS improvement over the prior year.

Speaker Change: This will meaningfully improve the overall capital intensity of our financial profile and drive our adjusted EBITDA margins on a consolidated basis back to the mid to high 20% area overall, which is our goal.

Speaker Change: As a result of the improved sales volumes and improved gross profit in the fourth quarter adjusted EBITDA improved 8% in the quarter on a constant currency basis, implying a 24, 1% adjusted EBITDA margin.

Speaker Change: This brings the full years results two up 14% on a constant currency basis, and a 22, 7% adjusted EBITDA margin for the year, which is a 90 bps improvement over the prior year.

William Drew: Moving to the balance sheet and liquidity, we completed 2024 with a strong liquidity position and refinanced credit facility. We had a cash balance of $76.1 million and no drawings on our revolving credit facility, bringing our reported net leverage to four turns on an LTM basis. A recent peak for leverage was 5.7 times in the June quarter of 2023, and we have been steadily delevering since, with the goal of growing just at EBITDA and getting back to generating cash. Our next target is to get to between 2.5 to 3 turns of leverage, which we believe we can achieve in the next 18 to 24 months.

Speaker Change: Moving to the balance sheet and liquidity, we completed in 2024 with a strong liquidity position and refinanced credit facility, we had a cash balance of $76 1 million and no drawings on our revolving credit facility, bringing our reported net leverage to four turns on an LTM basis.

Speaker Change: A recent peak for leverage was five seven times in the June quarter of 2023, and we have been steadily delevering.

Goal of growing adjusted EBITDA and getting back to generating cash.

Speaker Change: Our next target is to get to between two five to three turns of leverage which we believe we can achieve in the next 18 to 24 months.

William Drew: Our steady progress and improving performance enabled us to refinance our term loan in December with a new syndicated seven-year term loan fee facility. Our new facility is all USD, so we continue to utilize cross-currency swaps to hedge our capital structure. These swaps replace our UFD exposure with Euro exposure, reducing our currency risk as it relates to debt service, and also enable us to save on interest expense by swapping our SOFR exposure with EuroBOR, saving us roughly 130 bps on the hedged portion annually. One thing to point out as it relates to currency is that outside of our cap structure, which we hedge through cross-currency swaps, our exposure is largely translation as our revenue and production costs in the regions we operate are largely matched in local currency, particularly in the U.S.

Speaker Change: Our steady progress in improving performance enabled us to refinance our term loan in December with a new syndicated seven year term loan B facility.

Speaker Change: Our new facility is all USD. So we continue to utilize cross currency swaps to hedge our capital structure. These.

Speaker Change: These swaps replace our USD exposure with euro exposure, reducing our currency risk as it relates to debt service and also enable us to save on interest expense by swapping our sofa exposure with Euro bar savings roughly 130 bps on the hedged portion of annually.

Speaker Change: One thing to point out as it relates to currency is that outside of our cap structure, which we hedged through cross currency swaps. Our exposure is largely translation as our revenue and production costs in the regions we operate.

Speaker Change: Largely matched in local currency, particularly in the U S and Europe.

William Drew: and Europe. Our CapEx for the year was $33.1 million, a reduction of 40% from 2023. We finished our Malaysia plan in August and have begun ramping our production there. This marks the end of our multi-year investment cycle. As we've been saying, we now have a fully invested, world-class digital and physical infrastructure.

Speaker Change: Our capex for the year was $33 1 million a reduction of 40% from 2023, we finished our Malaysia plant in August and have begun ramping our production there.

Speaker Change: This marks the end of our multi year investment cycle as we've been saying, we now have a fully invested world class digital and physical infrastructure.

William Drew: Related to CapEx, I want to speak briefly on tariff. The environment around this is obviously uncertain, but I wanted to share that from a paper sourcing perspective, we see minimal impact as we source locally in our production areas. From a converter standpoint, we continue to work on ways to limit and mitigate potential impact. In our CapEx plans for the year, the impact of the current tariffs of China increased our spend by roughly only a million dollars in 2025 compared to what it would have been in 2024.

Speaker Change: Related to Capex I want to speak briefly on tariffs.

Speaker Change: The environment around us is obviously uncertain, but I wanted to share that from a paper sourcing perspective, we see minimal impact as we source locally in our production areas.

Speaker Change: From a conversion standpoint, we continue to work on ways to limit and mitigate potential impacts.

Speaker Change: And our Capex plans for the year the impact of the current tariffs out of China increased our spend by roughly only $1 million in 2025 compared to what it would have been in 2024.

William Drew: One area I want to provide some additional color on as well with the accounting impact of the Amazon more until more mentioned. As you see us report in 2025, there will be some noise related to the revenue associated with Amazon as the value of the warrants are recognized. For folks who aren't familiar with these types of transactions, we will need to reduce a portion of our revenue from Amazon with the value of the warrants over the life of the deal. That means each period there'll be a non-cash decrease to our reported revenue figures, which will flow down through the income statement to gross profit adjusted EBITDA net income.

Speaker Change: One area I want to provide some additional color on as well was the accounting impact of the Amazon warrants Omar mentioned as these.

Speaker Change: <unk> reported in 2025, there will be some noise related to the revenue associated with Amazon as the value of the warrants are recognized for folks who aren't familiar with these types of transactions, we will need to reduce a portion of our revenue from Amazon with the value of the warrants over the life of the deal.

Speaker Change: Means each period, there will be a noncash decrease to our reported revenue figures, which will flow down through the income statement to gross profit adjusted EBITDA net income.

William Drew: You will see the impact of this clearly in the Statement of Cash Flows, where it gets added back in, as well as in the footnotes, where we'll break out the value for the period. We wanted to flag this, so the reported gap figures and the justice will be impacted by the value of the warrant. When evaluating our performance, we recommend looking at our income statement figures on a pro forma basis, adding those revenue offsets in to get a true sense of the cash flow performance. While the reporting optics are a bit confusing at first, we believe this deal sets a great alignment for meaningful incremental growth and cash flow for Ranpak with the upcoming years.

Speaker Change: You will see the impact of this clearly in the statement of cash flows where it gets added back in as well as in the footnotes, where we'll breakout the value for the period. We wanted to flag. This as the reported GAAP figures and adjusted EBITDA will be impacted by the value of the warrants.

Speaker Change: When evaluating our performance we recommend looking at our income statement figures on a pro forma basis, adding those revenue offsets and to get a true sense of the cash flow performance.

Speaker Change: While the reporting optics are a bit confusing at first we believe this deals thats, a great alignment for meaningful incremental growth and cash flow for impact with the upcoming years.

Omar Asali: With that, I'll turn it to Omar. Thank you, Bill. The past couple of years, and 2024 in particular, have laid the foundation for the next chapter of RANPAC. We are executing and following our plan. Some of our key accomplishments include, we re-architected the IT system and now have world-class technology driving our decision-making and providing insights. We won enterprise accounts with more to come and have economically aligned ourselves with the largest e-commerce player in the world. We concluded our investment cycle and got back to cash generation mode.

Omar: With that I'll turn it to Omar.

Omar: Thank you Bill the past couple of years in 2024 in particular have laid the foundation for the next chapter of Ram Pack, we are executing on following our plan.

Omar: Some of our key accomplishments include.

Omar: We re architected the it system and now have world class technology, driving our decision, making and providing insights.

Omar: We won enterprise accounts with more to come and have economically aligned ourselves with the largest e-commerce player in the world.

Omar: We concluded our investment cycle and got back to cash generation mode.

Omar Asali: For our next chapter, our goal is to deliver the following. automation at scale. That means 100 million plus in sales in the next few years. Two, we have incentivized our largest customer to provide us with hundreds of millions of incremental spend and deepened our relationship with them. 3, we are focused on getting leverage to 2.5 to 3 times. Our goal is for our CAF structure to not be a topic of discussion. Four, enterprise account wins and a lower leverage profile will enable us to go further on offense and scale the business. Five, as we get closer to our target leverage profile, we will have a lot more options on the menu related to capital allocation.

Omar: For our next chapter our goal is to deliver the following automd.

Omar: Automation at scale that means 100 million plus in sales in the next few years to.

Omar: We have incentivized, our largest customer to provide us with hundreds of millions of incremental spend and deepened our relationship with them.

Omar: Three we are focused on getting leverage to two five to three times. Our goal is for our cap structure to not be a topic of discussion.

Omar: For <unk>.

Omar: Enterprise account wins, and a lower leverage profile will enable us to go further on offense and scale the business.

Omar: Five as we get closer to our target leverage profile, we will have a lot more options on the menu related to capital allocation.

Omar Asali: Our share price does not reflect the platform we have built and the momentum of this business. I look forward to being able to go on offense, especially when our shares are under pressure.

Omar: Our share price does not reflect the platform, we have built and the momentum of this business.

Omar: I look forward to being able to go on offense, especially when our shares are under pressure.

Omar Asali: Regarding guidance for the year, on a constant currency basis, we are forecasting net revenue growth in the area of 5 to 11% and adjusted EBITDA growth of 5 to 16%, calculated by translating 2025 forecasted metrics and an exchange rate of 1 euro to 108, which represents the average exchange rate of 2024, which results in a range of 387 to 409 million in net revenue and 88 to 97 million for adjusted EBITDA. This guidance reflects the expectation of a reported non-cash net revenue and adjusted EBITDA reduction of between $3 million to $5 million in 2025 related to the recognition of foreign expense against Amazon revenue.

Omar: Regarding guidance for the year on a constant currency basis, we are forecasting net revenue growth in the area of 5% to 11% and adjusted EBITDA growth of 5% to 16%.

Omar: Escalated by translating 2025 forecasted metrics and an exchange rate of one euro to one OE, which.

Omar: Presents the average exchange rate of 2024, which results in a range of 387 to 419 million in net revenue and <unk> $88 million to $97 million for adjusted EBITDA.

This guidance reflects the expectation of a reported noncash net revenue and adjusted EBITDA reduction of between $3 million to $5 million in 2025 related to the recognition of foreign expense against Amazon revenue.

Omar: So even though there may be a bit of noise. This year as we absorbed the impact of the first year of our new economic arrangement with our largest customer overall, we feel great about the strategic and economic nature of this deal.

Omar Asali: So even though there may be a bit of noise this year as we absorb the impact of the first year of our new economic arrangement with our largest customer, overall, we feel great about the strategic and economic nature of this deal. For reference, our prior method of reporting constant currency at a 1.15 exchange rate would have been 400 million to 425 million in top line and 92 million to 101 of adjusted EBIT.

Omar: For reference our prior method of reporting constant currency at a 116 exchange rate would have been $400 million to $425 million in top line and $92 million to 101 of adjusted EBITDA.

Omar Asali: From a more general standpoint, our expectations going into 2025 are of a normalizing operating environment in e-commerce as the consumer and labor market in North America remain resilient. We saw improving trends from the fourth quarter continuing to the start of the year in this area, which is encouraging.

Omar: From a more general standpoint, our expectations going into 2025 are of a normalizing operating environment in e-commerce as the consumer and labor market in North America remained resilient.

Omar: We saw improving trends from the fourth quarter continue into the start of the year in this area, which is encouraging.

Omar Asali: Industrial activity is expected to remain lackluster globally until businesses get more confidence in the operating environment and adjust to the new norms post-election. We expect to achieve mid to high single-digit volume growth in PPS, building on the momentum of 2024, and recognizing that we'll have a tough comparison in the second half. Industrial automation remains a mega theme in an environment where labor costs and other rising inputs pressure margins. Our solutions deliver real savings and efficiencies, minimize costs and waste. We are forecasting automation revenue to be up more than 50% in 2025. Our forecasted growth and adjusted EBITDA of 5% to 16% reflects the contributions from the expected top line increase and improving margin profile.

Omar: Industrial activity is expected to remain lackluster globally until businesses get more confidence in the operating environment and adjust to the new norms post election.

Omar: We expect to achieve mid to high single digit volume growth in bps building on the momentum of 2024 and recognizing that we lap at US comparison in the second half.

Omar: Industrial automation remains a mega theme in an environment, where labor costs and other rising inputs pressure margins.

Omar: Our solutions deliver real savings and efficiencies minimize cost and waste we are forecasting automation revenue to be up more than 50% in 2025.

Omar: Our forecasted growth in adjusted EBITDA of 5% to 16% reflects the contributions from the expected top line increase and improving margin profile.

Omar Asali: We expect that capital expenditures will be between $36 to $38 million as our major investment cycle is complete, enabling us to focus on cash generation and deleveraging and taking into account current knowns on tariffs, which obviously are dynamic. We expect to generate roughly $20 million in cash in 2025 at today's currency levels, which provide us with the ability to pay down roughly $50 million of debt to help lower our interest burden and gross leverage profile. Generally speaking, outside of the specific enterprise account activity driving PPS, an automation performance that we are keenly aware of, we believe this guidance is somewhat conservative and reflects a continued somewhat challenging near-term backdrop in Europe.

Omar: We expect that capital expenditures will be between 36% to $38 million as our major investment cycle is complete enabling us to focus on cash generation and deleveraging and taking into account current knowns on tariffs, which obviously are dynamic.

Omar: We expect to generate roughly $20 million in cash in 2025 at today's currency levels, which provide us with the ability to pay down roughly $50 million of debt to help lower our interest burden and gross leverage profile.

Omar: Generally speaking outside of the specific enterprise account activity driving vps and automation performance that we are keenly aware of we believe this guidance is somewhat conservative and reflects our continued somewhat challenging near term backdrop in Europe.

Omar: Expanding our presence in Asia Pacific was a key accomplishment in 2024 and sets us up well to grow in the region.

Omar Asali: Expanding our presence in Asia Pacific was a key accomplishment in 2024 and sets us up well to grow in the region. As that factory ramps, lead times to get products to key markets such as Japan, Korea, Australia significantly reduce, and we have the opportunity to reduce our freight and logistics costs, making us much more competitive in the region. Local paper sourcing is further upside. I'm excited about that as we have identified more local mills that could provide us with well-priced paper relative to what we currently source in Europe.

Omar: As that factory ramps lead times to get products to key markets, such as Japan, Korea, Australia significantly reduce and we have the opportunity to reduce our freight and logistics costs, making us much more competitive in the region.

Omar: Local paper sourcing as further upside on <unk>.

Omar: Excited about that as we have identified more local mills that could provide us with low price paper relative to what we currently source in Europe.

Operator: Thank you all again.

Omar: Thank you all again at this point, we'd like to open the line up for questions operator.

Operator: At this point, we'd like to open the line up for questions. Operator. Thank you.

Omar: Thank you if you would like to ask a question. Please press star followed by the number one on your telephone keypad to withdraw any questions Press star one again.

Operator: If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw any questions, press star one again.

Greg Palm: Our first question will come from Greg Palm from Craig Hallam. Please go ahead, your line is open. Yeah, good morning. Thanks for taking the questions and, you know, congrats on doing everything you said you were going to do at the start of the year. Thank you, Greg. Good morning.

Speaker Change: Our first question will come from Greg Palm from Craig Hallum. Please go ahead. Your line is open.

Greg Palm: Yeah. Good morning. Thanks.

Speaker Change: Thanks for taking the questions.

Speaker Change: Congrats on doing everything you said you were going to do at start of the year.

Greg Palm: Thank you Greg good morning.

Omar Asali: Let's start with Amazon, if if we could, and wanted to get a little bit more color on kind of how you view 25 in terms of the ramp up of the commercial agreement. And specifically, are you able to give us some color on, you know, maybe revenue expectations for this year relative to what you reported in 2024? Yeah, let me start and then I'll ask Bill to chime in. So we continue to ramp up nicely with Amazon. As you know, Greg, in our business, the second half of the year is always a lot more important than the first half, given, you know, seasonality and holiday activity, etc.

Speaker Change: Let's start with Amazon, if if we could.

Greg Palm: And wanted to get a little bit more color.

Greg Palm: Kind of how you view 25 in terms of the ramp up of the commercial agreement.

Greg Palm: Specifically are you able to give us some color on maybe revenue expectations for this year relative to what you reported in 2024.

Greg Palm: Yes.

Speaker Change: Yes, let me start and then I'll ask bill to chime in so.

Speaker Change: We continue to ramp up nicely with Amazon as you know Greg in our business. The second half of the year is always a lot more important than.

And then the first half given seasonality and holiday activity et cetera.

Omar Asali: So right now, we're actually doing quite a bit more with them across different facilities in the U.S. We're also expanding our dialogue outside of the U.S. in Europe and in Asia Pacific with some of their, you know, facilities there. And we're expanding dialogue, you know, across our different offerings, not just in PPS, but in automation, in cold chain, etc. I'm expecting as the year goes on that we will continue to ramp up activity with them. So I'm honestly expecting a very busy year for us with them. And we feel that we're pretty aligned given the strategic deal that we got together.

Speaker Change: So right now, we're actually doing quite a bit more with them across different facilities in the U S.

Speaker Change: There.

Speaker Change: Also expanding our dialog outside of the U S in Europe and in Asia Pacific with some of their.

Speaker Change: Facilities, there and.

Speaker Change: And we're expanding dialogue across our different our different offerings not just in PPS smart.

Speaker Change: And automation and cold chain et cetera.

Speaker Change: We're expecting as the year goes on that we will continue to ramp up activity with them.

Speaker Change: So honestly expecting a very busy year for us with them and we feel.

Speaker Change: That we're pretty aligned given the strategic deal that we got together.

William Drew: I'll let Bill maybe talk a little bit about scope. As you know, throughout the year, we may move more and more towards an asset light model with them, where basically the cost of the paper and the paper buying is not part of the calculation around warrants and revenue. So that's something we continue to work and there'll be a transitional period for that, you know, in the upcoming months and quarters. But Bill, I don't know if you want to add anything about scale. Yeah, sure. So I think from a volume perspective, right, we're expecting to continue to grow meaningfully with Amazon, you know, we're expecting double digit volume growth there in a number of different areas.

I'll, let bill maybe talk a little bit about scope as you know throughout the year, we may move more and more towards an asset light model with them.

Speaker Change: We're basically at a cost of the paper and the paper buying is not part of the calculation around warrants and revenue. So thats something we continue to work and there'll be a transitional period for that.

Speaker Change: In the upcoming months and quarters, but bill I don't know if you want to add anything about about scale.

Bill: Yeah sure. So I think from a from a volume perspective, right, where we're expecting to continue to grow meaningfully with Amazon.

Bill: We're expecting double digit volume growth, there and a number of different areas and we think that there's really good opportunity to continue to expand with them in North America as well as other parts of the world. So we're excited about deepening the relationship there.

Omar Asali: We think that there's really good opportunity to continue to expand with them in North America, as well as other parts of the world. So we're excited about deepening the relationship there. And, you know, as the relationship evolves, there's other areas, you know, within our product portfolio that we can expand into. And when you talk about an evolving relationship with them specifically, should that translate into a higher installed base? Or is the thought that you're going to continue to sort of refurbish, you know, existing machines in the field? Honestly, I think our hope and expectation is both.

Bill: And as the relationship evolves there is other areas within our product portfolio that we can expand into.

Bill: And when you talk about an evolving relationship with them specifically should that translate into a higher installed base or is the thought that you're going to continue disorder refurbish existing machines in the field.

Bill: Honestly I think our hope and expectation is both we continue to increase our footprint wisdom.

Omar Asali: We continue to increase our footprint with them. The dialogue, to be quite frank, Greg, is around very, very sizable opportunities. You know, we're not ready to sort of report any numbers per se, but the dialogue is expansive. It's around a lot of opportunities. It entails, you know, increasing PPS and both new as well as refurbished equipment. It entails more consumables, frankly. It entails even some new areas that we want to enter that we believe we can help them with. And we can help them, you know, hopefully over time, we can build scale in some of these new opportunities.

Bill: The dialogue to be quite Frank Greg.

Bill: Around very very sizable opportunities.

Speaker Change: We're not ready to sort of report.

Speaker Change: Any numbers per se, but the dialogue is expansive it's around a lot of opportunities it entails increase.

Speaker Change: Increasing PPS and both new as well as refurbished equipment. It entails more consumables frankly, it entails even some new areas that we want to enter that we believe we can help them with and we can help them.

Speaker Change: Hopefully overtime, we can build scale in some of these new opportunities. So I feel like the level of activity and dialogue is very robust.

Omar Asali: So I feel like the level of activity and dialogue is very robust. Let us see how the next few months go. And when we have something more definitive to report, you know, we will report back.

Speaker Change: Let us see how the next few months ago, and when we have something more definitive to report.

Speaker Change: We will report back I will say that.

Omar Asali: I will say that we've been talking about enterprise accounts, as you know, for a number of quarters. And as evidenced by, frankly, Q3 and Q4, we were surprised to the upside with the level of activity and volume that was needed to satisfy some of those accounts. And that includes Amazon and other customers. And we're hoping and expecting that that trend will continue in 2025. And we think we can actually win more enterprise accounts in 2025. So we're quite, in North America, we're quite encouraged with what we're seeing, Greg. Okay, great.

Speaker Change: We've been talking about enterprise accounts as you know for a number of quarters.

Speaker Change: And as evidenced by frankly, Q3, and Q4, but we were surprised to the upside with the level of activity and volume that was needed to satisfy some of those accounts and.

Speaker Change: And that includes Amazon and other customers and we're hoping and expecting that that trend will continue in 2025, and we think we can actually win more enterprise accounts in 2025. So we are quite in North America, we're quite encouraged with what we're seeing Greg.

Speaker Change: Okay great.

Omar Asali: You know, lastly, you pointed out that you have a lot of European exposure today. That's, I think, recently been, you know, quite a big headwind. And you mentioned kind of the whatever it takes, some of the proposed stimulus over there. I mean, it's obviously too early to know what will happen. But is it, you know, are you seeing, you know, do you think you could see green shoots? Are you getting any feedback? I'm just trying to get a sense of whether this ends up maybe potentially being a source of strength at some point. So Europe, as we all know, has been a challenge.

Speaker Change: Lastly, you pointed out that you have a lot of European exposure today.

Speaker Change: I think recently been.

Speaker Change: Quite a big headwind and you mentioned kind of do whatever it takes some of the proposed stimulus over there I mean, it's obviously too early to know what will happen but.

Speaker Change: Are you seeing do you expect you could see green shoots are you are you getting any feedback I'm just trying to get a sense of whether this ends up maybe potentially being a source of strength at some point.

Speaker Change: So Europe as we all know has been a challenge it's a very big piece of our footprint. That's a very important margin very important sorry business for us with very attractive margins.

Omar Asali: It's a very big piece of our footprint. It's a very important business for us with very attractive margins. If you look at our guide, and I'll just make a bit of comment around our guide, you will see our guide for 25 has a little bit of a broad range in it, and I would argue has a little bit of conservatism in it, and that conservatism is largely driven by the macro picture and by Europe and uncertainty around Europe. So we reflected that in our numbers, because frankly, what I'm seeing inside the business and what I'm seeing with some of our customers is a lot more bullish than our guide, but we tempered it given your question about Europe.

Speaker Change: If you look at our guide and I'll, just make a bit of comment around our guide.

Speaker Change: You will see.

Speaker Change: Our guide for 'twenty five.

Speaker Change: <unk> has a little bit of a broad range in it and I would argue has a little bit of conservatism in it and that conservatism is largely driven by the macro picture and by Europe and uncertainty around Europe. So we reflected that in our numbers because frankly, what I am seeing inside the business and what I'm seeing with some of our customers is a lot more bullish on our <unk>.

Speaker Change: But we tempered it given your question about Europe.

Omar Asali: The last couple of days, the announcements from Germany around stimulus, around defense, around whatever it takes are very, very encouraging. We're hoping, it's early days, we're hoping that will translate into economic activity, into more confidence at CEO level. That type of activity can be very important for us. Europe is a very important market. Germany, in particular, is a very important market for Rampack. So I'm quite encouraged, but it's early days. And then you'll see the reaction, whether it's in the Euro the last couple of days, whether it's in a number of basically announcements around hopefully a slightly better macro backdrop, all these things will be helpful.

Speaker Change: Last couple of days, the announcements from Germany around stimulus around defense around whatever it takes are very very encouraging. We're hoping it's early days, we are hoping that will translate into economic activity into more confidence at CEO level that type of activity. It can be very important for us Europe is a very.

Speaker Change: Important market, Germany in particular is a very important market for ramp back so I'm quite encouraged but it's early days.

Speaker Change: And then Youll see the reaction whether it's in the euro the last couple of days.

Speaker Change: Whether it's an and.

Speaker Change: Number of basically announcements around hopefully a slightly better macro backdrop. All these things will be helpful. And then of course, there is the biggest question around geopolitics and around potential piece and if all that transpires, if that's going to be a very significant.

Omar Asali: And then of course, there's the biggest question around geopolitics and around potential peace. And if all that transpires, that's gonna be a very significant tailwind for us. So it's not reflected in our numbers. We're watching things closely. We are talking to our team constantly on the ground. Let's see how the next few weeks, again, these are very fresh announcements. Let's see in the next few weeks what transpires on the ground. But these early signs are pretty positive, Greg. Yeah, that makes sense.

Speaker Change: Yeah.

Speaker Change: Tailwind for us so it is not reflected in our numbers. We're watching things closely we are talking to our team constantly underground let.

Speaker Change: Let's see how the next few weeks again these are very fresh announcements, let's see the next few weeks what transpires underground, but these early signs are pretty positive Greg yes.

Speaker Change: Yes that makes sense.

Operator: All right, I'll leave it there. Thanks. Thank you.

Speaker Change: Alright, I will leave it there thanks.

Speaker Change: Thank you.

Ghansham Panjabi: Our next question comes from Ghansham Panjabi from Baird. Please go ahead.

Speaker Change: Our next question comes from Ghansham Panjabi from Baird. Please go ahead. Your line is open.

Operator: Your line is open.

Omar Asali: Operator. Good morning, everybody. Morning, Ghansham. Omar, on the mid to high single-digit volume growth expectation for 2025, how does that break down in terms of contribution from paper versus automation? Also, what are you forecasting for e-commerce versus the industrial end markets? Because I understand the Amazon sort of...

Speaker Change: Thanks, operator, good morning, everybody.

Speaker Change: Morning, guys Tomorrow on the mid to high single digit volume growth expectation for 2025.

Speaker Change: Does that break down in terms of contribution from paper versus automation.

Speaker Change: Are you forecasting for e-commerce versus the industrial end markets, because they understand the Amazon sort of relationship.

Speaker Change: Spansion et cetera, but comparisons will be tougher.

Speaker Change: Especially north American e-commerce in the back half of next year 2025, Okay. Sure. Let me let me start with just some commentary Ghansham and then I'll have bill maybe walk you through.

Omar Asali: Sure, let me start with just some commentary, Ghansham, and then I'll have Bill maybe walk you through, you know, through a bit more precise numbers. We continue to see attractive sort of backdrop in e-commerce. Amazon by far is the biggest, but as I stated, we are winning other pretty sizable enterprise accounts that we think will ramp up in 2025, and that will drive part of the growth. So in addition to Amazon, we're expecting more and more activity and ramp up in volume with other sizable accounts. Amazon themselves, we believe there are a lot of opportunities that we can enter, and frankly, even other geographies where today we are not active.

Speaker Change: So a bit more precise numbers.

Speaker Change: We continue to see attractive.

Speaker Change: Sort of backdrop in e-commerce, Amazon by far is the biggest.

Speaker Change: But as I stated, we are winning other pretty sizeable enterprise accounts that we think will ramp up in 2025 and that will drive part of the growth. So in addition to Amazon, we are expecting more and more activity and ramp up in volume with other sizable accounts.

Speaker Change: Amazon themselves. We believe there are a lot of opportunities that we can enter and frankly, even other geographies where today, we are not active so it stops.

Omar Asali: So it's tough, you know, beyond the current business that we have with them, we think there's actually, despite the tough comp that you refer, we think there's quite a bit of growth opportunity there.

Speaker Change: Beyond the current business that we have with them. We think there's actually despite the tough comp, but that youll refer we think theres quite a bit of growth opportunity there on the industrial side.

Omar Asali: On the industrial side, our forecast has been a little bit muted, frankly, more just given the macro backdrop and given what we're seeing out there in the marketplace. So we have not ascribed huge growth on the industrial channel, frankly, globally. And then the last piece in automation, you know the size of our business. We expect that in 2025, we will deliver north of 50%, 5-0 growth. And that's part of our growth algorithm.

Speaker Change: Our forecast has been a little bit muted frankly, more just given the macro backdrop and given what we're seeing out there in the marketplace. So have not ascribed huge growth on the industrial channel frankly globally, and then the last piece and automation.

Speaker Change: Size of our business, we we expect that in.

Speaker Change: In 2025, we will deliver north of 50% five zero growth and Thats part of our growth algorithm. So these are sort of the pieces that are coming together.

William Drew: So these are sort of the pieces that are coming together that we feel will drive the numbers that we outlined.

Speaker Change: That we feel will drive the numbers that we outlined by Bill do you want to add any color sure. Yes. It got some just for the building blocks. If you think about the volume the automation contribution et cetera.

William Drew: But Bill, do you want to add any color? Sure, yeah, Ghanshyam, just for the building blocks, if you think about the volume, the automation contribution, et cetera, you know, the way that we were trying to break it down was for PPS volume growth to be in that mid to high single digits. So at the low end and the high end of the range with automation contributing, call it three to five points, right? At the low to high end. And then we've got two to three points, really, of kind of what we would call price mix headwind with, you know, a point of that being the Amazon warrants.

Bill: The way that we were trying to break it down was for PPS volume growth to be in that mid to high single digits. So at the low end and the high end of the range.

Bill: With automation contributing call it three to five points right at the low to high end and then we've got two to three points really are kind of what we would call price mix headwind with a point of that being the Amazon warrants.

William Drew: So that's how you get to kind of that 5-11% Ghanshyam.

Bill: So that's how you get to the kind of that 5% to 11% Ghansham.

Operator: Okay, that's perfect.

Bill: Okay that's perfect.

William Drew: And then going back to 4Q, you know, did EBITDA margins come in where you thought? 17% core sales growth versus the 8% on EBITDA. Sure, I'll be, just to be blunt about where we are, the growth Ghansham surpassed our expectations. So we knew that we were winning business and that we're going to ramp up. We tried to do the best forecasting we could. We tried to basically have our team and our physical footprint ready for meaningful growth. And growth ended up being a bit bigger than we expected. And frankly, that meant we were not as efficient as we wanted to be.

Bill: And then going back to <unk> EBITDA.

Bill: EBITDA margins come in where you thought they would 17% core sales growth versus the 8% on EBITDA growth.

Bill: Yes.

Bill: Just give us some a little bit more color on that sure.

Bill: Just to be.

Blunt about where we are the growth ghansham surpassed our expectations. So we knew that we were winning business in that we're going to ramp up.

Bill: We try to do it best forecasting we could we tried to basically have our team and our physical footprint ready for meaningful growth and growth ended up being bigger than we expected and frankly.

Bill: That meant we were not as efficient as we want it to be our top priority was instead of focusing on efficiency ghansham.

William Drew: Our top priority was, instead of focusing on efficiency, Ghansham was focusing on a good customer experience as we're onboarding and wrapping up with customers. And that meant some pressure on gross margin. It meant, frankly, a little bit of added resources, et cetera, in our G&A to make sure we're fulfilling, you know, customers' expectations and hopefully surpassing that. I expect now that we have a better handle of, you know, that growth, and I feel we have a better handle of the expectation from where we are here going forward, you will start seeing more and more efficiency from us.

Bill: Was focusing on a good customer experience as we're onboarding and wrapping up with customers and that meant.

Bill: Some pressure on gross margin.

Bill: Frankly, a little bit of added resources et cetera.

Bill: <unk> to make sure we're fulfilling.

Bill: Customers' expectations and hopefully start passing that.

Bill: I expect now that we have a better handle of.

Bill: That growth and I feel we have a better handle of the expectation from where we are here going forward you will start seeing more and more efficiency from us and that will be reflected in the margin profile right now the top priority at ramp back is driving growth and making sure. Our customers are happy and we believe over time as we normalize you will.

William Drew: And that will be reflected in the margin profile. Right now, the top priority at Rampak is driving growth and making sure our customers are happy.

William Drew: And we believe over time, as we normalize, you will see more of that growth flow into both gross margin and EBITDA margin.

Bill: You'll see more of that growth flow into both gross margin and EBITDA margin.

Speaker Change: Okay, Perfect and then bill in terms of the EBITDA bridge for 25.

Operator: Perfect.

William Drew: And then Bill, you know, in terms of the Ipidab Bridge for 25, you know, 88 to Sure. So from a free cash flow perspective, you know, Omar mentioned and I mentioned in the prepared remarks that generating cash and using that to pay down debt is a top priority for Ranpak. So, there's a tremendous amount of focus on cash generation within the company going into 2025. If you want to do kind of a walk from EBITDA to free cash, right? If you start kind of in that midpoint of the range there in $93, $94 million, you know, we're expecting about $36, $37 million of capex.

Speaker Change: <unk> hundred 97 in terms of how that translates into free cash flow can you just give us some parameters associated with it.

Speaker Change: Sure so from a free cash flow perspective.

Speaker Change: Omar mentioned and I mentioned in the prepared remarks that generating cash and using that to pay down debt is a top priority for <unk>. So there is a.

Speaker Change: A tremendous amount of focus on cash generation within the company going into 2025.

Speaker Change: If you want to give kind of a walk from EBITDA to free cash right. It is if you start kind of in that mid point of the range, there and $93 $94 million.

We're expecting about 36 $37 million of Capex.

William Drew: Cash interest, we expect to be about $34 million on a net basis if rates stay where they are. We expect to have, you know, roughly $4 million or so, $5 million of cash taxes, and then a slight benefit in work and cap to get you to right around that $20 million in free cash.

Speaker Change: Cash interest, we expect to be about $34 million on a net basis if rates stay where they are.

Speaker Change: We expect to have roughly $4 million or so $5 million of cash taxes, and then a slight benefit in working cap to get you to right around that $20 million of free cash.

Speaker Change: Okay Perfect and then just finally, just so I understand it because.

William Drew: And then just finally, you know, just so I understand it. So the $3 to $5 million in warrant expense you're embedding for 2025 on EBITDA, that assumes an embedded... contribution from Amazon is that That's correct. So we have to allocate a portion of our expected sales to that warrant expense. So just thinking out to 26, would it also be 3 to 5, or would it vary depending? It'll vary based on the sales contribution, so hopefully it grows.

Speaker Change: For us in terms of the warrant expense et cetera.

Speaker Change: So the $3 million to $5 million and warrant expense, you're embedding for 2025 on EBITDA.

Speaker Change: And assumes an embedded sales contribution from Amazon does that is that correct.

Speaker Change: That's correct. So we have to allocate a portion of our expected sales to that warrant expense.

Speaker Change: And so just thinking out to 2006 would it also be three to five or would it vary depending on.

Speaker Change: Sales contribution.

Speaker Change: It will vary based on the sales contribution so hopefully gross.

Speaker Change: Okay.

Operator: Thanks so much, guys.

Speaker Change: Okay. Thanks, so much guys. Thanks for taking my questions.

Operator: Thanks. Thanks, Ghansham.

Ghansham Panjabi: Thanks Ghansham.

Operator: For any additional questions, please press star followed by one on your telephone keypad.

Speaker Change: For any additional questions. Please press star followed by one on your telephone keypad.

Troy Jensen: Our next question comes from Troy Jensen from Cantor Fitzgerald. Please go ahead, your line is open. Hey gentlemen, congrats on all the great news here recently. Thanks, Troy. Good morning. Hey, so a quick just clarity here. Automation, I think you guys said was $30 million in the quarter and you expect, excuse me, $30 million in the year and you expect it to grow greater than 50% in 2025? That's, that's exactly right. So our expectation is somewhere, let's call it 45 plus for 2025 in top line for automation. All right, perfect.

Speaker Change: Our next question comes from Troy Jensen from Cantor Fitzgerald. Please go ahead. Your line is open.

Troy Jensen: Hey, gentlemen, congrats on all the great news here recently.

Speaker Change: Thanks, Troy and good morning.

Speaker Change: Hey, good morning, Hey, So quick just clarity here automation I think you guys said it was $30 million in the quarter and we expect to excuse me $30 million, a year and expected to grow greater than that.

Speaker Change: The 2% and 25.

Speaker Change: That's exactly right. So our expectation is somewhere let's call it 45% plus for 2025 and topline for automation.

Speaker Change: Okay, Perfect and then just one or two automation products. That's driving this growth or is it more broad base related to some of these new products launched.

Omar Asali: And then is there just one or two, you know, automation products that's driving this growth? Or is it more broad-based? Is this, you know, related to some of these new products launched in early January? Yeah, that's it. There's a lot of activity in automation. There's a number of what I'm going to call, let's call it smaller opportunities of few pieces of equipment here and there. There are a couple of sizable accounts that we have been working with for a number of years. In many cases, Troy, we've installed things in last year and the year before, and we expect to ramp up and provide more automation solutions to some of their other facilities.

Speaker Change: The January yes, that's it.

Speaker Change: There is a lot of activity in automation. There is a number of what I am going to call, let's call. It smaller smaller opportunities a few pieces of equipment here and there. There are a couple of sizable accounts that we have been working with for a number of years in many cases, Troy we've installed things in <unk>.

Speaker Change: Last year and the year before and we expect to ramp up.

Speaker Change: And provide more automation solutions to some of their other facilities. So it's a mix of some large repeated customers as well as some of the smaller orders here and there.

Omar Asali: So it's a mix of some large repeated customers as well as some of the smaller, you know, orders here and there. There are probably globally close to three or four very large enterprises that are driving part of that growth. Not all of it, but a meaningful part of it. And frankly, that's the nature of the business. If you're not winning with large accounts in automation, you know, for e-commerce and for warehouses and fulfillment, then, you know, I don't think you're a real player in this space. The space is a little bit chunky. So that's driving part of the growth.

Speaker Change: There are probably globally close to three or four very large enterprises that are driving part of that growth not all of it but a meaningful part of it and frankly thats the nature of the business, if you're not winning with large accounts in automation for E Commerce and four warehouses are full.

Speaker Change: Element. Then then I don't think you are a real player in this space. The space is a little bit chunky. So that's driving part of the growth. The good news is in the majority of these cases stroy. These are actually existing customers with our solutions installed where we think we can ramp up.

Omar Asali: The good news is in the majority of these cases, Troy, these are actually existing customers with our solutions installed where we think we can ramp up. These are not completely new customers with new orders and new relationships.

Speaker Change: Are not completely new customers with new orders and new relationships.

Speaker Change: Got you perfect maybe a couple of questions for Bill here.

Omar Asali: Was there a 10% customer in Q4 or all of 2024? There was so starting in Q3 it got close and then Q4 there was a 10% customer and then for the full year there was. was. Okay, perfect.

Speaker Change: Was there a 10% customer in Q4 or all of 2024.

Speaker Change: There was so starting in Q3 it got closed in Q4, there was a 10% customer and then for the full year.

Speaker Change: Yes.

Speaker Change: Okay Perfect and then just last question can you help us out with revenue seasonality in Q1, let me kind of coming off a strong Q4, and what does it kind of typically seasonally do and in the March quarter.

Omar Asali: And then just last question, can you help sell with revenue seasonality in Q1? I mean, kind of coming off a strong Q4, what does it kind of typically seasonally do in the March? Sure, so typically there's a step down from Q4 to Q1, right? And that's been, you know, high single digit, you know, historically, and sometimes low double digit, depending on how strong the holiday season. But, you know, the way that the seasonality of the business typically works is Q1 is typically the lowest in terms of revenue contribution, and then it slowly builds throughout the year.

Speaker Change: Sure. So typically there is a step down from Q4 to Q1 in.

Speaker Change: And that's been high single digits.

Speaker Change: Historically, sometimes low double digit depending on how strong the holiday season.

Speaker Change: But the way that the seasonality of the business. Typically works is Q1 is typically the lowest in terms of revenue contribution and then it slowly builds throughout the year. So it gets a little bit bigger in Q2, and then really the second half is where you start to see it ramp up.

Omar Asali: So it gets a little bit bigger in Q2. Then really the second half is where you start to see it ramp up, where Q3 is the next largest, and then Q4, obviously with the e-commerce holiday season, by far being the largest quarter for us. Typically for this year, when we're looking at it, we're going to be moving more probably towards a 47-53 type first half, second half, maybe a little bit more if you have a bigger holiday season. Got it.

Speaker Change: Where Q3 is the is the.

Speaker Change: Is the next largest and then Q4, obviously with an e-commerce holiday season.

Speaker Change: By far being the largest quarter for us.

Speaker Change: Typically for that.

Speaker Change: This year when we're looking at it.

Speaker Change: Going to be moving more probably towards the $47 53 type of first half second half maybe a little bit more if you are a bigger bigger holiday season.

Speaker Change: Got it alright, well, thanks, gentlemen, and good luck this year.

Operator: All right. Well, thanks, gentlemen, and good luck this year. Thank you for watching.

Speaker Change: Thank you for that.

Operator: We have no further questions.

Speaker Change: We have no further questions I would like to turn the call back over to Dow Jones for closing remarks.

William Drew: I would like to turn the call back over to Bill Drew for closing remarks. Thank you, Julianne. And thank you all for joining us today.

Speaker Change: Thank you Julianne and thank you all for joining US today, we look forward to speaking again soon for Q1.

William Drew: We look forward to speaking again soon for Q1.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

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