Release Date: March 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ranpak Holdings Corp (PACK, Financial) achieved its best quarter of the year and second-best quarterly revenue in its history, driven by strong e-commerce activity in North America.
- The company experienced double-digit volume growth for the year, with automation revenue growing by more than 40% and expected to grow another 50% in 2025.
- Ranpak Holdings Corp (PACK) successfully reduced its CapEx by 40% as major investment cycles concluded, allowing the company to return to cash generation mode.
- The company opened a new facility in Malaysia to serve the APAC market, reducing production and logistics costs.
- Ranpak Holdings Corp (PACK) secured a strategic partnership with the largest e-commerce company in the world, enhancing its market position and validating its solutions.
Negative Points
- The European market remains challenging, with muted industrial activity and uncertainty about tariffs impacting performance.
- The North American paper market experienced tightness, leading to short-term inefficiencies in freight and logistics, temporarily impacting margins.
- Ranpak Holdings Corp (PACK) faces potential upward pressure on pricing in Europe due to volatile energy markets.
- The company's automation segment, while growing, is still a drag on profitability, contributing a negative $7 million to adjusted EBITDA for the year.
- The company anticipates a non-cash revenue reduction related to Amazon warrants, which will impact reported GAAP figures.
Q & A Highlights
Q: Can you provide more details on the commercial agreement with Amazon and revenue expectations for 2025 compared to 2024?
A: Omar Asali, CEO, explained that Ranpak is ramping up activities with Amazon, especially in the second half of the year due to seasonality. The company is expanding its dialogue with Amazon in the US, Europe, and Asia Pacific, covering various offerings like PPS and automation. Bill Drew, CFO, added that they expect double-digit volume growth with Amazon and are exploring asset-light models to optimize costs.
Q: How does the volume growth expectation for 2025 break down between paper and automation, and what are the forecasts for e-commerce versus industrial markets?
A: Omar Asali noted that e-commerce, particularly with Amazon, will drive growth, alongside other enterprise accounts. The industrial market forecast is muted due to macroeconomic conditions. Automation is expected to grow over 50% in 2025. Bill Drew added that PPS volume growth is expected in the mid to high single digits, with automation contributing 3 to 5 points to overall growth.
Q: What are the expectations for EBITDA margins and free cash flow in 2025?
A: William Drew stated that the focus is on cash generation to pay down debt. They expect EBITDA to be between $88 million to $97 million, with free cash flow around $20 million. This includes $36 million to $37 million in CapEx and $34 million in cash interest.
Q: Can you elaborate on the impact of the warrant expense related to Amazon on EBITDA?
A: William Drew explained that the warrant expense, estimated at $3 million to $5 million for 2025, is tied to expected sales to Amazon. This expense will vary based on sales contributions and is expected to grow as sales increase.
Q: What is driving the growth in automation, and are there specific products or accounts contributing to this growth?
A: Omar Asali mentioned that automation growth is driven by both large enterprise accounts and smaller orders. There are 3 to 4 large enterprises contributing significantly, with existing customers expanding their automation solutions. The growth is broad-based across various products and regions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
