NYSE:PACK Ranpak Q1 2023 Earnings Report $4.14 +0.02 (+0.36%) Closing price 04/25/2025 03:59 PM EasternExtended Trading$4.16 +0.02 (+0.36%) As of 04/25/2025 04:34 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Ranpak EPS ResultsActual EPS-$0.15Consensus EPS -$0.05Beat/MissMissed by -$0.10One Year Ago EPS-$0.17Ranpak Revenue ResultsActual Revenue$81.20 millionExpected Revenue$83.54 millionBeat/MissMissed by -$2.34 millionYoY Revenue Growth-1.60%Ranpak Announcement DetailsQuarterQ1 2023Date5/4/2023TimeBefore Market OpensConference Call DateThursday, May 4, 2023Conference Call Time8:30AM ETUpcoming EarningsRanpak's Q1 2025 earnings is scheduled for Thursday, May 1, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Ranpak Q1 2023 Earnings Call TranscriptProvided by QuartrMay 4, 2023 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00My name is Jean Louis. Welcome to the Rand Pak Holdings Q1 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over Ms. Operator00:00:25Sarah Hervats, General Counsel. Speaker 100:00:30Thank 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 ks 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 differ materially from these statements. Rampack assumes no obligation and does not intend to update any such forward looking statements. Speaker 100:01:14You should not place undue reliance on these forward looking statements, all of which speak to the company only as of today. The earnings release we issued this morning and the presentation for today's call are posted on the Investor Relations section of our website. A copy of the release has been included in a Form 8 ks 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. Speaker 100:01:47Please 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 March 31, 2023. The 10 Q will be available through the SEC or on the Investor Relations section of our website. With me today, I have Omar Aasily, our Chairman and CEO and Bill Drew, our CFO. Omar will summarize our Q1 results and provide commentary on the operating landscape, and Bill will provide additional detail on the financial results before we open up the call for questions. Speaker 100:02:22With that, I'll turn the call over to Omar. Speaker 200:02:25Thank you, Sarah, and good morning, everyone. I appreciate you all joining us. Our Q1 financial results were mostly in line with our expectations as we expected top line in the first half of the year to be more subdued with volumes projected to pick up more in the back half of twenty twenty three. We shared an update with you on our Q4 call The January February top line results were tracking in line with 2021 and that is roughly how we finished the quarter. Our top line results of $84,800,000 on a constant currency basis is just shy of the $85,000,000 from 2021 and slightly above where we were in Q1 of last year. Speaker 200:03:09North America sales were up 1% in the quarter versus last year. I would characterize activity levels in the region as decent in the quarter, but not robust given the macro. The manufacturing sector remains sluggish as evidenced in the PMI data and on the consumer side, e commerce activity related to more You can see this environment reflected in the trucking and container data where volumes are clearly down. I believe the impact of the higher rate environment, bank stresses and increasing unemployment concerns have impacted consumer confidence and warrant a cautious outlook in the near term in North America. While the shorter term macro is a challenge, On a positive note, we are making inroads with many key accounts that have historically been plastic only. Speaker 200:04:07These are longer sales cycle processes, We can feel the momentum in discussions throughout these organizations shifting towards paper. I believe it is only a matter of time before the volumes in North America start to Europe and APAC activity levels in the Q1 were fairly solid with sales up 1% versus the prior year. From a regional perspective within the reporting group, I would say Europe was stronger than Asia as we seem to be through the destocking that impacted us last year and the better than expected energy environment has improved confidence. I would not call it a robust environment there as I think many businesses and consumers are cautious Given the continuing inflationary pressures and uncertain energy outlook, but I would characterize it as a solid baseline to operate from. In APAC, we had a strong start versus plan, but the outlook there is somewhat uneven with pockets of strength in places like Japan and Korea and some weakness in Australia and China. Speaker 200:05:11The environment remains a challenging one where nowhere really feels robust right now. Overall, I would say the start to the year was stronger in all geographies with January February results pretty solid and then activity level softening towards the end of March and to the start of the Q2. Our trial activity and customer engagement is solid And while the short term is choppy given the state of the world and the consumer, I do like what I'm seeing out of some larger accounts we are chasing. As a reminder, we have significantly more favorable comparisons in the second half of the year, which leads me to continue to be constructive on the outlook for the year even with a slower start. While the top line outlook is not as robust as I would like, the input cost environment continues to be a positive surprise compared to our plan as the paper markets have remained favorable. Speaker 200:06:07North America has seen some pricing improvement since the start of the year, Pricing remains higher than I would have anticipated under the circumstances given the supply demand dynamic, which to me would point to more pressure on pricing in our favor. In Europe, the better than expected energy environment has helped drive improvement in the paper markets to start the year. We have all seen how volatile energy can be and what extreme weather swings can do. So we continue to monitor the environment closely and are focused on derisking the remainder of the year as much as possible with our vendors who are able to lock in forward pricing. Overall, we feel good about continuing to claw back our gross margins throughout the year and our commitment to getting closer to our targeted gross margin profile. Speaker 200:06:56Outside of favorable movements in Energy, Paper and Logistics, inflationary pressures in labor and services persist globally, So we are making adjustments to areas of spend within our control until the operating environment provides better clarity. We've examined all of our forward spend and prioritized areas of need, while deferring areas that are not immediately required to support the business or do not provide near term revenue generating opportunities. We are laser focused on productivity and doing more with what we have built over the past few years. I'm pleased to report we have opened up our new European headquarters in Eigelshoven. I want to congratulate our team on doing job of making this transition as smooth as possible for our customers and our employees. Speaker 200:07:45Our operations have not missed a beat And as of April, our employees are all working out of that new facility. Our R and D and automation center in North America is on track to open this summer, providing us with the ability to manufacture automation equipment in the region and finally have a showroom in the region where we can bring prospective customers. I believe this will be a game changer for our automation business in the U. S. Market and will really help propel us to the next level. Speaker 200:08:15We complete the funding of these real estate capital commitments over the course of the next few months. Beyond that, we are focused on conserving capital And getting back to the cash generating engine, Rampack has been known for since inception. We're a small company, But we now have a state of the art digital and physical infrastructure to aid us in running the business and serving our customers. It is time for us to harvest what we have been investing in for the past number of years and drive efficiencies while being tighter on our capital spend. We're taking a more targeted and focused approach to the business and prioritizing only those activities in the near term that can really move the needle. Speaker 200:08:59I'm extremely pleased with the quality of our team and our product pipeline and believe a focus on execution and enhancing productivity rather than Expansion in the near term will deliver the best results. Now with that, let me turn it over to Bill for some financial detail. Speaker 300:09:18Thank you, Omar. In the deck, you'll see a summary of some of our key performance indicators. We'll also be filing our 10 Q, which provides further information on Rampack's operating results. Machine placement increased 3.8% year over year to over 139,600 machines globally. Positioning systems declined 1%, while void fill installed systems increased 5% and wrapping increased 7% year over year. Speaker 300:09:42Growth in the machine field population has been lower this year to a combination of lower activity levels generally and our efforts to optimize our fleet. To maximize capital efficiency, we are focused on getting underutilized converters back redeploying them to more productive areas. Overall, net revenue for the company in the Q1 was up 1% year over year on a constant currency basis, driven by increased price and contribution from automation, offset by slightly lower volumes. North American net revenue increased 1% year over year with cushioning and void fill up versus the prior year, offset by continued headwinds in wrapping. Purchasing demand remains fairly steady, while e commerce activity as it relates to more discretionary merchandise remains lower due to inflationary pressures and the pull forward of purchases we've discussed previously. Speaker 300:10:28In Europe and APAC, Net revenue on a constant currency basis was up 1% year over year with all categories up slightly in the quarter. Bonds were down slightly in the region year over year, but we are year over year and represented approximately 5% of sales on a constant currency basis as we continue to get traction in the space with our box customization and automated dunnage solutions. Our gross profit increased 15% on a constant currency basis, implying a margin of 34% compared to 29.8% in the prior year. The prior year comparison had some noise given the SAP go live in the Q1, where we experienced some inefficiencies, resulting in approximately 1.5. Drag on the margin. Speaker 300:11:14So if you take that into account, gross profit will be up approximately 8% on a constant currency basis. I think it's helpful to point out the inflection in the gross margin profile and step up from the 28.1% margin experienced in Q4 2022 on a very similar revenue profile. We shared in our Q4 call, we expected the gross margin environment to steadily improve throughout the year as the benefits of the input cost environment improves. We see this in Q1 as some of the paper benefits flow through beginning in February March. Obviously, as more volumes flow through, the better pickup will be as we expect to absorb more overhead and get the greater benefit of lower pricing. Speaker 300:11:50Adjusted EBITDA declined 21% year over year to 15,100,000 implying a 17.8% margin driven by higher G and A compared to the prior year. On an absolute basis, this Disappointing, but again, you can see the inflection from Q4 2022 where the adjusted EBITDA margin was 15.2%. As we get into the second half of the year, we expect to make up ground and generate a substantial amount of the adjusted EBITDA we plan to generate for the year. We expect that volume should be higher due to the traditional seasonality of business. We will also be at a point where we expect that the destocking impact should be completely eliminated in all regions. Speaker 300:12:24Last year was very unusual for a variety of reasons, in particular, the deviation from the usual revenue cadence of the year. Typically, we see the Q1 and second quarters being smaller contributors with the back half comprising up to 55 percent of revenue for the year. In 2022, our Q2 was our highest revenue contributor. Instead of seeing a step up in the second half of the year, We experienced less than 50% of the revenue being generated in the back half. Beyond the top line cadence, we also expect to have the greatest impact of paper price reductions in the second half as our costs increased steadily throughout 2022 and peaked in the Q4. Speaker 300:12:58Capital expenditures for the quarter were $11,800,000 driven by the funding of our real estate project as well as converter placement. Moving briefly to the balance sheet and liquidity. We completed Q1 with a strong liquidity position, including a cash balance of $58,600,000 to end the quarter and no drawings on our revolving credit facility. Our net leverage based on reported LTM adjusted EBITDA was 5.7 times at the end of the quarter or 5.2 times based on definition of adjusted EBITDA on the credit facility. We are expecting leverage to peak in the Q2 as we fund our capital returns related to real estate and growth against our most robust quarterly contributor last year. Speaker 300:13:34And we expect to begin our deleveraging path through adjusted EBITDA growth in the back half of the year. I want to reiterate the message from the Q4 where we recognize the importance of maintaining a strong cash and liquidity position and are focused on returning to our targeted leverage ratio of 3 times or less. After Q2, the major components of our near term CapEx cycle will be complete outside of the Malaysia facility, which is roughly 2,000,000 enabling us to focus on cash generation and deleveraging. We've lowered our paper inventories to our target levels and converted the previous safety stock to cash. We remain extremely tight with converter CapEx and are pushing to get converters back from underutilized accounts so we can refabricate them and redeploy them to more productive accounts. Speaker 300:14:15As Omar mentioned, we will be hyper vigilant on costs for the remainder of the year to put us in the best position to get our profitability metrics back on track. With that, I'll turn it back to Omar before we move on to questions. Speaker 200:14:27Thank you, Bill. In closing, I'm pleased with the improvements We have a lot of work to do to get back to where we want to be financially, but I believe we are moving in the right direction. We are very well positioned to capitalize on the opportunities ahead of us from the global focus on sustainability as well as customers' elevated interest In automation, we have developed various new offerings being released over the next 12 months in void fill, wrapping, Cold chain and automation that we believe further establish us as industry leaders in these areas. We are pleased with our organic growth Opportunities and ability to scale our existing business. I firmly believe we are in the right spot and have the right team and tools to be successful. Speaker 200:15:21It has been a long journey to get to this point and one filled with a lot of change for the organization. Our employees transitioned from being a 45 year old private company with a certain way of operating to being public company, which obviously brings a different level of operating requirements. We also made up for years of underinvestment in systems, processes and people, which also brought about a whole new way of operating. At this point, I feel the company is finally in a spot where we can get back to basics without large distractions and really begin to execute on the vision. We're confident in our strategy and believe we will unlock meaningful and profitable growth over the next number of years. Speaker 200:16:04With that, let's open the call up for questions. Operator? Operator00:16:19Your first question comes from the line of Greg Palm from Craig Hallum Capital Group. Please go ahead. Speaker 400:16:27Yes. Good morning. Thanks for taking the questions here. I guess maybe starting with a little bit more on the commentary on what you've Seen recently and maybe how that relates to the guidance that you put out last quarter. I don't think you mentioned it at all. Speaker 400:16:45So I'm just Kind of curious how you're feeling about revenue and EBITDA in light of everything that's occurred maybe over the last 4, 5, 6 weeks? Speaker 200:16:54Yes. Good morning, Greg. We continue to feel good about the guidance that we put out. So there's no change there. As you know with the cadence of our business, the first half of the year from a seasonality standpoint Typically is softer than the second half of the year. Speaker 200:17:14Given what we've seen with destocking last year, given what we've seen in the environment, think that pattern of seasonality is going to come back to fruition this year again, I. E, we think 2022 was an anomaly. Given that our expectations continue to be the same vis a vis guidance on top line as well as EBITDA. The end of the Q1 here was a little bit softer and the beginning of Q2 Was a little bit softer, frankly. I think it has a lot to do with the macro environment, and what we're seeing with banks and What we're reading in headlines, but it's not changing our view, our trials, our pipeline activity, our MPI Activity with new products and then what we're doing with automation, all that continues to be on track. Speaker 200:18:08So we continue to feel good about the rest of the year. Speaker 400:18:13Got it. If I could just maybe dig in just a little bit further under the assumption That what you've seen over the last, again, 4, 5, 6 weeks, if that continues or gets worse, Does that put the guidance at risk? I guess I'm just trying to get a sense of what the current guidance sort of assumes from A macro environment standpoint. Speaker 200:18:39Yes. The current guidance, just to give you a sense, assumes more or less, I'm going to say, Flattish volume year over year and we think that's where we're going to end up. To your point, if the macro environment weakens from here and weakens materially, yes, that could have an impact. So we did not assume a robust sort of macro environment to get to our guidance. And we also frankly speaking in our gross margins and in our COGS have more cushion than what's in the guidance And we think that continues to be more favorable. Speaker 200:19:19So if the top line is weaker, that will have an impact. We do have a cushion in gross margin that would offset some of that softness. But the overall assumption that we've made on the economy And on the world, is that the world more or less is where it is right now? We did not assume any robust recovery. We did not assume further weakening from here. Speaker 200:19:43If we're going to start seeing more banks have issues, more consumers have issues, elevated unemployment And if the world really takes a step back, of course, that will impact us, because that's not our base case assumption. I don't know if that gives you a sense of sort of our thinking on the guidance. Operator00:20:05Thank you. Your next question comes from the line of Ghansham Panjabi of Baird. Please go ahead. Speaker 500:20:15Hey guys, good morning. Good morning. First off, following up on the last question, good morning. Relative to your previous guidance construct, is it fair to say that Maybe the volumes outlook is a little bit murkier, maybe it's a little bit lower than you initially forecast, but that's going to be offset by just the changed input cost environment. Is that sort of the right way to think about it? Speaker 200:20:35I think that's a fair way to think about it. I think certainly the environment It's not great from a volume standpoint. And of course, as I said earlier, if it weakens from here that could have an impact On us, we feel a lot better about input costs. We feel a lot better about what we're seeing sort of from a COGS standpoint. And frankly, given all the investments we've made, gansham, we feel a lot better about our execution ability And our ability to focus, I mean, we're a company that has 850 employees. Speaker 200:21:14So in the last year, dealing with the macro environment, Dealing with putting in new technology systems and switching the way we operate, that was a lot. Right now, we don't have to deal with these issues. We're executing in a new environment with state of the art technology. We're more focused on being sharper in our execution, which I think will help. So this gives us some confidence on achieving our numbers On the top line and the volume trends, on the one hand, yes, the macro environment is a challenge. Speaker 200:21:47On the other hand, I will tell you our trial activity, our pipeline is super robust. It's pretty strong globally, and we have a number of dialogue in today's environment with advanced large accounts that are talking about meaningful switches from plastic to paper. So all that, I think, could offset part of the macro weakness, if you will. And again, when you put it all together, we did not assume robust volume trends. Speaker 500:22:19Okay, great. Thank you. And then in terms of just the operating environment at current, I mean, clearly everybody's sort of seeing it across the consumer supply chain, industrial supply chain, etcetera. And I would assume that there's going to be more focus on cost sets just like you're doing at your level. Is mix Is there a issue to keep in mind for the future as it relates to your customers' decisions on maybe trading down a little bit just to Keep costs in check or is that not really a risk factor for you? Speaker 200:22:51Honestly, costs And price has been an issue for a while, for a number of quarters. And we're seeing A lot of customers focus on that. And part of what we're doing with a lot of customers is making Sure. We're very articulate and specific about where we're helping them in terms of speed, reliability, total cost of ownership To make sure that we are helping them with their own bottom line. So that trend continues given the inflationary environment. Speaker 200:23:24We are seeing in some cases with mix people trading down a little bit. Is it a big driver right now? Not really. I think for us, the biggest driver is just articulating how we're helping these customers From an efficiency, speed and total cost of ownership, and that's typically how we win. So I'm not expecting drastic moves on mix That could go against us. Speaker 200:23:52I do expect as we have more and more dialogue with some of these large customers That are in our pipeline about the switch from plastic to paper that they're going to be very, very price sensitive in this environment. So they want sustainability, Ghansham, But they want to make sure it's not coming at a premium for them. Operator00:24:13Thank you. Your next Good morning. Speaker 600:24:24So I guess the first question is maybe kind of continuing on something Ghansham was asking about. As I think about The installed base and it actually you did see some declines in the installed base on the cushioning side sequentially In the quarter, how do we think about your being more proactive in pulling machines from existing customers and better utilizing kind of the installed base of machines that you have out there or redeploying those to limit incremental capital spend in the near term? Speaker 200:25:01Sure. I'll start and then I'll have Bill chime in, Adam. So as you know, in the past 12, 14 months, We've continued to invest in CapEx and in converters and equipment and did not get the commensurate sort of volume help Today, sort of starting really the beginning of this year, we've been laser focused on just optimizing the fleet that we have. So in many cases, we see opportunities to move certain pieces of equipment from one account to another, where we think it could help The volume down the road also we and our customers are learning in this environment that maybe their new normal for the near term It's lower than what we had expected a year ago or 6 months ago, so we're adjusting accordingly. So we believe there continues to be an opportunity from here to drive our growth without just 100% incrementally investing in new CapEx and adding new converters. Speaker 200:26:01So part of the thing that you're seeing from us is optimizing the existing fleet. The other part that we're focused on is, as I mentioned, with new products, We're investing in new products and that will always drive increasing the fleet. So you will see as we launch new products that Maybe our fleet of equipment is increasing a little bit, but the existing footprint that we have with existing products, there's still some room to optimize to drive the top line. Bill? Speaker 300:26:31Yes. Adam, I would just say from a gross shipments basis, right, so placing machines at new accounts and new account activity, Those were actually in line with where we were in Q1 of 2022. So from a gross shipping space, still very solid activity. As Omar mentioned, we have been making a concerted effort to optimize the fleet, looking at lower margin business and getting some of that equipment back. Product cushioning, cushioning is one area actually where we've been trying to get machines back because there's actually really, really solid demand in the industrial how competitive we are from a pricing standpoint. Speaker 300:27:08So trying to get some of those machines back, refabricate those and get those deployed out to the field is a big effort of ours. So I would expect that to pick back up in the future quarters. Speaker 600:27:21Okay. That's really helpful. So and if I think about just for the year, where what should Total CapEx be both converter and some of the facility investments you're making and along the same lines, how should we think about cash operating expenses for 2023 at this point? Speaker 300:27:39Sure. So the CapEx for the year, we had said at the beginning of the year that it will be about $55,000,000 all in CapEx, I think just given what we're seeing in some of the discretionary spend, we'll be taking that down a little bit, probably close to 50. If you think about the split between the converter spends, that's going to be $25,000,000 to $30,000,000 of converters. Maybe we can do a little bit better than that, manage tighter, do better job of redeploying existing equipment. And then on the real estate investment front, that was running around 25,000,000 So the majority of those expenses related to the Iglisoten facility, which opened up in April and that we're operating currently in the Shelton facility. Speaker 300:28:23So most of that will be by the end of Q2. And again on the operating expense question, I think you were asking about kind of Operating from a G and A perspective, that should be running around 25% of sales. Operator00:28:42Thank you. Follow-up question from the line of Greg Palm of Greg Hallum Capital Group. Please go ahead. Speaker 400:28:54Thanks. Omar, I wanted to just follow-up on the commentary about the progress you're seeing in some of these plastic only accounts. But can you just Maybe give us a sense of where we're at, what gives you the confidence that Some of these might pivot to paper. Is it going to be 100%? Any I don't know if you can quantify Anything, but I just thought that commentary was especially interesting. Speaker 200:29:26Yes. I think, Greg, look, Last year, like any other year, we were chasing a number of these accounts. And of course, we were pushing the case for our products Over plastics. And I would say we were doing a bunch of meetings, a bunch of discussions, but not exactly trials. What has changed this year As with a number of these accounts, our equipment is in their facilities. Speaker 200:29:51It's being tried out. They are Buying obviously small amounts from us right now to consume paper that equipment. We like sort of feedback that we're hearing about these trials. In today's environment, and I've said this before, trials take a little bit longer than we like, given the soft macro So trials might be a little bit prolonged. However, the feedback that we continue to see on the ground with a number of these important accounts They like the product. Speaker 200:30:22They are interested in the switch. I would not say the switch is going to be 100%. I think many of these accounts are trying to reduce plastic footprint and move to other substrates. We're the beneficiary of that, But that's incremental volume. And my expectation given how we're executing, given what I'm seeing in the size of the pipeline And then the feedback on the trials themselves, Greg, is that we will win our fair share and that would be driving incremental volume. Speaker 200:30:53Now again, a lot of these large accounts because they may take longer, if what I'm saying will happen, You will see that in the second half of the year more than the first half of the year. But in the first half of the year, we have placed the equipment. We are in these warehouses and facilities and they are using our product and trialing it. So this is why I feel pretty good about where we're headed. And this is materially different than last year where we were not having the trials in action with some of these large accounts. Speaker 200:31:24It was more conversation. Now we're seeing some action and hopefully that action will translate into business activity for us in the second half of this year. Operator00:31:37Thank you. There are no further questions at this time. I will now turn the call over to Bill for closing remarks. Speaker 300:31:44Thank you. And thank you all for joining us today. We look forward to speaking again following Q2. Operator00:31:51Thank you. This concludes today's conference call. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallRanpak Q1 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Ranpak Earnings HeadlinesRanpak (PACK) to Release Earnings on ThursdayApril 24 at 2:51 AM | americanbankingnews.comCEO Confidence Drops As Economic Uncertainty LoomsApril 23, 2025 | forbes.comWarning: “DOGE Collapse” imminentElon Strikes Back You may already sense that the tide is turning against Elon Musk and DOGE. Just this week, President Trump promised to buy a Tesla to help support Musk in the face of a boycott against his company. But according to one research group, with connections to the Pentagon and the U.S. government, Elon's preparing to strike back in a much bigger way in the days ahead.April 27, 2025 | Altimetry (Ad)Ranpak (PACK) Introduces AI-Powered Packaging Innovations to Reduce WasteMarch 17, 2025 | insidermonkey.comRanpak Unveils New AI and Automation Solutions at ProMat 2025March 12, 2025 | finance.yahoo.comRanpak Holdings Corp. (NYSE:PACK) Released Earnings Last Week And Analysts Lifted Their Price Target To US$11.17March 11, 2025 | finance.yahoo.comSee More Ranpak Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Ranpak? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Ranpak and other key companies, straight to your email. Email Address About RanpakRanpak (NYSE:PACK), together with its subsidiaries, provides product protection solutions and end-of-line automation solutions for e-commerce and industrial supply chains in North America, Europe, and Asia. The company offers protective packaging solutions, such as void-fill protective systems that convert paper to fill empty spaces in secondary packages and protect objects under the FillPak brand; cushioning protective systems, which convert paper into cushioning pads under the PadPak brand; and wrapping protective systems that create pads or paper mesh to wrap and protect fragile items, as well as to line boxes and provide separation when shipping various objects under the WrapPak, Geami, and ReadyRoll brands, as well as cold chain products, which are used to provide insulation for goods. It also offers end-of-line packaging automation products, which help end users automate the void filling and box closure processes after product packing is complete. The company sells its products to end users primarily through a distributor network, and directly to select end-users. Ranpak Holdings Corp. was founded in 1972 and is headquartered in Concord Township, Ohio.View Ranpak ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Markets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 7 speakers on the call. Operator00:00:00My name is Jean Louis. Welcome to the Rand Pak Holdings Q1 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over Ms. Operator00:00:25Sarah Hervats, General Counsel. Speaker 100:00:30Thank 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 ks 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 differ materially from these statements. Rampack assumes no obligation and does not intend to update any such forward looking statements. Speaker 100:01:14You should not place undue reliance on these forward looking statements, all of which speak to the company only as of today. The earnings release we issued this morning and the presentation for today's call are posted on the Investor Relations section of our website. A copy of the release has been included in a Form 8 ks 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. Speaker 100:01:47Please 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 March 31, 2023. The 10 Q will be available through the SEC or on the Investor Relations section of our website. With me today, I have Omar Aasily, our Chairman and CEO and Bill Drew, our CFO. Omar will summarize our Q1 results and provide commentary on the operating landscape, and Bill will provide additional detail on the financial results before we open up the call for questions. Speaker 100:02:22With that, I'll turn the call over to Omar. Speaker 200:02:25Thank you, Sarah, and good morning, everyone. I appreciate you all joining us. Our Q1 financial results were mostly in line with our expectations as we expected top line in the first half of the year to be more subdued with volumes projected to pick up more in the back half of twenty twenty three. We shared an update with you on our Q4 call The January February top line results were tracking in line with 2021 and that is roughly how we finished the quarter. Our top line results of $84,800,000 on a constant currency basis is just shy of the $85,000,000 from 2021 and slightly above where we were in Q1 of last year. Speaker 200:03:09North America sales were up 1% in the quarter versus last year. I would characterize activity levels in the region as decent in the quarter, but not robust given the macro. The manufacturing sector remains sluggish as evidenced in the PMI data and on the consumer side, e commerce activity related to more You can see this environment reflected in the trucking and container data where volumes are clearly down. I believe the impact of the higher rate environment, bank stresses and increasing unemployment concerns have impacted consumer confidence and warrant a cautious outlook in the near term in North America. While the shorter term macro is a challenge, On a positive note, we are making inroads with many key accounts that have historically been plastic only. Speaker 200:04:07These are longer sales cycle processes, We can feel the momentum in discussions throughout these organizations shifting towards paper. I believe it is only a matter of time before the volumes in North America start to Europe and APAC activity levels in the Q1 were fairly solid with sales up 1% versus the prior year. From a regional perspective within the reporting group, I would say Europe was stronger than Asia as we seem to be through the destocking that impacted us last year and the better than expected energy environment has improved confidence. I would not call it a robust environment there as I think many businesses and consumers are cautious Given the continuing inflationary pressures and uncertain energy outlook, but I would characterize it as a solid baseline to operate from. In APAC, we had a strong start versus plan, but the outlook there is somewhat uneven with pockets of strength in places like Japan and Korea and some weakness in Australia and China. Speaker 200:05:11The environment remains a challenging one where nowhere really feels robust right now. Overall, I would say the start to the year was stronger in all geographies with January February results pretty solid and then activity level softening towards the end of March and to the start of the Q2. Our trial activity and customer engagement is solid And while the short term is choppy given the state of the world and the consumer, I do like what I'm seeing out of some larger accounts we are chasing. As a reminder, we have significantly more favorable comparisons in the second half of the year, which leads me to continue to be constructive on the outlook for the year even with a slower start. While the top line outlook is not as robust as I would like, the input cost environment continues to be a positive surprise compared to our plan as the paper markets have remained favorable. Speaker 200:06:07North America has seen some pricing improvement since the start of the year, Pricing remains higher than I would have anticipated under the circumstances given the supply demand dynamic, which to me would point to more pressure on pricing in our favor. In Europe, the better than expected energy environment has helped drive improvement in the paper markets to start the year. We have all seen how volatile energy can be and what extreme weather swings can do. So we continue to monitor the environment closely and are focused on derisking the remainder of the year as much as possible with our vendors who are able to lock in forward pricing. Overall, we feel good about continuing to claw back our gross margins throughout the year and our commitment to getting closer to our targeted gross margin profile. Speaker 200:06:56Outside of favorable movements in Energy, Paper and Logistics, inflationary pressures in labor and services persist globally, So we are making adjustments to areas of spend within our control until the operating environment provides better clarity. We've examined all of our forward spend and prioritized areas of need, while deferring areas that are not immediately required to support the business or do not provide near term revenue generating opportunities. We are laser focused on productivity and doing more with what we have built over the past few years. I'm pleased to report we have opened up our new European headquarters in Eigelshoven. I want to congratulate our team on doing job of making this transition as smooth as possible for our customers and our employees. Speaker 200:07:45Our operations have not missed a beat And as of April, our employees are all working out of that new facility. Our R and D and automation center in North America is on track to open this summer, providing us with the ability to manufacture automation equipment in the region and finally have a showroom in the region where we can bring prospective customers. I believe this will be a game changer for our automation business in the U. S. Market and will really help propel us to the next level. Speaker 200:08:15We complete the funding of these real estate capital commitments over the course of the next few months. Beyond that, we are focused on conserving capital And getting back to the cash generating engine, Rampack has been known for since inception. We're a small company, But we now have a state of the art digital and physical infrastructure to aid us in running the business and serving our customers. It is time for us to harvest what we have been investing in for the past number of years and drive efficiencies while being tighter on our capital spend. We're taking a more targeted and focused approach to the business and prioritizing only those activities in the near term that can really move the needle. Speaker 200:08:59I'm extremely pleased with the quality of our team and our product pipeline and believe a focus on execution and enhancing productivity rather than Expansion in the near term will deliver the best results. Now with that, let me turn it over to Bill for some financial detail. Speaker 300:09:18Thank you, Omar. In the deck, you'll see a summary of some of our key performance indicators. We'll also be filing our 10 Q, which provides further information on Rampack's operating results. Machine placement increased 3.8% year over year to over 139,600 machines globally. Positioning systems declined 1%, while void fill installed systems increased 5% and wrapping increased 7% year over year. Speaker 300:09:42Growth in the machine field population has been lower this year to a combination of lower activity levels generally and our efforts to optimize our fleet. To maximize capital efficiency, we are focused on getting underutilized converters back redeploying them to more productive areas. Overall, net revenue for the company in the Q1 was up 1% year over year on a constant currency basis, driven by increased price and contribution from automation, offset by slightly lower volumes. North American net revenue increased 1% year over year with cushioning and void fill up versus the prior year, offset by continued headwinds in wrapping. Purchasing demand remains fairly steady, while e commerce activity as it relates to more discretionary merchandise remains lower due to inflationary pressures and the pull forward of purchases we've discussed previously. Speaker 300:10:28In Europe and APAC, Net revenue on a constant currency basis was up 1% year over year with all categories up slightly in the quarter. Bonds were down slightly in the region year over year, but we are year over year and represented approximately 5% of sales on a constant currency basis as we continue to get traction in the space with our box customization and automated dunnage solutions. Our gross profit increased 15% on a constant currency basis, implying a margin of 34% compared to 29.8% in the prior year. The prior year comparison had some noise given the SAP go live in the Q1, where we experienced some inefficiencies, resulting in approximately 1.5. Drag on the margin. Speaker 300:11:14So if you take that into account, gross profit will be up approximately 8% on a constant currency basis. I think it's helpful to point out the inflection in the gross margin profile and step up from the 28.1% margin experienced in Q4 2022 on a very similar revenue profile. We shared in our Q4 call, we expected the gross margin environment to steadily improve throughout the year as the benefits of the input cost environment improves. We see this in Q1 as some of the paper benefits flow through beginning in February March. Obviously, as more volumes flow through, the better pickup will be as we expect to absorb more overhead and get the greater benefit of lower pricing. Speaker 300:11:50Adjusted EBITDA declined 21% year over year to 15,100,000 implying a 17.8% margin driven by higher G and A compared to the prior year. On an absolute basis, this Disappointing, but again, you can see the inflection from Q4 2022 where the adjusted EBITDA margin was 15.2%. As we get into the second half of the year, we expect to make up ground and generate a substantial amount of the adjusted EBITDA we plan to generate for the year. We expect that volume should be higher due to the traditional seasonality of business. We will also be at a point where we expect that the destocking impact should be completely eliminated in all regions. Speaker 300:12:24Last year was very unusual for a variety of reasons, in particular, the deviation from the usual revenue cadence of the year. Typically, we see the Q1 and second quarters being smaller contributors with the back half comprising up to 55 percent of revenue for the year. In 2022, our Q2 was our highest revenue contributor. Instead of seeing a step up in the second half of the year, We experienced less than 50% of the revenue being generated in the back half. Beyond the top line cadence, we also expect to have the greatest impact of paper price reductions in the second half as our costs increased steadily throughout 2022 and peaked in the Q4. Speaker 300:12:58Capital expenditures for the quarter were $11,800,000 driven by the funding of our real estate project as well as converter placement. Moving briefly to the balance sheet and liquidity. We completed Q1 with a strong liquidity position, including a cash balance of $58,600,000 to end the quarter and no drawings on our revolving credit facility. Our net leverage based on reported LTM adjusted EBITDA was 5.7 times at the end of the quarter or 5.2 times based on definition of adjusted EBITDA on the credit facility. We are expecting leverage to peak in the Q2 as we fund our capital returns related to real estate and growth against our most robust quarterly contributor last year. Speaker 300:13:34And we expect to begin our deleveraging path through adjusted EBITDA growth in the back half of the year. I want to reiterate the message from the Q4 where we recognize the importance of maintaining a strong cash and liquidity position and are focused on returning to our targeted leverage ratio of 3 times or less. After Q2, the major components of our near term CapEx cycle will be complete outside of the Malaysia facility, which is roughly 2,000,000 enabling us to focus on cash generation and deleveraging. We've lowered our paper inventories to our target levels and converted the previous safety stock to cash. We remain extremely tight with converter CapEx and are pushing to get converters back from underutilized accounts so we can refabricate them and redeploy them to more productive accounts. Speaker 300:14:15As Omar mentioned, we will be hyper vigilant on costs for the remainder of the year to put us in the best position to get our profitability metrics back on track. With that, I'll turn it back to Omar before we move on to questions. Speaker 200:14:27Thank you, Bill. In closing, I'm pleased with the improvements We have a lot of work to do to get back to where we want to be financially, but I believe we are moving in the right direction. We are very well positioned to capitalize on the opportunities ahead of us from the global focus on sustainability as well as customers' elevated interest In automation, we have developed various new offerings being released over the next 12 months in void fill, wrapping, Cold chain and automation that we believe further establish us as industry leaders in these areas. We are pleased with our organic growth Opportunities and ability to scale our existing business. I firmly believe we are in the right spot and have the right team and tools to be successful. Speaker 200:15:21It has been a long journey to get to this point and one filled with a lot of change for the organization. Our employees transitioned from being a 45 year old private company with a certain way of operating to being public company, which obviously brings a different level of operating requirements. We also made up for years of underinvestment in systems, processes and people, which also brought about a whole new way of operating. At this point, I feel the company is finally in a spot where we can get back to basics without large distractions and really begin to execute on the vision. We're confident in our strategy and believe we will unlock meaningful and profitable growth over the next number of years. Speaker 200:16:04With that, let's open the call up for questions. Operator? Operator00:16:19Your first question comes from the line of Greg Palm from Craig Hallum Capital Group. Please go ahead. Speaker 400:16:27Yes. Good morning. Thanks for taking the questions here. I guess maybe starting with a little bit more on the commentary on what you've Seen recently and maybe how that relates to the guidance that you put out last quarter. I don't think you mentioned it at all. Speaker 400:16:45So I'm just Kind of curious how you're feeling about revenue and EBITDA in light of everything that's occurred maybe over the last 4, 5, 6 weeks? Speaker 200:16:54Yes. Good morning, Greg. We continue to feel good about the guidance that we put out. So there's no change there. As you know with the cadence of our business, the first half of the year from a seasonality standpoint Typically is softer than the second half of the year. Speaker 200:17:14Given what we've seen with destocking last year, given what we've seen in the environment, think that pattern of seasonality is going to come back to fruition this year again, I. E, we think 2022 was an anomaly. Given that our expectations continue to be the same vis a vis guidance on top line as well as EBITDA. The end of the Q1 here was a little bit softer and the beginning of Q2 Was a little bit softer, frankly. I think it has a lot to do with the macro environment, and what we're seeing with banks and What we're reading in headlines, but it's not changing our view, our trials, our pipeline activity, our MPI Activity with new products and then what we're doing with automation, all that continues to be on track. Speaker 200:18:08So we continue to feel good about the rest of the year. Speaker 400:18:13Got it. If I could just maybe dig in just a little bit further under the assumption That what you've seen over the last, again, 4, 5, 6 weeks, if that continues or gets worse, Does that put the guidance at risk? I guess I'm just trying to get a sense of what the current guidance sort of assumes from A macro environment standpoint. Speaker 200:18:39Yes. The current guidance, just to give you a sense, assumes more or less, I'm going to say, Flattish volume year over year and we think that's where we're going to end up. To your point, if the macro environment weakens from here and weakens materially, yes, that could have an impact. So we did not assume a robust sort of macro environment to get to our guidance. And we also frankly speaking in our gross margins and in our COGS have more cushion than what's in the guidance And we think that continues to be more favorable. Speaker 200:19:19So if the top line is weaker, that will have an impact. We do have a cushion in gross margin that would offset some of that softness. But the overall assumption that we've made on the economy And on the world, is that the world more or less is where it is right now? We did not assume any robust recovery. We did not assume further weakening from here. Speaker 200:19:43If we're going to start seeing more banks have issues, more consumers have issues, elevated unemployment And if the world really takes a step back, of course, that will impact us, because that's not our base case assumption. I don't know if that gives you a sense of sort of our thinking on the guidance. Operator00:20:05Thank you. Your next question comes from the line of Ghansham Panjabi of Baird. Please go ahead. Speaker 500:20:15Hey guys, good morning. Good morning. First off, following up on the last question, good morning. Relative to your previous guidance construct, is it fair to say that Maybe the volumes outlook is a little bit murkier, maybe it's a little bit lower than you initially forecast, but that's going to be offset by just the changed input cost environment. Is that sort of the right way to think about it? Speaker 200:20:35I think that's a fair way to think about it. I think certainly the environment It's not great from a volume standpoint. And of course, as I said earlier, if it weakens from here that could have an impact On us, we feel a lot better about input costs. We feel a lot better about what we're seeing sort of from a COGS standpoint. And frankly, given all the investments we've made, gansham, we feel a lot better about our execution ability And our ability to focus, I mean, we're a company that has 850 employees. Speaker 200:21:14So in the last year, dealing with the macro environment, Dealing with putting in new technology systems and switching the way we operate, that was a lot. Right now, we don't have to deal with these issues. We're executing in a new environment with state of the art technology. We're more focused on being sharper in our execution, which I think will help. So this gives us some confidence on achieving our numbers On the top line and the volume trends, on the one hand, yes, the macro environment is a challenge. Speaker 200:21:47On the other hand, I will tell you our trial activity, our pipeline is super robust. It's pretty strong globally, and we have a number of dialogue in today's environment with advanced large accounts that are talking about meaningful switches from plastic to paper. So all that, I think, could offset part of the macro weakness, if you will. And again, when you put it all together, we did not assume robust volume trends. Speaker 500:22:19Okay, great. Thank you. And then in terms of just the operating environment at current, I mean, clearly everybody's sort of seeing it across the consumer supply chain, industrial supply chain, etcetera. And I would assume that there's going to be more focus on cost sets just like you're doing at your level. Is mix Is there a issue to keep in mind for the future as it relates to your customers' decisions on maybe trading down a little bit just to Keep costs in check or is that not really a risk factor for you? Speaker 200:22:51Honestly, costs And price has been an issue for a while, for a number of quarters. And we're seeing A lot of customers focus on that. And part of what we're doing with a lot of customers is making Sure. We're very articulate and specific about where we're helping them in terms of speed, reliability, total cost of ownership To make sure that we are helping them with their own bottom line. So that trend continues given the inflationary environment. Speaker 200:23:24We are seeing in some cases with mix people trading down a little bit. Is it a big driver right now? Not really. I think for us, the biggest driver is just articulating how we're helping these customers From an efficiency, speed and total cost of ownership, and that's typically how we win. So I'm not expecting drastic moves on mix That could go against us. Speaker 200:23:52I do expect as we have more and more dialogue with some of these large customers That are in our pipeline about the switch from plastic to paper that they're going to be very, very price sensitive in this environment. So they want sustainability, Ghansham, But they want to make sure it's not coming at a premium for them. Operator00:24:13Thank you. Your next Good morning. Speaker 600:24:24So I guess the first question is maybe kind of continuing on something Ghansham was asking about. As I think about The installed base and it actually you did see some declines in the installed base on the cushioning side sequentially In the quarter, how do we think about your being more proactive in pulling machines from existing customers and better utilizing kind of the installed base of machines that you have out there or redeploying those to limit incremental capital spend in the near term? Speaker 200:25:01Sure. I'll start and then I'll have Bill chime in, Adam. So as you know, in the past 12, 14 months, We've continued to invest in CapEx and in converters and equipment and did not get the commensurate sort of volume help Today, sort of starting really the beginning of this year, we've been laser focused on just optimizing the fleet that we have. So in many cases, we see opportunities to move certain pieces of equipment from one account to another, where we think it could help The volume down the road also we and our customers are learning in this environment that maybe their new normal for the near term It's lower than what we had expected a year ago or 6 months ago, so we're adjusting accordingly. So we believe there continues to be an opportunity from here to drive our growth without just 100% incrementally investing in new CapEx and adding new converters. Speaker 200:26:01So part of the thing that you're seeing from us is optimizing the existing fleet. The other part that we're focused on is, as I mentioned, with new products, We're investing in new products and that will always drive increasing the fleet. So you will see as we launch new products that Maybe our fleet of equipment is increasing a little bit, but the existing footprint that we have with existing products, there's still some room to optimize to drive the top line. Bill? Speaker 300:26:31Yes. Adam, I would just say from a gross shipments basis, right, so placing machines at new accounts and new account activity, Those were actually in line with where we were in Q1 of 2022. So from a gross shipping space, still very solid activity. As Omar mentioned, we have been making a concerted effort to optimize the fleet, looking at lower margin business and getting some of that equipment back. Product cushioning, cushioning is one area actually where we've been trying to get machines back because there's actually really, really solid demand in the industrial how competitive we are from a pricing standpoint. Speaker 300:27:08So trying to get some of those machines back, refabricate those and get those deployed out to the field is a big effort of ours. So I would expect that to pick back up in the future quarters. Speaker 600:27:21Okay. That's really helpful. So and if I think about just for the year, where what should Total CapEx be both converter and some of the facility investments you're making and along the same lines, how should we think about cash operating expenses for 2023 at this point? Speaker 300:27:39Sure. So the CapEx for the year, we had said at the beginning of the year that it will be about $55,000,000 all in CapEx, I think just given what we're seeing in some of the discretionary spend, we'll be taking that down a little bit, probably close to 50. If you think about the split between the converter spends, that's going to be $25,000,000 to $30,000,000 of converters. Maybe we can do a little bit better than that, manage tighter, do better job of redeploying existing equipment. And then on the real estate investment front, that was running around 25,000,000 So the majority of those expenses related to the Iglisoten facility, which opened up in April and that we're operating currently in the Shelton facility. Speaker 300:28:23So most of that will be by the end of Q2. And again on the operating expense question, I think you were asking about kind of Operating from a G and A perspective, that should be running around 25% of sales. Operator00:28:42Thank you. Follow-up question from the line of Greg Palm of Greg Hallum Capital Group. Please go ahead. Speaker 400:28:54Thanks. Omar, I wanted to just follow-up on the commentary about the progress you're seeing in some of these plastic only accounts. But can you just Maybe give us a sense of where we're at, what gives you the confidence that Some of these might pivot to paper. Is it going to be 100%? Any I don't know if you can quantify Anything, but I just thought that commentary was especially interesting. Speaker 200:29:26Yes. I think, Greg, look, Last year, like any other year, we were chasing a number of these accounts. And of course, we were pushing the case for our products Over plastics. And I would say we were doing a bunch of meetings, a bunch of discussions, but not exactly trials. What has changed this year As with a number of these accounts, our equipment is in their facilities. Speaker 200:29:51It's being tried out. They are Buying obviously small amounts from us right now to consume paper that equipment. We like sort of feedback that we're hearing about these trials. In today's environment, and I've said this before, trials take a little bit longer than we like, given the soft macro So trials might be a little bit prolonged. However, the feedback that we continue to see on the ground with a number of these important accounts They like the product. Speaker 200:30:22They are interested in the switch. I would not say the switch is going to be 100%. I think many of these accounts are trying to reduce plastic footprint and move to other substrates. We're the beneficiary of that, But that's incremental volume. And my expectation given how we're executing, given what I'm seeing in the size of the pipeline And then the feedback on the trials themselves, Greg, is that we will win our fair share and that would be driving incremental volume. Speaker 200:30:53Now again, a lot of these large accounts because they may take longer, if what I'm saying will happen, You will see that in the second half of the year more than the first half of the year. But in the first half of the year, we have placed the equipment. We are in these warehouses and facilities and they are using our product and trialing it. So this is why I feel pretty good about where we're headed. And this is materially different than last year where we were not having the trials in action with some of these large accounts. Speaker 200:31:24It was more conversation. Now we're seeing some action and hopefully that action will translate into business activity for us in the second half of this year. Operator00:31:37Thank you. There are no further questions at this time. I will now turn the call over to Bill for closing remarks. Speaker 300:31:44Thank you. And thank you all for joining us today. We look forward to speaking again following Q2. Operator00:31:51Thank you. This concludes today's conference call. You may now disconnect.Read morePowered by