NYSE:PACK Ranpak Q2 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-$0.03Consensus EPS -$0.09Beat/MissBeat by +$0.06One Year Ago EPS-$0.14Ranpak Revenue ResultsActual Revenue$81.90 millionExpected Revenue$83.50 millionBeat/MissMissed by -$1.60 millionYoY Revenue Growth-5.60%Ranpak Announcement DetailsQuarterQ2 2023Date8/3/2023TimeBefore Market OpensConference Call DateThursday, August 3, 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 TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Ranpak Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 3, 2023 ShareLink copied to clipboard.There are 4 speakers on the call. Operator00:00:02My name is Edmund, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rentpak Second Quarter Earnings Call. All lines have been placed on mute Anne to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Sarah Horvath, General Counsel, you may begin Nao. Speaker 100:00:47Thank 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 these 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 your questions in this conference call may include forward looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. RamPac assumes no obligation and does not intend to update any such forward looking statements. Speaker 100:01:31You 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 that we submitted to the SEC before this call. We will also make a replay of this conference call available via webcast on the company website. For financial information that is presented on a non GAAP basis, we have included reconciliations to the comparable GAAP information. Speaker 100:02:07Please 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 June 30, 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 Asali, our Chairman and CEO and Bill Drew, our CFO. Omar will summarize our Q2 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 100:02:43With that, I'll turn the call over to Omar. Speaker 200:02:46Thank you, Sarah, and good morning, everyone. I appreciate you all joining us today. Our overall Q2 financial results demonstrate continued improvement from the start of the year as we see meaningful improvement in our margin profile driven by the more favorable input cost environment Antite Spending Initiatives. Although volumes were not where we would like them to be at this point, we enter 2023 with the expectations that volume would be subdued in the first half of the year and our second quarter results reflect that. We spoke on our previous call about the softness to start the quarter. Speaker 200:03:21May June saw improved activity levels with overall demand relatively steady. Generally speaking, consumer spending continues to be impacted by the reference for travel and essentials rather than the purchase of discretionary goods and many manufacturers are hesitant to invest given the uncertain outlook across the globe. When we came into the year, we expected the second half to demonstrate the beginning of more normal operating conditions. We are still watching for that to manifest itself in the activity levels, so remain cautious on the volume outlook in the near term. Rob. Speaker 200:04:03We're focusing on those things that are under our control to improve our performance. And right now, our top focus North America sales were down 6% in the quarter versus last year, driven by lower volumes in PPS. Similar to last quarter, I would characterize activity levels in the region as stable, but at a subdued level to start the year. Sentiment among manufacturing customers reflects a slow environment and I think the recent PMI and ISM data reflect this. E commerce activity continues to be hampered by the allocation of consumers' funds to restaurants, travel, groceries and apparel compared to more discretionary purchases of items such as electronics and goods for the whole. Speaker 200:04:53AUG shipments as well as freight and logistics data with like companies tightly managing their inventory with sell through remaining soft and a higher cost of capital flowing through the economy. I would say overall a similar message on the general environment from what you heard from us in Q1, with the difference being the quarter ended on a better note compared to the start. I also mentioned in the Q1 call, we are making inroads with many key accounts that may have historically been plastic only. These trials and relationships continue to deepen and the momentum has only gotten better since the last update. I remain optimistic about the shift towards paper for many large organizations in North America. Speaker 200:05:36Sales in Europe, Asia Pacific were down 7.6% for quarter on a constant currency basis as activity levels in the regions are weighed on by the overall economic environment in Europe where manufacturing remains in contraction territory and consumer confidence is extremely low due to persistent inflationary pressures. We are through the destocking in Europe that played us last year, and I think in some cases customers are over correcting on the inventory side, the overall environment in the region remains constrained even with energy pricing down more than 80% from the peak. Asia is mixed, but places like Australia, New Zealand and Japan demonstrate strength in account activity. The volume environment remains inconsistent. January was solid, February was decent, March April were weaker, followed by a strong May and a decent June. Speaker 200:06:33It is hard right now to get certain or generally constructive in the short term on the volume environment of the existing base book of business, but the key account activity we are pursuing does provide for some optimism to be layered in throughout the rest of the year and into 2024, which is positive for us. On another positive note, the margin profile of the business is improving faster than anticipated with gross margins achieving levels year to date that we thought would take all year to achieve. Fortunately, supply chains have meaningfully improved and we are getting more relief on the input cost side of things, which supports expected continued margin improvement throughout 2023 globally. We have seen this year when the volumes are there in the stronger months, the operating leverage is powerful. So I'm confident we are getting back on track. Speaker 200:07:25In the immediate term though, we are not waiting for the macro to turn. We're tightening the focus of the company and executing on those areas that are in our control. We're aggressively managing headcount and new projects to tighten our spend profile. We are prioritizing initiatives that maximize cash flow generation and only pursuing growth projects that move the needle and maximize return. Speaker 300:07:49We have Speaker 200:07:49made tremendous investments in digital and physical infrastructure as well as new products over the past couple of years. We're now in the mode of a Titan scope that is focused on productivity and efficiency. In short, we as a team are working the assets we have to generate cash and demonstrate the benefits and contributions of the investments we have made. Now with that, let me turn it over to Bill for some financial detail. Speaker 300:08:14Thank 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 Rampac's operating results. Machine placement increased 3.1% year over year to over 140,700 machines globally. Cushioning systems declined 0.6%, well void fill installed systems increased 4.1% and wrapping increased 5.2% year over year. Speaker 300:08:39Growth in the machine field population has been lower Teer due 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 and redeploying them to more productive areas. Overall, net revenue for the company in the Q2 was down 7% year over year on a constant currency basis, driven by headwinds in both geographies against the largest quarter we experienced in 2022. North American net revenue decreased 6% versus the prior year, driven by lower industrial activity and continued e commerce malaise as it relates to discretionary goods. In Europe and APAC, net revenue on a constant currency basis was down 7.6% year over year with all categories under pressure in the quarter due to lower volumes versus the prior year, driven largely by Speaker 200:09:24a lower base level of activity given the Speaker 300:09:25volatility of energy and remaining inflationary pressures in the region. Outside of April, We've seen a steady base level of volumes in Europe for most of the year and when these base levels of activity are present, the profitability in the region is returning to more historical levels, which is really encouraging. Automation sales increased year over year and represented approximately 7% of sales on a constant currency basis as we continue to get traction in the space with our box customization and automated dunnage solutions. Although our top line was down, the impact in the second quarter was more than offset by the improved input cost environment as gross profit increased 5% on a constant currency basis, implying a margin of 37% compared to 32.6% in the prior year. This is continued improvement from Q4 of 2022 and Q1 of this year, which both had very similar levels of consolidated net revenue. Speaker 300:10:14On roughly $85,000,000 in sales in each of those quarters, our gross margins have improved from 28.1% in Q4 to 34% in Q1 37% in Q2 with the largest benefits coming in May June, which were a better volume months in the quarter compared to a lackluster April, which we previously communicated. Obviously, as more volumes flow through, the better the pickup will be as we expect to absorb more overhead and get the greater benefit of lower pricing. Constant currency adjusted EBITDA increased 4% year over year to $19,000,000 implying a 22.5% margin driven by improved gross profit and tight control on spend and represent continued sequential improvement. This compares to $12,900,000 $15,100,000 in constant currency adjusted EBITDA on similar sales Q4 2022 and Q1 2023 respectively. As we get into the second half of the year, we expect our financial profile behind us from what we can see, leaving the general velocity to be largely driven by end user demand needs. Speaker 300:11:21Again, last year was very unusual for a variety of reasons, But in particular, the deviation from the usual revenue cadence of the year, which had shown the back half stepping up meaningfully from the first half and generating roughly 55% of the volumes for the year. We do expect to see some improvement in the back half of this year, but I do think it will be weighed on by the overall environment, which is slower to rebound. Fortunately, we 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. We believe improved and steadier volumes in the second half combined with maximum input cost savings should enable us to continue to improve our adjusted EBITDA throughout the year. In some regions, we continue to experience input cost savings. Speaker 300:12:02So as we reach our target margin levels in the region, we will need to share those savings with our customers. Well, this puts some pressure on the top line. The margin profile is what we were most focused on in the near term as we believe the volumes will pick up in due course and get the top line's trajectory back on track. Capital expenditures for the quarter were $13,400,000 with more than half driven by the funding of our real estate projects and other investments. We continue to place a strong emphasis on minimizing CapEx projects and convertor spend to maximize cash flow generation for remainder of the year. Speaker 300:12:32Moving briefly to the balance sheet and liquidity. We completed Q2 with a strong liquidity position, including a cash balance of $53,900,000 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. We continue to expect leverage to peak in the second some of our capital commitments related to real estate did move into Q3 given the timing of invoices from the developers. I want to reiterate the message from the previous couple of quarters where we recognize the importance of maintaining a strong cash and liquidity position and are focused on returning to our target levered ratio of 3 times or less. Speaker 300:13:16At this point, major components of our investment cycle are complete outside of the Malaysia facility, which is roughly $1,500,000 enabling us to focus on cash generation and deleveraging. We've tightly managed working capital and are vigilant on cost to maximize cash and get our profitability metrics back on track. With that, I'll turn it back to Omar before we move on to questions. Speaker 200:13:37Thank you, Bill. In closing, we continue to make progress to improve the financial profile of the business and believe we have all the tools necessary to get back to where we want to be. Our long term objective is a business that is steadily growing its Topline in the high single to low double digit area, gross margins in the high 30s to 40% area an EBITDA margins in the high 20s to low 30s percent area, with substantial cash being generated along the way. We're committed to deleveraging to 3 turns or less and believe we can achieve this through EBITDA growth as our margins continue to improve, volumes return and we generate cash from our existing asset base. We've completed or will be in the near term completing our large projects for RamPac that have been underway for the past couple of years. Speaker 200:14:26These are in the areas of systems and IT, Physical Infrastructure and MPI and Innovation. Our North America and European headquarters as well as our Connecticut Automation Center are done. The heavy lift in our systems and IT spend is complete and the tremendous MPI development over the past few years further cements ourselves as the leader in paper based protective packaging and end of line automation. All of these physical, digital and new product initiatives have taken a tremendous amount focus on capital over the past few years, all while dealing with the pandemic followed by an energy crisis in our biggest region. Now that we have our platform in place, we have rationalized our objectives and narrowed our scope of projects to provide a level of focus to the organization that has not been available in years. Speaker 200:15:16We have developed a strong scalable core where we are focused on gaining efficiencies through better processes and access to data. I've mentioned earlier the favorable input cost environment and shared on a few occasions our goal to get gross margins for PPS back to the historical levels. In certain regions of the world, we have been able to achieve this. So we are at a point now where we need to share some of the savings with our customers. This has happened ahead of schedule, but it does present some pressure to the top line forecast we provided at the beginning of the year. Speaker 200:15:51At this point, given the slower economic outlook and pricing concessions due to our sharing of lower input costs, we anticipate being below the top line range we provided at beginning of the year. We continue to focus on achieving adjusted EBITDA within our original range. We are pleased with the gross margin improvement and are working on volume initiatives to ensure that EBITDA and improved overall margin profile follows. The account activity is extremely strong, particularly in North America. Sustainability is becoming more entrenched in larger players. Speaker 200:16:24So I'm pleased with our outlook and how we are positioned for the next number of years. With that, let me open the call up for some questions. Operator? Speaker 300:17:02Edmund, do you want to open up the line to questions? Edmund? Apologies everybody. It looks like the operator is having some technical difficulties. We'll follow-up with the analysts individually.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallRanpak Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress 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.comReal Americans Don’t Wait on Wall Street’s Next MoveWhat's happening in the markets right now should concern every freedom-loving American who's worked hard and saved smart. Your 401(k) doesn't deserve to be dragged through the mud by tariffs, trade wars, reckless spending, and political standoffs. And you don't have to stand by while Wall Street plays roulette with your future.April 27, 2025 | Premier Gold Co (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 4 speakers on the call. Operator00:00:02My name is Edmund, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rentpak Second Quarter Earnings Call. All lines have been placed on mute Anne to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Sarah Horvath, General Counsel, you may begin Nao. Speaker 100:00:47Thank 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 these 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 your questions in this conference call may include forward looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. RamPac assumes no obligation and does not intend to update any such forward looking statements. Speaker 100:01:31You 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 that we submitted to the SEC before this call. We will also make a replay of this conference call available via webcast on the company website. For financial information that is presented on a non GAAP basis, we have included reconciliations to the comparable GAAP information. Speaker 100:02:07Please 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 June 30, 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 Asali, our Chairman and CEO and Bill Drew, our CFO. Omar will summarize our Q2 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 100:02:43With that, I'll turn the call over to Omar. Speaker 200:02:46Thank you, Sarah, and good morning, everyone. I appreciate you all joining us today. Our overall Q2 financial results demonstrate continued improvement from the start of the year as we see meaningful improvement in our margin profile driven by the more favorable input cost environment Antite Spending Initiatives. Although volumes were not where we would like them to be at this point, we enter 2023 with the expectations that volume would be subdued in the first half of the year and our second quarter results reflect that. We spoke on our previous call about the softness to start the quarter. Speaker 200:03:21May June saw improved activity levels with overall demand relatively steady. Generally speaking, consumer spending continues to be impacted by the reference for travel and essentials rather than the purchase of discretionary goods and many manufacturers are hesitant to invest given the uncertain outlook across the globe. When we came into the year, we expected the second half to demonstrate the beginning of more normal operating conditions. We are still watching for that to manifest itself in the activity levels, so remain cautious on the volume outlook in the near term. Rob. Speaker 200:04:03We're focusing on those things that are under our control to improve our performance. And right now, our top focus North America sales were down 6% in the quarter versus last year, driven by lower volumes in PPS. Similar to last quarter, I would characterize activity levels in the region as stable, but at a subdued level to start the year. Sentiment among manufacturing customers reflects a slow environment and I think the recent PMI and ISM data reflect this. E commerce activity continues to be hampered by the allocation of consumers' funds to restaurants, travel, groceries and apparel compared to more discretionary purchases of items such as electronics and goods for the whole. Speaker 200:04:53AUG shipments as well as freight and logistics data with like companies tightly managing their inventory with sell through remaining soft and a higher cost of capital flowing through the economy. I would say overall a similar message on the general environment from what you heard from us in Q1, with the difference being the quarter ended on a better note compared to the start. I also mentioned in the Q1 call, we are making inroads with many key accounts that may have historically been plastic only. These trials and relationships continue to deepen and the momentum has only gotten better since the last update. I remain optimistic about the shift towards paper for many large organizations in North America. Speaker 200:05:36Sales in Europe, Asia Pacific were down 7.6% for quarter on a constant currency basis as activity levels in the regions are weighed on by the overall economic environment in Europe where manufacturing remains in contraction territory and consumer confidence is extremely low due to persistent inflationary pressures. We are through the destocking in Europe that played us last year, and I think in some cases customers are over correcting on the inventory side, the overall environment in the region remains constrained even with energy pricing down more than 80% from the peak. Asia is mixed, but places like Australia, New Zealand and Japan demonstrate strength in account activity. The volume environment remains inconsistent. January was solid, February was decent, March April were weaker, followed by a strong May and a decent June. Speaker 200:06:33It is hard right now to get certain or generally constructive in the short term on the volume environment of the existing base book of business, but the key account activity we are pursuing does provide for some optimism to be layered in throughout the rest of the year and into 2024, which is positive for us. On another positive note, the margin profile of the business is improving faster than anticipated with gross margins achieving levels year to date that we thought would take all year to achieve. Fortunately, supply chains have meaningfully improved and we are getting more relief on the input cost side of things, which supports expected continued margin improvement throughout 2023 globally. We have seen this year when the volumes are there in the stronger months, the operating leverage is powerful. So I'm confident we are getting back on track. Speaker 200:07:25In the immediate term though, we are not waiting for the macro to turn. We're tightening the focus of the company and executing on those areas that are in our control. We're aggressively managing headcount and new projects to tighten our spend profile. We are prioritizing initiatives that maximize cash flow generation and only pursuing growth projects that move the needle and maximize return. Speaker 300:07:49We have Speaker 200:07:49made tremendous investments in digital and physical infrastructure as well as new products over the past couple of years. We're now in the mode of a Titan scope that is focused on productivity and efficiency. In short, we as a team are working the assets we have to generate cash and demonstrate the benefits and contributions of the investments we have made. Now with that, let me turn it over to Bill for some financial detail. Speaker 300:08:14Thank 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 Rampac's operating results. Machine placement increased 3.1% year over year to over 140,700 machines globally. Cushioning systems declined 0.6%, well void fill installed systems increased 4.1% and wrapping increased 5.2% year over year. Speaker 300:08:39Growth in the machine field population has been lower Teer due 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 and redeploying them to more productive areas. Overall, net revenue for the company in the Q2 was down 7% year over year on a constant currency basis, driven by headwinds in both geographies against the largest quarter we experienced in 2022. North American net revenue decreased 6% versus the prior year, driven by lower industrial activity and continued e commerce malaise as it relates to discretionary goods. In Europe and APAC, net revenue on a constant currency basis was down 7.6% year over year with all categories under pressure in the quarter due to lower volumes versus the prior year, driven largely by Speaker 200:09:24a lower base level of activity given the Speaker 300:09:25volatility of energy and remaining inflationary pressures in the region. Outside of April, We've seen a steady base level of volumes in Europe for most of the year and when these base levels of activity are present, the profitability in the region is returning to more historical levels, which is really encouraging. Automation sales increased year over year and represented approximately 7% of sales on a constant currency basis as we continue to get traction in the space with our box customization and automated dunnage solutions. Although our top line was down, the impact in the second quarter was more than offset by the improved input cost environment as gross profit increased 5% on a constant currency basis, implying a margin of 37% compared to 32.6% in the prior year. This is continued improvement from Q4 of 2022 and Q1 of this year, which both had very similar levels of consolidated net revenue. Speaker 300:10:14On roughly $85,000,000 in sales in each of those quarters, our gross margins have improved from 28.1% in Q4 to 34% in Q1 37% in Q2 with the largest benefits coming in May June, which were a better volume months in the quarter compared to a lackluster April, which we previously communicated. Obviously, as more volumes flow through, the better the pickup will be as we expect to absorb more overhead and get the greater benefit of lower pricing. Constant currency adjusted EBITDA increased 4% year over year to $19,000,000 implying a 22.5% margin driven by improved gross profit and tight control on spend and represent continued sequential improvement. This compares to $12,900,000 $15,100,000 in constant currency adjusted EBITDA on similar sales Q4 2022 and Q1 2023 respectively. As we get into the second half of the year, we expect our financial profile behind us from what we can see, leaving the general velocity to be largely driven by end user demand needs. Speaker 300:11:21Again, last year was very unusual for a variety of reasons, But in particular, the deviation from the usual revenue cadence of the year, which had shown the back half stepping up meaningfully from the first half and generating roughly 55% of the volumes for the year. We do expect to see some improvement in the back half of this year, but I do think it will be weighed on by the overall environment, which is slower to rebound. Fortunately, we 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. We believe improved and steadier volumes in the second half combined with maximum input cost savings should enable us to continue to improve our adjusted EBITDA throughout the year. In some regions, we continue to experience input cost savings. Speaker 300:12:02So as we reach our target margin levels in the region, we will need to share those savings with our customers. Well, this puts some pressure on the top line. The margin profile is what we were most focused on in the near term as we believe the volumes will pick up in due course and get the top line's trajectory back on track. Capital expenditures for the quarter were $13,400,000 with more than half driven by the funding of our real estate projects and other investments. We continue to place a strong emphasis on minimizing CapEx projects and convertor spend to maximize cash flow generation for remainder of the year. Speaker 300:12:32Moving briefly to the balance sheet and liquidity. We completed Q2 with a strong liquidity position, including a cash balance of $53,900,000 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. We continue to expect leverage to peak in the second some of our capital commitments related to real estate did move into Q3 given the timing of invoices from the developers. I want to reiterate the message from the previous couple of quarters where we recognize the importance of maintaining a strong cash and liquidity position and are focused on returning to our target levered ratio of 3 times or less. Speaker 300:13:16At this point, major components of our investment cycle are complete outside of the Malaysia facility, which is roughly $1,500,000 enabling us to focus on cash generation and deleveraging. We've tightly managed working capital and are vigilant on cost to maximize cash and get our profitability metrics back on track. With that, I'll turn it back to Omar before we move on to questions. Speaker 200:13:37Thank you, Bill. In closing, we continue to make progress to improve the financial profile of the business and believe we have all the tools necessary to get back to where we want to be. Our long term objective is a business that is steadily growing its Topline in the high single to low double digit area, gross margins in the high 30s to 40% area an EBITDA margins in the high 20s to low 30s percent area, with substantial cash being generated along the way. We're committed to deleveraging to 3 turns or less and believe we can achieve this through EBITDA growth as our margins continue to improve, volumes return and we generate cash from our existing asset base. We've completed or will be in the near term completing our large projects for RamPac that have been underway for the past couple of years. Speaker 200:14:26These are in the areas of systems and IT, Physical Infrastructure and MPI and Innovation. Our North America and European headquarters as well as our Connecticut Automation Center are done. The heavy lift in our systems and IT spend is complete and the tremendous MPI development over the past few years further cements ourselves as the leader in paper based protective packaging and end of line automation. All of these physical, digital and new product initiatives have taken a tremendous amount focus on capital over the past few years, all while dealing with the pandemic followed by an energy crisis in our biggest region. Now that we have our platform in place, we have rationalized our objectives and narrowed our scope of projects to provide a level of focus to the organization that has not been available in years. Speaker 200:15:16We have developed a strong scalable core where we are focused on gaining efficiencies through better processes and access to data. I've mentioned earlier the favorable input cost environment and shared on a few occasions our goal to get gross margins for PPS back to the historical levels. In certain regions of the world, we have been able to achieve this. So we are at a point now where we need to share some of the savings with our customers. This has happened ahead of schedule, but it does present some pressure to the top line forecast we provided at the beginning of the year. Speaker 200:15:51At this point, given the slower economic outlook and pricing concessions due to our sharing of lower input costs, we anticipate being below the top line range we provided at beginning of the year. We continue to focus on achieving adjusted EBITDA within our original range. We are pleased with the gross margin improvement and are working on volume initiatives to ensure that EBITDA and improved overall margin profile follows. The account activity is extremely strong, particularly in North America. Sustainability is becoming more entrenched in larger players. Speaker 200:16:24So I'm pleased with our outlook and how we are positioned for the next number of years. With that, let me open the call up for some questions. Operator? Speaker 300:17:02Edmund, do you want to open up the line to questions? Edmund? Apologies everybody. It looks like the operator is having some technical difficulties. We'll follow-up with the analysts individually.Read morePowered by