Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ranpak Holdings Q3 Earnings Call. [Operator Instructions] I will now turn the call over to Sara Horvath, General Counsel. Please go ahead.

Thank you, and good morning, everyone. Before we begin, I'd like to remind you that we will discuss forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forward-looking statements as a result of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K and our other filings filed with the SEC. Some of the statements and responses to your questions in this conference call may include forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. Ranpak assumes no obligation and does not intend to update any such forward-looking statements. You should not place undue reliance on these forward-looking statements, all of which speak to the company only as of today. 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 the Form 8-K that we submitted to the SEC before this call. We will also make a replay of this conference call available via webcast on the company website. For financial information that is presented on a non-GAAP basis, we have included reconciliations to the comparable GAAP information. Please refer to the table and slide presentation accompanying today's earnings release. Lastly, we'll be filing our 10-Q with the SEC for the period ending September 30, 2025. The 10-Q will be available through the SEC or on the Investor Relations section of our website. With me today, I have Omar Asali, our Chairman and CEO; and Bill Drew, our CFO. Omar will summarize our third quarter results and discuss our outlook, and Bill will provide additional detail on the financial results before we open up the call for questions. With that, I'll turn the call over to Omar.

Thank you, Sara, and good morning, everyone. Thank you for joining us today. I wanted to start today by discussing our third quarter announcement that we entered into a strategic and economic partnership with Walmart. This agreement has been years in the making and required the hard work and execution of many of our Ranpak team members. The Walmart agreement is a transformational deal for Ranpak and Ranpak Automation in particular. I'm extremely proud of the team and the solutions we have built in automation as those really drove the origination of this partnership. Our warrant agreement with Walmart can be summarized as a potential for up to $300 million in spend, excluding the cost of paper over 10 years, in exchange for warrants to purchase up to 22.5 million shares in Ranpak with a strike price of $6.83 per share. We expect that over $100 million of such potential spend would be allocated towards automation equipment and services with $200 million of such potential spend focused on PPS products. Given the requirements for vesting exclude the cost of paper, this implies roughly $600 million in potential reported spend in PPS products over the 10-year period for a total potential spend of roughly $700 million across all of our products. This is an extremely exciting transaction for us at Ranpak, and I believe cements our place as a true leader in warehouse automation. Adding to the momentum in automation, we are pleased to share that we have entered into a multiyear enterprise sales agreement with Medline, the largest provider of medical surgical products and supply chain solutions serving all points of care to provide them with our Decision Tower and right-sizing solutions for up to 14 of their distribution centers over the next several years. As the world's largest user…

Thank you, Omar. In the deck, you'll see a summary of some of our key performance indicators. We'll also be filing our 10-Q, which provides further information on Ranpak's operating results. Overall, net revenue for the company in the third quarter increased 4.4% year-over-year on a constant currency basis, driven by solid volume growth in North America and an increase in automation revenue, offset by a somewhat sluggish environment in Europe and destocking in APAC. For the quarter, in the Europe and APAC reporting segment, combined revenue decreased 0.6% on a constant currency basis, driven by 2.5% PPS volume headwinds, offset somewhat by price/mix and 34.5% growth in automation revenue. Our reported results benefited from 6.4 points of currency as the euro has meaningfully appreciated since the start of the year. In North America, both PPS and automation increased year-over-year, driven by large e-commerce accounts. Automation increased $2.1 million or 140% and void-fill and wrapping each contributed positively to growth, resulting in regional revenue growth of 10.9%, net of $0.8 million warrant expense, which detracted 1.7 points from reported NOAM results. Gross profit declined 3.8% in the quarter on a constant currency basis and would have declined 1.5%, excluding the $0.8 million non-cash impact of warrants. Excluding depreciation within COGS, gross profit increased 3.2% on a constant currency basis due to higher sales and improved margins in both NOAM and EMEA. Higher gross profit ex depreciation from both geographies drove an increase in adjusted EBITDA of 3.5% in the quarter on a constant currency basis or 7.5% excluding the $0.8 million noncash impact of warrants. We continue to keep a tight lid on our spending and are laser-focused on our margin enhancement initiatives to drive growth in adjusted EBITDA and enhance our cash position with the ultimate goal of deleveraging…

Thank you, Bill. While it has been a challenging start to the year, I'm pleased we demonstrated meaningful progress on our margin enhancement initiatives this quarter, and I'm looking forward to further improvements going forward. As we think about the finish of the year, we feel very good about continued growth in automation and achieving $40 million to $45 million in revenue for 2025, net of warrant expense. The momentum in automation is building, and I believe we have something special in that business. In North America, the PPS business continues to perform well, driven by our larger customers, and I believe we will have a strong holiday season based on the feedback I'm hearing from the team and our customers. Our margin enhancement initiatives are well underway and having an impact. I believe a lot of the noise and disruption from the beginning of the year is well behind us. Europe and Asia Pacific have been a bit more volatile as volumes have been up and down from 1 month to another. Asia Pacific has some air pockets of destocking as lead times for products that we are producing there go from 5 months to 1 to 2. That being said, our distribution channel in both reporting regions is getting invigorated by our new products in cushioning, void-fill and wrapping. Our innovation is broad-based and that is energizing our partners as well as attracting talented personnel to join the Ranpak team. I have been out meeting with our distribution partners in North America and Europe, and the message is consistent. They all want to grow with Ranpak. I feel very strongly that we're on the right path and building momentum with customers and the market. Based on the environment in Europe and Asia Pacific, we are expecting to come…

[Operator Instructions] Your first question comes from Greg Palm with Craig-Hallum.

Omar, going back to the guide, just wanted to make sure I understand all the kind of the puts and takes. So, it sounds like relative to the last update, really no change in automation, no change in North America, a little bit of a slowdown or weaker results in kind of Europe and APAC. Is that right? Anything else that you want to point out? I just wanted to make sure I understood all that.

No, you got it right. I think we continue to feel excellent about automation globally, by the way. In North America, we continue to see very robust volumes, including up to now. Europe and Asia Pacific are a little bit inconsistent. So, just to be clear, we will be within the guide. It's just given the inconsistency in those businesses, we expect to be on the lower end of the range. And that's the thing that we're monitoring. And honestly, Europe continues to start and showed some pattern of improvement. The hesitation we have around that, Greg, is things are changing fast in Europe, and we would like to see a trend continue over a longer period of time before we build our confidence on the business there. But that's basically the summary. You got it right in terms of the building blocks.

Yes. Okay. And gross margin actually bounced back a lot more, I guess, more quickly as well relative to what I would have thought. How much of sort of the full impact of both pricing and some of the cost reductions did you see in Q3? And I guess maybe a different way to ask it is, how much is still left to go in Q4?

In pricing, obviously, given what we've done in North America, we saw a good positive impact in Q3. On the cost initiatives, margin improvement, continuous improvement, honestly, I see a lot more room there. We continue to execute. We're improving in our buying. We're improving in our logistics and freight. We've made some tangible moves. We have a plan over the next few months to continue doing that. We are also looking at our physical footprint and optimizing that. You may recall, we've hired a new Chief Operating Officer who joined us, who is working hard on some of these initiatives. So, I think on the cost initiatives, I'm expecting a lot more progress and to continue to drive gross margin on that front.

Okay. Perfect. And then, just shifting gears to Walmart, obviously, a very important announcement. So, congrats there again. But can you give us just a sense on like how the ramp will progress over the time frame, $700 million spend, 10 years. I mean that implies a pretty significant annual contribution. I'm guessing it will be a lot less than that initially and then ramp more meaningfully over time, but maybe you can help us understand what that might look like based on what you know today?

Sure. So, we are already in the ramp-up phase. There was some modest help in Q3. You will see more help in automation in Q4. And then we're expecting in '26 and beyond in the next few years to really ramp up quite a bit on the equipment side. I personally think that spend will occur in a period that's meaningfully shorter than 10 years given the dialogue I'm having with Walmart. I think you will see Walmart relatively quickly become probably the second largest customer we have, and there's quite a bit of room to grow in terms of their annual spend with us. So, I think we will see how '26 goes, Greg. And then, obviously, that will help us guide the upcoming sort of ramp-up. The key thing is, some of our projects are in their next-generation facilities. So, it's related to their build-out there. And you can see in public comments, Walmart is investing heavily in e-commerce, in DCs and in FC fulfillment, and we are the beneficiaries of that as they continue to invest in that area. So, I think you will see some impact in -- starting in Q4 and hopefully, much bigger impact in '26 and thereafter.

Okay. Perfect. And then just lastly, your sort of longer-term targets that you put out, I want to make sure I heard it right. You said $800 million in revenue in 5 years, automation to contribute 15%, 1-5, of that. Is that right? And then do you have sort of an EBITDA margin target in mind if you're able to execute upon that?

You have that right. So, these are the right numbers sort of in the next 5 years, and that is sort of our organic plan, if you will, where we think the businesses we have today, the new product introductions that we're working on, we think they can lead effectively to doubling the top line in the next 5 years to $800 million. You have it right on automation, where I believe, we can get to 15%, 1-5, out of that $800 million coming from automation. And honestly, the guidance I have for the team that we're working towards and you're seeing us making progress towards that, is we want to be in a business that has north of 25% EBITDA margin. So that's the longer-term goal.

[Operator Instructions] Your next question comes from Ghansham Panjabi with Baird.

Just sort of building on the last question as it relates to 2025, I mean, obviously, a lot going on with the macroeconomic environment in Europe, U.S. and of course, your internal initiatives, et cetera. What is a reasonable baseline for volumes for 4Q? And how would that disaggregate between your 2 major regions?

Ghansham, this is Bill. So, for 4Q, I think we're expecting fairly consistent with what you saw this quarter just based on what we're seeing out of Europe and then continued strength in North America. So, we continue to see the enterprise accounts drive solid volumes in North America. We do think we'll get more of a contribution from the distribution channel as well in North America, which should help to improve things and also contribute favorably to the margin. EMEA and APAC, given that the environment there remains a little bit more challenging and harder to call. So, we are expecting to be a little bit down there year-over-year and also taking into account some of the destocking in APAC. But overall, as we exit the year, we're looking to get back to growth in that area as well.

Okay. And then, in terms of automation, clearly, this is -- or at least I think it's going to be more lumpy than perhaps your protective packaging business in terms of volumes. How do you think about -- how should we think about the comparison going into next year and how you're going to build off that pretty significant momentum that you're showing this year for different reasons, including your strategic partnerships?

Ghansham, I think as you highlight, obviously, automation is about -- it's driven by the sale and then the deployment and installation of equipment. So, it's a little bit different than the consumable business we have in PPS. As I said, we feel very confident that we will hit the $40 million to $45 million this year, which will represent meaningful 40%, call it, 50% growth year-over-year. In the near term, honestly, Ghansham, we continue to see the trend of 50% plus growth in automation. And our confidence in that growth trajectory is increasing because, frankly, a bunch of it is with customers that we've signed, that we're deploying, that we're building the equipment and installing and it's agreeing with them on the deployment and installation schedule. And as I announced in the call, we have a large enterprise agreement now with Medline, it's very sophisticated in automation. We're very excited about helping them in a number of their DCs, and we're working on other deployments like that. So, this is a business where you can start building a backlog over time, Ghansham, and the confidence in the numbers is higher, but it's probably more a business where you should think about it in terms of annual deployments that you can do rather than quarter-by-quarter, which is how we're thinking about it. But the growth trajectory in the near term, I'm expecting it to be 50% plus in the top line.

Got it. And just one final one as it relates to the momentum that you're seeing with these -- again, these partnerships, et cetera, including Medline. How is the weighting going to change between North America and the overseas market, especially Europe as we -- over the next 3 years, just given the asymmetric growth that you're seeing? Or is the growth yet to come in Europe and the weighting is going to be pretty much comparable as it is now?

That's a great question, Ghansham, because obviously, recently and with enterprise accounts, we've seen bigger growth in North America, and we've seen some challenges in Europe. What I'm expecting, as Europe stabilizes, is that we will get back to growth in Europe, in particular, around new product introductions that are really important globally, but in particular, very important in Europe as we try to come up with converters that are faster and have a more compact sort of footprint. And that's really important in the European market where DCs and warehouses are smaller than what you see in the U.S. So, we have a road map to regain market share to drive our growth. Having said that, in the next few years, I continue to expect higher and more further growth in North America than in Europe. And to your question, I think the geographic exposure of our company over time will lean heavier towards the U.S., but for the right reasons. In other words, not because I think Europe is going to decline, I actually think we're going to reverse the trends. And as Europe stabilizes, we will grow, but it will be at a lower pace than what we're seeing in North America. And look, we've been a small public company that's a bit unusual in the quantum of exposure to Europe. So, over time, I expect that you will see Europe still being a very large and important contributor, but North America play a bigger role. And obviously, given sheer size today, we think Asia Pacific has tremendous room for growth to drive top line.

Okay. And if I could just squeeze one more question, maybe for Bill as it relates to cash flow, anything we should keep in mind versus the initial guidance? And obviously, you're pointing towards the lower end of your EBITDA range for the back half of the year? And then also lastly, on CapEx for '26, can you give us a frame of reference as to how to think about that component?

Yes, sure. I think it's pretty consistent, right, with what we went through last quarter. We did lower our year-end cash balance forecast to $65 million to $70 million, which is a little bit lower than what we talked about in Q3 -- sorry, at the end of Q2. And that's really driven by just the performance in Europe and APAC, right, the lower sales environment there. So, I think we are looking to finish in that $65 million to $70 million area in cash on hand, and that's just driven by the lower volume outlook. And as we think about next year, right, we do look to get back to free cash flow generation. So, I think for us, we're looking to generate probably $15 million to $20 million in free cash at least next year based on what we're seeing. And I think the CapEx piece of that would be about $35 million or so based on what we're looking at now.

There are no further questions at this time. I'll now turn the call back over to Bill Drew for closing remarks.

Thanks a lot, Carly, and thank you all for joining us today. We look forward to speaking again after Q4.

Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.