Earnings call: Ranpak posts growth, eyes end-of-line automation leadership

Ranpak Holdings Corp. (NYSE: NYSE:), a leader in paper-based packaging solutions, reported a robust second quarter of 2024, with mid-single-digit top-line growth and enhanced profitability. The company highlighted a 17% increase in North American sales, attributed to stronger void-fill activity, while Europe and Asia Pacific experienced slower activity. Despite anticipating some input cost increases in the latter half of the year, Ranpak aims to preserve its target margin profile. The company’s strategic focus on account management and a transition to end-of-line automation, coupled with a shift from plastic to paper packaging, is expected to drive future volume growth and profit expansion.

Key Takeaways

• Mid-single-digit top-line growth and improved profitability in Q2 2024.
• 17% sales increase in North America, slower activity in Europe and Asia Pacific.
• Expectation of input cost increases in H2 2024, with margin profile targets maintained.
• Strategic focus on driving account activity and leading in end-of-line automation.
• Optimism about the industry’s shift from plastic to paper, enhancing volume growth and profitability.
• Cost-saving measures implemented to improve margin profile.

Company Outlook

• Ranpak is optimistic about revenue growth and EBITDA for the year.
• The company is focusing on volume growth, profitability, and cash generation.
• Efforts to double the business size in the Asia Pacific within a few years.
• Malaysia plant to go live in August, with full ramp-up in 2025.
• $5-10 million annual EBITDA boost expected from North American strategic accounts.
• Potential for an additional $10-20 million EBITDA from discretionary goods and industrial activity recovery.

Bearish Highlights

• Slower activity levels in Europe and Asia Pacific.
• Input cost increases anticipated in the second half of the year.

Bullish Highlights

• 20% volume increase in North America in Q2.
• Strategic accounts contributing to incremental business and EBITDA.
• Positive outlook on the switch from plastic to paper packaging.
• Automation and data as differentiators in large account discussions.
• Automation bookings up 100% in the past quarter.

Misses

• Revenue delays in the automation business due to customer IT integration issues.

Q&A Highlights

• Ranpak discussed the impact of strategic accounts and the shift from plastic to paper.
• Cost savings of $5 million from G&A cuts to impact current and Q4 earnings.
• Industry trend following Amazon (NASDAQ:)’s lead in switching from plastic to paper.
• 50%+ growth rate in automation business expected for the full year despite IT integration delays.

Ranpak’s earnings call conveyed a strong performance in its North American market and an ambitious outlook for its automation business. The company’s strategic initiatives and industry trends, such as the shift from plastic to paper, are poised to contribute significantly to its EBITDA. With the upcoming activation of its Malaysia plant and targeted cost reductions, Ranpak is strategically positioning itself for continued growth and market leadership in sustainable packaging solutions.

InvestingPro Insights

Ranpak Holdings Corp. (NYSE: PACK) has demonstrated a promising financial trajectory in the second quarter of 2024, with several indicators pointing towards a potentially fruitful year ahead. Notably, the company’s net income is expected to grow this year, aligning with the optimistic revenue and EBITDA outlook presented in the company’s earnings call. This expected uptick in profitability is a key highlight for investors considering the company’s future prospects.

In terms of stock performance, Ranpak has exhibited a strong return over the last month, with a 24.96% increase, and an impressive 88.35% surge over the last six months. This robust performance is indicative of investor confidence and market reception to the company’s strategic initiatives and industry positioning. It’s worth noting, however, that the company’s stock price movements have been quite volatile, which could be a consideration for investors with a lower appetite for risk.

From a financial health standpoint, Ranpak’s liquid assets exceed its short-term obligations, suggesting a solid liquidity position that could support the company’s operational needs and investment in growth areas such as automation and expansion into the Asia Pacific market.

InvestingPro Data metrics further illuminate the company’s current financial status:

• Market Cap (Adjusted): 645.81M USD, offering a glimpse into the company’s valuation in the market.

• Revenue Growth for the last twelve months as of Q2 2024: 7.68%, reflecting the company’s ability to increase its sales in a competitive environment.

• Price to Book Ratio as of Q2 2024: 1.14, which could suggest that the stock is reasonably valued relative to the company’s book value.

For readers interested in a deeper analysis, there are additional InvestingPro Tips available on that could further inform investment decisions.

Ranpak’s forward-looking strategies and the industry’s shift from plastic to paper packaging could continue to be significant drivers of growth, as reflected in the company’s strong performance metrics and the positive outlook shared during the earnings call.

Full transcript – One Madison A (PACK) Q2 2024:

Operator: Thank you for standing by. My name is John, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Ranpak Holdings Second Quarter 2024 Earnings Call. All lines have been placed in me to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded. Thank you. I would now like to turn the call over to Sara Horvath, General Counsel. Please go ahead.

Sara Horvath: 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 a 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 June 30, 2024. The 10-Q will be available through the SEC or on the Investor Relations section of our website. With me today are Omar Asali, our Chairman and CEO; and Bill Drew, our CFO. Omar will summarize our second quarter results and provide commentary on the operating landscape and Bill will provide additional details on the financial results before we open up the call for questions. With that, I’ll turn the call over to Omar.

Omar Asali: Thank you, Sara, and good morning, everyone. I appreciate you all joining us today. Our second quarter financial results built on the momentum over the past three quarters and delivered mid-single-digit top line growth with improved profitability driven by our fourth quarter in a row of higher volumes. Growth this quarter was largely driven by North America strategic account activity as the plastic-to-paper shift takes hold as well as strength in Asia Pacific. Overall, our start to the year is in line with the expectations, and we are pleased with our steady improvement in the face of a somewhat continued challenging economic backdrop. North America sales increased 17% in the quarter versus last year, driven by improved void-fill activity, particularly with strategic accounts. The underlying macro remains choppy with industrials under pressure and discretionary goods activity remaining out of favor, particularly as housing activity is muted. That being said, we have not been sitting idly by waiting for the general environment to recover. We have been focused on self-help in terms of winning new large accounts and becoming more efficient. And this is what drove the excellent results in North America in the second quarter. The plastic-to-paper ship transition that began in April drove a substantial portion of the volume growth in North America as our strategic account activity ramped up throughout the quarter. We are pleased to see some of the public announcements regarding the plastic-to-paper shift that have been made by key players in the e-commerce space and expect this to be the beginning of a sizable movement towards paper-based solutions. We are excited to see the public validation by marquee names of the equal or better product protection efficacy paper provides versus air pillows as well as the positive feedback from consumers and employees who handle the materials. We applaud the efforts taking place to reduce the amount of plastic and supply chains and the positive impact it will have on the environment and key stakeholders. Europe and Asia Pacific activity levels in the second quarter were less robust than North America with volumes increasing a little over 3%, but constant currency sales down about 1% overall versus the prior year driven by pricing headwinds, which we will begin to lap in August. Slower activity levels in the region were mainly driven by the manufacturing and industrial sectors. Consumer confidence in the region has been improving since the end of the third quarter, but it’s still well below pre-COVID levels. Geographically speaking, we have seen strength in Brazil, France and the Netherlands, while Poland and Germany remain weaker. In Asia Pacific, Japan has been a meaningful driver of growth. The input cost environment was in line with the first quarter and provided a slight benefit to us year-over-year, although the mix of lower cushioning and higher void fill resulted in slightly lower gross margins. We’re expecting to see some input cost increases begin to flow through the second half of the year as some producers in North America react to tighter supply and demand dynamics and increases in the RISE index. In Europe, activity is more mixed with some producers raising price, while others are focused on obtaining more volume through more attractive pricing. Overall, we expect some input cost pressure in the second half of the year, which we will look to offset in order to maintain our 37% to 38% target margin profile for the year. Energy pricing in Europe remains favorable as storage levels in the region are above the 5-year average, but we do expect some volatility as we approach fall and winter season and geopolitical headlines may move the markets. We’re working with our vendors to lock in their energy pricing where possible to minimize exposure and gain visibility into forward pricing. At this point in the cycle, the inventory levels in the channel are tight with distributors and end users trying to minimize the amount of inventory carried due to increased carrying costs. If prices begin to rise, you could see some of this tightness reverse as customers will look to protect themselves from increases. With that, let me turn the call over to Bill for some financial detail.

Bill Drew: Thank you, Omar. In the deck, you’ll see a summary of some of our key performance indicators. We’ll also be filing our 10-Q, which provides further information on Ranpak’s operating results. Machine placement increased 0.4% year-over-year to approximately 141,000 machines globally. Cushioning Systems declined 0.3%, while void-fill installed systems increased 0.7% and wrapping machines were roughly flat year-over-year. Growth in the machine field population continues to be lower this year due to a combination of lower activity levels related to industrial and manufacturing sectors as well as our efforts to optimize our fleet. Overall, net revenue for the company in the second quarter was up 5.9% year-over-year on a constant currency basis, driven by an 8.8% increase in volumes, offset somewhat by lower price. North American net revenue increased 17.1% year-over-year with voice all driving the outperformance, offset slightly by decreases in cushioning and wrapping. Volumes were up approximately 20% versus prior year, driven by strength in e-commerce related to strategic account activity ramp up. In Europe and APAC, net revenue on a constant currency basis was down 1% year-over-year, driven by pricing headwinds in the PPS business that outweighed volume growth of 3.2% and increases in automation. The industrial sector in Europe remains challenged, impacting our Cushioning business, which experienced the greatest headwinds. The second quarter saw a bit of a step back in Europe compared to what we had seen in the previous few quarters when the general economic improvement was stronger. Our gross profit increased 5.4% on a constant currency basis, implying a margin of 36.8% compared to 37% in the prior year. This is roughly in line with expectations as we expected gross margin to be in line with Q4 throughout the year, but was pressured somewhat from less cushioning contribution versus the prior year. Maintaining our gross margin profile is a critical area of focus for us, so we are committed to taking action to observe it in the second half of the year. Adjusted EBITDA increased 7.4% year-over-year to $20.4 million, complying a 22.8% margin driven by higher volumes and gross profit flow-through. We are extremely focused on continuing to improve the financial profile of the business and generating cash. We invested in working capital in the quarter to position ourselves well for the ramp in strategic account activity. We will work this down in the second half of the year to ensure we are managing our working capital efficiently and driving cash generation. We have taken actions to reduce our spend, which we expect will be felt in the third quarter in order to continue to improve our financial profile and maximize profitability to drive cash generation. Capital expenditures for the quarter were $9.9 million, driven by converter placement and investments related to our Malaysia production facility. For the remainder of the year, we expect capital expenditures to step down as many of our converter purchases were more heavily weighted in the front half of the year, as was our spend on the APAC production plant, which goes live in August. The Malaysia go-live marks the end of our multiyear investment cycle related to the transformation of our digital and physical infrastructure. We now have a fully invested platform that is world class and will provide us with the insights and functionality to scale the business. Moving briefly to the balance sheet and liquidity. We completed Q2 with a strong liquidity position, including a $65 million cash balance and no drawings on our revolving credit facility. As discussed in the Q1 call, we received €20 million in proceeds from a patent litigation settlement and sales patents in the second quarter. We also made an additional investment in PiccoRobot [ph] in the quarter as they’re unloading robots gain in the marketplace. We continue to make steady progress on our goal of deleveraging and reached 4.2 times at the end of the quarter, down from 4.6 times at 2023 year-end and 5.7 times as of Q2 2023. We expect to build cash in the back half of the year and particularly in the fourth quarter as we enter into the traditionally stronger holiday season and volumes pick up, resulting in cash generation for the year. We continue to pursue our leverage target of being below four turns on a constant currency basis by year-end and ultimately getting to three turns or below. With that, I’ll turn it back to Omar before we move on to questions.

Omar Asali: Thank you, Bill. In closing, I’m pleased with the continued steady improvement in the business and delivering on our fourth consecutive quarter of volume growth. I’m also pleased with the continued progress on our key commercial initiatives of driving strategic account activity and becoming the go-to player in end-of-line automation. We continue to feel good about the overall trajectory of the business and outlook. We believe our team has done a good job positioning us well with key accounts in North America. The effects of this began to materialize in Q2 with North American volumes up 20%, and we expect to see additional strategic account benefits get layered in going into the fourth quarter, providing us with solid momentum in PPS for the remainder of the year and into 2025. As the pure-play paper provider, as these accounts are switching from plastic to paper, we are gaining incremental business at the expense of our plastic competition, even if we have to share some of these wins. Automation and data is increasingly a differentiator in these conversations with large sophisticated accounts. We have boxed customization, automated dunnage [ph] insertion, visual quality inspection, void detection and analytics, pre cubing analysis, robotic pat insertion and more. We are finding more and more that we are separating ourselves from our competition by being able to provide value-added solutions that provide real insights into our customers’ business. It is not strictly a conversation about Donage [ph] Our approach is about forging deeper and stickier relationships with our customers based on some of these value-added solutions that I just mentioned. In Europe, although the macro is choppy, volumes continue to be up, and we expect to begin lapping our pricing headwinds in August, which will help the comparison for the remainder of the year. Asia Pacific is off to a strong start to the year, driven by Japan and Southeast Asia. As Bill mentioned, our Malaysia plant will go live in August and will begin serving limited SKUs this year and fully ramp up capabilities in 2025 to serve the Asia Pacific region. We believe local production capabilities will provide us with additional sourcing options as well as lower logistics and production costs that we can share with the market in order to drive growth. Our goal is to scale that region in PPS, and I’m optimistic that within a few years, we can potentially double the size of that business. Volume growth, profitability and cash generation are the key areas of focus for us. We believe we are well positioned for continued volume growth even with a challenging operating environment. On the profitability side, the lower contribution from cushioning in the near term is putting some pressure on the margin profile. So we’re taking steps to rightsize our G&A to enhance the margin profile even in the face of some macro headwinds. We have identified areas of cost savings and have implemented measures to reduce run rate G&A by more than $5 million by end of the year. Part of our excitement for the near and medium term is driven by three distinct activities: first, are the actions and announcements by large players in the U.S. to switch from plastic to paper. We all recall the largest e-commerce player making such an announcement recently, and we believe many others in the industry will follow. We estimate near-term strategic account activity in North America could result in an additional $5 million to $10 million annually in EBITDA for us. If others in the industry follow there would be further upside. Second, we believe that volumes related to discretionary goods purchases and industrial activity will normalize after being in a slump for the past couple of years. A 50% recovery to pandemic peak levels, assuming current pricing and costs sold, could result in roughly another $10 million to $20 million of additional EBITDA. Third, we believe our automation business is inflecting, potentially turning it from an $8 million negative EBITDA profile to a positive contributor as it scales to become a high-teens to 20% EBITDA margin business over time. Bottom line is our platform is fully invested in and beginning to pay us back on our investments in terms of efficiencies, scale and insights into the business. All of these 3 things contribute to growing near-term EBITDA meaningfully and improving the margin profile of the business. Regarding cash generation, 2024 concludes our investment cycle and our CapEx spend will take a meaningful step down going forward. Expected adjusted EBITDA growth, lower CapEx and managing our working capital will enable us to get back to generating cash in 2024. The first half of the year is consistently a draw on cash, and we tend to build cash up in the final 4 months of the year as volumes peak and we work down inventory for our busy season. Our entire organization is committed to managing spend and working capital tightly to focus on generating cash. Now let’s open it up for some questions. Operator?

Operator: Thank you. [Operator Instructions] Thank you. The first question comes from the line of Ghansham Panjabi from Baird. Please go ahead.

Unidentified Analyst: Hi. This is actually Josh Fesley [ph] on for Ghansham. Thanks for taking the question. Maybe starting off with a question on pricing. You guys called out the pricing headwinds in Europe of roughly 2% in the quarter. Was that in line with your initial expectations? Any color around that would be helpful. And then for my second question, could you guys disaggregate between new wins versus core markets as it relates to the 20% increase in North America? I know you said the majority of it was the result of new wins, but any color there would be helpful as well. And then maybe how should we think about that dynamic between the two for the back half of the year?

Omar Asali: Sure. So on pricing, Josh, yes, no surprise. That’s within our expectation, and that will start lapping this month in August, given some pricing action we took a year ago sort of with some price reductions in the marketplace in Europe. And we think the comparison, if you will, in the second half of the year will start getting easier from a pricing standpoint. On the new wins, maybe I’ll just start and then have Bill give you more detail. So a big chunk of the growth has been in the strategic accounts. Our base business did grow, but obviously, the majority of that 20% volume has been with some of the new accounts. We expect that in the second half of the year, we still have a number of wins, by the way that are signed. The trials are over, their closed accounts. So we’re going to be installing and servicing mode of these customers. So I’m expecting meaningful growth with new wins in the second half of the year. And we typically see a pickup just given the seasonality of our business and the base case. So overall, if you put that in numbers, I think year-to-date, globally, we’ve grown around 7%. We’re very confident that growth for the year will be in low double digits once you layer in the strategic accounts and the activity in the second half. But I’ll have maybe Bill give you a bit more color as well.

Bill Drew: Yes. Thanks, Josh. Just as far as the consolidated base business goes, even without those strategic accounts, the volumes still would have been up in the quarter. So we are still continuing to see the base business grow and we’re layering in these additional strategic accounts on top of it, and that’s kind of been the mindset going into this year, right, is continue to grow the base business and layer in the strategic accounts on top of it.

Unidentified Analyst: Awesome. Great. That’s super helpful. And then for my second — or next question, maybe just focusing on Cushioning. Can you expand on what drove the decline in the quarter? And how would you have us thinking about that vertical for the back half of the year? And then also, how are margins for cushioning relative to the company as a whole?

Omar Asali: So cushioning tends to be a slightly higher margin business for us. By the way, as a company, the levels of margins we have in the different products are pretty close, but cushioning tends to be slightly higher. Look, industrial activity has not been robust, frankly, globally, and that has impacted our cushioning business. We’re not seeing attrition or account losses. We’re not seeing customers go to competitors, but we are seeing in manufacturers and industrial players, a bit of a slowdown. Frankly, it’s a little bit more pronounced in Europe than in other geographies. We continue to service these customers. We continue to be very bullish about their outlook. The rate environment and some of the macro aspects in the environment may impact how these companies how they do business and how they grow going forward. But we’re not seeing any signs that are concerning, frankly, other than a macro backdrop that is not robust. And we’re pretty focused on sort of as these companies recover that we maintain our market share with them.

Unidentified Analyst: Awesome. Thank you both. I’ll hand it off.

Operator: The next question comes from the line of Adam Samuelson from Goldman Sachs. Please go ahead.

Adam Samuelson: Yes. Thank you. Good morning, everyone.

Omar Asali: Good morning, Adam.

Adam Samuelson: Omar, Will, just as a kind of level set given the performance in the quarter and some of the tailwinds from new business wins, some of the headwinds in the cushioning business and softness in Europe. I just want to be clear, are you — is your view on kind of the revenue growth and EBITDA for the year changed relative to where you were 3 and 6 months ago?

Omar Asali: It has not. If anything, our confidence has increased, Adam, in what we’ve been saying given the robust activity with, in particular, some of the larger accounts. And we’ve been talking about the strategic accounts, I think, for 3 to 4 quarters now. And the difference today versus the last few quarters, is we’ve closed on these accounts. Their actual wins. Now in Q2, it was a ramp-up period with some of them. So you will see, hopefully, a re-rating of our base case volume going forward given some of these wins. And in addition to some of these Q2 wins, we have a number of closed deals in Q3 that we’re installing and that will start servicing and hopefully ramping up in Q3, getting ready for Q4. So I think our confidence is increasing in terms of volume trends. This is why we’re saying in the second half of the year, you’re going to see more robust volume numbers from us than in the first half. And in that base case, we are not assuming a big recovery in the industrial channel, in the manufacturing channel. We’re assuming that things stay more or less the same. And that we continue to service these accounts and continue to work with them. If we are surprised to the upside, I think that’s no problem. If there is further macro weakness in industrial and manufacturing, clearly, like anybody else who’s in the space, that will impact us. But for us, if you look at as a company, historically, we’ve been under-indexed to large accounts. So this effort in the past year to really work with large strategic accounts, service them, have some wins with them. And clearly, we’ve been supported by the switch from plastic to paper. I think this is getting us in a place where we’re more comfortable that our business is more representative of large accounts, medium and small-sized accounts and that we’re not under-indexed to the big players. But overall, our conviction is increasing, Adam.

Adam Samuelson: Okay. No, that’s helpful. And then, Omar, you had in your prepared remarks, you gave kind of some potential EBITDA contributions between some of the large accounts and the automation and kind of nonpaper consumables growth that you’ve been targeting as well as $5 million of annualized savings from G&A cuts. Of those kind of measures, what — how much do you actually think you’ll be realizing in calendar ’24. And in particular, the — what is the current expectation for the automation kind of other equipment revenue this year?

Omar Asali: Sure. So let me start and then maybe Bill can give a bit more precision. So on the cost savings exercise, which was driven by a number of factors. One is we’re looking at where the opportunities are and in areas where we had too much spend and we’re not expecting growth or had too much G&A, we decided to basically reduce some costs there. The second piece is, frankly, given our investments in technology with efficiencies and with new processes, we felt there are ways for us to reduce spend and be a bit more efficient. And that $5 million number I talked about, that is something we executed on in this quarter. You will see some impact of it this quarter. You will see a bigger impact in Q4 and then the annual run rate going forward would be the $5 million. So I think you’ll see a nice, nice contribution from this quarter and then more in Q4. In terms of the strategic accounts, look, a lot of these are done. It’s about us just installing starting to sell product. These are no longer trials, et cetera. So our conviction in hitting that number of incremental EBITDA from those accounts is high. The question is how do you annualize it and what’s the ramp-up period. And again, many of them are Q2 wins, so they will contribute at a minimum for the full second half of the year. Some of them are Q3 wins that will help us starting in August and September and then hopefully fully ramp up by Q4. With all strategic accounts Adam, in our business. It’s very important that we are fully ramped up and ready by the beginning of Q4 because that’s peak season, and that’s what customers expect. So at a minimum, expect that quarter to fully contribute. But let me have maybe Bill give a bit more specifics.

Bill Drew: Yes, Adam, just on the strategic account wins, right, that $5 million to $10 million for this year, as Omar mentioned, some of it is staged, right? So some of it is Q2. So we’ll get a big chunk of that this year and then others are be late Q3 into Q4 as those ramp up. So of that, call it, $5 million to $10 million, I would say, at least 3 we should be experiencing this year with the remainder fully ramped up going into next year.

Adam Samuelson: All right. That’s all very helpful. I’ll pass it on. Thank you.

Operator: The next question comes from the line of Greg Palm from Craig-Hallum Capital Group. Please go ahead.

Unidentified Analyst: This is Danny Eggerichs for Greg today. I was hoping to maybe hit on strategic accounts to obviously seems like activity has been really good. I guess if you look back 3 months, is it safe to say that the conversion has maybe gone better than you were thinking at that time, and you’ve seen kind of incremental volume gains from what you were expecting a few months ago?

Omar Asali: I think that’s fair. I think, look, when you’re winning some of these accounts and you’re trying to forecast and trying to understand the business, we’re doing the best we can. Sometimes the forecast that we have might be a little bit more aggressive and we’re surprised on the downside. And sometimes, maybe we were a little bit more cautious, more conservative and the speed with which accounts have implemented solutions and maybe the volume was a bit better than we expected. And we’re clearly sort of in Q2 in the latter category. So some of these wins ended up being a bit more sizable than we expected, the ramp-up and the customers pushing us to install and get going was a little bit faster. I will tell you, I feel great about how we’re executing with these accounts. I get a lot of sort of feedback from some of these large customers about our customer service, about product join on time, quality of our product, their packers being happy, their leadership being happy. So we’re very focused on that execution, which is building both our confidence as well as our reputation. And I feel really good that as we install and work more with some of these large accounts, we will keep proving ourselves. But I think overall, your characterization is probably fair that in Q2, maybe in North America, a couple of accounts were a little bit sort of more sizable than we expected.

Unidentified Analyst: Got it. And then just maybe in terms of that Amazon announcement of kind of the full switch from paper to plastic. I guess do you expect or have you seen any evidence yet of maybe other companies within the industry, your customers kind of accelerating their plans or kind of spurring kind of an industry-wide shift from plastic to paper.

Omar Asali: 100%, you’re going to see more follow suit and more companies are not just talking about it, but they’re actually doing it. And more and more accounts are thinking about that switch. And that’s part of the closes that I mentioned that we’re experiencing in Q3 where we’re trying to service these accounts and ramp up. But I think you’re going to continue to see a way with large accounts and sizable brands and brand owners making the switch and embracing more paper solutions in our industry. And that’s part of the conviction and the excitement that we’re seeing in the North America market that we like. And we’re anxious to sort of continue to deliver to some of these new customers. And frankly, some of them are existing that may have had different substrates and different products that they’re using. And now they’re announcing that they want to switch completely to paper and less on plastic.

Unidentified Analyst: Got it. Makes sense. Maybe just one last one, hitting on automation, kind of took a sequential step down in the quarter. Are we still thinking about that kind of a 50%-plus grower for this year?

Omar Asali: We are — our bookings in the quarter were up about 100% this past quarter. Some of the revenue delays was more driven by customers and IT integration on the customer part, not on ours. We have a very good funnel, very good pipeline for second half of the year, and we continue to have very high conviction in that 50% plus number for the full year. So we’re expecting to have a very busy second quarter in our automation business, given recent bookings activity and given funnel activity.

Unidentified Analyst: Okay. That’s great. Thanks.

Omar Asali: Thank you.

Operator: And that does conclude the question-and-answer session. I would like to turn the floor back over to Bill Drew for closing remarks.

Bill Drew: Thanks, John, and thanks, everybody, for joining us today. Looking forward to catching up next quarter.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.+

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