Ranpak Holdings Corp. (NYSE:PACK) Q4 2022 Earnings Call Transcript

Omar Asali:

nat-gas: In America it’s obviously less about energy. It’s more about supply/demand. A number of new mills that are coming online, a lot of capacity coming online, as the volumes for corrugated and volume for paper and the general economy is a little bit weaker. We are able to negotiate with our vendors better pricing for, again the upcoming quarters. In many of these cases, these new pricing, Greg, are not starting on Jan 1, but starting in some cases on Feb 1 and March 1. So they were helped a little bit the first quarter, but then as Bill mentioned, they’ll help us more as the year progresses. So these are situations where we’ve already negotiated supply, already negotiated pricing. I would say in America, its supply/demand picture that’s helping us. In Europe, it’s largely energy that’s helping us. And this is why we feel pretty good about recovering a meaningful part of the gross margin.

Greg Palm: Okay, great. And then last one for Bill, I appreciate the upfront disclosure regarding the material weakness, so that doesn’t come as a surprise to everybody, but I missed a little bit of the commentary. Can you just maybe repeat exactly what happened?

William Drew: Yes, sure. And we’ll have a full description in section 9A, the 10-K when it comes out. But I think at a high level, right, 2022 had a lot of changes to systems, processes, reports that are used in the audit process. I would say the biggest things that we encountered in our 2022 year end audit where related to it ITGCs, right? So the general IT controls some access issues and the knock-on effects that all those had on the other controls, which made them ineffective, unfortunately. So, we’ll be enhancing policies and procedures obviously to improve the environment. It’s something that we take incredibly seriously and it’s disappointing taking this step back after having two years of a clean audit, but we’re going to make sure that we address the situation as promptly as possible.

We’ll have some recruiting in some key positions that will help in accounting and other support functions as well as IT, invest in some additional tools right, to help with some of the access provisioning and monitoring. So we’re going to work hard to address this.

Greg Palm: Okay. All right, I’ll leave it there. Thanks.

Operator: We have no further questions at this time. I’ll hand the conference back over to Bill for any closing remarks.

William Drew: Thank you, Regina, and thanks everybody for joining us today. We look forward to catching up next quarter.

Operator: Ladies and gentlemen, that will conclude today’s meeting. Thank you all for joining. You may now disconnect.