One Madison Corporation (NYSE: OMAD, OMAD.U, OMAD.WS) (“One
Madison”) today announced unaudited preliminary first quarter 2019
results for Rack Holdings Inc. (“Rack Holdings”), holding company
of Ranpak Corp. (“Ranpak” or the “Company”). Rack Holdings’
unaudited preliminary first quarter highlights, compared to first
quarter 2018, in each case on a non-GAAP constant currency basis,
include:
- Net sales increased 12% year over year
to $66.5 million, driven by 8% growth in systems placement and
strength across Cushioning, Wrapping, and Void-Fill product
lines
- Gross profit increased 9% year over
year to $28.3 million due to higher sales and slightly offset by
higher input costs
- Accelerated investment in R&D by
nearly 100% year over year in response to identified growth
opportunities
- Pro forma Adjusted EBITDA increased 8%
year over year to $19.4 million
- Reiterate 2019 expectations of $289mm
in net sales and $95mm of Pro forma Adjusted EBITDA
- Anticipated closing of One
Madison-Ranpak business combination in Q2 2019
Unaudited Preliminary Consolidated First Quarter 2019
Results
(Presented on a Non-GAAP Constant
Currency Basis)
$ in 000's
Three Months EndedMarch
31,
2019 2018 % Change Net sales(1)
$ 66,548
$ 59,501
12% Cost of sales(1) 38,221 33,618 14% Gross profit(1) 28,327
25,883 9% Research and development(1) 881 442 99% Pro forma
Adjusted EBITDA(1)
$ 19,425
$ 18,069
8% Capital Spend(1) (6,725) (6,104) 10% Protective Packaging
Systems Installed Base 98,538 91,612 8% (1) On a constant
currency basis, calculated by applying the average exchange rate
for the presented period to the to the prior year, which was 1.15
EUR/USD. These metrics presented on constant currency absis are
non-GAAP measures.
The increase in first quarter net sales was driven by strong
growth in Cushioning and Wrapping product lines as well as growth
in Void-Fill, slightly offset by a decline in the e3neo/End of Line
Automation product line. The first quarter is typically the
smallest contributor to annual Net sales and Adjusted EBITDA as
many of Ranpak’s end users experience greater demand for their
products to be shipped in the second half of the year.
Historically, as the year progresses, quarterly sales volumes
continually increase through the year into the fourth quarter
providing the Company with greater operating leverage and a higher
margin profile in the second half of the year. Beginning in the
second quarter of 2018, Ranpak invested in the business by adding
key new roles in senior management including a Managing Director of
Americas and a Global Director of e-Commerce, as well as hiring a
new VP of Global Marketing & Product Development to further
drive growth. The Company continued investing in the business in
first quarter of 2019 through the acceleration of R&D in
response to near-term growth opportunities it has identified in the
market. Given the timing of these investments, we expect the second
half of 2019 to result in a stronger margin profile and higher
growth rate in Adjusted EBITDA. We are excited about Ranpak’s
growth prospects and reiterate our 2019 guidance of $289 million in
expected net sales and $95 million of expected Adjusted EBITDA on a
constant currency basis.
Upon the consummation of the previously announced business
combination, Rack Holdings will become a wholly-owned subsidiary of
One Madison and One Madison will be re-named “Ranpak Holdings
Corp.” The business combination is expected to close in the second
quarter of 2019.
Omar Asali, One Madison’s Chairman and Chief Executive Officer,
said: “Ranpak continues to make tremendous progress. These
preliminary first quarter results provide ample evidence of
Ranpak’s sound financial footing and potential for growth. We look
forward to building on this success, and expanding on Ranpak’s
business, following the closing of our transaction.” Mr. Asali will
become the Executive Chairman of the Board of Directors of the
combined company upon the closing of the business combination.
Mark Borseth, Ranpak’s Chief Executive Officer, added: “We are
excited about our 2019 first quarter results. The whole team at
Ranpak has done a terrific job and we are excited to begin our new
chapter with the help of Omar and the entire One Madison team.” Mr.
Borseth will become the Chief Executive Officer of the combined
company upon the closing of the business combination.
One Madison plans to report first quarter 2019 results for Rack
Holdings following the consummation of the business transaction. As
the financial information presented above is preliminary, such
information remains subject to change, and any changes would be
reflected in such report of Rack Holdings’ first quarter 2019
results.
USE OF NON-GAAP FINANCIAL METRICS
The unaudited preliminary financial information presented above
consists of Non-GAAP financial metrics, as it is calculated on a
constant currency basis, by applying the average exchange rate for
the presented period to the prior year, which for Q1 2019 was 1.15
EUR/USD. We believe these non-GAAP financial metrics provide useful
supplemental information to assess Ranpak’s organic operating
performance on a period-by-period basis by eliminating the effect
of currency volatility. Non-GAAP financial metrics should be viewed
in addition to, and not in lieu of, Rack Holdings reported results
prepared in accordance with GAAP. The corresponding GAAP metrics on
a year over year basis are as follows:
Unaudited Preliminary Consolidated First Quarter
2019 Results (Presented on a GAAP Actual Currency Basis)
$ in 000's
Three Months EndedMarch
31,
2019 2018 Net sales $ 66,083 $ 61,607 7% Cost
of sales 37,939 34,770 9% Gross profit 28,144 26,837 5% Research
and development 864 425 103%
In addition, pro forma adjusted EBITDA, as set forth above, is a
non-GAAP measure. Pro forma Adjusted EBITDA is earnings before
interest expense, income taxes, depreciation and amortization plus
other adjustments to exclude one-time expenses and include
estimated public company costs and additions to the management
team. We believe that pro forma adjusted EBITDA provides useful
supplemental information to assess Ranpak’s operating performance
and to evaluate period-by-period comparisons. This non-GAAP
financial metric should be viewed in addition to, and not in lieu
of, Rack Holdings’ reported results prepared in accordance with
GAAP. Set forth below is a reconciliation of Adjusted EBITDA to Net
Loss, the nearest GAAP equivalent.
Reconciliation of adjusted net sales and cost of
sales Currency: $ 000
Q1'19 Q1'18 Net sales
66,083 61,607 Pro-forma adjustments - (406) Constant currency
exchange 465 (2,084)
Adjusted net sales(1)
66,548 59,118 Cost of sales(2) 37,939 34,770
Pro-forma adjustments - (284) Constant currency exchange 282
(1,135)
Adjusted cost of sales (at 1.15 constant
currency)(2) 38,221 33,351 Adjusted
gross profit (at 1.15 constant currency)(3)
28,327 25,767 Reconciliation of pro forma
Adjusted EBITDA Currency: $ 000
Q1'19 Q1'18
Net Loss (3,371) (6,781) Depreciation &
amortization 16,134 16,294 Interest 8,101 7,091 Income tax (606)
(1,311) Unrealized (gain)/loss on translation (2,125) 2,998
Constant currency exchange 144 (710) Non-cash impairment losses 153
296 M&A, restructuring and severance 839 1 PE sponsor costs 518
400 Other non-core and non-cash adjustments 367 641
Adjusted
EBITDA(4) 20,153 18,919 Pro-forma e3Neo -
(122) Pro-forma public company costs (729) (729)
Pro-forma
adjusted EBITDA(4) 19,425 18,069
(1) Adjusted net sales is a non-GAAP measure. Adjusted net
sales is net sales on a constant currency basis (€1.15 to $1 USD)
plus other adjustments to account for a change in revenue
recognition for e3neo in 1Q18. (2) Adjusted cost of sales is
a non-GAAP measure. Adjusted cost of sales is cost of sales on a
constant currency basis (€1.15 to $1 USD) plus other adjustments to
account for change in revenue recognition for e3neo in 1Q18.
(3) Adjusted gross profit is a non-GAAP measure. Adjusted gross
profit is adjusted net sales less adjusted cost of sales.
(4) Adjusted EBITDA and Pro forma Adjusted EBITDA are both non-GAAP
measures. Adjusted EBITDA is earnings before interest expense,
income taxes, depreciation and amortization plus other non-core and
non-cash adjustments including recruiting fees and non-recurring
professional fees. Pro forma Adjusted EBITDA is Adjusted EBITDA
plus adjustments for one time expenses related to the E3Neo
acquisition and include estimated public company costs and
additions to the management team.
About One Madison Corporation
One Madison is a special purpose acquisition company launched in
2018 for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business
combination with one or more businesses. One Madison began trading
on NYSE in January 2018 and its Class A ordinary shares, units and
warrants trade under the ticker symbols OMAD, OMAD.U, and OMAD.WS,
respectively. One Madison is sponsored by One Madison Group LLC, an
investment firm founded by Omar Asali, formerly President and Chief
Executive Officer of HRG Group. One Madison’s investors and
strategic partners include JS Capital and Soros Capital (the family
offices of Jonathan Soros and Robert Soros, respectively), as well
as entities managed by Blackstone Alternative Solutions L.L.C. On
December 12, 2018, One Madison entered into a definitive agreement
with affiliates of Rhône Capital, pursuant to which One Madison
will combine with Ranpak.
About Ranpak Corp.
Founded in 1972, Ranpak's goal was to create the first
environmentally responsible system to effectively protect products
during shipment. The development and improvement of materials,
systems and total solution concepts have earned Ranpak a reputation
as an innovative leader in e-commerce and industrial supply chain
solutions. Ranpak is headquartered in Concord Township, Ohio and
has approximately 550 employees.
Caution About Forward-Looking Statements
The information in this press release may contain
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Our forward-looking statements include, but are
not limited to, statements regarding our or our management team’s
expectations, hopes, beliefs, intentions or strategies regarding
the future. Statements that are not historical facts, including
statements about the pending transaction among One Madison
Corporation (the “Company”), Rack Holdings L.P. and Rack Holdings
Inc. (“Ranpak”) and the transactions contemplated thereby, and the
parties, perspectives and expectations, are forward-looking
statements. In addition, any statements that refer to estimates,
projections, forecasts or other characterizations of future events
or circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “forecast,” “intend,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. Forward-looking
statements in this press release may include, for example,
statements about: our ability to complete our initial business
combination; our expectations around the performance of the
prospective target business or business; our success in retaining
or recruiting, or changes required in, our officers, key employees
or directors following our initial business combination; our
officers and directors allocating their time to other businesses
and potentially having conflicts of interest with our business or
in approving our initial business combination; the proceeds of the
forward purchase shares being available to us; our potential
ability to obtain additional financing to complete our initial
business combination; our public securities’ potential liquidity
and trading; the lack of a market for our securities; the use of
proceeds not held in the trust account or available to us from
interest income on the trust account balance; the trust account not
being subject to claims of third parties; or our financial
performance following this offering.
The forward-looking statements contained in this press release
are based on our current expectations and beliefs concerning future
developments and their potential effects on us taking into account
information currently available to us. There can be no assurance
that future developments affecting us will be those that we have
anticipated. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond our control) or
other assumptions that may cause actual results or performance to
be materially different from those expressed or implied by these
forward-looking statements. These risks include, but are not
limited to: (1) the occurrence of any event, change or other
circumstances that could result in the failure to consummate the
initial business combination; (2) the possibility that the terms
and conditions set forth in any definitive agreements with respect
to the initial business combination may differ materially from the
terms and conditions set forth herein; (3) the outcome of any legal
proceedings that may be instituted against the Company, Ranpak or
others following the announcement of the initial business
combination and any definitive agreements with respect thereto; (4)
the inability to complete the initial business combination due to
the failure to obtain approval of the stockholders of the Company,
to obtain financing to complete the initial business combination or
to satisfy other conditions to closing in the definitive agreements
with respect to the initial business combination; (5) changes to
the proposed structure of the initial business combination that may
be required or appropriate as a result of applicable laws or
regulations or as a condition to obtaining regulatory approval of
the initial business combination; (6) the ability to meet and
maintain NYSE’s listing standards following the consummation of the
initial business combination; (7) the risk that the initial
business combination disrupts current plans and operations of
Ranpak as a result of the announcement and consummation of the
initial business combination; (8) costs related to the initial
business combination; (9) changes in applicable laws or
regulations; (10) the possibility that Ranpak or the Company may be
adversely affected by other economic, business, and/or competitive
factors; and (11) other risks and uncertainties indicated from time
to time in filings made with the SEC. Should one or more of these
risks or uncertainties materialize, they could cause our actual
results to differ materially from the forward-looking statements.
We are not undertaking any obligation to update or revise any
forward looking statements whether as a result of new information,
future events or otherwise. You should not take any statement
regarding past trends or activities as a representation that the
trends or activities will continue in the future. Accordingly, you
should not put undue reliance on these statements.
Use of Non-GAAP Financial Measures
The information included in this press release includes non-GAAP
financial measures for Rack Holdings, including net sales, cost of
sales and gross profit on a constant currency basis, adjusted
EBITDA and pro forma adjusted EBITDA. The Company and Rack Holdings
believe presentation of these non-GAAP measures is useful because
they allow management to more effectively evaluate its operating
performance and compare the results of its operations from period
to period and against its peers without regard to financing methods
or capital structure. Management does not consider these non-GAAP
measures in isolation or as an alternative to similar financial
measures determined in accordance with GAAP. The computations of
net sales, cost of sales and gross profit on a constant currency
basis, adjusted EBITDA and pro forma adjusted EBITDA may not be
comparable to other similarly titled measures of other companies.
These non-GAAP financial measures should not be considered as
alternatives to, or more meaningful than, measures of financial
performance as determined in accordance with GAAP or as indicators
of operating performance.
No Offer or Solicitation
This press release is for informational purposes only and shall
not constitute an offer to sell or the solicitation of an offer to
buy any securities pursuant to the proposed business combination or
otherwise, nor shall there be any sale of securities in any
jurisdiction in which the offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act.
Additional Information
In connection with the proposed acquisition, One Madison filed a
registration statement on Form S-4 (File No. 333-230030) (the
“Registration Statement”) with the Securities and Exchange
Commission (the “SEC”), which includes a preliminary proxy
statement/prospectus, that is both the proxy statement to be
distributed to holders of the Company’s ordinary shares in
connection with the Company’s solicitation of proxies for the vote
by the Company’s shareholders with respect to the business
combination and other matters as described in the Registration
Statement, as well as the prospectus relating to the offer of the
securities to be issued to the Company’s equityholders in
connection with the Company’s proposed domestication as a Delaware
corporation in connection with the completion of the business
combination. The Registration Statement has not yet been declared
effective. After the Registration Statement is declared effective,
the Company will mail a definitive proxy statement/prospectus and
other relevant documents to its shareholders. STOCKHOLDERS ARE
ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES
AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.
Stockholders may obtain a free copy of the proxy
statement/prospectus (when available) and any other relevant
documents filed with the SEC from the SEC’s website at
http://www.sec.gov. In addition, stockholders will be able to
obtain, without charge, a copy of the proxy statement/prospectus
and other relevant documents (when available) at One Madison’s
website at
http://www.onemadisoncorp.com/corporate-governance--investor-relations.html
or by contacting One Madison’s investor relations department via
e-mail at info@onemadisongroup.com.
Participants in the Solicitation
One Madison and its directors, executive officers and other
members of its management and employees may be deemed to be
participants in the solicitation of proxies from One Madison’s
stockholders with respect to the proposed acquisition. Information
about One Madison’s directors and executive officers and their
ownership of One Madison’s common stock is set forth in One
Madison’s filings with the SEC, including (i) the Annual Report on
Form 10-K for the fiscal year ended December 31, 2018, which was
filed on February 28, 2019 and (ii) the Registration Statement on
Form S-4 initially filed on March 1, 2019, as amended on April 8,
2019. Stockholders may obtain additional information regarding the
direct and indirect interests of the participants in the
solicitation of proxies in connection with the proposed
acquisition, including the interests of One Madison’s directors and
executive officers in the proposed acquisition, which may be
different than those of One Madison’s stockholders generally, by
reading the proxy statement/prospectus and other relevant documents
regarding the proposed acquisition, which will be filed with the
SEC.
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version on businesswire.com: https://www.businesswire.com/news/home/20190423005375/en/
Sard Verbinnen & Co.Jamie Tully/David Millar212-687-8080
One Madison Corp (NYSE:OMAD.UN)
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