Ranpak (PACK) - 2025 Q2 - Quarterly Results

Executive Summary & Business Outlook This section outlines Ranpak's strategic performance, key achievements, and future financial outlook for 2025 CEO Commentary & Strategic Highlights Ranpak achieved its eighth consecutive quarter of volume growth, driven by North American enterprise customers and automation, while implementing cost reductions to improve future gross margins and leveraging a robust automation backlog for significant revenue growth - Achieved 8th consecutive quarter of volume growth, driven by deepening relationships with Enterprise customers in North America in Protective and Automation[3] - Global paper volumes increased 5.2% and net revenue increased 6.8% year-over-year (3.8% constant currency), primarily due to North American e-commerce strength[3] - AEBITDA declined 15.8% (18.4% constant currency) due to lower volumes in Europe and APAC and higher North American production costs, with margin pressures expected to ease in Q3 due to cost reduction initiatives[3] - Cost reduction initiatives, including headcount reduction and logistics optimization, aim for a 3-5 gross margin point improvement in North America in H2 2025[3] - Automation backlog is robust for H2 2025, with expected net revenue of $40-$45 million for the full year, implying substantial growth and improved financial profile[4] - A strategic relationship with a major player in protective packaging and warehouse automation is viewed as a turning point for establishing leadership in both Protective and Automation[5] Outlook for Remainder of 2025 Ranpak updated its 2025 guidance, projecting second-half net revenue of $216-$230 million and AEBITDA of $44.5-$54.5 million, with total 2025 net revenue of $406.5 million and AEBITDA of $83.3 million, despite warrant expense Updated Forward-Looking Guidance for H2 2025 (at 1 Euro to 1.15 USD) | Metric | Range | | :---------------- | :---------------- | | Net Revenue | $216 - $230 million | | AEBITDA | $44.5 - $54.5 million | Implied Total 2025 Guidance (using year-to-date actuals and midpoint of H2 guidance) | Metric | Amount | | :---------------- | :---------------- | | Total Net Revenue | $406.5 million | | Total AEBITDA | $83.3 million | - Guidance reflects an estimated $4 million recognition of warrant expense in H2 2025, leading to a total non-cash net revenue and AEBITDA reduction of $4-$6 million for the full year[6] - Ranpak is positioned to weather the current environment due to operational diversity, global footprint, and value-added solutions, with cemented partnerships expected to drive strong future growth[6][8] Second Quarter 2025 Financial Highlights This section details Ranpak's Q2 2025 financial performance, including revenue, net loss, AEBITDA, and the impact of warrants on overall results Overall Performance Ranpak reported a 6.8% year-over-year net revenue increase to $92.3 million in Q2 2025, despite a $7.5 million net loss and a 15.8% decrease in Adjusted EBITDA Q2 2025 Key Financial Highlights (YoY Change) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | % Change | % Change (Constant Currency) | | :-------------------------------- | :----------------- | :----------------- | :------- | :--------------------------- | | Net Revenue | $92.3 | $86.4 | 6.8% | 3.8% | | Net (Loss) Income | ($7.5) | $5.5 | (236.4)% | (236.4)% | | Adjusted EBITDA (AEBITDA) | $16.5 | $19.6 | (15.8)% | (18.4)% | - Net revenue includes a $1.2 million non-cash reduction for warrants, impacting the reported growth[7][10][14] Revenue Breakdown by Product Line Q2 2025 net revenue growth was primarily driven by increases in cushioning and void-fill product lines, alongside higher paper consumable sales volume and automated box sizing equipment sales Q2 2025 Net Revenue by Product Line (YoY Change) | Product Line | Q2 2025 (Millions) | Q2 2024 (Millions) | $ Change | % Change | | :----------- | :----------------- | :----------------- | :------- | :------- | | Cushioning | $36.8 | $35.0 | $1.8 | 5.1% | | Void-Fill | $41.1 | $37.7 | $3.4 | 9.0% | | Wrapping | $7.3 | $8.4 | ($1.1) | (13.1)% | | Other Net Revenue | $7.1 | $5.3 | $1.8 | 32.1% | - Net revenue increase was driven by a 5.2% increase in paper consumable product sales volume, a 1.8% increase in automated box sizing equipment sales, and a 3.0% increase from foreign currency fluctuations[11] - Partially offset by a 1.9% decrease in price or mix of paper consumable products and a 1.3% decrease from the provision for common stock warrants[11] Impact of Warrants Outstanding warrants resulted in a $1.2 million non-cash reduction in Q2 2025 net revenue, impacting gross profit, gross margin, AEBITDA, and AEBITDA margin Non-Cash Impact of Warrants on Q2 2025 Results (in millions) | Metric | 2025 | 2024 | % Change | % Change Related to Non-cash Impact of Warrants | | :----------- | :--- | :--- | :------- | :-------------------------------------------- | | Net revenue | $92.3 | $86.4 | 6.8% | (1.4)% | | Gross profit | $28.9 | $31.7 | (8.8)% | (3.8)% | | Gross margin | 31.3% | 36.7% | (5.4)% | (0.9)% | | AEBITDA | $16.5 | $19.6 | (15.8)% | (6.1)% | | AEBITDA Margin | 17.9% | 22.7% | (4.8)% | (1.1)% | - The non-cash reduction in revenue from warrants related to the agreement with Amazon was $1.2 million in Q2 2025[12] Packaging Systems Installed Base Ranpak's total installed base of protective packaging systems grew 2.7% year-over-year to approximately 145.0 thousand machines as of June 30, 2025, primarily driven by Void-Fill systems Installed Base of Protective Packaging Systems (in thousands) | Product Line | June 30, 2025 | June 30, 2024 | Change | % Change | | :----------- | :------------ | :------------ | :----- | :------- | | Cushioning | 34.6 | 34.9 | (0.3) | (0.9)% | | Void-Fill | 87.9 | 83.9 | 4.0 | 4.8% | | Wrapping | 22.5 | 22.4 | 0.1 | 0.4% | | Total | 145.0 | 141.2 | 3.8 | 2.7% | Balance Sheet and Liquidity Ranpak maintained a strong liquidity position at Q2 2025 with $49.2 million cash and no revolving credit facility borrowings, alongside $408.0 million outstanding on its term facility Liquidity Position as of June 30, 2025 (in millions) | Metric | Amount | | :-------------------------------- | :----- | | Cash Balance | $49.2 | | Revolving Credit Facility Borrowings | $0.0 | | USD-denominated First Lien Term Facility Outstanding | $408.0 | - The $50.0 million revolving credit facility matures in December 2029, and the $408.0 million term facility matures in December 2031[13] Financial Statements This section presents Ranpak's condensed consolidated statements of operations, balance sheets, and cash flows for the periods ended June 30, 2025 Condensed Consolidated Statements of Operations For Q2 2025, Ranpak reported $92.3 million net revenue but a $7.5 million net loss, a significant shift from prior year net income, with a $18.4 million net loss for the six-month period Condensed Consolidated Statements of Operations (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | $92.3 | $86.4 | $183.5 | $171.7 | | Cost of product sales | $56.0 | $48.5 | $110.8 | $94.2 | | Cost of leased machines | $7.4 | $6.2 | $12.9 | $13.5 | | Gross profit | $28.9 | $31.7 | $59.8 | $64.0 | | Selling, general and administrative expenses | $28.8 | $27.3 | $57.7 | $55.2 | | Depreciation and amortization expense | $8.8 | $8.3 | $17.8 | $16.7 | | Loss from operations | ($9.7) | ($5.2) | ($17.7) | ($10.0) | | Interest expense | $8.3 | $5.3 | $17.0 | $11.5 | | Net (loss) income | ($7.5) | $5.5 | ($18.4) | ($2.6) | | Basic and diluted (loss) income per share | ($0.09) | $0.07 | ($0.22) | ($0.03) | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $1,138.0 million and total liabilities to $599.0 million, while shareholders' equity slightly decreased to $539.0 million Condensed Consolidated Balance Sheets (in millions) | Asset/Liability/Equity | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Assets: | | | | Cash and cash equivalents | $49.2 | $76.1 | | Total current assets | $151.9 | $151.2 | | Property, plant and equipment, net | $145.2 | $137.6 | | Goodwill | $457.0 | $443.7 | | Total assets | $1,138.0 | $1,104.2 | | Liabilities: | | | | Total current liabilities | $87.3 | $68.4 | | Long-term debt | $397.7 | $400.8 | | Total liabilities | $599.0 | $556.1 | | Shareholders' Equity: | | | | Total shareholders' equity | $539.0 | $548.1 | | Total liabilities and shareholders' equity | $1,138.0 | $1,104.2 | Condensed Consolidated Statements of Cash Flows For H1 2025, net cash used in operating activities was $4.9 million, a significant decrease from prior year, primarily due to net loss and increased inventories, resulting in a $26.9 million decrease in cash Condensed Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | ($4.9) | $24.8 | | Net cash used in investing activities | ($19.8) | ($19.1) | | Net cash used in financing activities | ($4.9) | ($1.6) | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | $2.7 | ($1.0) | | Net (Decrease) Increase in Cash and Cash Equivalents | ($26.9) | $3.1 | | Cash and Cash Equivalents, end of period | $49.2 | $65.1 | - Key adjustments to reconcile net loss to net cash from operating activities include depreciation and amortization ($31.9 million), stock-based compensation ($4.1 million), and provision for common stock warrants ($2.0 million)[27] - Changes in operating assets and liabilities show a $15.0 million increase in inventories and a $4.0 million increase in income tax receivable, contributing to the decrease in operating cash flow[27] Non-GAAP Financial Measures This section defines and reconciles Ranpak's non-GAAP financial measures, including EBITDA, Adjusted EBITDA (AEBITDA), and Constant Currency, to provide additional insights into operational performance Definitions of Non-GAAP Measures Ranpak uses non-GAAP measures like EBITDA, AEBITDA, and Constant Currency to offer additional insights into operating performance by adjusting for non-cash and non-recurring items - EBITDA is calculated as net income (loss) adjusted to exclude benefit from (provision for) income taxes, interest expense, and depreciation and amortization[29] - AEBITDA is calculated as net income (loss) adjusted to exclude income taxes, interest expense, depreciation and amortization, stock-based compensation, foreign currency (gain) loss, amortization of cloud-based software implementation costs, and other income/expense items[30] - Constant Currency change amounts are non-GAAP measures that calculate the year-over-year impact of foreign currency movements using prior period foreign currency rates applied to current year results, providing a clearer view of operational performance without currency volatility[31][32] - Non-GAAP measures have limitations, including not reflecting cash capital expenditure requirements, changes in working capital, or the impact of tax payments, and may not be comparable to measures used by other companies[33] Reconciliation of Non-GAAP Measures This section provides detailed reconciliations of GAAP net income (loss) to non-GAAP EBITDA and AEBITDA for the three and six months ended June 30, 2025 and 2024, highlighting various adjustments Three Months Ended June 30, 2025 and 2024 This subsection reconciles GAAP net income (loss) to non-GAAP EBITDA and AEBITDA for Q2 2025 and 2024, detailing adjustments for non-recurring items Reconciliation of GAAP to Non-GAAP for Q2 2025 (in millions) | Metric | 2025 | 2024 | $ Change | % Change | Constant Currency (Non-GAAP) % Change | | :------------------------------------ | :--- | :--- | :------- | :------- | :------------------------------------ | | Net (loss) income | ($7.5) | $5.5 | ($13.0) | (236.4) | (236.4) | | EBITDA | $15.6 | $29.3 | ($13.7) | (46.8) | (48.8) | | Adjustments (total) | $0.9 | ($9.7) | $10.6 | NM | NM | | AEBITDA | $16.5 | $19.6 | ($3.1) | (15.8) | (18.4) | - Significant adjustments for Q2 2025 include M&A, restructuring, severance ($3.6 million), stock-based compensation ($2.0 million), and unrealized gain on strategic investments (($5.8 million))[34] - Q2 2024 adjustments included a gain on sale of patents (($5.4 million)) and patent litigation settlement (($16.1 million))[34] Six Months Ended June 30, 2025 and 2024 This subsection reconciles GAAP net loss to non-GAAP EBITDA and AEBITDA for H1 2025 and 2024, detailing adjustments for non-recurring items Reconciliation of GAAP to Non-GAAP for H1 2025 (in millions) | Metric | 2025 | 2024 | $ Change | % Change | Constant Currency (Non-GAAP) % Change | | :------------------------------------ | :--- | :--- | :------- | :------- | :------------------------------------ | | Net loss | ($18.4) | ($2.6) | ($15.8) | (607.7) | (611.5) | | EBITDA | $25.3 | $44.7 | ($19.4) | (43.4) | (44.3) | | Adjustments (total) | $8.5 | ($5.9) | $14.4 | NM | NM | | AEBITDA | $33.8 | $38.8 | ($5.0) | (12.9) | (13.4) | - Significant adjustments for H1 2025 include M&A, restructuring, severance ($6.5 million), stock-based compensation ($4.1 million), and unrealized gain on strategic investments (($5.8 million))[35] - H1 2024 adjustments included a gain on sale of patents (($5.4 million)) and patent litigation settlement (($16.1 million))[35] Additional Information This section provides details on the Q2 2025 conference call and a cautionary notice regarding forward-looking statements and associated risks Conference Call Details Ranpak hosted a conference call and webcast on August 5, 2025, to discuss Q2 2025 financial results, with a telephonic replay available - Conference call and webcast held on Tuesday, August 5, 2025, at 8:30 a.m. (ET)[16] - Webcast link: https://events.q4inc.com/attendee/183436170; Conference ID: 8369975[16] - Telephonic replay available from August 5 to August 12, 2025, using passcode: 8369975[17] Cautionary Notice Regarding Forward-Looking Statements This notice highlights that forward-looking statements are subject to risks like supply chain issues, market competition, and economic conditions, which could cause actual results to differ materially - Forward-looking statements are based on current expectations and beliefs, but actual results may differ materially due to various risks and uncertainties[18][19] - Risks include inability to secure paper supply, rising input prices (labor, energy, freight), geopolitical conflicts, high competition, consumer sensitivity, macroeconomic uncertainty, loss of customers, and failure to develop new products[19] - The company does not undertake any obligation to update or revise forward-looking statements, and past trends are not a guarantee of future activities[20][21]