Ranpak (PACK) - 2021 Q2 - Quarterly Report

Part I – Financial Information This section provides the unaudited condensed consolidated financial statements, management's discussion and analysis, and disclosures on market risk and internal controls Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows, with detailed notes on accounting policies and financial components Financial Performance Overview | Financial Metric | Three Months Ended June 30, 2021 (Millions USD) | Three Months Ended June 30, 2020 (Millions USD) | Six Months Ended June 30, 2021 (Millions USD) | Six Months Ended June 30, 2020 (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $90.0 million | $66.1 million | $177.7 million | $129.5 million | | Gross Profit | $35.7 million | $27.0 million | $72.0 million | $53.8 million | | Income (Loss) from Operations | $1.1 million | $(2.1) million | $8.8 million | $(2.7) million | | Net Income (Loss) | $(5.2) million | $(8.5) million | $1.1 million | $(12.1) million | | Diluted EPS | $(0.07) | $(0.12) | $0.01 | $(0.17) | Consolidated Balance Sheet Highlights | Balance Sheet Item | June 30, 2021 (Millions USD) | December 31, 2020 (Millions USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $125.3 million | $48.5 million | | Total Assets | $1,222.2 million | $1,133.5 million | | Long-term debt | $408.1 million | $432.7 million | | Total Liabilities | $592.9 million | $610.6 million | | Total Shareholders' Equity | $629.3 million | $522.9 million | Consolidated Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2021 (Millions USD) | Six Months Ended June 30, 2020 (Millions USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $30.8 million | $22.3 million | | Net cash used in investing activities | $(26.8) million | $(18.6) million | | Net cash provided by (used in) financing activities | $73.2 million | $(0.7) million | | Net Increase in Cash and Cash Equivalents | $76.8 million | $2.9 million | Note 4 — Segment and Geographic Information The company operates as a single reportable segment, with Europe/Asia contributing significantly more revenue and gross profit than North America in the first six months of 2021 Revenue by Geography | Revenue by Geography | Six Months Ended June 30, 2021 (Millions USD) | Six Months Ended June 30, 2020 (Millions USD) | | :--- | :--- | :--- | | North America | $63.8 million | $55.3 million | | Europe/Asia | $113.9 million | $74.2 million | | Total Net Revenue | $177.7 million | $129.5 million | Note 7 — Long-Term Debt The company's long-term debt primarily consists of dollar and euro term facilities, with a $20.9 million prepayment in June 2021 reducing total debt to $409.2 million - In June 2021, the company prepaid $20.9 million of principal on its First Lien Dollar Term Facility[68] - An $8.2 million exit payment, triggered by a lower leverage ratio at year-end 2020, was paid to lenders in the first quarter of 2021[80] Note 15 — Shareholders' Equity Shareholders' equity significantly increased due to a May 2021 public offering raising $103.4 million and the conversion of 3.6 million Class C shares to Class A - In May 2021, the company completed an equity offering of approximately 5.3 million shares of Class A common stock, generating net proceeds of $103.4 million[129] - A shareholder converted 3.6 million Class C shares into 3.6 million Class A shares in April 2021[129] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting significant revenue growth driven by e-commerce demand, liquidity improvements from an equity offering, and the impact of rising costs - The installed base of protective packaging systems grew 12.9% year-over-year to 123,600 units as of June 30, 2021, driven by a 14.1% increase in Void-fill machines and a 29.6% increase in Wrapping machines[157] - The company anticipates pressure on gross margins due to rising costs for paper and freight, which it will attempt to pass on to customers[157] - The COVID-19 pandemic has boosted demand from e-commerce end-users, offsetting reductions in other industries, though social distancing measures have delayed some new packaging system installations[155] Results of Operations The company achieved strong year-over-year growth, with Q2 2021 net revenue increasing 36.2% to $90.0 million and H1 2021 net income reaching $1.1 million Three Months Ended June 30 Financial Performance | Metric | Three Months Ended June 30, 2021 (Millions USD) | Three Months Ended June 30, 2020 (Millions USD) | % Change | | :--- | :--- | :--- | :--- | | Net Revenue | $90.0 million | $66.1 million | +36.2% | | North America Revenue | $35.7 million | $28.2 million | +26.6% | | Europe/Asia Revenue | $54.3 million | $37.9 million | +43.3% | | Net Loss | $(5.2) million | $(8.5) million | N/A | Six Months Ended June 30 Financial Performance | Metric | Six Months Ended June 30, 2021 (Millions USD) | Six Months Ended June 30, 2020 (Millions USD) | % Change | | :--- | :--- | :--- | :--- | | Net Revenue | $177.7 million | $129.5 million | +37.2% | | North America Revenue | $63.8 million | $55.3 million | +15.4% | | Europe/Asia Revenue | $113.9 million | $74.2 million | +53.5% | | Net Income (Loss) | $1.1 million | $(12.1) million | N/A | - Constant currency AEBITDA, a non-GAAP measure, increased by 34.7% to $25.6 million for Q2 2021 and by 44.5% to $53.6 million for H1 2021, compared to the respective prior-year periods[180][194] Liquidity and Capital Resources The company's liquidity significantly improved, with cash and cash equivalents rising to $125.3 million due to a $103.4 million equity offering and increased operating cash flow - Cash and cash equivalents stood at $125.3 million as of June 30, 2021[206] - The May 2021 Equity Offering generated net proceeds of $103.4 million, which were used for a $20.9 million debt prepayment and a $70.0 million investment in a money market fund[206] - Total debt decreased to $414.8 million as of June 30, 2021, from $439.8 million at December 31, 2020[207] Quantitative and Qualitative Disclosures About Market Risk The company identifies interest rate, foreign currency, and commodity price risks, with foreign currency risk from Euro exposure being significant and unhedged - A hypothetical 100 basis point change in interest rates would have impacted cash interest expense by $3.3 million for the first six months of 2021[232] - For H1 2021, 67.0% of net revenue was denominated in currencies other than the U.S. dollar, primarily the Euro, where a 10% change in the Euro/USD exchange rate would have impacted reported net revenue by approximately $11.4 million[235] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of the end of the period[238] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[239] Part II – Other Information This section covers legal proceedings, risk factors by reference to prior filings, and a list of exhibits filed with the quarterly report Legal Proceedings The company reports no legal proceedings for the period - None[240] Risk Factors The report refers to the detailed discussion of risk factors in the company's Annual Report on Form 10-K for the year ended December 31, 2020, without introducing new ones - There are no material changes from the risk factors previously disclosed in the company's 2020 Form 10-K[241] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, incentive plans, a credit agreement amendment, and required certifications - Key exhibits filed include the Permitted Exit Payment Amendment to the First Lien Credit Agreement, CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and Inline XBRL data files[247]