• Packaging System placement up 4.4% year over year to approximately 139,100 machines at December 31, 2022
• Fourth quarter net revenue decreased 27.2% year over year to $79.4 million and decreased 22.2% year over year on a constant currency basis to $85.1 million
• Fourth quarter net loss of $7.3 million compared to net loss of $2.5 million
• Fourth quarter constant currency Adjusted EBITDA (“AEBITDA”) of $12.9 million down 63.9%, or $22.8 million, year over year

Ranpak Holdings Corp (NYSE: PACK) (“Ranpak” or “the Company”), a leading provider of environmentally sustainable, systems-based, product protection solutions for e-Commerce and industrial supply chains, today reported its fourth quarter and full year 2022 financial results.

Omar Asali, Chairman and Chief Executive Officer, commented, “We had our most challenging period of the year in the fourth quarter as a weak holiday season in e-Commerce coupled with soft industrial activity weighed on our performance. Our results were driven in particular by a challenging December as it appears many of our customers pushed orders into January, leading to a stronger than expected start to the year after the disappointing finish. Overall, through the first two months of the year we are seeing a slightly more stable operating environment relative to the second half of 2022, and we are seeing relief in many of the input cost pressures we endured throughout 2022, leading me to believe we may have seen the trough in performance.”

“Net revenue for the quarter decreased 22.2% year over year on a constant currency basis to $85.1 million. The decline was primarily driven by lower volumes in North America and Europe/APAC due to lower e-Commerce and industrial activity resulting from macro uncertainty and customers’ focus on reducing inventory into year end. Our top-line pressure and input cost headwinds combined to create downward pressure on our profitability as gross margins declined to 28.1% from 35.6% in the prior year, and Adjusted EBITDA declined 63.9% on a constant currency basis to $12.9 million. For the year net revenue declined 8.8% on a constant currency basis to $344.1 million and Adjusted EBITDA declined 43.3% to $66.8 million on a constant currency basis, resulting in a margin of 19.4%.”

“2022 was an exceptionally difficult year for Ranpak, particularly as we endured many headwinds that impacted us at a time when we were making key investments to position us well for the future. We are extremely disappointed in the performance for the year and are committed to getting our results back in-line with the historical high quality financial profile of this business. While the economic environment remains volatile, we have reasons to believe 2023 will be a better year for Ranpak. Based on our conversations with customers and our 2023 results to date, the de-stocking that plagued us throughout 2022 in Europe/APAC appears to be largely behind us. After an extended period of blistering increases, we believe that our largest input cost, Kraft paper, peaked in price at the end of the year and is now turning into a potential tailwind for us in 2023. A historically warm winter and ample LNG supplies resulted in European natural gas prices retreating more than 80% since the summer, leading to improved confidence in the region and contributing to a lower cost operating environment compared to 2022. These are important forces that have turned more in our favor and I am confident that we will be well positioned to take advantage of the more favorable environment in order to recapture Ranpak’s historical growth and profitability.”

Fourth Quarter 2022 Highlights

• Packaging systems placement increased 4.4% year over year, to approximately 139,100 machines as of December 31, 2022
• Net revenue decreased 27.2% and decreased 22.2% adjusting for constant currency
• Net loss of $7.3 million compared to net loss of $2.5 million
• Constant currency AEBITDA¹ of $12.9 million for the three months ended December 31, 2022 is down 63.9%

Net revenue for the fourth quarter of 2022 was $79.4 million compared to net revenue of $109.1 million in the fourth quarter of 2021, a decrease of $29.7 million or 27.2% year over year. Net revenue was negatively impacted by decreases in cushioning, void-fill, wrapping, and other sales. In addition to currency headwinds, revenue from all product categories was negatively affected by lower economic activity; lower e-Commerce use due to the opening up of economies; the impact inflationary pressures are having on consumer and corporate budgets; and tightening inventory management in response to uncertainties in the European economic environment. Cushioning decreased $10.6 million, or 24.3%, to $33.1 million from $43.7 million; void-fill decreased $12.0 million, or 26.5%, to $33.2 million from $45.2 million; wrapping decreased $6.0 million, or 38.2%, to $9.7 million from $15.7 million; and other sales decreased $1.1 million, or 24.4%, to $3.4 million from $4.5 million for the fourth quarter of 2022 compared to the fourth quarter of 2021. Other net revenue includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field, such as systems accessories. The decrease in net revenue is quantified by a decrease in the volume of sales of our paper consumable products of approximately 29.3 percentage points (“pp”) and a decrease of 0.1 pp in sales of automated box sizing equipment. These decreases were partially offset by a 7.2 pp increase in the price or mix of our paper consumable products.

Net revenue in North America for the fourth quarter of 2022 totaled $36.1 million compared to net revenue in North America of $45.8 million in the fourth quarter of 2021. The decrease of $9.7 million, or 21.2%, was attributable to decreases in all categories, which were primarily caused by the aforementioned global economic factors.

Net revenue in Europe/Asia for the fourth quarter of 2022 totaled $43.3 million compared to net revenue in Europe/Asia of $63.3 million in the fourth quarter of 2021. The decrease of $20.0 million, or 31.6%, was driven by decreases in all categories as well as currency headwinds. Constant currency net revenue in Europe/Asia was $49.0 million for the fourth quarter of 2022, a $14.6 million, or 23.0%, decrease from constant currency net revenue of $63.6 million for the fourth quarter of 2021.

Net loss for the fourth quarter of 2022 increased $4.8 million to $7.3 million from a net loss of $2.5 million in the fourth quarter of 2021.

Full Year 2022 Highlights

• Net revenue decreased 15.0% and decreased 8.8% adjusting for constant currency
• Net loss of $41.4 million compared to net loss of $2.8 million
• Constant currency AEBITDA of $66.8 million for the year ended December 31, 2022 is down 43.3%

Balance Sheet and Liquidity

Ranpak completed the fourth quarter of 2022 with a strong liquidity position, including a cash balance of $62.8 million and no borrowings on its $45 million Revolving Credit Facility. As of December 31, 2022, the Company had First Lien Term Loan facilities outstanding consisting of a $250.0 million USD-denominated term loan and €135.5 million euro-denominated term loan resulting in an Adjusted EBITDA net leverage ratio of 5.3x based on results on a constant currency basis through the fourth quarter of 2022.

The bank-adjusted EBITDA net leverage ratio used for determining the applicable interest rate, mandatory prepayment amounts and compliance with our covenants under our First Lien Term facilities was 4.8x for the fourth quarter of 2022. The First Lien Term Loan facilities are the only debt facilities outstanding and mature in June 2026.

The following table presents Ranpak’s installed base of protective packaging systems by product line as of December 31, 2022 and 2021:

Outlook for 2023

Overall as we think about our future, our primary structural tailwinds of e-Commerce, Automation, and Sustainability continue to be extremely attractive places to be long term. In 2023 we are focused on resuming volume growth in PPS through increased penetration and new product innovation, with upcoming new launches in Wrapping, Void-fill, and Cold-Chain solutions. We also expect a greater contribution from Automation as both of our manufacturing facilities will be open in the second half of the year. On a constant currency basis, we are forecasting net revenue growth in the area of 6% – 12% and AEBITDA growth of 14% – 28%, which results in a range of $365 – $385 million in constant currency net revenue and $76 – $86 million for AEBITDA. We expect the second half of the year to be a bigger contributor to the overall top-line as new product launches hit and we resume a slightly improved operating environment. The top-line growth combined with our input cost savings are the primary driver of the AEBITDA outperformance as we benefit from the positive operating leverage on our G&A from greater volumes and higher gross margins.

Conference Call Information

The Company will host a conference call and webcast at 8:30 a.m. (ET) on Wednesday, March 15, 2023. The conference call and earnings presentation will be webcast live at the following link: https://events.q4inc.com/attendee/757236617. Investors who cannot access the webcast may listen to the conference call live via telephone by dialing (888) 330-2446 or (240) 789-2732 and use the Conference ID: 8498994.

A telephonic replay of the webcast also will be available starting at 11:30 a.m. (ET) on Wednesday, March 15, 2023. and ending at 11:59 p.m. (ET) on Wednesday, March 22, 2023. To listen to the replay, please dial (800) 770-2030 or (647) 362-9199 and use the passcode: 8498994.

Note Regarding Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of 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 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 news release include, for example, statements about our expectations around the future performance of the business, including our forward-looking guidance.

The forward-looking statements contained in this news 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: (i) our inability to secure a sufficient supply of paper to meet our production requirements; (ii) the impact of the price of kraft paper on our results of operations; (iii) our reliance on third party suppliers; (iv) the COVID-19 pandemic, the Russia and Ukraine conflict, and associated responses; (v) the high degree of competition in the markets in which we operate; (vi) consumer sensitivity to increases in the prices of our products; (vii) global inflation and other macroeconomic factors; (viii) changes in consumer preferences with respect to paper products generally; (ix) continued consolidation in the markets in which we operate; (x) the loss of significant end-users of our products or a large group of such end-users; (xi) our failure to develop new products that meet our sales or margin expectations; (xii) our future operating results fluctuating, failing to match performance or to meet expectations; (xiii) our ability to fulfill our public company obligations; (xiv) our exposure to changes in interest rates; and (xv) 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.

Note Regarding Preliminary Unaudited Financial Information

The preliminary, unaudited financial information for the three months and year ended, and as at, December 31, 2022 contained in this press release is based on the information available to the Company as of the date hereof. The Company is working to complete its financial statements for the year ended and as at December 31, 2022, and its independent auditors are working to complete their audit work. As such, the Company’s financial statements may differ from the preliminary, unaudited financial information contained in this press release. The Company has today filed a Form 12b-25 with the U.S. Securities and Exchange Commission and expects to file its Form 10-K no later than March 31, 2023. As a result of its work to date, the Company expects to disclose a number of material weaknesses in its internal control over financial reporting at December 31, 2022 and conclude that its internal control over financial reporting and, as a result, its disclosure controls were not effective at December 31, 2022. However, these material weaknesses in internal control over financial reporting are not expected to result in any changes to the financial information for the year ended and as at December 31, 2022 included in this press release.

Non-GAAP Financial Data

In this press release, we present Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and constant currency EBITDA and constant currency adjusted EBITDA (“Constant currency AEBITDA”), which are non-GAAP financial measures. We have included EBITDA, constant currency EBITDA and AEBITDA because they are key measures used by our management and Board of Directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA, constant currency EBITDA and constant currency AEBITDA can provide a useful measure for period-to-period comparisons of our primary business operations.

However, EBITDA, constant currency EBITDA and constant currency AEBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. In particular, EBITDA, constant currency EBITDA and constant currency AEBITDA should not be viewed as substitutes for, or superior to, net income (loss) prepared in accordance with GAAP as a measure of profitability or liquidity. Some of these limitations are:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA, constant currency EBITDA and constant currency AEBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
• EBITDA, constant currency EBITDA and constant currency AEBITDA do not reflect changes in, or cash requirements for, our working capital needs;
• constant currency AEBITDA does not consider the potentially dilutive impact of equity-based compensation;
• EBITDA, constant currency EBITDA and constant currency AEBITDA do not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to us;
• constant currency AEBITDA does not take into account any restructuring and integration costs;
• constant currency EBITDA and constant currency AEBITDA are presented on constant currency basis and give effect to the impact of currency fluctuations; and;
• other companies, including companies in our industry, may calculate EBITDA, constant currency EBITDA and constant currency AEBITDA differently, which reduces their usefulness as comparative measures.

EBITDA — EBITDA is a non-GAAP financial measure that we calculate as net income (loss), adjusted to exclude: benefit from (provision for) income taxes; interest expense; and depreciation and amortization.

Constant currency EBITDA — Constant currency EBITDA is a non-GAAP financial measure that we present on a constant currency basis and we calculate as net income (loss), adjusted to exclude: benefit from (provision for) income taxes; interest expense; and depreciation and amortization.

Constant currency AEBITDA — Constant currency AEBITDA is a non-GAAP financial measure that we calculate as net income (loss), adjusted to exclude: benefit from (provision for) income taxes; interest expense; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items; as further adjusted to reflect the performance of the business on a constant currency basis.

We present constant currency EBITDA and constant currency AEBITDA on a constant currency basis because it allows a better insight into the performance of our businesses that operate in currencies other than our reporting currency. Before consolidation, our Europe/Asia financial data is derived in Euros. To calculate the adjustment that we apply to present constant currency EBITDA and constant currency AEBITDA on a constant currency basis, we multiply this Euro-derived data by 1.15 to reflect an exchange rate of 1 Euro to 1.15 U.S. dollars (“USD”), which we believe is a reasonable exchange rate to use to give a stable depiction of the business without currency fluctuations between periods, to calculate Europe/Asia data in constant currency USD. We believe that using an exchange rate of 1.15 is reasonable because it approximates the average exchange rate of the Euro to USD over the past five years. In addition, we include certain other unaudited, non-GAAP constant currency data for the three months and year ended December 31, 2022 and 2021. This data is based on our historical financial statements, adjusted (where applicable) to reflect a constant currency presentation between periods for the convenience of readers. We reconcile this data to our GAAP data for the same period for the three months and year ended December 31, 2022 and 2021.

This press release also includes forecasts for certain non-GAAP metrics. We are unable to provide a reconciliation of our forecast of net revenue on a constant currency basis for 2023 to a forecast of net revenue on a GAAP basis without unreasonable effort primarily because we are unable to forecast with reasonable certainty the associated currency impact. In addition, a reconciliation of our forecast for constant currency AEBITDA for 2023 to GAAP net income cannot be provided without unreasonable effort because we are unable to forecast with reasonable certainty several of the items necessary to calculate such comparable GAAP measure, including asset impairments, integration related expenses, reorganizations and discontinued operations related expenses, legal settlement costs, constant currency adjustments, as well as other unusual or non-recurring gains or losses. These items are uncertain, depend on various factors, and could be material to our results computed in accordance with GAAP. We believe the inherent uncertainties in reconciling such non-GAAP measures for projected periods to the most comparable GAAP measures would make the forecasted comparable GAAP measures difficult to predict with reasonable certainty or reliability.