• Packaging System placement up 1.5% year over year to approximately 141,200 machines at December 31, 2023
• Net revenue for the fourth quarter increased 13.9% year over year to $90.4 million and increased 10.3% year over year on a constant currency basis to $93.9 million
• Net loss for the fourth quarter of $9.3 million compared to net loss of $7.3 million for the prior year period.
• Constant Currency Adjusted EBITDA (“AEBITDA”) for the fourth quarter of $24.4 million up 89.1%, or $11.5 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 2023 financial results.

Omar Asali, Chairman and Chief Executive Officer, commented, “We are pleased with our fourth quarter results as Ranpak finished the year on a positive note and built on the volume improvement momentum which began in the third quarter of 2023. Net revenue for the quarter increased 10.3% year over year on a constant currency basis to $93.9 million, driven by growth in both North America and Europe/APAC. We saw continued general improvement in the operating environment in Europe in the quarter and a more pronounced e-Commerce holiday season uptick in North America. Volumes overall increased 10% compared to the prior year and finished positive for the year after a slower start. In addition to our improved top-line performance, we experienced our most profitable quarter of the year as better volumes and more favorable input costs drove an Adjusted EBITDA increase of 89.1% to $24.4 million on a constant currency basis. Overall, we continued to claw back our targeted gross margin throughout the year and are encouraged by the volume improvement we began to see in the second half of the year. The fourth quarter shows the power of the model when a sufficient amount of volumes are flowing through the complex and we are committed to building on our finish to the year to have a much improved 2024.”

“We have been working towards bringing our key initiatives to drive top-line growth to fruition and made solid progress executing in this area. Strategic account activity in PPS in North America will begin to be felt in the second quarter and we believe Automation revenue growth will step up this year driven by inroads we have made in the industry by building our reputation as a top-tier end of line Automation player. We made substantial investments in our digital and physical infrastructure as well as our product portfolio over the past couple of years, and believe 2024 is the first year where we are able to focus on volumes, profitability, and deleveraging rather than additional investment. We finished 2023 at 4.6x net debt to LTM Adjusted EBITDA on a constant currency basis which is a full turn below our recent peak in Q2, and are committed to moving further down the path towards less than 3.0x leverage.”

Fourth Quarter 2023 Highlights

• Packaging systems placement increased 1.5% year over year, to approximately 141,200 machines as of December 31, 2023
• Net revenue increased 13.9% and increased 10.3% adjusting for constant currency
• Net loss of $9.3 million compared to net loss of $7.3 million
• Constant currency AEBITDA¹ of $24.4 million for the three months ended December 31, 2023 is up 89.1%

Net revenue for the fourth quarter was $90.4 million compared to net revenue of $79.4 million in 2022, an increase of $11.0 million or 13.9%. Net revenue was positively impacted by increases in cushioning, void-fill, wrapping, and other revenue. Revenue from our cushioning and void-fill product categories continued to improve quarter over quarter on a consolidated basis driven by increased utilization of packaging systems by end users, driven by the holiday season and improved operating environment. Cushioning increased $2.8 million, or 8.5%, to $35.9 million from $33.1 million; void-fill increased $5.2 million, or 15.7%, to $38.4 million from $33.2 million; wrapping increased $0.5 million, or 5.2%, to $10.2 million from $9.7 million; and other sales increased $2.5 million, or 73.5%, to $5.9 million from $3.4 million, for the fourth quarter of 2023 compared to the fourth quarter of 2022. Other net revenue includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field, such as systems accessories.

The increase in net revenue is quantified by an increase in the volume of our paper consumable products of approximately 10.4% and a 2.2% increase in sales of automated box sizing equipment, partially offset by a 2.1% decrease in the price or mix of our paper consumable products. Constant currency net revenue was $93.9 million for the fourth quarter of 2023, an $8.8 million, or 10.3%, increase from constant currency net revenue of $85.1 million for the fourth quarter of 2022.

Net revenue in North America for the fourth quarter of 2023 totaled $39.1 million compared to $36.1 million in the fourth quarter of 2022. The increase of $3.0 million, or 8.3%, was attributable to increases in cushioning sales of $0.3 million, void-fill sales of $1.7 million, and other sales of $1.4 million, partially offset by a decrease in wrapping sales of $0.4 million.

Net revenue in Europe/Asia for the fourth quarter of 2023 totaled $51.3 million compared to $43.3 million in the fourth quarter of 2022. The increase of $8.0 million, or 18.5%, was driven by increases in cushioning sales of $2.5 million, void-fill sales of $3.5 million, wrapping sales of $0.9 million, and other sales of $1.1 million, as well as favorable currency exchange rates of the Euro to the U.S. dollar. Constant currency net revenue in Europe/Asia was $54.8 million for the fourth quarter of 2023, a $5.8 million, or 11.8%, increase from constant currency net revenue of $49.0 million for the fourth quarter of 2022.

Full Year 2023 Highlights

• Net revenue increased 3.0% and increased 1.4% adjusting for constant currency
• Net loss of $27.1 million compared to net loss of $41.4 million
• Constant currency AEBITDA of $76.5 million for the year ended December 31, 2023 is up 14.5%

Balance Sheet and Liquidity

Ranpak completed the fourth quarter of 2023 with a strong liquidity position, including a cash balance of $62.0 million and no borrowings on its $45 million Revolving Credit Facility, which matures in June 2025. As of December 31, 2023, the Company had $250.0 million of USD-denominated term loans and €134.0 million of euro-denominated term loans outstanding under its First Lien Term Loan facilities, resulting in an Adjusted EBITDA net leverage ratio of 4.6x based on results on a constant currency basis through the fourth quarter of 2023. The First Lien Term Loan facilities mature in June 2026.

The following table presents Ranpak’s installed base of protective packaging systems by product line as of December 31, 2023 and 2022:

Outlook for 2024

On a constant currency basis, we are forecasting net revenue growth in the area of 6% – 12% and AEBITDA growth of 5% – 16%, which results in a range of $370 – $390 million in constant currency net revenue and $80 – $89 million for AEBITDA on a constant currency basis. Our outlook reflects our expectation of a continuing but somewhat uneven return to a more normal operating environment as e-Commerce buying patterns normalize and strategic account activity ramps up, while industrial activity remains slower. Our expected growth in Adjusted EBITDA reflects expected strong top-line growth and a steady margin profile that is consistent with the second half of 2023. Our focus for 2024 is to grow volumes in PPS, scale Automation, and focus on profitability and cash generation to de-lever. We made tremendous investments in facilities, technology, products, and people over the past few years. We have now transitioned to a new phase in Ranpak focused on achieving strong returns on these investments.

Conference Call Information

The Company will host a conference call and webcast at 4:30 p.m. (ET) on Monday, March 11, 2024. The conference call and earnings presentation will be webcast live at the following link: https://events.q4inc.com/attendee/432867697. Investors who cannot access the webcast may listen to the conference call live via telephone by dialing (800) 715-9871 and use the Conference ID: 5813434.

A telephonic replay of the webcast also will be available starting at 7:30 p.m. (ET) on Monday, March 11, 2024 and ending at 11:59 p.m. (ET) on Monday, March 18, 2024. To listen to the replay, please dial (800) 770-2030 and use the passcode: 5813434.

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 rising prices on production inputs, including labor, energy, and freight on our results of operations; (iii) the impact of the price of kraft paper on our results of operations; (iv) our reliance on third party suppliers; (v) geopolitical conflicts and other social and political unrest or change; (vi) the high degree of competition and continued consolidation in the markets in which we operate; (vii) consumer sensitivity to increases in the prices of our products, changes in consumer preferences with respect to paper products generally, or customer inventory rebalancing; (viii) economic, competitive and market conditions generally, including macroeconomic uncertainty, the impact of inflation, and variability in energy, freight, labor and other input costs; (ix) the loss of certain customers; (x) our failure to develop new products that meet our sales or margin expectations, or the failure of those products to achieve market acceptance; (xi) our ability to achieve our environmental, social and governance (“ESG”) goals and maintain the sustainable nature of our product portfolio and fulfill our obligations under evolving ESG standards; (xii) our ability to fulfill our obligations under new disclosure regimes relating to environmental, social and governance matters, such as the European Sustainability Disclosure Standards recently adopted by the European Union (“EU”) under the EU’s Corporate Sustainability Reporting Directive (“CSRD”); (xiii) our future operating results fluctuating, failing to match performance or to meet expectations; (xiv) our ability to fulfill our public company obligations; 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.

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 constant currency 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 a 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 present on a constant currency basis and 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, 2023 and 2022. 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, 2023 and 2022.

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.