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Ranpak Holdings Corp. (PACK)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was mixed: revenue rose 6.9% YoY to $91.2M on 12% consumables volume growth (constant-currency +8.8%), but margins compressed and GAAP loss widened; Adjusted EBITDA fell 9.9% to $17.3M as Europe/APAC softness, input cost inflation, and mix weighed on profitability .
  • Versus S&P Global consensus, revenue modestly beat by ~0.7% (Actual $91.2M vs $90.56M*), while Primary EPS missed (Actual -$0.08* vs -$0.04*); S&P EBITDA missed as well (Actual $8.0M* vs $18.1M*) as company AEBITDA ($17.3M) includes adjustments not in S&P “EBITDA” . Values retrieved from S&P Global.
  • North America was the growth engine (sales +33%, volumes +40% YoY) on enterprise-driven plastic-to-paper transition; Europe/APAC turned weak in March but stabilized slightly in April; several automation projects shifted from Q1 to Q2, with full-year automation still targeted at ~50% growth .
  • No explicit update to 2025 guidance this quarter; management remains focused on pricing, cost actions (~$8M structural reductions), and mix to restore margins, while Amazon warrant accounting will create non-cash revenue/AEBITDA headwinds ($3–$5M FY’25) .

What Went Well and What Went Wrong

  • What Went Well

    • Enterprise-led growth in North America: “North America posted another excellent net revenue quarter, driven by 45% PPS volume growth… net revenue growth of 33.5%” .
    • Momentum intact in automation despite timing: “Automation sales were slightly up… some projects got pushed from Q1 to Q2… momentum… extremely strong” .
    • Strategic alignment with Amazon (warrant deal) viewed as growth catalyst: “great alignment for meaningful incremental growth and cash flow” .

  • What Went Wrong

    • Europe/APAC softness in March drove margin pressure: “lower volumes in Europe and APAC… higher input costs” reduced AEBITDA; mix and inefficiencies also weighed .
    • Input cost inflation and supply tightness in North American kraft paper created short-term logistics/efficiency issues; inventory was built to protect service levels .
    • Non-cash Amazon warrant impact reduced reported revenue by ~$0.8M (0.9% headwind) and contributed ~420 bps to reported AEBITDA headwind in Q1 .

Financial Results

Headline results: Q3 2024 → Q4 2024 → Q1 2025

MetricQ3 2024Q4 2024Q1 2025
Net Revenue ($M)$92.2 $105.0 $91.2
Gross Profit ($M)$34.4 $41.4 $30.9
Gross Margin (%)37.3% 39.4% 33.9% (calc. from 30.9/91.2)
AEBITDA ($M)$20.5 (constant FX) $25.3 $17.3
AEBITDA Margin (%)~22.2% (calc. from 20.5/92.2) 24.1% ~19.0% (calc. from 17.3/91.2)
Net Loss ($M)$(8.1) $(8.0) $(10.9)
GAAP Diluted EPS$(0.10) $(0.10) $(0.13)

Versus estimates (S&P Global):

Metric (Q1 2025)ActualConsensusSurprise
Revenue ($M)$91.2 $90.56*+$0.64M / +0.7% (Beat)
Primary EPS-$0.08*-$0.04*-$0.04 (Miss)
EBITDA ($M)$8.0*$18.05*-$10.05M (Miss)

Values retrieved from S&P Global. Note: Company-reported AEBITDA ($17.3M) includes adjustments not reflected in S&P “EBITDA” .

Product mix (Q1 2025 vs Q1 2024):

ProductQ1 2025 ($M)Q1 2024 ($M)YoY %
Cushioning$30.1 $37.3 -19.3%
Void-Fill$44.1 $33.1 +33.2%
Wrapping$10.7 $8.6 +24.4%
Other$6.3 $6.3 0.0%

KPIs:

KPIQ1 2025Q1 2024YoY
PPS Installed Base (000s)143.8 140.8 +2.1%
Void-Fill Systems (000s)86.4 83.4 +3.6%
Wrapping Systems (000s)23.0 22.7 +1.3%
Cushioning Systems (000s)34.4 34.7 -0.9%

Balance sheet and cash flow highlights (Q1 2025):

  • Cash: $65.5M; undrawn $50M revolver; $409.0M term loan outstanding; net cash from ops $(1.3)M (inventory build to protect service) .

Guidance Changes

No explicit update in Q1; management discussed pricing/cost actions and automation timing but did not change FY 2025 guidance. The most recent formal guide (3/6/2025) remains:

MetricPeriodPrevious Guidance (3/6)Current (Q1)Change
Net Revenue (constant FX)FY 2025$387–$409M No update in Q1 Maintained
Adjusted EBITDA (constant FX)FY 2025$88–$97M No update in Q1 Maintained
Non-cash Amazon warrant drag (reported)FY 2025$3–$5M reduction to reported revenue/AEBITDA Reiterated as Q1 impact ($0.8M) and ongoing Maintained
CapExFY 2025$36–$38M No update in Q1 Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
AI/Technology/AutomationAutomation revenue growing; robust bookings Automation ~$30M FY, >50% growth targeted for 2025; AI/vision (Rabot), Decision Tower, data (Precube’it) Projects slipped Q1→Q2 but momentum “extremely strong”; confident in ~50% growth Positive; timing shift not demand
Supply chain/input costsFX/energy volatility manageable; gross margin 37.3% NA kraft paper tightness in Q4; logistics inefficiencies US kraft paper tight; price taken in Q2; inventory build to protect service Cost actions in flight; near-term headwind
Tariffs/MacroMacro choppy but improving trends Tariff uncertainty; limited paper sourcing impact; capex tariff ~$1M increase Tariff impact mainly on converters; mitigating via alternative sourcing/refurbishing Managed; limited COGS exposure
Product performanceVoid-fill strength; cushioning softer Void-fill and automation drove top line Void-fill +33%; wrapping +24%; cushioning -19% Mix shift toward void-fill
Regional trendsGlobal volumes accelerated; NA strength NA holiday season strength; EU/APAC modest NA: sales +33%, volumes +40%; EU/APAC weak March, slight April stabilization NA-led growth; EU/APAC watch
Guidance/ToneDeleveraging progress; constructive FY25 guide: rev +5–11%, AEBITDA +5–16% No update; focus on pricing/cost actions; confident automation Steady; execution focus

Management Commentary

  • Strategic focus and alignment: “We believe [Amazon warrant] provides great alignment for meaningful incremental growth and cash flow for Ranpak… a testament to the strong innovation and execution we have delivered.”
  • Regional dynamics: “North America… the key driver… sales up 33% and volumes up more than 40%… Europe/APAC… weaker-than-expected March… April saw stabilization” .
  • Margin plan: “We have taken price in the second quarter… and we have identified structural cost reductions of $8 million” .
  • Tariffs: “Impact… largely related to capital expenditures of our PPS converters… stepping up… refabricate and refurbish existing machines… [Automation] value proposition… remains extremely compelling even with the current tariff” .

Q&A Highlights

  • Europe/APAC softness and outlook: Europe weaker in March (Nordics/Germany soft), April stabilization; Japan strong; overall constructive on APAC, cautious on Europe .
  • Automation timing and demand: Slips from Q1 to Q2 reflect deal timing, not demand; large enterprise ROI keeps projects moving despite tariffs; still targeting >50% growth in 2025 .
  • Margin trajectory: Expect gross margin to improve Q1→Q2 with bigger step-up in H2 as pricing and cost actions take hold .
  • Cost actions detail: Structural cost reductions focused on headcount, freight/logistics, outside storage, and discretionary spend; operational planning improvements after NA paper tightness .
  • Amazon warrant optics: Non-cash revenue reduction flows through gross profit/AEBITDA/NI, added back in cash flow; Q1 impact ~$0.8M (0.9% of sales) .

Estimates Context

  • Q1 2025 comparison to S&P Global consensus: revenue beat by ~0.7% (Actual $91.2M vs $90.56M*), Primary EPS missed by $0.04 (Actual -$0.08* vs -$0.04*), and S&P EBITDA missed (Actual $8.0M* vs $18.05M*) . Values retrieved from S&P Global.
  • Note on definitions: Company reports EBITDA ($9.7M) and AEBITDA ($17.3M), while S&P “EBITDA” excludes company adjustments; use caution comparing company AEBITDA to S&P EBITDA .
  • Estimate depth: Revenue estimates (n=3), EPS estimates (n=1) indicate limited analyst coverage; estimate dispersion likely low* Values retrieved from S&P Global.

Key Takeaways for Investors

  • North America enterprise momentum is intact and should continue to drive consumables volumes; automation growth (~50% targeted) remains a key 2H lever despite Q1 timing slips .
  • Margin repair is the central narrative for H2’25: pricing actions, $8M structural cost reductions, and operational fixes should sequentially lift gross margin from Q1 trough levels .
  • Reported figures will include non-cash Amazon warrant offsets ($3–$5M FY’25), obscuring underlying cash economics; evaluate “as-adjusted” performance excluding the warrant impact .
  • Mix shift (void-fill strength, cushioning decline) favors e-commerce exposure; watch for stabilization in Europe/APAC as an upside optionality to the margin story .
  • Liquidity is solid ($65.5M cash, undrawn revolver) with deleveraging supported by cash generation focus; cross-currency swaps help interest expense and FX risk .
  • Tariff exposure is mainly capex/converters; mitigation via alternative sourcing/refurbishment should limit structural COGS impact; not expected to impair automation ROI .
  • Near-term trading: modest top-line beat overshadowed by EPS/EBITDA misses vs S&P; stock likely keyed to evidence of margin inflection and automation bookings conversion in Q2–Q3.

Values retrieved from S&P Global: Revenue Consensus Mean, Primary EPS Consensus Mean, EBITDA Consensus Mean, and number of estimates.