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Ranpak Holdings Corp. (PACK)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue rose 6.8% YoY to $92.3M, but gross margin compressed 540 bps to 31.3% and AEBITDA fell 15.8% to $16.5M as Europe/APAC softness and North American cost inefficiencies weighed on profitability . Versus S&P Global consensus, PACK delivered a revenue miss ($92.3M vs $94.5M*) and a significant EPS miss (-$0.09 vs +$0.04*), with SPGI “EBITDA” also below expectations ($8.1M* vs $18.2M*) .
  • Management updated 2H25 guidance to $216–$230M revenue and $44.5–$54.5M AEBITDA; implied FY25 revenue of $406.5M is within/above the prior range ($387–$409M), while implied AEBITDA of $83.3M is below the prior $88–$97M, reflecting warrant impacts and margin pressure. Net revenue is effectively maintained (midpoint higher), AEBITDA lowered .
  • North America remained the growth engine (sales +12.2%, volume +14.8%), while Europe/APAC volumes were flat YoY with July showing signs of stabilization. Automation grew 34% YoY, with FY25 automation revenue targeted at $40–$45M and breakeven targeted by Q4, supported by a robust, largely contracted 2H backlog .
  • Cost/margin actions (pricing, freight/logistics optimization, lower-cost warehousing, headcount -3% since April) are expected to add 300–500 bps to North American gross margin in 2H. Management reiterated optimism for a stronger 2H financial profile; Board also extended the $50M share repurchase authorization (36-month) .

What Went Well and What Went Wrong

  • What Went Well

    • Enterprise momentum and automation: “Automation increased 34% in the quarter… we expect… $40–$45 million in Automation net revenue for 2025,” with the majority of 2H already in backlog and Q4 near breakeven .
    • North America strength: NOAM sales +12.2% and volume +14.8% YoY; more wins with enterprise customers amid plastic-to-paper transitions .
    • Executing margin/cost plan: Pricing taken in Q2, freight/logistics consolidation, lower-cost warehouse space, and 3% headcount reduction since April; targeted NA gross margin improvement of 300–500 bps in 2H .

  • What Went Wrong

    • Profitability pressure: Gross margin fell to 31.3% (from 36.7% LY) and AEBITDA declined 15.8% YoY; warrants reduced revenue by $1.2M (1.4%) and contributed to margin pressure .
    • Regional headwinds: Lower volumes in Europe/APAC and temporary NOAM inefficiencies (paper supply disruptions, above-market storage) impacted profitability; Q2 Europe remained soft though July is improving .
    • Estimate misses: Revenue and EPS missed SPGI consensus; SPGI “EBITDA” also below expectations, highlighting severity of near-term margin pressure (company emphasizes AEBITDA, not tracked by consensus) .

Financial Results

Income Statement Summary

MetricQ2 2024Q1 2025Q2 2025
Net Revenue ($M)86.4 91.2 92.3
Gross Profit ($M)31.7 30.9 28.9
Gross Margin (%)36.7% 33.9% (calc. from 30.9/91.2) 31.3%
Net Income ($M)5.5 (10.9) (7.5)
Diluted EPS ($)0.07 (0.13) (0.09)
EBITDA ($M)29.3 9.7 15.6
Adjusted EBITDA (AEBITDA) ($M)19.6 17.3 16.5
AEBITDA Margin (%)22.7% 19.0% (calc. from 17.3/91.2) 17.9%

Actual vs S&P Global Consensus (Q2 2025)

MetricActualConsensus (S&P Global)
Revenue ($M)92.3 94.45*
EPS (Primary) ($)(0.09) 0.04*
“EBITDA” ($M, SPGI definition)8.1*18.25*

Values with asterisks (*) retrieved from S&P Global.

Segment Net Revenue ($M)

SegmentQ2 2024Q2 2025
Cushioning35.0 36.8
Void-Fill37.7 41.1
Wrapping8.4 7.3
Other (incl. automation, accessories)5.3 7.1

Key KPIs

KPIJun 30, 2024Jun 30, 2025
Installed Base – Cushioning (k)34.9 34.6
Installed Base – Void-Fill (k)83.9 87.9
Installed Base – Wrapping (k)22.4 22.5
Total Systems Installed (k)141.2 145.0

Notes:

  • Amazon warrant impact reduced Q2 reported revenue by $1.2M (1.4%) and affected margins/AEBITDA comparisons .
  • Balance sheet/liquidity: Cash $49.2M; no revolver borrowings; term debt $408.0M outstanding; derivatives up due to hedges .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue ($M)2H 2025n/a216 – 230 New
AEBITDA ($M)2H 2025n/a44.5 – 54.5 New
Net Revenue ($M)FY 2025 (Implied)387 – 409 406.5 (implied from 2H + YTD) Maintained (midpoint ↑)
AEBITDA ($M)FY 2025 (Implied)88 – 97 83.3 (implied) Lowered
Automation Revenue ($M)FY 2025“~50% growth” (qualitative) 40 – 45 Quantified update

Additional corporate action: Board extended Class A share repurchase authorization up to $50.0M for 36 months .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2025)Trend
Automation scaling/backlogFY25: ~50% growth expected ; Q1: projects slipped but confidence intact Automation +34% YoY; FY25 $40–$45M with majority of 2H contracted; breakeven targeted Q4 Improving/scaling
Enterprise accounts & Amazon warrantsAmazon warrants signed (Jan 2025) ; Q1 warrant headwind $0.8M Q2 warrant headwind $1.2M (1.4%); FY25 warrant impact $4–$6M expected ; margin pressure ~1.3 pts from warrants Mixed: alignment benefits, near-term headwind
Cost/margin actionsQ1: pricing, $8M structural cost-out identified; margin trajectory improving into 2H Headcount -3% since April; freight/warehousing optimized; NA gross margin +300–500 bps expected in 2H; $1M impact Q3, $2M/quarter run-rate by Q4 Benefits to show in 2H
Regional trendsQ4 strength led by NOAM; Europe/APAC softer in March NOAM sales +12.2%, volume +14.8% YoY; Europe/APAC flat volumes; July Europe improving; APAC temporary destocking NOAM strong; EMEA stabilizing
Tariffs/macroQ1: tariffs impacting converter CapEx; energy volatility; mitigating actions EU 15% tariff deal seen stabilizing; US bonus depreciation supports automation ROI Macro still volatile, policy tailwinds
Org/leadership—Transition to global structure; new COO from Ingersoll Rand joins Sept; CRO role expanded Operational strengthening
Liquidity/hedgingQ1: $210M cross-currency swaps; leverage commentary Cash $49.2M; net leverage 4.6x LTM, bank leverage 3.8x; year-end cash target $70–$75M Stable/liquidity focus

Management Commentary

  • “Global paper volumes increased 5.2%… but AEBITDA declined 15.8%… driven by lower volumes in Europe and APAC and higher production costs in North America… We expect our cost reduction and margin improvement initiatives are set to take hold in Q3… three to five gross margin point improvement in North America in the second half” — Omar Asali, CEO .
  • “We expect to generate $40–$45 million in Automation net revenue for 2025, with the vast majority of the second half already in backlog… has been a $5 million drag on AEBITDA to start the year” — Omar Asali .
  • “Across the company, we have reduced headcount by 3% since April… of roughly $8 million in annualized cost out initiatives… ~$1 million will be felt in Q3 and the full run rate of $2 million per quarter will be felt in Q4” — Omar Asali .
  • “If you exclude depreciation, margins would have been 43.5% vs 47.6% prior year… ~4.7 points of margin pressure related to warrants or temporary one-off items” — Bill Drew, CFO .
  • “We completed the second quarter with a strong liquidity position… cash balance of $49.2 million… net leverage 4.6x LTM… expect to end the year with around $70–$75 million in cash” — Bill Drew .

Q&A Highlights

  • Bridge to flat FY25 AEBITDA: CFO cited 1.0–1.5 pts from warrants (~$5M), ~2 pts temporary inefficiencies, plus mix pressure from EMEA/APAC; NOAM expected up YoY even with warrants .
  • Europe July stabilization: Management saw July volumes up YoY, with hopes for improved predictability post EU tariff deal; cautioned variability remains .
  • Margin drivers: ~1.3 pts from warrants; ~1 pt restructuring/footprint; ~1 pt above-market storage now resolved; freight and sourcing optimizations should support 2H margin recovery .
  • Cash/FCF outlook: Target $70–$75M year-end cash vs earlier higher expectations, reflecting lower EBITDA, inefficiencies, and working capital; still plan ~$4M debt paydown in 2025 .
  • Automation profitability: Expect slight drag in Q3, around breakeven in Q4; cited strong 2H backlog largely contracted and a potential >$100M multi-year NA automation deal in the works .

Estimates Context

  • Q2 2025 results vs SPGI consensus: Revenue $92.3M vs $94.45M*; EPS (Primary) -$0.09 vs +$0.04*; SPGI “EBITDA” $8.1M* vs $18.25M*. Company emphasizes AEBITDA ($16.5M) rather than SPGI “EBITDA,” which may differ in definition .
  • Estimate base was light (EPS n=1, Revenue n=3), reducing confidence in consensus precision; nonetheless, the magnitude of the EPS miss was significant (swing from positive to negative) [functions.GetEstimates].
  • Forward: With implied FY25 revenue maintained (midpoint higher) but AEBITDA lowered, Street models likely need to reduce 2H/2026 EBITDA and margin trajectories to reflect warrant impacts and a slower margin recovery cadence despite expected 2H improvements .

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Mixed print: topline resilient (+6.8% YoY) but profitability underwhelmed (gross margin -540 bps, AEBITDA -15.8%), driving an EPS and revenue miss vs SPGI consensus; near-term margins remain the swing factor .
  • Guidance reset: Implied FY25 revenue is maintained within range (midpoint higher), but AEBITDA is guided below prior, largely due to warrant headwinds and slower margin normalization; expect Street to trim EBITDA .
  • 2H setup improving: Pricing, cost-outs, and logistics/warehouse actions should lift NA margins by 300–500 bps; automation backlog is robust, with Q4 breakeven targeted .
  • Enterprise/Automation flywheel: NOAM volume strength (+14.8%) and a potential >$100M multi-year automation contract in NA underpin the medium-term growth algorithm, though timing risk remains .
  • Watch EMEA stabilization: July signaled improvement; sustained recovery would materially aid consolidated margins given EMEA’s profitability sensitivity .
  • Capital/hedging: Liquidity remains adequate (cash $49.2M; no revolver draw), with currency hedges in place; year-end cash expected $70–$75M while continuing modest deleveraging .
  • Trading lens: Near-term stock reaction likely driven by the EPS/margin miss and AEBITDA guide-down, partially offset by stronger 2H margin/automation setup and repurchase authorization extension .