Overview

Ranpak is a leading provider of environmentally sustainable, systems-based, product protection and end-of-line automation solutions for e-commerce and industrial supply chains. The company operates manufacturing facilities in the United States, Europe, and Asia, and has an installed base of approximately 143.8 thousand Protective Packaging Solutions (PPS) systems serving a diverse set of distributors and end-users.

In the first quarter of 2025, Ranpak generated net revenue of $91.2 million, an increase of 6.9% (8.8% on a constant currency basis) compared to the first quarter of 2024. This increase was driven by growth in void-fill and wrapping products, partially offset by a decline in cushioning. The company’s North America segment saw a 33.5% increase in net revenue, while the Europe/Asia segment declined 9.0% (6.0% on a constant currency basis).

Financial Performance

Ranpak’s cost of sales increased 13.8% (15.7% on a constant currency basis) in the first quarter of 2025 compared to the prior year period, primarily due to higher production costs and increased sales volume, partially offset by a decrease in depreciation expense. Gross profit declined 4.3% (2.5% on a constant currency basis) to $30.9 million.

Selling, general, and administrative (SG&A) expenses increased 3.6% to $28.9 million, driven by higher stock-based compensation and IT maintenance costs, partially offset by lower professional fees. Depreciation and amortization expense increased 7.1% to $9.0 million, while other operating expenses increased 25.0% to $1.0 million due to higher research and development costs.

Interest expense increased 40.3% to $8.7 million, primarily due to a decrease in interest income from the company’s swap agreements. Foreign currency gain was $2.6 million, a decrease of $1.2 million from the prior year period.

Ranpak recorded an income tax benefit of $3.2 million in the first quarter of 2025, compared to a $1.5 million benefit in the prior year period. The effective tax rate was 22.6% and 15.8% in the respective periods.

Segment Performance

In the North America segment, net revenue increased 33.5% to $42.6 million, driven by strong growth in void-fill and wrapping products, partially offset by a decline in cushioning. Segment EBITDA increased 45.7% to $5.1 million, primarily due to a foreign currency gain and higher intersegment royalty charges.

The Europe/Asia segment saw net revenue decline 9.0% (6.0% on a constant currency basis) to $48.6 million, with decreases in cushioning and other revenue partially offset by growth in void-fill and wrapping. Segment EBITDA decreased 61.3% to $4.6 million, due to the lower net sales, increased production costs, and higher intersegment royalty charges.

Non-GAAP Measures

Ranpak presents Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) and Adjusted EBITDA (AEBITDA) as non-GAAP financial measures. EBITDA for the first quarter of 2025 was $9.7 million, a decrease of 37.0% compared to the prior year period. AEBITDA was $17.3 million, a decrease of 9.9% (7.8% on a constant currency basis).

The company also uses constant currency measures to exclude the impact of foreign currency translation effects when comparing current results to the prior year. On a constant currency basis, net revenue increased 8.8%, while AEBITDA decreased 7.8%.

Strengths and Weaknesses

Ranpak’s key strengths include its leading market position in environmentally sustainable protective packaging solutions, diversified customer base, and global manufacturing and distribution capabilities. The company has also demonstrated the ability to grow its void-fill and wrapping product lines.

However, Ranpak faces headwinds from inflationary pressures, which have impacted its end-users and suppliers, as well as volatility in paper and energy costs. The company’s Europe/Asia segment has also struggled with declining revenue and profitability. Additionally, the company’s reliance on foreign currency exchange rates and interest rate movements exposes it to market risks.

Outlook and Conclusion

Looking ahead, Ranpak will need to navigate the challenging macroeconomic environment, manage its input costs, and continue to innovate and expand its product offerings to drive growth. The company’s focus on sustainability and automation solutions may provide opportunities, but it will also need to address the weaknesses in its Europe/Asia operations.

Overall, Ranpak’s first quarter 2025 results demonstrate the company’s ability to grow its top line, but also the pressure it faces on profitability due to inflationary and other market factors. Investors will be closely watching Ranpak’s ability to execute its strategy and manage its costs in the coming quarters.