Ranpak Holdings’ Earnings Call: Mixed Outlook with Growth Potential

Ranpak Holdings Corp. Class A ((PACK)) has held its Q2 earnings call. Read on for the main highlights of the call.

Ranpak Holdings Corp. recently held its earnings call, revealing a mixed outlook for the company. While the firm continues to see volume growth and advancements in its automation segment, challenges persist with declining gross margins and profitability, primarily due to increased input costs and market uncertainties in Europe and APAC. However, strategic cost reductions and a new product launch are anticipated to drive improvements in the latter half of the year.

Volume Growth and Revenue Increase

Ranpak reported its eighth consecutive quarter of volume growth, with consolidated net revenue increasing by 3.8% year-over-year. This growth was driven by a 5.2% increase in volume and a notable 12.2% sales rise in North America, highlighting the company’s continued expansion in key markets.

Automation Segment Expansion

The company’s automation segment saw a significant revenue increase of 34% compared to the previous year. Ranpak expects full-year automation revenue to reach between $40 million and $45 million, indicating a robust backlog and strong payback profiles for high-volume customers, showcasing the segment’s potential.

Strategic Initiatives and Cost Reduction

Ranpak has implemented strategic cost reduction programs, resulting in a 3% headcount reduction since April. These initiatives are expected to improve gross margins by 300 to 500 basis points in the second half of 2025, reflecting the company’s efforts to enhance operational efficiency.

New Product Launch

The launch of a new cushioning product is expected to compete effectively with foam in place, contributing to an improved mix profile as it gains traction. This product launch is part of Ranpak’s strategy to diversify its offerings and strengthen its market position.

Gross Margin Decline

Despite these positive developments, Ranpak faced a decline in gross margin ex depreciation by 540 basis points year-over-year in Q2. This was primarily due to an unfavorable product mix in North America and increased input costs, posing challenges to profitability.

Profitability Challenges

Adjusted EBITDA declined by 18% on a constant currency basis, mainly due to increased input costs, inefficiencies in North America, and an unfavorable mix. This highlights the financial pressures the company is currently facing.

European and APAC Market Challenges

Revenue in Europe and APAC decreased by 2.7% on a constant currency basis, with Europe facing growth challenges due to tariff and trade uncertainties. These regions continue to present hurdles for Ranpak’s expansion efforts.

Cash Flow and Debt Management

Ranpak expects to end the year with $70 million to $75 million in cash, which is lower than initially expected. Debt paydown is also anticipated to be less than originally planned, reflecting challenges in cash flow management.

Forward-Looking Guidance

During the earnings call, Ranpak provided a cautious yet optimistic outlook for the remainder of the year. The company expects significant improvements in financial performance in the second half due to cost reduction initiatives and structural realignment. Automation revenue is projected to grow substantially, with net revenue for the second half of 2025 expected to be between $216 million and $230 million, and adjusted EBITDA ranging from $44.5 million to $54.5 million. These projections reflect a slight adjustment from the original forecast, accounting for warrant expenses.

In summary, Ranpak Holdings Corp.’s earnings call highlighted a mixed sentiment, with ongoing volume growth and automation segment expansion juxtaposed against challenges in profitability and market uncertainties. The company’s strategic initiatives and new product launches are poised to drive improvements, while forward-looking guidance suggests cautious optimism for sustained growth.