SEC Info  
    Home      Search      My Interests      Help      Sign In      Please Sign In

Ranpak Holdings Corp. – ‘10-Q’ for 6/30/22

On:  Thursday, 7/28/22, at 9:16am ET   ·   For:  6/30/22   ·   Accession #:  950170-22-13292   ·   File #:  1-38348

Previous ‘10-Q’:  ‘10-Q’ on 5/6/22 for 3/31/22   ·   Next:  ‘10-Q’ on 11/1/22 for 9/30/22   ·   Latest:  ‘10-Q/A’ on 11/1/23 for 9/30/23   ·   2 References:   

Find Words in Filings emoji
 
  in    Show  and   Hints

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 7/28/22  Ranpak Holdings Corp.             10-Q        6/30/22   94:16M                                    Donnelley … Solutions/FA

Quarterly Report   —   Form 10-Q

Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML   5.13M 
 2: EX-31.1     Certification -- §302 - SOA'02                      HTML     34K 
 3: EX-31.2     Certification -- §302 - SOA'02                      HTML     33K 
 4: EX-32       Certification -- §906 - SOA'02                      HTML     31K 
10: R1          Document and Entity Information                     HTML     84K 
11: R2          Unaudited Condensed Consolidated Statements of      HTML    150K 
                Operations and Comprehensive Income (Loss)                       
12: R3          Unaudited Condensed Consolidated Balance Sheets     HTML    141K 
13: R4          Unaudited Condensed Consolidated Balance Sheets -   HTML     40K 
                Parenthetical                                                    
14: R5          Unaudited Condensed Consolidated Statements of      HTML     89K 
                Changes in Shareholders' Equity                                  
15: R6          Unaudited Condensed Consolidated Statements of      HTML    115K 
                Cash Flows                                                       
16: R7          Nature of Operations                                HTML     31K 
17: R8          Basis of Presentation and Summary of Significant    HTML     38K 
                Accounting Policies                                              
18: R9          Supplemental Balance Sheet Data and Cash Flow       HTML    230K 
                Information                                                      
19: R10         Segment and Geographic Information                  HTML    173K 
20: R11         Revenue Recognition, Contracts with Customers       HTML    109K 
21: R12         Goodwill, Long-Lived and Intangible Assets, Net     HTML    170K 
22: R13         Long-Term Debt                                      HTML     89K 
23: R14         Derivative Instruments                              HTML    198K 
24: R15         Accumulated Other Comprehensive Income (Loss)       HTML    143K 
25: R16         Fair Value Measurement                              HTML    117K 
26: R17         Income Taxes                                        HTML     48K 
27: R18         Leases                                              HTML    286K 
28: R19         Commitments and Contingencies                       HTML     35K 
29: R20         Stock-Based Compensation                            HTML    156K 
30: R21         Earnings (Loss) per Share                           HTML    281K 
31: R22         Transactions with Related Parties                   HTML     34K 
32: R23         Subsequent Event                                    HTML     31K 
33: R24         Basis of Presentation and Summary of Significant    HTML     42K 
                Accounting Policies (Policies)                                   
34: R25         Supplemental Balance Sheet Data and Cash Flow       HTML    230K 
                Information (Tables)                                             
35: R26         Segment and Geographic Information (Tables)         HTML    166K 
36: R27         Revenue Recognition, Contracts with Customers       HTML    101K 
                (Tables)                                                         
37: R28         Goodwill, Long-Lived and Intangible Assets, Net     HTML    171K 
                (Tables)                                                         
38: R29         Long-Term Debt (Tables)                             HTML     67K 
39: R30         Derivative Instruments (Tables)                     HTML    181K 
40: R31         Accumulated Other Comprehensive Income (Loss)       HTML    141K 
                (Tables)                                                         
41: R32         Fair Value Measurement (Tables)                     HTML    109K 
42: R33         Income Taxes (Tables)                               HTML     41K 
43: R34         Leases (Tables)                                     HTML    289K 
44: R35         Stock-Based Compensation (Tables)                   HTML    149K 
45: R36         Earnings (Loss) per Share (Tables)                  HTML    277K 
46: R37         Supplemental Balance Sheet Data and Cash Flow       HTML     35K 
                Information - Components of Accounts Receivable,                 
                Net (Details)                                                    
47: R38         Supplemental Balance Sheet Data and Cash Flow       HTML     51K 
                Information - Narrative (Details)                                
48: R39         Supplemental Balance Sheet Data and Cash Flow       HTML     40K 
                Information - Schedule of Inventory, Net (Details)               
49: R40         Supplemental Balance Sheet Data and Cash Flow       HTML     46K 
                Information - Schedule of Property. Plant and                    
                Equipment (Details)                                              
50: R41         Supplemental Balance Sheet Data and Cash Flow       HTML     34K 
                Information - Schedule of Depreciation Expense                   
                (Details)                                                        
51: R42         Supplemental Balance Sheet Data and Cash Flow       HTML     45K 
                Information - Schedule of Accrued Liabilities and                
                Other (Details)                                                  
52: R43         Supplemental Balance Sheet Data and Cash Flow       HTML     39K 
                Information - Supplemental Cash Flow Information                 
                (Details)                                                        
53: R44         Segment and Geographic Information - Narrative      HTML     39K 
                (Details)                                                        
54: R45         Segment and Geographic Information - Schedule of    HTML     72K 
                Revenue, Segment Gross Profit from External                      
                Customers, Certain Expenses and Long-Lived Assets,               
                by Geographical Areas (Details)                                  
55: R46         Revenue Recognition, Contracts with Customers -     HTML     29K 
                Narrative (Details)                                              
56: R47         Revenue Recognition, Contracts with Customers -     HTML     34K 
                Schedule of Change in Deferred Revenue (Details)                 
57: R48         Revenue Recognition, Contracts with Customers -     HTML     53K 
                Revenue from Contracts with Customers Summarized                 
                by Segment Geography (Details)                                   
58: R49         Goodwill, Long-Lived and Intangible Assets, Net -   HTML     38K 
                Schedule of Goodwill Balances by Operating Segment               
                (Details)                                                        
59: R50         Goodwill, Long-Lived and Intangible Assets, Net -   HTML     54K 
                Schedule of Identifiable Intangible Assets, Net                  
                (Details)                                                        
60: R51         Goodwill, Long-Lived and Intangible Assets, Net -   HTML     42K 
                Schedule of Finite-Lived Intangible Assets                       
                Amortization Expense (Details)                                   
61: R52         Goodwill, Long-Lived and Intangible Assets, Net -   HTML     30K 
                Narrative (Details)                                              
62: R53         Goodwill, Long-Lived and Intangible Assets, Net -   HTML     37K 
                Schedule of Intangible Asset Remaining Useful Life               
                (Details)                                                        
63: R54         Long-Term Debt - Narrative (Details)                HTML     90K 
64: R55         Long-Term Debt - Schedule of Long Term Debt         HTML     51K 
                (Details)                                                        
65: R56         Derivative Instruments - Narrative (Details)        HTML     79K 
66: R57         Derivative Instruments - Schedule of Interest Rate  HTML     44K 
                Swaps (Details)                                                  
67: R58         Derivative Instruments - Schedule of Derivative     HTML     47K 
                Assets and Liabilities at Fair Value (Details)                   
68: R59         Derivative Instruments - Effect of Derivative       HTML     39K 
                Instruments on Statement of Financial Position                   
                (Details)                                                        
69: R60         Accumulated Other Comprehensive Income (Loss) -     HTML     74K 
                Components of AOCI (Details)                                     
70: R61         Accumulated Other Comprehensive Income (Loss) -     HTML     51K 
                Changes in AOCI (Details)                                        
71: R62         Fair Value Measurement - Schedule of Carrying       HTML     49K 
                Amounts, Estimated Fair Values and Respective Fair               
                Value Measurements (Details)                                     
72: R63         Income Taxes - Schedule of Effective Tax Rate       HTML     29K 
                (Details)                                                        
73: R64         Income Taxes - Narrative (Details)                  HTML     32K 
74: R65         Leases - Schedule of Operating Leases and Finance   HTML     51K 
                Leases included in Condensed Consolidated Balance                
                Sheets (Details)                                                 
75: R66         Leases - Schedule of Components of Lease Costs      HTML     42K 
                (Details)                                                        
76: R67         Leases - Schedule of Maturities of Lease            HTML     83K 
                Liabilities (Details)                                            
77: R68         Leases - Schedule of Additional Information to      HTML     56K 
                Leases (Details)                                                 
78: R69         Stock-Based Compensation - Summary of Certain Data  HTML     34K 
                for Stock-Based Compensation Plans (Details)                     
79: R70         Stock-Based Compensation - 2019 Plan (Details)      HTML     40K 
80: R71         Stock-Based Compensation - Narrative (Details)      HTML     50K 
81: R72         Stock-Based Compensation - Performance-Based        HTML     58K 
                Restricted Stock Unit and Restricted Stock Unit                  
                Activity (Details)                                               
82: R73         Stock-Based Compensation - Director Stock Unit      HTML     47K 
                Activity (Details)                                               
83: R74         Shareholders' Equity - Narrative (Details)          HTML     41K 
84: R75         Shareholders' Equity - Schedule of Common Stock     HTML     34K 
                Outstanding (Details)                                            
85: R76         Earnings (Loss) per Share - Schedule of Earnings    HTML     87K 
                Per Share Basic and Diluted (Details)                            
86: R77         Earnings (Loss) per Share - Additional Information  HTML     29K 
                (Details)                                                        
87: R78         Earnings (Loss) per Share - Schedule of             HTML     33K 
                Antidilutive Securities (Details)                                
88: R79         Transactions with Related Parties - Narrative       HTML     31K 
                (Details)                                                        
89: R80         Subsequent Event - Narrative (Details)              HTML     33K 
92: XML         IDEA XML File -- Filing Summary                      XML    181K 
90: XML         XBRL Instance -- pack-20220630_htm                   XML   4.39M 
91: EXCEL       IDEA Workbook of Financial Reports                  XLSX    158K 
 5: EX-101.CAL  XBRL Calculations -- pack-20220630_cal               XML    243K 
 7: EX-101.DEF  XBRL Definitions -- pack-20220630_def                XML    833K 
 9: EX-101.LAB  XBRL Labels -- pack-20220630_lab                     XML   1.58M 
 8: EX-101.PRE  XBRL Presentations -- pack-20220630_pre              XML   1.22M 
 6: EX-101.SCH  XBRL Schema -- pack-20220630                         XSD    222K 
93: JSON        XBRL Instance as JSON Data -- MetaLinks              498±   800K 
94: ZIP         XBRL Zipped Folder -- 0000950170-22-013292-xbrl      Zip    424K 


‘10-Q’   —   Quarterly Report

Document Table of Contents

Page (sequential)   (alphabetic) Top
 
11st Page  –  Filing Submission
"Part I -- Financial Information
"Item 1. Condensed Consolidated Financial Statements (Unaudited)
"Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021
"Unaudited Condensed Consolidated Balance Sheets -- June 30, 2022 and December 31, 2021
"Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30, 2022 and 2021
"Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021
"Notes to the Unaudited Condensed Consolidated Financial Statements
"Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
"Item 3. Quantitative and Qualitative Disclosures About Market Risk
"Item 4. Controls and Procedures
"Part II -- Other Information
"Item 1. Legal Proceedings
"Item 1A. Risk Factors
"Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
"Item 3. Defaults Upon Senior Securities
"Item 4. Mine Safety Disclosures
"Item 6. Exhibits
"Signatures

This is an HTML Document rendered as filed.  [ Alternative Formats ]



 iX:   C:  C:  C: 
  10-Q  
 i  i false i  i http://fasb.org/us-gaap/2022#PropertyPlantAndEquipmentNet i Q2 i --12-31 i  i http://fasb.org/us-gaap/2022#LongTermDebtNoncurrent i 0001712463 i http://www.ranpak.com/20220630#CurrentPortionOfLongTermDebtAndFinanceLeaseLiabilities i 0001712463us-gaap:NondesignatedMemberus-gaap:InterestRateSwapMember2019-01-310001712463us-gaap:LandMember2021-12-310001712463us-gaap:DomesticLineOfCreditMemberpack:FirstLienTermFacilityMember2022-06-300001712463us-gaap:TrademarksAndTradeNamesMember2022-06-300001712463pack:NorthAmericaSegmentMember2021-04-012021-06-300001712463pack:DepreciationandAmortizationMember2021-04-012021-06-3000017124632020-02-132020-02-140001712463us-gaap:RestrictedStockUnitsRSUMember2021-12-310001712463pack:NorthAmericaSegmentMember2021-12-310001712463us-gaap:OverAllotmentOptionMember2021-05-012021-05-310001712463pack:RestrictedStockUnitsandPerformancebasedRestrictedStockUnitsMember2021-04-012021-06-300001712463pack:DepreciationandAmortizationMember2022-04-012022-06-3000017124632022-03-310001712463us-gaap:AdditionalPaidInCapitalMember2021-06-300001712463us-gaap:AccountingStandardsUpdate201409Member2022-04-012022-06-300001712463pack:PaperMember2021-04-012021-06-300001712463pack:OneMadisonGroupLLCMember2021-04-012021-06-300001712463us-gaap:CommonClassAMember2022-03-310001712463pack:RealizedGainLossOnCrossCurrencySwapMember2022-01-012022-06-300001712463pack:EuropeAndAsiaSegmentMember2022-06-300001712463pack:FirstLienTermFacilityMember2022-01-012022-06-300001712463us-gaap:CommonClassAMember2021-03-310001712463pack:DirectorStockUnitsMember2022-06-300001712463us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2021-01-012021-06-300001712463us-gaap:AccountingStandardsUpdate201602Member2021-04-012021-06-300001712463us-gaap:CostOfSalesMember2021-04-012021-06-300001712463pack:TwoThousandTwentyOneLtipPrsusMembersrt:MaximumMember2022-01-012022-06-300001712463us-gaap:CommonClassCMember2022-07-260001712463pack:AccumulatedGainLossOnCrossCurrencySwapMember2021-12-310001712463us-gaap:CommonClassAMember2021-12-310001712463us-gaap:AccountingStandardsUpdate201602Member2022-04-012022-06-300001712463us-gaap:RetainedEarningsMember2022-04-012022-06-300001712463pack:PerformanceBasedRestrictedStockUnitsMember2022-01-012022-06-300001712463us-gaap:CommonClassAMember2021-05-012021-05-310001712463us-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001712463pack:AccumulatedGainLossOnCrossCurrencySwapMember2022-06-300001712463us-gaap:TechnologyBasedIntangibleAssetsMember2021-12-310001712463us-gaap:RestrictedStockUnitsRSUMembersrt:DirectorMember2022-01-012022-06-300001712463us-gaap:RetainedEarningsMember2021-04-012021-06-300001712463pack:NorthAmericaSegmentMember2022-06-3000017124632021-01-012021-12-310001712463us-gaap:RetainedEarningsMember2021-06-300001712463us-gaap:EarliestTaxYearMember2022-01-012022-06-300001712463pack:EuropeAndAsiaSegmentMember2021-01-012021-06-300001712463us-gaap:AccumulatedTranslationAdjustmentMember2022-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberpack:FirstLienTermFacilityMemberus-gaap:InterestRateSwapMember2022-06-300001712463us-gaap:ForeignLineOfCreditMemberpack:FirstLienTermFacilityMember2022-06-300001712463us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001712463us-gaap:IntellectualPropertyMember2022-06-3000017124632021-05-012021-05-310001712463us-gaap:TechnologyBasedIntangibleAssetsMembersrt:WeightedAverageMember2021-01-012021-12-310001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001712463us-gaap:LineOfCreditMemberpack:FirstLienTermFacilityMember2022-06-300001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001712463pack:NorthAmericaSegmentMember2021-01-012021-06-300001712463us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2021-12-310001712463srt:MinimumMemberpack:PerformanceBasedRestrictedStockUnitsMember2022-01-012022-06-300001712463us-gaap:MachineryAndEquipmentMember2022-06-300001712463us-gaap:FairValueInputsLevel2Member2022-06-300001712463pack:NorthAmericaSegmentMember2022-04-012022-06-300001712463pack:ConvertingMachinesMember2022-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2021-12-310001712463us-gaap:TechnologyBasedIntangibleAssetsMember2022-06-300001712463us-gaap:RevolvingCreditFacilityMember2019-06-030001712463pack:PaperMember2022-01-012022-06-300001712463pack:EuropeSegmentMember2022-06-300001712463us-gaap:CostOfSalesMember2022-04-012022-06-300001712463us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2020-03-270001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001712463us-gaap:AdditionalPaidInCapitalMember2020-12-310001712463us-gaap:AdditionalPaidInCapitalMember2022-03-310001712463us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001712463pack:InterestRateSwapFiveMember2022-04-300001712463us-gaap:IntellectualPropertyMembersrt:WeightedAverageMember2022-01-012022-06-300001712463pack:EuropeAndAsiaSegmentMember2022-04-012022-06-300001712463pack:NorthAmericaSegmentMember2022-01-012022-06-300001712463us-gaap:RevolvingCreditFacilityMember2022-01-012022-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherAssetsMemberus-gaap:InterestRateSwapMember2021-12-310001712463us-gaap:FairValueInputsLevel3Member2021-12-310001712463pack:DirectorStockUnitsMember2021-12-310001712463srt:WeightedAverageMember2022-01-012022-06-300001712463us-gaap:AccountingStandardsUpdate201602Member2021-01-012021-06-300001712463us-gaap:ProductAndServiceOtherMember2022-04-012022-06-300001712463srt:NorthAmericaMemberus-gaap:AccountingStandardsUpdate201409Member2022-04-012022-06-300001712463us-gaap:EmployeeStockOptionMemberpack:A2019PlanMember2022-01-012022-06-300001712463us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2022-06-300001712463srt:WeightedAverageMember2021-01-012021-12-310001712463us-gaap:CommonClassCMember2021-01-012021-06-300001712463us-gaap:AccountingStandardsUpdate201409Memberpack:EuropeAsiaMember2021-01-012021-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2022-06-300001712463us-gaap:CommonClassAMember2021-04-012021-06-300001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001712463pack:DepreciationandAmortizationMember2022-01-012022-06-300001712463us-gaap:AdditionalPaidInCapitalMember2021-12-310001712463pack:OneMadisonGroupLLCMember2022-01-012022-06-300001712463pack:InterestRateSwapThreeMember2022-01-012022-06-3000017124632022-04-012022-06-300001712463pack:ConvertingMachinesMember2021-12-310001712463us-gaap:LandMember2022-06-300001712463us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-06-300001712463us-gaap:LatestTaxYearMember2022-01-012022-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberpack:FirstLienTermFacilityMemberus-gaap:InterestRateSwapMember2021-12-310001712463us-gaap:CommonClassAMember2022-07-260001712463pack:InterestRateSwapFiveMember2022-07-012022-07-310001712463us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-06-300001712463us-gaap:FairValueInputsLevel3Member2022-06-300001712463us-gaap:CommonClassCMember2022-01-012022-06-300001712463us-gaap:BuildingAndBuildingImprovementsMember2022-06-300001712463pack:FirstLienTermFacilityMember2021-03-310001712463us-gaap:EmployeeStockOptionMemberpack:A2019PlanMember2022-06-300001712463us-gaap:RevolvingCreditFacilityMember2021-12-310001712463us-gaap:FairValueInputsLevel1Member2022-06-300001712463us-gaap:IntellectualPropertyMember2021-12-310001712463us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001712463pack:NoCustomerMembersrt:MaximumMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2022-01-012022-06-300001712463us-gaap:LineOfCreditMemberus-gaap:EurodollarMemberpack:FirstLienCreditAgreementMember2021-01-012021-12-310001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberpack:AccruedLiabilitiesAndOtherMemberus-gaap:InterestRateSwapMember2022-06-300001712463us-gaap:RevolvingCreditFacilityMember2022-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2019-09-250001712463pack:EuropeAndAsiaSegmentMember2022-01-012022-06-300001712463us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001712463us-gaap:RetainedEarningsMember2022-03-310001712463pack:MachineLeaseMember2022-04-012022-06-300001712463pack:InterestRateSwapTwoMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2019-09-250001712463pack:InterestRateSwapThreeMember2021-09-300001712463pack:MachineLeaseMember2021-04-012021-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2022-06-300001712463us-gaap:ProductAndServiceOtherMember2021-04-012021-06-300001712463us-gaap:CommonClassAMember2022-01-012022-03-310001712463us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2022-01-012022-06-300001712463pack:InterestRateSwapThreeMember2022-02-012022-02-280001712463us-gaap:DesignatedAsHedgingInstrumentMemberpack:InterestRateSwapTwoMemberus-gaap:CashFlowHedgingMember2021-12-310001712463pack:RealizedGainLossOnCrossCurrencySwapMember2021-12-310001712463us-gaap:TrademarksAndTradeNamesMember2021-12-310001712463us-gaap:CommonClassAMember2021-01-012021-06-300001712463us-gaap:FairValueInputsLevel1Member2021-12-310001712463us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310001712463us-gaap:AccountingStandardsUpdate201409Memberpack:EuropeAsiaMember2022-01-012022-06-300001712463us-gaap:CommonClassCMember2021-03-310001712463us-gaap:CommonClassCMember2021-12-310001712463pack:InterestRateSwapTwoMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberpack:FirstLienTermFacilityMember2021-12-310001712463us-gaap:CommonClassAMember2021-01-012021-03-310001712463us-gaap:AccountingStandardsUpdate201409Member2022-01-012022-06-300001712463us-gaap:IntellectualPropertyMembersrt:WeightedAverageMember2021-01-012021-12-310001712463us-gaap:DomesticLineOfCreditMemberpack:FirstLienTermFacilityMember2021-12-310001712463us-gaap:LineOfCreditMemberpack:FirstLienCreditAgreementMember2022-01-012022-06-300001712463srt:NorthAmericaMemberus-gaap:AccountingStandardsUpdate201409Member2022-01-012022-06-300001712463pack:RestrictedStockUnitsandPerformancebasedRestrictedStockUnitsMember2021-01-012021-06-300001712463us-gaap:SubsequentEventMemberus-gaap:CommonClassAMember2022-07-260001712463us-gaap:DomesticLineOfCreditMemberpack:FirstLienTermFacilityMember2019-06-030001712463us-gaap:AccountingStandardsUpdate201409Memberpack:EuropeAsiaMember2022-04-012022-06-300001712463pack:PerformanceBasedRestrictedStockUnitsMember2021-12-3100017124632021-01-012021-06-300001712463pack:MachineLeaseMember2021-01-012021-06-300001712463pack:OneMadisonGroupLLCMember2021-01-012021-06-300001712463pack:DirectorStockUnitsMember2022-01-012022-06-3000017124632021-03-310001712463us-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001712463us-gaap:CommonClassAMember2021-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberpack:InterestRateSwapTwoMemberus-gaap:CashFlowHedgingMemberpack:FirstLienTermFacilityMember2022-06-300001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001712463us-gaap:StandbyLettersOfCreditMember2022-06-300001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001712463us-gaap:CustomerRelationshipsMembersrt:WeightedAverageMember2022-01-012022-06-300001712463pack:RestrictedStockUnitsandPerformancebasedRestrictedStockUnitsMember2022-04-012022-06-300001712463us-gaap:AccountingStandardsUpdate201409Memberpack:EuropeAsiaMember2021-04-012021-06-300001712463us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-06-300001712463us-gaap:CommonClassAMember2022-04-012022-06-300001712463pack:EuropeAndAsiaSegmentMember2021-04-012021-06-300001712463us-gaap:AdditionalPaidInCapitalMember2022-06-300001712463us-gaap:CommonClassCMember2022-04-012022-06-300001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001712463us-gaap:RetainedEarningsMember2020-12-310001712463us-gaap:RestrictedStockUnitsRSUMember2022-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherAssetsMemberus-gaap:InterestRateSwapMember2022-06-300001712463pack:PerformanceBasedRestrictedStockUnitsMember2022-06-300001712463pack:InterestRateSwapFourMember2022-02-280001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-300001712463us-gaap:MachineryAndEquipmentMember2021-12-3100017124632021-06-300001712463us-gaap:AccountingStandardsUpdate201409Member2021-04-012021-06-3000017124632022-01-012022-03-310001712463us-gaap:ProductAndServiceOtherMember2021-01-012021-06-300001712463pack:FirstLienDollarTermFacilityMember2021-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:InterestRateSwapMember2021-12-3100017124632022-06-300001712463us-gaap:TechnologyBasedIntangibleAssetsMembersrt:WeightedAverageMember2022-01-012022-06-300001712463us-gaap:CommonClassCMember2022-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:InterestRateSwapMember2022-06-3000017124632021-04-012021-06-300001712463us-gaap:CustomerRelationshipsMembersrt:WeightedAverageMember2021-01-012021-12-310001712463us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-310001712463srt:NorthAmericaMemberus-gaap:AccountingStandardsUpdate201409Member2021-01-012021-06-300001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2021-12-310001712463us-gaap:RetainedEarningsMember2022-06-300001712463pack:ComputerandOfficeEquipmentMember2022-06-300001712463us-gaap:RetainedEarningsMember2022-01-012022-03-310001712463us-gaap:AccountingStandardsUpdate201602Member2022-01-012022-06-300001712463us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2021-04-012021-06-300001712463us-gaap:LineOfCreditMemberpack:FirstLienTermFacilityMember2021-12-310001712463us-gaap:CommonClassCMember2021-06-300001712463us-gaap:AdditionalPaidInCapitalMember2021-03-310001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2022-06-300001712463pack:MachineLeaseMember2022-01-012022-06-300001712463srt:NorthAmericaMemberus-gaap:AccountingStandardsUpdate201409Member2021-04-012021-06-300001712463us-gaap:ForeignLineOfCreditMemberpack:FirstLienTermFacilityMember2021-12-310001712463us-gaap:CommonClassCMember2020-12-310001712463pack:OneMadisonGroupLLCMember2022-04-012022-06-300001712463us-gaap:ForeignLineOfCreditMemberpack:FirstLienTermFacilityMember2019-06-030001712463us-gaap:BuildingAndBuildingImprovementsMember2021-12-310001712463pack:EuropeSegmentMember2021-12-310001712463us-gaap:CustomerRelationshipsMember2022-06-300001712463us-gaap:RetainedEarningsMember2021-01-012021-03-310001712463pack:PaperMember2021-01-012021-06-300001712463us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2022-01-012022-06-300001712463us-gaap:SubsequentEventMemberus-gaap:CommonClassAMember2022-07-262022-07-260001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:InterestRateSwapMember2021-12-310001712463pack:DepreciationandAmortizationMember2021-01-012021-06-300001712463us-gaap:CostOfSalesMember2021-01-012021-06-300001712463pack:ComputerandOfficeEquipmentMember2021-12-310001712463us-gaap:RetainedEarningsMember2021-12-310001712463us-gaap:CustomerRelationshipsMember2021-12-3100017124632021-12-310001712463pack:NoCustomerMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-06-300001712463us-gaap:RetainedEarningsMember2021-03-310001712463us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-06-300001712463us-gaap:FairValueInputsLevel2Member2021-12-310001712463us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberpack:AccruedLiabilitiesAndOtherMemberus-gaap:InterestRateSwapMember2021-12-310001712463pack:EuropeAndAsiaSegmentMember2021-12-310001712463us-gaap:CommonClassAMember2020-12-310001712463pack:RestrictedStockUnitsandPerformancebasedRestrictedStockUnitsMember2022-01-012022-06-300001712463us-gaap:CommonClassCMember2021-04-012021-06-300001712463us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LineOfCreditMemberpack:FirstLienCreditAgreementMember2022-01-012022-06-300001712463us-gaap:CommonClassAMember2022-01-012022-06-300001712463us-gaap:CommonClassCMember2022-03-310001712463us-gaap:RevenueFromContractWithCustomerMemberpack:NoCustomerMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-06-300001712463pack:PaperMember2022-04-012022-06-300001712463pack:RealizedGainLossOnCrossCurrencySwapMember2022-06-300001712463us-gaap:AccountingStandardsUpdate201409Member2021-01-012021-06-300001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001712463us-gaap:ProductAndServiceOtherMember2022-01-012022-06-300001712463us-gaap:CostOfSalesMember2022-01-012022-06-300001712463us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2022-04-012022-06-300001712463srt:MaximumMemberpack:PerformanceBasedRestrictedStockUnitsMember2022-01-012022-06-300001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001712463pack:EuropeSegmentMember2022-01-012022-06-3000017124632022-01-012022-06-3000017124632019-01-012019-12-310001712463pack:AccumulatedGainLossOnCrossCurrencySwapMember2022-01-012022-06-300001712463pack:InterestRateSwapFourMember2022-04-012022-04-300001712463us-gaap:LineOfCreditMemberus-gaap:EurodollarMemberpack:FirstLienCreditAgreementMember2022-01-012022-06-300001712463us-gaap:AccumulatedTranslationAdjustmentMember2021-12-3100017124632021-01-012021-03-310001712463pack:InterestRateSwapTwoMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMember2022-06-300001712463us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-3100017124632020-12-310001712463srt:MaximumMemberpack:NoCustomerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2021-01-012021-12-310001712463us-gaap:CommonClassAMember2022-06-300001712463pack:TwoThousandTwentyOneLtipPrsusMembersrt:MinimumMember2022-01-012022-06-30iso4217:EURutr:Ratexbrli:purepack:Segmentxbrli:sharesiso4217:USDxbrli:sharesiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM  i 10-Q

 

(Mark One)

 i 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended  i June 30,  i 2022 / 

or

 i 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________.

Commission File Number  i 001-38348

 

 i RANPAK HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

 

 

 i Delaware

 i 98-1377160

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

 

 i 7990 Auburn Road

 i Concord Township,  i Ohio  i 44077

(Address of principal executive offices) (Zip Code)

 

( i 440)  i 354-4445

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and formal fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

 i Class A Ordinary Shares, par value $0.0001 per share

 i PACK

 i New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  i Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  i Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 i Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 i 

Emerging growth company

 i 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  i  No ☒

 

As of July 26, 2022, the registrant had  i 79,052,587 of its Class A common shares, $0.0001 par value per share, outstanding and  i 2,921,099 of its Class C common shares, $0.0001 par value per share, outstanding.

 

 


 

Ranpak Holdings Corp.

Quarterly Report on Form 10-Q

For the Period Ended June 30, 2022

 

Table of Contents

 

 

 

Page

Part I – Financial Information

 

1

Item 1. Condensed Consolidated Financial Statements (Unaudited)

 

1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

39

Item 4. Controls and Procedures

 

40

Part II – Other Information

 

40

Item 1. Legal Proceedings

 

40

Item 1A. Risk Factors

 

40

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

40

Item 3. Defaults Upon Senior Securities

 

40

Item 4. Mine Safety Disclosures

 

40

Item 5. Other Information

 

40

Item 6. Exhibits

 

41

Signatures

 

42

 

 


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Index to Unaudited Condensed Consolidated Financial Statements

Ranpak Holdings Corp.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021

Unaudited Condensed Consolidated Balance Sheets – June 30, 2022 and December 31, 2021

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021

Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021

Notes to the Unaudited Condensed Consolidated Financial Statements

 

 

1


 

Ranpak Holdings Corp.

Unaudited Condensed Consolidated Statements of Operations

and Comprehensive Income (Loss)

(in millions, except share and per share data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Paper revenue

 

$

 i 70.2

 

 

$

 i 73.5

 

 

$

 i 136.4

 

 

$

 i 148.3

 

Machine lease revenue

 

 

 i 12.5

 

 

 

 i 12.4

 

 

 

 i 24.7

 

 

 

 i 23.2

 

Other revenue

 

 

 i 4.1

 

 

 

 i 4.1

 

 

 

 i 8.2

 

 

 

 i 6.2

 

Net revenue

 

 

 i 86.8

 

 

 

 i 90.0

 

 

 

 i 169.3

 

 

 

 i 177.7

 

Cost of goods sold

 

 

 i 58.5

 

 

 

 i 54.3

 

 

 

 i 116.4

 

 

 

 i 105.7

 

Gross profit

 

 

 i 28.3

 

 

 

 i 35.7

 

 

 

 i 52.9

 

 

 

 i 72.0

 

Selling, general and administrative expenses

 

 

 i 30.3

 

 

 

 i 24.6

 

 

 

 i 60.0

 

 

 

 i 43.7

 

Depreciation and amortization expense

 

 

 i 8.0

 

 

 

 i 8.7

 

 

 

 i 16.2

 

 

 

 i 17.4

 

Other operating expense, net

 

 

 i 1.4

 

 

 

 i 1.3

 

 

 

 i 1.9

 

 

 

 i 2.1

 

Income (loss) from operations

 

 

( i 11.4

)

 

 

 i 1.1

 

 

 

( i 25.2

)

 

 

 i 8.8

 

Interest expense

 

 

 i 4.9

 

 

 

 i 6.0

 

 

 

 i 9.9

 

 

 

 i 11.6

 

Foreign currency (gain) loss

 

 

( i 2.3

)

 

 

 i 1.2

 

 

 

( i 2.9

)

 

 

( i 2.4

)

Loss before income tax benefit

 

 

( i 14.0

)

 

 

( i 6.1

)

 

 

( i 32.2

)

 

 

( i 0.4

)

Income tax benefit

 

 

( i 2.7

)

 

 

( i 0.9

)

 

 

( i 6.8

)

 

 

( i 1.5

)

Net income (loss)

 

$

( i 11.3

)

 

$

( i 5.2

)

 

$

( i 25.4

)

 

$

 i 1.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Two-class method

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.01

 

Diluted

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.01

 

Class A – earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.01

 

Diluted

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.01

 

Class C – earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.02

 

Diluted

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding – Class A and C

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 i 81,943,235

 

 

 

 i 77,653,610

 

 

 

 i 81,759,372

 

 

 

 i 75,617,785

 

Diluted

 

 

 i 81,943,235

 

 

 

 i 77,653,610

 

 

 

 i 81,759,372

 

 

 

 i 77,028,319

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), before tax

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

$

( i 11.7

)

 

$

 i 2.2

 

 

$

( i 14.5

)

 

$

( i 6.2

)

Interest rate swap adjustments

 

 

 i 2.7

 

 

 

 i 0.6

 

 

 

 i 10.8

 

 

 

 i 3.2

 

Cross-currency swap adjustments

 

 

 i 4.2

 

 

 

 i -

 

 

 

 i 4.3

 

 

 

 i -

 

Total other comprehensive income (loss), before tax

 

 

( i 4.8

)

 

 

 i 2.8

 

 

 

 i 0.6

 

 

 

( i 3.0

)

Provision for income taxes related to other comprehensive income (loss)

 

 

 i 1.7

 

 

 

 i 0.2

 

 

 

 i 3.7

 

 

 

 i 0.8

 

Total other comprehensive income (loss), net of tax

 

 

( i 6.5

)

 

 

 i 2.6

 

 

 

( i 3.1

)

 

 

( i 3.8

)

Comprehensive loss, net of tax

 

$

( i 17.8

)

 

$

( i 2.6

)

 

$

( i 28.5

)

 

$

( i 2.7

)

 

See notes to unaudited condensed consolidated financial statements.

2


 

Ranpak Holdings Corp.

Unaudited Condensed Consolidated Balance Sheets

(in millions, except share data)

 

 

 

June 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

 i 59.2

 

 

$

 i 103.9

 

Accounts receivable, net

 

 

 i 42.8

 

 

 

 i 43.7

 

Inventories, net

 

 

 i 42.8

 

 

 

 i 32.9

 

Income tax receivable

 

 

 i 6.3

 

 

 

 i 2.7

 

Prepaid expenses and other current assets

 

 

 i 20.3

 

 

 

 i 8.3

 

Total current assets

 

 

 i 171.4

 

 

 

 i 191.5

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

 i 120.4

 

 

 

 i 126.3

 

Operating lease right-of-use assets, net

 

 

 i 5.1

 

 

 

 i 6.6

 

Goodwill

 

 

 i 444.1

 

 

 

 i 453.0

 

Intangible assets, net

 

 

 i 384.9

 

 

 

 i 406.5

 

Deferred tax assets

 

 

 i -

 

 

 

 i 0.1

 

Other assets

 

 

 i 38.0

 

 

 

 i 29.4

 

Total assets

 

$

 i 1,163.9

 

 

$

 i 1,213.4

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

 i 31.4

 

 

$

 i 33.5

 

Accrued liabilities and other

 

 

 i 18.0

 

 

 

 i 31.5

 

Current portion of long-term debt

 

 

 i 0.9

 

 

 

 i 1.0

 

Operating lease liabilities, current

 

 

 i 1.9

 

 

 

 i 2.4

 

Deferred machine fee revenue

 

 

 i 1.4

 

 

 

 i 3.1

 

Total current liabilities

 

 

 i 53.6

 

 

 

 i 71.5

 

 

 

 

 

 

 

 

Long-term debt

 

 

 i 388.2

 

 

 

 i 400.4

 

Deferred tax liabilities

 

 

 i 95.3

 

 

 

 i 97.7

 

Derivative instruments

 

 

 i -

 

 

 

 i 2.4

 

Operating lease liabilities, non-current

 

 

 i 3.3

 

 

 

 i 4.3

 

Other liabilities

 

 

 i 4.6

 

 

 

 i 0.9

 

Total liabilities

 

 

 i 545.0

 

 

 

 i 577.2

 

 

 

 

 

 

 

 

Commitments and contingencies – Note 13

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Class A common stock, $ i  i 0.0001 /  par,  i  i 200,000,000 /  shares

 

 

 

 

 

 

authorized at June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Shares issued and outstanding:  i  i 79,039,192 /  and  i  i 78,482,024 / 

 

 

 

 

 

 

at June 30, 2022 and December 31, 2021, respectively

 

 

 i -

 

 

 

 i -

 

Class C common stock, $ i  i 0.0001 /  par,  i  i 200,000,000 /  shares

 

 

 

 

 

 

authorized at June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Shares issued and outstanding:  i  i  i  i 2,921,099 /  /  / 

 

 

 

 

 

 

at June 30, 2022 and December 31, 2021

 

 

 i -

 

 

 

 i -

 

Additional paid-in capital

 

 

 i 700.1

 

 

 

 i 688.9

 

Accumulated deficit

 

 

( i 80.7

)

 

 

( i 55.3

)

Accumulated other comprehensive income (loss)

 

 

( i 0.5

)

 

 

 i 2.6

 

Total shareholders' equity

 

 

 i 618.9

 

 

 

 i 636.2

 

Total liabilities and shareholders' equity

 

$

 i 1,163.9

 

 

$

 i 1,213.4

 

 

See notes to unaudited condensed consolidated financial statements.

3


Ranpak Holdings Corp.

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

(in millions, except share data)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class C

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Accumulated Earnings (Deficit)

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total

 

Balance at December 31, 2020

 

 

 i 69,005,059

 

 

$

-

 

 

 

 i 6,511,293

 

 

$

-

 

 

$

 i 564.7

 

 

$

( i 52.5

)

 

$

 i 10.7

 

 

$

 i 522.9

 

Stock-based awards vested and distributed

 

 

 i 332,718

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

( i 1.7

)

 

 

-

 

 

 

-

 

 

 

( i 1.7

)

Issue Director shares

 

 

 i 5,584

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of restricted stock units

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 i 2.7

 

 

 

-

 

 

 

-

 

 

 

 i 2.7

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 i 6.3

 

 

 

-

 

 

 

 i 6.3

 

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

( i 6.4

)

 

 

( i 6.4

)

Balance at March 31, 2021

 

 

 i 69,343,361

 

 

$

-

 

 

 

 i 6,511,293

 

 

$

-

 

 

$

 i 565.7

 

 

$

( i 46.2

)

 

$

 i 4.3

 

 

$

 i 523.8

 

Shareholder conversion of Class C to Class A

 

 

 i 3,590,194

 

 

 

-

 

 

 

( i 3,590,194

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

May 2021 Equity Offering

 

 

 i 5,250,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 i 103.4

 

 

 

-

 

 

 

-

 

 

 

 i 103.4

 

Stock-based awards vested and distributed

 

 

 i 202,414

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Issue Director shares

 

 

 i 83,954

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of restricted stock units

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 i 4.7

 

 

 

-

 

 

 

-

 

 

 

 i 4.7

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

( i 5.2

)

 

 

-

 

 

 

( i 5.2

)

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 i 2.6

 

 

 

 i 2.6

 

Balance at June 30, 2021

 

 

 i 78,469,923

 

 

$

-

 

 

 

 i 2,921,099

 

 

$

-

 

 

$

 i 673.8

 

 

$

( i 51.4

)

 

$

 i 6.9

 

 

$

 i 629.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

 i 78,482,024

 

 

$

-

 

 

 

 i 2,921,099

 

 

$

-

 

 

$

 i 688.9

 

 

$

( i 55.3

)

 

$

 i 2.6

 

 

$

 i 636.2

 

Stock-based awards vested and distributed

 

 

 i 521,719

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

( i 2.9

)

 

 

-

 

 

 

-

 

 

 

( i 2.9

)

Issue Director shares

 

 

 i 2,495

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of restricted stock units

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 i 8.8

 

 

 

-

 

 

 

-

 

 

 

 i 8.8

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

( i 14.1

)

 

 

-

 

 

 

( i 14.1

)

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 i 3.4

 

 

 

 i 3.4

 

Balance at March 31, 2022

 

 

 i 79,006,238

 

 

$

-

 

 

 

 i 2,921,099

 

 

$

-

 

 

$

 i 694.8

 

 

$

( i 69.4

)

 

$

 i 6.0

 

 

$

 i 631.4

 

Stock-based awards vested and distributed

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Issue Director shares

 

 

 i 32,954

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of restricted stock units

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 i 5.3

 

 

 

-

 

 

 

-

 

 

 

 i 5.3

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

( i 11.3

)

 

 

-

 

 

 

( i 11.3

)

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

( i 6.5

)

 

 

( i 6.5

)

Balance at June 30, 2022

 

 

 i 79,039,192

 

 

$

-

 

 

 

 i 2,921,099

 

 

$

-

 

 

$

 i 700.1

 

 

$

( i 80.7

)

 

$

( i 0.5

)

 

$

 i 618.9

 

 

See notes to unaudited condensed consolidated financial statements.

4


 

Ranpak Holdings Corp.

Unaudited Condensed Consolidated Statements of Cash Flows

(in millions)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Net income (loss)

 

$

( i 25.4

)

 

$

 i 1.1

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

 i 36.6

 

 

 

 i 35.9

 

Amortization of deferred financing costs

 

 

 i 0.7

 

 

 

 i 1.1

 

Loss on disposal of fixed assets

 

 

 i 0.2

 

 

 

 i 0.7

 

Deferred income taxes

 

 

( i 4.4

)

 

 

( i 2.4

)

Amortization of initial value of interest rate swap

 

 

( i 0.4

)

 

 

( i 0.4

)

Currency gain on foreign denominated debt and notes payable

 

 

( i 2.6

)

 

 

( i 2.6

)

Amortization of restricted stock units

 

 

 i 14.1

 

 

 

 i 7.4

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

(Increase) decrease in receivables, net

 

 

( i 2.4

)

 

 

( i 0.9

)

(Increase) decrease in inventory

 

 

( i 10.3

)

 

 

( i 9.2

)

(Increase) decrease in prepaid expenses and other assets

 

 

( i 4.4

)

 

 

 i 0.1

 

Increase (decrease) in accounts payable

 

 

( i 1.1

)

 

 

 i 7.5

 

Increase (decrease) in accrued liabilities

 

 

( i 6.1

)

 

 

 i 0.8

 

Change in other assets and liabilities

 

 

( i 10.8

)

 

 

( i 8.3

)

Net cash provided by (used in) operating activities

 

 

( i 16.3

)

 

 

 i 30.8

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

Converter equipment

 

 

( i 17.1

)

 

 

( i 21.9

)

Other capital expenditures

 

 

( i 5.7

)

 

 

( i 4.3

)

Total capital expenditures

 

 

( i 22.8

)

 

 

( i 26.2

)

Patent and trademark expenditures

 

 

( i 1.0

)

 

 

( i 0.6

)

Net cash used in investing activities

 

 

( i 23.8

)

 

 

( i 26.8

)

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

Proceeds from equity offerings, gross

 

 

 i -

 

 

 

 i 104.0

 

Prepayments on term loan

 

 

 i -

 

 

 

( i 20.9

)

Transaction costs of equity offerings

 

 

 i -

 

 

 

( i 0.6

)

Principal payments on term loans

 

 

( i 0.8

)

 

 

( i 0.8

)

Payments on finance lease liabilities

 

 

( i 0.4

)

 

 

( i 0.3

)

Exit Payment

 

 

 i -

 

 

 

( i 8.2

)

Tax payments for withholdings on stock-based awards distributed

 

 

( i 2.5

)

 

 

 i -

 

Net cash provided by (used in) financing activities

 

 

( i 3.7

)

 

 

 i 73.2

 

 

 

 

 

 

 

 

Effect of Exchange Rate Changes on Cash

 

 

( i 0.9

)

 

 

( i 0.4

)

Net Increase (Decrease) in Cash and Cash Equivalents

 

 

( i 44.7

)

 

 

 i 76.8

 

Cash and Cash Equivalents, beginning of period

 

 

 i 103.9

 

 

 

 i 48.5

 

Cash and Cash Equivalents, end of period

 

$

 i 59.2

 

 

$

 i 125.3

 

 

See notes to unaudited condensed consolidated financial statements.

5


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 i 

Note 1 Nature of Operations

Ranpak Holdings Corp. is a leading provider of environmentally sustainable, systems-based, product protection solutions for e-Commerce and industrial supply chains. Through proprietary protective packaging solutions (“PPS”) systems and paper consumables, the Company offers a full suite of protective packaging solutions. The Automated Solutions (“AS”) and Automated Paper Solutions (“APS”) (collectively, “Automation”) product lines provide end-of-line automation systems that solve distinct challenges facing end-users. The Company’s business is global, with a strong presence in the United States and Europe. Throughout this report, when we refer to “Ranpak,” the “Company,” “we,” “our,” or “us,” we are referring to Ranpak Holdings Corp. and all of our subsidiaries, except where the context indicates otherwise.

 i 

Note 2 Basis of Presentation and Summary of Significant Accounting Policies

Unaudited Interim Financial Statements These interim unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for each of the three years ended December 31, 2021, 2020, and 2019, which are included in our Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 10-K”). The three months ended June 30, 2022 may be further referred to herein as the “second quarter of 2022.” The three months ended June 30, 2021 may be further referred to herein as the “second quarter of 2021.”

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with instructions to Form 10-Q and Rule 10-01 of the Securities and Exchange Commission (“SEC”) Regulation S-X as they apply to interim financial information. Accordingly, the unaudited interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements, although we believe that the disclosures made are adequate to make the information not misleading.

The interim condensed consolidated financial statements are unaudited but, in our opinion, include all adjustments that are necessary for a fair statement of operations and financial position for the periods presented. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.

 i Principles of Consolidation — The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries prepared in conformity with GAAP. All intercompany balances and transactions have been eliminated in consolidation and certain immaterial prior year amounts have been reclassified consistent with current year presentation. All amounts are in millions, except share and per share amounts and are approximate due to rounding.

 i 

Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and such differences could be material.

 i 

Foreign Currency — The nature of business activities involves the management of various financial and market risks, including those related to changes in foreign currency exchange rates. The functional currency of our operating subsidiaries outside the U.S. is the applicable local currency. For those operations, assets and liabilities are translated into U.S. dollars at period-end exchange rates and revenues and expenses are translated into U.S. dollars using average monthly exchange rates.

 i 

Recently Adopted Accounting Standards — We have adopted all applicable accounting standards and did not adopt any new accounting standards issued by the Financial Accounting Standards Board (“FASB”) in 2022.

Recently Issued Accounting Standards — As of June 30, 2022, it is not expected that the future adoption of any recently issued accounting pronouncements by the FASB will have a material impact on our financial position, results of operations or cash flows.

 / 
 i 

Note 3 Supplemental Balance Sheet Data and Cash Flow Information

Cash and cash equivalents — Cash and cash equivalents include securities with original maturities of three months or less and cash in banks. In June 2021, we invested in a money market fund, which is classified as a cash equivalent because of its short-term, highly liquid nature that is readily convertible to cash. Unrealized gains or losses are included in other operating non-operating expense (income), net and were immaterial in all periods presented. The balance was approximately $ i 35.1 million and $ i 70.0 million at June

6


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

30, 2022 and December 31, 2021, respectively. The fair value of money market funds is considered Level 1 in the fair value hierarchy because they are securities traded in active markets. Refer to Note 10, “Fair Value Measurement” for further detail.

In May 2021, we completed a public offering of  i 4.5 million shares of Class A common stock. Additionally, the underwriters completed the exercise of an allotment option to sell an additional  i 0.8 million shares (the public offering and the allotment option collectively referred to as the “May 2021 Equity Offering”). Cash proceeds received in the May 2021 Equity Offering, net of underwriting fees, commissions, and transaction expenses, were $ i 103.4 million. We used some of the proceeds to invest in a money market fund to generate short-term cash returns. Additionally, we prepaid $ i 20.9 million of principal on the First Lien Dollar Term Facility in the June 2021 Prepayment (herein defined). Refer to Note 7, “Long-Term Debt” for further detail.

 i 

Accounts Receivable, net — The components of accounts receivable, net were as follows:

 

 

 

June 30, 2022

 

 

December 31, 2021

 

Accounts receivable

 

$

 i 43.6

 

 

$

 i 44.7

 

Allowance for doubtful accounts

 

 

( i 0.8

)

 

 

( i 1.0

)

Accounts receivable, net

 

$

 i 42.8

 

 

$

 i 43.7

 

 / 

 

At June 30, 2022 and December 31, 2021, no customer’s accounts receivable balances exceeded  i  i 10.0 / % of our accounts receivable balance.

 i 

Inventories, net — The components of inventories, net were as follows:

 

 

 

June 30, 2022

 

 

December 31, 2021

 

Raw materials

 

$

 i 17.6

 

 

$

 i 19.5

 

Work-in-process

 

 

 i 14.7

 

 

 

 i 1.2

 

Finished goods

 

 

 i 10.8

 

 

 

 i 12.5

 

Total inventories

 

 

 i 43.1

 

 

 

 i 33.2

 

Reserve for obsolescence

 

 

( i 0.3

)

 

 

( i 0.3

)

Inventories, net

 

$

 i 42.8

 

 

$

 i 32.9

 

 / 

 

 i 

Property, Plant and Equipment, net — The following table details our property, plant and equipment, net:

 

 

 

June 30, 2022

 

 

December 31, 2021

 

Land

 

$

 i 4.0

 

 

$

 i 4.1

 

Buildings and improvements

 

 

 i 8.7

 

 

 

 i 9.2

 

Machinery and equipment

 

 

 i 32.4

 

 

 

 i 22.3

 

Computer and office equipment

 

 

 i 10.6

 

 

 

 i 12.7

 

Converting machines

 

 

 i 169.3

 

 

 

 i 164.1

 

Total property, plant, and equipment

 

 

 i 225.0

 

 

 

 i 212.4

 

Accumulated depreciation

 

 

( i 104.6

)

 

 

( i 86.1

)

Property, plant, and equipment, net

 

$

 i 120.4

 

 

$

 i 126.3

 

 

Depreciation expense recorded in cost of goods sold and depreciation and amortization in the unaudited condensed consolidated statements of operations and comprehensive income (loss) was as follows:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Depreciation expense included in

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cost of goods sold

 

$

 i 9.8

 

 

$

 i 9.4

 

 

$

 i 20.4

 

 

$

 i 18.5

 

Depreciation and amortization expense

 

 

 i 0.8

 

 

 

 i 1.3

 

 

 

 i 1.7

 

 

 

 i 2.7

 

Total depreciation expense

 

$

 i 10.6

 

 

$

 i 10.7

 

 

$

 i 22.1

 

 

$

 i 21.2

 

 / 

 

 i 

Accrued Liabilities and Other – The components of accrued liabilities and other were as follows:

 

7


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 

 

June 30, 2022

 

 

December 31, 2021

 

Employee compensation

 

$

 i 1.7

 

 

$

 i 1.5

 

Taxes

 

 

 i 12.0

 

 

 

 i 6.9

 

Professional fees

 

 

 i 1.4

 

 

 

 i 4.6

 

Bonus

 

 

 i 0.5

 

 

 

 i 10.1

 

Interest

 

 

 i 1.5

 

 

 

 i 1.7

 

Interest rate swap liability, current portion

 

 

 i -

 

 

 

 i 3.8

 

Other

 

 

 i 0.9

 

 

 

 i 2.9

 

Accrued liabilities and other

 

$

 i 18.0

 

 

$

 i 31.5

 

 / 
 i 

Supplemental Cash Flow Information — Supplemental cash flow information is as follows:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid

 

$

 i 5.2

 

 

$

 i 5.4

 

 

$

 i 10.3

 

 

$

 i 10.9

 

Income taxes paid

 

$

 i 1.1

 

 

$

 i 4.3

 

 

$

 i 1.8

 

 

$

 i 5.0

 

Non-cash investing activities

 

 

 

 

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for lease liabilities

 

$

 i 0.2

 

 

$

 i 1.7

 

 

$

 i 0.3

 

 

$

 i 10.6

 

Capital expenditures in accounts payable

 

 i 

 

 

 i 

 

 

$

 i 0.9

 

 

$

 i 0.4

 

 / 
 / 

 

 i 

Note 4 Segment and Geographic Information

In accordance with ASC 280, Segment Reporting (“ASC 280”), we determined we have  i two operating segments which are aggregated into  i one reportable segment, Ranpak. The chief operating decision maker assesses the Company’s performance and allocates resources based on the Company’s consolidated financial information. The aggregation of the two operating segments is based on the Company’s determination that, per ASC 280, the operating segments have similar economic characteristics, and are similar in all of the following areas: the nature of products and services, the nature of production processes, the type or class of customer for their products or services, and the methods used to distribute their products or provide their services. In addition, the operating segments were aggregated for purposes of determining whether segments meet the quantitative threshold for separate reporting.

 i 

We attribute revenue and gross profit to individual countries based on the selling location. Our products are primarily sold from North America and Europe. As previously noted, segment gross profit includes certain depreciation and amortization expenses that are included in cost of goods sold.

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

 i 34.3

 

 

$

 i 35.7

 

 

$

 i 65.2

 

 

$

 i 63.8

 

Europe/Asia

 

 

 i 52.5

 

 

 

 i 54.3

 

 

 

 i 104.1

 

 

 

 i 113.9

 

Net revenue

 

 

 i 86.8

 

 

 

 i 90.0

 

 

 

 i 169.3

 

 

 

 i 177.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment gross profit

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

 i 11.0

 

 

 

 i 13.5

 

 

 

 i 20.9

 

 

 

 i 23.1

 

Europe/Asia

 

 

 i 17.3

 

 

 

 i 22.2

 

 

 

 i 32.0

 

 

 

 i 48.9

 

Gross profit

 

 

 i 28.3

 

 

 

 i 35.7

 

 

 

 i 52.9

 

 

 

 i 72.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses excluded from segment gross profit

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

 i 30.3

 

 

 

 i 24.6

 

 

 

 i 60.0

 

 

 

 i 43.7

 

Depreciation and amortization expense

 

 

 i 8.0

 

 

 

 i 8.7

 

 

 

 i 16.2

 

 

 

 i 17.4

 

Other operating expense, net

 

 

 i 1.4

 

 

 

 i 1.3

 

 

 

 i 1.9

 

 

 

 i 2.1

 

Interest expense

 

 

 i 4.9

 

 

 

 i 6.0

 

 

 

 i 9.9

 

 

 

 i 11.6

 

Foreign currency (gain) loss

 

 

( i 2.3

)

 

 

 i 1.2

 

 

 

( i 2.9

)

 

 

( i 2.4

)

Loss before income tax benefit

 

$

( i 14.0

)

 

$

( i 6.1

)

 

$

( i 32.2

)

 

$

( i 0.4

)

 

Our customers are not concentrated in any specific geographic region. During the six months ended June 30, 2022 and 2021, no customers exceeded  i  i 10 / % of net revenue.

The following table presents our long-lived assets by geographic region:

8


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 

 

 

June 30, 2022

 

 

December 31, 2021

 

North America

 

$

 i 64.8

 

 

$

 i 62.1

 

Europe/Asia

 

 

 i 60.7

 

 

 

 i 64.2

 

Total long-lived assets

 

$

 i 125.5

 

 

$

 i 126.3

 

 / 
 / 

 

 i 

Note 5 Revenue Recognition, Contracts with Customers

Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received in exchange for those goods or services. Revenue for paper consumables is recognized based on shipping terms, which is the point in time the customer obtains control of the promised goods. Revenue for equipment sales is recognized based on an input method, based on percentage of completion of cost and effort incurred. Maintenance revenue is recognized straight-line on the basis that the level of effort is consistent over the term of the contract. Lease components within contracts with customers are recognized in accordance with ASC 842. Our contract durations are twelve months or less and lease revenues beyond twelve months are not estimable.

Sales, value-added, and other taxes collected from customers and remitted to governmental authorities are excluded from revenue.

Our paper consumables, automation equipment, and maintenance services are determined to be distinct performance obligations. Free on loan and leased equipment is typically identified as a separate lease component in scope of ASC 842. In association to the sale of automation equipment, we sell other goods and services, such as extended warranties, preventative maintenance services, spare parts and spare part packages, and consulting services.

We have forms of variable consideration present in our contracts with customers, including rebates and other discounts. We estimate variable consideration using either the expected value method or the most likely amount method. We include in the transaction price some or all of an amount of variable consideration estimated to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The time between when a performance obligation is satisfied and when billing and payment occur is closely aligned and performance obligations do not extend beyond one year. As the transfer of control of our products results in an unconditional right to receive consideration, we did  i  i no / t record contract assets as of June 30, 2022 and December 31, 2021.

Deferred revenue represents contractual amounts received from customers that exceed percentage of project completion that is in excess of costs incurred for automation equipment sales, as well as prepayments for machine fees. Customers prepay machine fees quarterly, which are deferred and then recognized as the performance obligations are satisfied over the next quarter.  i Our enforceable contractual obligations have durations of less than one year and are included in current liabilities on the unaudited condensed consolidated balance sheets. Changes in deferred revenue were as follows:

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

Beginning balance

 

$

 i 3.1

 

Deferral of revenue

 

 

 i 5.6

 

Recognition of revenue

 

 

( i 7.3

)

Ending balance

 

$

 i 1.4

 

 

9


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 i 

In addition to the disaggregation of revenue between paper, machine lease, and other revenue, we also disaggregate our revenue by segment geography to assist in evaluating the nature, timing, and uncertainty of revenue and cash flows that may be impacted by economic factors:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

ASC 606

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

 i 28.6

 

 

$

 i 30.6

 

 

$

 i 54.2

 

 

$

 i 54.2

 

Europe/Asia

 

 

 i 45.7

 

 

 

 i 47.0

 

 

 

 i 90.4

 

 

 

 i 100.3

 

Total paper and other revenue

 

$

 i 74.3

 

 

$

 i 77.6

 

 

$

 i 144.6

 

 

$

 i 154.5

 

ASC 842

 

 

 

 

 

 

 

 

 

 

 

 

Machine lease revenue

 

$

 i 12.5

 

 

$

 i 12.4

 

 

$

 i 24.7

 

 

$

 i 23.2

 

Net revenue

 

$

 i 86.8

 

 

$

 i 90.0

 

 

$

 i 169.3

 

 

$

 i 177.7

 

 / 

 

North America consists of the United States, Canada and Mexico, among others; Europe/Asia consists of European, Asian (including China), Pacific Rim, South American and African countries, among others.

 / 
 i 

Note 6 Goodwill, Long-Lived and Intangible Assets, Net

Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of purchase price over the fair value of net assets acquired. Trademarks and trade names are accounted for as indefinite-lived intangible assets and, accordingly, are not subject to amortization. We review goodwill on a reporting unit basis and indefinite-lived assets for impairment annually on October 1st and on an interim basis whenever events or changes in circumstances indicate the carrying value of goodwill or indefinite-lived intangible assets may be impaired.

We assessed whether events or circumstances indicate that it was more likely than not that our goodwill and indefinite-lived intangible assets were impaired as of June 30, 2022. The goodwill and indefinite-lived intangible assets assessments included consideration of key factors such as macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity-and reporting unit-specific events. We concluded that it is more likely than not that the fair value of our reporting units and indefinite-lived intangible assets exceeded their carrying values at June 30, 2022.

 i 

The following table shows our goodwill balances by operating segment that are aggregated into one reportable segment:

 

 

 

North America

 

 

Europe

 

 

Total

 

Balance at December 31, 2021

 

 

 i 338.8

 

 

 

 i 114.2

 

 

 

 i 453.0

 

Currency translation

 

 

 i -

 

 

 

( i 8.9

)

 

 

( i 8.9

)

Balance at June 30, 2022

 

$

 i 338.8

 

 

$

 i 105.3

 

 

$

 i 444.1

 

 / 

 

Finite-Lived Intangible Assets, net

Finite-lived or amortizable intangible assets consist of patented and unpatented technology, customer/distributor relationships, and other intellectual property.

Impairment of Long-lived Assets

We review our long-lived assets, including amortizable intangible assets and property, plant and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. For long-lived assets, an impairment loss is indicated when the undiscounted cash flows estimated to be generated by the asset group are not sufficient to recover the unamortized balance of the asset group. If indicators exist, the loss is measured as the excess of carrying value over the asset group’s fair value, as determined based on discounted future cash flows, asset appraisal and market values of similar assets. As of June 30, 2022, there were no indicators of impairment present for property, plant and equipment or amortizable intangible assets that required us to test for recoverability.

10


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 i 

The following tables summarize our identifiable intangible assets, net with definite and indefinite useful lives:

 

 

 

June 30, 2022

 

 

December 31, 2021

 

 

 

Gross Carrying Amount

 

 

Accumulated Amortization

 

 

Net

 

 

Gross Carrying Amount

 

 

Accumulated Amortization

 

 

Net

 

Customer/distributor relationships

 

$

 i 192.8

 

 

$

( i 39.5

)

 

$

 i 153.3

 

 

$

 i 201.7

 

 

$

( i 34.6

)

 

$

 i 167.1

 

Patented/unpatented technology

 

 

 i 172.2

 

 

 

( i 47.5

)

 

 

 i 124.7

 

 

 

 i 171.9

 

 

 

( i 39.4

)

 

 

 i 132.5

 

Intellectual property

 

 

 i 0.6

 

 

 

( i 0.1

)

 

 

 i 0.5

 

 

 

 i 0.6

 

 

 

( i 0.1

)

 

 

 i 0.5

 

Total definite-lived intangible assets

 

 

 i 365.6

 

 

 

( i 87.1

)

 

 

 i 278.5

 

 

 

 i 374.2

 

 

 

( i 74.1

)

 

 

 i 300.1

 

Trademarks/tradenames with indefinite lives

 

 

 i 106.4

 

 

 

 i -

 

 

 

 i 106.4

 

 

 

 i 106.4

 

 

 

 i -

 

 

 

 i 106.4

 

Identifiable intangible assets, net

 

$

 i 472.0

 

 

$

( i 87.1

)

 

$

 i 384.9

 

 

$

 i 480.6

 

 

$

( i 74.1

)

 

$

 i 406.5

 

 / 

 

 i 

The following table shows the remaining estimated amortization expense for our definite-lived intangible assets at June 30, 2022:

 

Year

 

Amount

 

2022

 

$

 i 14.4

 

2023

 

 

 i 28.9

 

2024

 

 

 i 28.8

 

2025

 

 

 i 28.3

 

2026

 

 

 i 27.9

 

Thereafter

 

 

 i 150.2

 

 

 

$

 i 278.5

 

 / 

 

Amortization expense was $ i 7.2 million and $ i 7.4 million in the second quarter of 2022 and 2021, respectively. Amortization expense was $ i 14.5 million and $ i 14.7 million in the six months ended June 30, 2022 and 2021, respectively.

 i 

The following table shows the remaining weighted-average useful life of our definite lived intangible assets as of June 30, 2022:

 

 

 

Remaining Weighted-Average Useful Life

 

 

June 30, 2022

 

December 31, 2021

Customer/distributor relationships

 

 i 12 years

 

 i 12 years

Patented/unpatented technology

 

 i 8 years

 

 i 9 years

Intellectual property

 

 i 7 years

 

 i 7 years

Total identifiable assets, net with definite lives

 

 i 10 years

 

 i 11 years

 / 
 / 

 

 i 

Note 7 Long-Term Debt

Ranger Pledgor LLC, a Delaware limited liability company (“Holdings”), Ranger Packaging LLC, a Delaware limited liability company (the “U.S. Borrower”), and Ranpak B.V., a private limited liability company under the laws of the Netherlands (the “Dutch Borrower” and together with the U.S. Borrower, the “Borrowers”), entered into a First Lien Credit Agreement on June 3, 2019 that provided for senior secured credit facilities to, in part, (i) fund a business combination, (ii) repay and terminate the existing indebtedness of Rack Holdings, and (iii) pay all fees, premiums, expenses and other transaction costs incurred in connection with the foregoing. The aggregate principal amount of the senior secured credit facilities consists of a $ i 378.2 million dollar-denominated first lien term facility (the “First Lien Dollar Term Facility”), a € i 140.0 million ($ i 152.6 million equivalent) euro-denominated first lien term facility (the “First Lien Euro Term Facility” and, together with the First Lien Dollar Term Facility, the “First Lien Term Facility”) and a $ i 45.0 million revolving facility (the “Revolving Facility” and together with the First Lien Term Facility, the “Facilities”). The First Lien Term Facility matures in  i 2026 and the Revolving Facility matures in  i 2024. In June 2021, we prepaid $ i 20.9 million of principal

11


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

on the First Lien Dollar Term Facility (the “June 2021 Prepayment”). As of June 30, 2022 and December 31, 2021,  i  i no /  amounts were outstanding under the Revolving Facility.

 i 

Long-term debt consisted of the following:

 

 

 

June 30, 2022

 

 

December 31, 2021

 

First Lien Dollar Term Facility

 

$

 i 250.0

 

 

$

 i 250.0

 

First Lien Euro Term Facility

 

 

 i 142.2

 

 

 

 i 155.0

 

Finance lease liabilities

 

 

 i 1.4

 

 

 

 i 1.5

 

Deferred financing costs, net

 

 

( i 4.5

)

 

 

( i 5.1

)

Total debt

 

 

 i 389.1

 

 

 

 i 401.4

 

Less: current portion of long-term debt

 

 

( i 0.4

)

 

 

( i 0.4

)

Less: current portion of finance lease liabilities

 

 

( i 0.5

)

 

 

( i 0.6

)

Long-term debt

 

$

 i 388.2

 

 

$

 i 400.4

 

 / 

 

Borrowings under the Facilities, at the Borrowers’ option, bear interest at either (1) an adjusted eurocurrency rate or (2) a base rate, in each case plus an applicable margin. The applicable margin is  i  i 3.75 / % with respect to eurocurrency borrowings, assuming a first lien net leverage ratio of less than  i 5.00:1.00, subject to a leverage-based step-up to an applicable margin equal to  i 400 basis points for eurocurrency borrowings. The interest rate for the First Lien Dollar Term Facility as of June 30, 2022 and December 31, 2021 was  i 4.82% and  i 3.85%, respectively. The interest rate for the First Lien Euro Term Facility as of June 30, 2022 and December 31, 2021 was  i  i 3.75 / %.

The Revolving Facility includes borrowing capacity available for standby letters of credit of up to $ i 5.0 million. Any issuance of letters of credit will reduce the amount available under the Revolving Facility. As of June 30, 2022, we had $ i 0.8 million committed to outstanding letters of credit, leaving net availability under the Revolving Facility at $ i 44.2 million.

The Facilities will provide the Borrowers with the option to increase commitments under the Facilities in an aggregate amount not to exceed the greater of $ i 95.0 million and  i 100% of trailing-twelve months Consolidated EBITDA (as defined in the definitive documentation with respect to the Facilities), plus any voluntary prepayments of the debt financing (and, in the case of the Revolving Facility, to the extent such voluntary prepayments are accompanied by permanent commitment reductions under the Revolving Facility), plus unlimited amounts subject to the relevant net leverage ratio tests and certain other conditions.

The obligations of (i) the U.S. Borrower under the Facilities and certain of its obligations under hedging arrangements and cash management arrangements are unconditionally guaranteed by Holdings and each existing and subsequently acquired or organized direct or indirect wholly-owned U.S. organized restricted subsidiary of Holdings (together with Holdings, the “U.S. Guarantors”) and (ii) the Dutch Borrower under the Facilities are unconditionally guaranteed by the U.S. Borrower, the U.S. Guarantors and each existing and subsequently acquired or organized direct or indirect wholly-owned Dutch organized restricted subsidiary of Holdings (the “Dutch Guarantors”, and together with the U.S. Guarantors, the “Guarantors”), in each case, other than certain excluded subsidiaries. The Facilities are secured by (i) a first priority pledge of the equity interests of the Borrowers and of each direct, wholly-owned restricted subsidiary of any Borrower or any Guarantor and (ii) a first priority security interest in substantially all of the assets of the Borrowers and the Guarantors (in each case, subject to customary exceptions), provided that obligations of the U.S. Borrower and U.S. Guarantors under the Facilities were not secured by assets of the Dutch Borrower or any Dutch Guarantor.

The Facilities impose restrictions that require the Company to comply with or maintain certain financial tests and ratios. Such agreements restrict our ability to, among other things: (i) declare dividends or redeem or repurchase capital stock, including with respect to Class A common stock; (ii) prepay, redeem or purchase other debt; (iii) incur liens; (iv) make loans, guarantees, acquisitions and other investments; (v) incur additional indebtedness; (vi) engage in sale and leaseback transactions; (vii) amend or otherwise alter debt and other material agreements; (viii) engage in mergers, acquisitions and asset sales; (ix) engage in transactions with affiliates; and (x) enter into arrangements that would prohibit us from granting liens or restrict our ability to pay dividends, make loans or transfer assets among our subsidiaries. We were in compliance with all financial covenants as of June 30, 2022.

On February 14, 2020, the Borrowers, Holdings, certain other subsidiaries of Holdings, certain lenders party to Amendment No. 1 (as defined below) and Goldman Sachs Lending Partners LLC (the “Administrative Agent”) entered into the Amendment No. 1 to First Lien Credit Agreement (“Amendment No. 1”) to amend the First Lien Credit Agreement, dated as of June 3, 2019 among the Borrowers, Holdings, the lenders, the issuing banks and the Administrative Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).

12


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

Among other things, the Amendment No. 1 amends the Credit Agreement such that (i) the requirement of the Borrowers to apply excess cash flow to mandatorily prepay term loans under the Credit Agreement commences with the fiscal year ending December 31, 2021 (instead of the fiscal year ending December 31, 2020) and (ii) the aggregate amount per fiscal year of capital stock of any parent company of the U.S. Borrower that is held by directors, officers, management, employees, independent contractors or consultants of the U.S. Borrower (or any parent company or subsidiary thereof) that the U.S. Borrower may repurchase, redeem, retire or otherwise acquire or retire for value has been increased to the greater of $ i 10.0 million and  i 10% of Consolidated Adjusted EBITDA (as defined in the Credit Agreement) (increased from the greater of $ i 7.0 million and  i 7% of Consolidated Adjusted EBITDA) as of the last day of the most recently ended four fiscal quarter period for which financial statements have been delivered.

On July 1, 2020, we entered into a borrower assumption agreement (“Borrower Assumption Agreement”), which provided that, in the following order, (i) Rack Holdings Inc. merged with and into Ranger Packaging LLC, with Ranger Packaging LLC as the surviving entity of such merger and (ii) Ranger Packaging LLC merged with and into Ranpak Corp., with Ranpak Corp. as the surviving entity of such merger (clauses (i) and (ii) collectively, the “Reorganization”). Contemporaneously with the Reorganization, Ranger Packaging LLC, Ranpak Corp., Ranger Pledgor LLC, certain other subsidiaries of Ranger Pledgor LLC and Goldman Sachs Lending Partners LLC entered into the Borrower Assumption Agreement whereby, among other things, Ranpak Corp. assumed all obligations, liabilities and rights of Ranger Packaging LLC as the U.S. Borrower under the Facilities.

Under the First Lien Term Facility agreement, our lower leverage ratio at December 31, 2020 required us to pay our lenders an $ i 8.2 million exit payment (the “Exit Payment”), which was paid in the first quarter of 2021.

As a result of making the Exit Payment to our lenders, we became eligible to enter into the Permitted Exit Payment Amendment (as defined in the Credit Agreement) to the Credit Agreement which, among other things, would introduce additional exceptions to the negative covenant that restricts the ability of the Borrowers and their restricted subsidiaries from paying dividends and distributions or repurchasing capital stock. On July 28, 2021, the Permitted Exit Payment Amendment to the Credit Agreement became effective.

 / 
 i 

Note 8 Derivative Instruments

We use derivatives as part of the normal business operations to manage our exposure to fluctuations in interest rates associated with variable interest rate debt and fluctuations in foreign currency translation associated with our global business presence. These derivatives can help decrease the volatility of cash flows affected by changes in interest rates and foreign currency exchange rates.

On January 31, 2019, the Company entered into a business combination contingent interest rate swap in a notional amount of $ i 200.0 million (the “January 2019 Swap”) to hedge part of the floating interest rate exposure under the First Lien Dollar Term Facility. The January 2019 Swap became effective on June 3, 2019 and would have terminated on June 3, 2022. The January 2019 Swap economically converts a portion of the variable rate debt to fixed rate debt. The Company receives floating interest payments monthly based on one-month LIBOR and pays a fixed rate of  i 2.56% to the counterparty. Prior to September 25, 2019, the Company did not apply hedge accounting to the January 2019 Swap. Changes in fair value were recorded to interest expense.

On September 25, 2019, the Company amended the January 2019 Swap to extend its term to mature on June 1, 2023 and lower the rate to  i 2.31% (the “Amended January 2019 Swap”). We concurrently entered into an incremental $ i 50.0 million notional swap at  i 1.5% and maturing on June 1, 2023 (the “September 2019 Swap”).

Additionally, on September 25, 2019, we designated as cash flow hedges the Amended January 2019 Swap and the September 2019 Swap and applied hedge accounting. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Changes in fair value are recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

On March 27, 2020, we entered into an interest rate swap that amended the Amended January 2019 Swap to a lower rate of  i 2.1% and extended the maturity to June 1, 2024 (the “Second Amended January 2019 Swap”). We designated the Second Amended January 2019 Swap as a cash flow hedge and applied hedge accounting.

13


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 i 

A summary of our interest rate swaps is as follows:

 

Interest Rate Swap Agreements

 

Designation

 

Maturity Date

 

Rate

 

Notional Value

 

 

Debt Instrument Hedged

 

Percentage of Debt Instrument Outstanding

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

September 2019 Swap

 

Cash flow hedge

 

June 1, 2023

 

 i 1.50%

 

$

 i 50.0

 

 

First Lien Dollar Term Facility

 

 i 20%

Second Amended January 2019 Swap

 

Cash flow hedge

 

June 1, 2024

 

 i 2.09%

 

 

 i 200.0

 

 

First Lien Dollar Term Facility

 

 i 80%

 

 

 

 

 

 

 

 

$

 i 250.0

 

 

 

 

 i 100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

September 2019 Swap

 

Cash flow hedge

 

June 1, 2023

 

 i 1.50%

 

$

 i 50.0

 

 

First Lien Dollar Term Facility

 

 i 20%

Second Amended January 2019 Swap

 

Cash flow hedge

 

June 1, 2024

 

 i 2.09%

 

 

 i 200.0

 

 

First Lien Dollar Term Facility

 

 i 80%

 

 

 

 

 

 

 

 

$

 i 250.0

 

 

 

 

 i 100%

 / 

 

The Second Amended January 2019 Swap contains an insignificant financing element that is amortized over the term of the hedging relationship.

As of June 30, 2022, we anticipate having to reclassify $ i 2.8 million from accumulated other comprehensive income into earnings during the next twelve months to offset the variability of the hedged items during this period.

On September 1, 2021, we entered into a cross currency swap (the “September 2021 Swap”) to protect our net investment in a European subsidiary and hedge against the risk of adverse changes in the exchange rate of the Euro and U.S. dollar (“USD”). On September 1, 2021, we designated the September 2021 Swap as a net investment hedge.  i The September 2021 Swap involves the receipt of fixed-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract without exchange of the underlying notional amounts. At a spot exchange rate of  i 1.1835, we converted notional amounts of approximately $ i 80.0 million at  i 5.84% for € i 67.6 million at  i 5.02%. The change in fair value of the September 2021 Swap is recorded in currency translation in other comprehensive income (loss) and accumulated other comprehensive income (loss). Components of the September 2021 Swap excluded from the assessment of effectiveness are amortized out of accumulated other comprehensive income (loss) and into interest expense over the life of the September 2021 Swap to maturity on June 1, 2024. / 

In February 2022, we terminated the September 2021 Swap. The resulting cash inflow of approximately $ i 2.1 million is recorded within other comprehensive income. We simultaneously entered into another cross-currency swap (the “February 2022 Swap”) and designated it as a net investment hedge. The February 2022 Swap involves the receipt of fixed-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract without exchange of the underlying notional amounts. At a spot exchange rate of  i 1.1345, we converted notional amounts of approximately $ i 80.0 million at  i 5.84% for € i 70.5 million at  i 4.37%. The change in fair value of the February 2022 Swap is recorded in currency translation in other comprehensive income (loss) and accumulated other comprehensive income. Components of the February 2022 Swap excluded from the assessment of effectiveness are amortized out of accumulated other comprehensive income and into interest expense over the life of the February 2022 Swap to maturity on June 1, 2024.

In April 2022, we terminated the February 2022 Swap, resulting in a cash inflow of approximately $ i 2.8 million. We simultaneously entered into another cross-currency swap (the “April 2022 Swap”) and designated it as a net investment hedge. The April 2022 Swap involves the receipt of fixed-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract without exchange of the underlying notional amounts. At a spot exchange rate of  i 1.0827, we converted notional amounts of approximately $ i 80.0 million at  i 5.84% for € i 73.9 million at  i 3.93%. The change in fair value of the April 2022 Swap is recorded in currency translation in other comprehensive income (loss) and accumulated other comprehensive income. Components of the April

14


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

2022 Swap excluded from the assessment of effectiveness are amortized out of accumulated other comprehensive income and into interest expense over the life of the April 2022 Swap to maturity on June 1, 2024.

In July 2022, we terminated the April 2022 Swap, resulting in a cash inflow of approximately $ i 5.1 million.

The following table summarizes the total fair values of derivative assets and liabilities and the respective classification in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021.  i The net amount of derivatives can be reconciled to the tabular disclosure of fair value in Note 10, “Fair Value Measurement”:

 

 

 

 

 

Assets (Liabilities)

 

 

 

Balance Sheet Classification

 

June 30, 2022

 

 

December 31, 2021

 

Interest Rate Swap Agreements

 

 

 

 

 

 

 

 

Designated as cash flow hedges

 

Accrued liabilities and other

 

$

 i -

 

 

$

( i 3.8

)

Designated as cash flow hedges

 

Derivative instruments

 

 

 i -

 

 

 

( i 2.4

)

Designated as cash flow hedges

 

Prepaid expenses and other current assets

 

 

 i 2.8

 

 

 

-

 

Designated as cash flow hedges

 

Other assets

 

 

 i 1.6

 

 

 

-

 

 

 

 

 

$

 i 4.4

 

 

$

( i 6.2

)

 

 

 

 

 

 

 

 

 

Cross-Currency Swap Agreement

 

 

 

 

 

 

 

 

Designated as net investment hedge

 

Other assets

 

$

 i 2.4

 

 

$

 i 2.3

 

 

 

 

 

$

 i 2.4

 

 

$

 i 2.3

 

 

 i 

The following table presents the effect of our derivative financial instruments on our unaudited condensed consolidated statements of operations. The income effects of our derivative activities are reflected in interest expense.

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Total interest expense presented in the statement of operations

 

$

 i 4.9

 

 

$

 i 6.0

 

 

$

 i 9.9

 

 

$

 i 11.6

 

Interest rate swap agreements designated as cash flow hedges

 

 

 i 0.6

 

 

 

 i 0.9

 

 

 

 i 1.6

 

 

 

 i 1.9

 

Cross-currency swap agreement designated as net investment hedge, amounts excluded from effectiveness testing

 

$

( i 0.5

)

 

$

 i -

 

 

$

( i 0.8

)

 

$

 i -

 

 / 
 / 

 

 i 

Note 9 Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) is a separate line within the unaudited condensed consolidated statements of equity that reports our cumulative income (loss) that has not been reported as part of net income (loss).  i The components of accumulated other comprehensive income (loss) at June 30, 2022 and December 31, 2021 were as follows:

 

 

 

June 30, 2022

 

 

 

Gross Balance

 

 

Tax Effect

 

 

Net Balance

 

Foreign currency translation

 

$

( i 12.0

)

 

$

 i -

 

 

$

( i 12.0

)

Unrealized gain (loss) on interest rate swaps

 

 

 i 7.6

 

 

 

( i 1.5

)

 

 

 i 6.1

 

Unrealized gain (loss) on cross-currency swap

 

 

 i 2.3

 

 

 

( i 0.6

)

 

 

 i 1.7

 

Realized gain (loss) on cross-currency swap

 

 

 i 4.9

 

 

 

( i 1.2

)

 

 

 i 3.7

 

Total

 

$

 i 2.8

 

 

$

( i 3.3

)

 

$

( i 0.5

)

 

 

 

December 31, 2021

 

 

 

Gross Balance

 

 

Tax Effect

 

 

Net Balance

 

Foreign currency translation

 

$

 i 2.5

 

 

$

 i -

 

 

$

 i 2.5

 

Unrealized gain (loss) on interest rate swaps

 

 

( i 3.2

)

 

 

 i 1.0

 

 

 

( i 2.2

)

Unrealized gain (loss) on cross-currency swap

 

 

 i 2.9

 

 

 

( i 0.6

)

 

 

 i 2.3

 

Total

 

$

 i 2.2

 

 

$

 i 0.4

 

 

$

 i 2.6

 

 

15


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

The following table presents the changes in accumulated other comprehensive income (loss) by component:

 

 

 

Six Months Ended June 30, 2022

 

 

 

Foreign currency translation

 

 

Unrealized gain (loss) on interest rate swaps

 

 

Unrealized gain (loss) on cross-currency swap

 

 

Realized gain (loss) on cross-currency swap

 

 

Total

 

Beginning balance

 

$

 i 2.5

 

 

$

( i 2.2

)

 

$

 i 2.3

 

 

$

 i -

 

 

$

 i 2.6

 

Other comprehensive income (loss) before reclassifications

 

 

( i 14.5

)

 

 

 i 12.4

 

 

 

( i 0.2

)

 

 

 i 3.7

 

 

 

 i 1.4

 

Amounts reclassified from accumulated other comprehensive income (loss)

 

 

 i -

 

 

 

( i 4.1

)

 

 

( i 0.4

)

 

 

 i -

 

 

 

( i 4.5

)

Ending balance

 

$

( i 12.0

)

 

$

 i 6.1

 

 

$

 i 1.7

 

 

$

 i 3.7

 

 

$

( i 0.5

)

 / 

 

 i 

Note 10 Fair Value Measurement

Financial instruments are required to be categorized within a valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activities.

The carrying values of cash and cash equivalents (primarily consisting of bank deposits and a money market fund), accounts receivable and accounts payable approximate their fair values due to the short-term nature of these instruments as of June 30, 2022 and December 31, 2021.

 i 

The following table provides the carrying amounts, estimated fair values and the respective fair value measurements of our financial instruments as of June 30, 2022 and December 31, 2021:

 

 

 

 

 

 

Fair Value Measurements

 

 

 

Carrying Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

 i 35.1

 

 

$

 i 35.1

 

 

$

 i -

 

 

$

 i -

 

Current and long-term debt

 

 

 i 393.6

 

 

 

 i -

 

 

 

 i 368.1

 

 

 

 i -

 

Interest rate swap agreements

 

 

 i 4.4

 

 

 

 i -

 

 

 

 i 4.4

 

 

 

 i -

 

Cross-currency swap agreement

 

$

 i 2.4

 

 

$

 i -

 

 

$

 i 2.4

 

 

$

 i -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

 i 70.0

 

 

$

 i 70.0

 

 

$

 i -

 

 

$

 i -

 

Current and long-term debt

 

 

 i 406.5

 

 

 

 i -

 

 

 

 i 406.5

 

 

 

 i -

 

Interest rate swap agreements

 

 

 i 6.2

 

 

 

 i -

 

 

 

 i 6.2

 

 

 

 i -

 

Cross-currency swap agreement

 

$

 i 2.3

 

 

$

 i -

 

 

$

 i 2.3

 

 

$

 i -

 

 / 

 

The money market fund is valued at net asset value and is considered a Level 1 measurement. The money market fund's carrying value approximates its value fair due to the short-term nature of the investment.

The fair value of outstanding long-term debt is based on prices and other relevant information generated by market transactions involving identical or comparable debt instruments, which represents a Level 2 measurement. Derivative positions are classified within Level 2 of the valuation hierarchy as they are valued using quoted market prices for similar assets and liabilities in active markets.

 / 

16


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 i 

Note 11 Income Taxes

For each interim reporting period, we make an estimate of the effective tax rate we expect to be applicable for the full year for our operations. This estimated effective tax rate is used in providing for income taxes on a year-to-date basis.  i Our effective tax rate was as follows:

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

Effective tax rate

 

 i 19.1%

 

 i 15.6%

 

 i 21.1%

 

 i 435.1%

 

The fluctuation in the effective tax rate over the periods presented above was primarily attributable to a jurisdictional mix of income between periods. The effective tax rate differs from the U.S. federal statutory rate due primarily to benefits derived from stock-based compensation, the U.S. foreign-derived intangible income deduction, tax credits available in the U.S., and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax rate.

We are subject to taxation in the United States (federal, state, local) and foreign jurisdictions. As of June 30, 2022, tax years  i 2019 through  i 2021 are subject to examination by the tax authorities.

Pursuant to ASC 740, Income Taxes (“ASC 740”), as of each balance sheet date, we assess our uncertain tax positions to determine whether factors underlying the sustainability assertion have changed. As of June 30, 2022, such factors have not changed and no additional adjustments are necessary.

 / 
 i 

Note 12 — Leases

We lease automobiles, machinery, equipment, warehouses, and office buildings. We account for these leases in accordance with ASC 842 by recording right-of-use assets and lease liabilities. The right-of-use asset represents our right to use underlying assets for the lease term and the lease liability represents our obligation to make lease payments under the leases. We determine if an arrangement is or contains a lease at contract inception and exercise judgment and apply certain assumptions when determining the discount rate, lease term, and lease payments. ASC 842 requires a lessee to record a lease liability based on the discounted unpaid lease payments using the interest rate implicit in the lease or, if the rate cannot be readily determined, the incremental borrowing rate. Generally, we do not have knowledge of the rate implicit in the lease and, therefore, we use the incremental borrowing rate for a lease. The lease term includes the non-cancelable period of the lease plus any additional periods covered by an option to extend that we are reasonably certain to exercise.

 i 

Operating leases and finance leases are included in the condensed consolidated balance sheets as follows:

 

 

 

Classification

 

June 30, 2022

 

 

December 31, 2021

 

Lease assets

 

 

 

 

 

 

 

 

Operating lease right-of-use assets, net

 

Assets

 

$

 i 5.1

 

 

$

 i 6.6

 

Finance lease right of use assets, net

 

Property, plant, and equipment, net

 

 

 i 1.4

 

 

 

 i 1.5

 

Total lease assets

 

 

 

$

 i 6.5

 

 

$

 i 8.1

 

Lease liabilities

 

 

 

 

 

 

 

 

Operating lease liabilities, current

 

Current liabilities

 

$

 i 1.9

 

 

$

 i 2.4

 

Operating lease liabilities, non-current

 

Non-current liabilities

 

 

 i 3.3

 

 

 

 i 4.3

 

Finance lease liabilities, current

 

Current portion of long-term debt

 

 

 i 0.6

 

 

 

 i 0.6

 

Finance lease liabilities, non-current

 

Long-term debt

 

 

 i 0.8

 

 

 

 i 0.9

 

Total lease liabilities

 

 

 

$

 i 6.6

 

 

$

 i 8.2

 

 / 
 i 

The components of lease costs, which are included in income from operations in our condensed consolidated statements of operations and comprehensive income (loss), were as follows:

 

17


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating leases

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease costs

 

$

 i 0.7

 

 

$

 i 0.8

 

 

$

 i 1.5

 

 

$

 i 1.4

 

Variable lease costs

 

 

 i 0.1

 

 

 

 i -

 

 

 

 i 0.1

 

 

 

 i 0.2

 

Total operating lease costs

 

$

 i 0.8

 

 

$

 i 0.8

 

 

$

 i 1.6

 

 

$

 i 1.6

 

Finance leases

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of right-of-use asset

 

$

 i 0.2

 

 

$

 i 0.1

 

 

$

 i 0.3

 

 

$

 i 0.3

 

Interest on finance lease liabilities

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

Total finance lease costs

 

$

 i 0.2

 

 

$

 i 0.1

 

 

$

 i 0.3

 

 

$

 i 0.3

 

 / 
 i 

Maturities of lease liabilities as of June 30, 2022 are as follows:

 

 

 

Operating

 

 

Finance

 

 

Total

 

2022

 

$

 i 1.3

 

 

$

 i 0.4

 

 

$

 i 1.7

 

2023

 

 

 i 1.7

 

 

 

 i 0.6

 

 

 

 i 2.3

 

2024

 

 

 i 1.4

 

 

 

 i 0.4

 

 

 

 i 1.8

 

2025

 

 

 i 1.1

 

 

 

 i 0.1

 

 

 

 i 1.2

 

2026

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

2027 and Thereafter

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

Total lease payments

 

 

 i 5.5

 

 

 

 i 1.5

 

 

 

 i 7.0

 

Less lease interest

 

 

( i 0.3

)

 

 

( i 0.1

)

 

 

( i 0.4

)

Total lease liabilities

 

$

 i 5.2

 

 

$

 i 1.4

 

 

$

 i 6.6

 

 / 
 i 

Additional information related to leases is presented as follows:

 

 

 

June 30, 2022

 

December 31, 2021

Operating leases

 

 

 

 

Weighted average remaining lease term

 

 i 3.2 years

 

 i 3.5 years

Weighted average discount rate

 

 i 3.7%

 

 i 3.8%

Finance leases

 

 

 

 

Weighted average remaining lease term

 

 i 2.7 years

 

 i 3.0 years

Weighted average discount rate

 

 i 3.5%

 

 i 3.3%

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

 i 0.7

 

 

$

 i 0.7

 

 

$

 i 1.4

 

 

$

 i 1.3

 

Operating cash flows from finance leases

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

Financing cash flows from finance leases

 

 

 i 0.2

 

 

 

 i 0.2

 

 

 

 i 0.4

 

 

 

 i 0.3

 

Total cash paid

 

$

 i 0.9

 

 

$

 i 0.9

 

 

$

 i 1.8

 

 

$

 i 1.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leased assets obtained in exchange for new operating lease liabilities

 

$

 i -

 

 

$

 i 1.5

 

 

$

 i -

 

 

$

 i 8.6

 

Leased assets obtained in exchange for new finance lease liabilities

 

 

 i 0.2

 

 

 

 i 0.2

 

 

 

 i 0.3

 

 

 

 i 2.0

 

Right-of-use assets obtained in exchange for lease liabilities

 

$

 i 0.2

 

 

$

 i 1.7

 

 

$

 i 0.3

 

 

$

 i 10.6

 

 / 

As previously noted, our machine lease revenue is accounted for under ASC 842 and is recognized on a straight-line basis over the terms of the agreements with customers, which have durations of less than one year.

 / 
 i 

Note 13 Commitments and Contingencies

Litigation

We are subject to legal proceedings and claims that arise in the ordinary course of our business. Management evaluates each claim and provides for potential loss when the claim is probable to be paid and reasonably estimable. While adverse decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any future accruals with respect to these currently known contingencies would not have a material effect on the financial condition,

18


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

liquidity or cash flows of the Company. There are no amounts required to be reflected in these unaudited interim condensed consolidated financial statements related to contingencies for the three and six months ended June 30, 2022.

Environmental Matters

Our operations are subject to extensive and changing U.S. federal, state and local laws and regulations, as well as the laws of other countries that establish health and environmental quality standards. These standards, among others, relate to air and water pollutants and the management and disposal of hazardous substances and wastes. We are exposed to potential liability for personal injury or property damage caused by any release, spill, exposure or other accident involving such pollutants, substances or wastes. There are no amounts required to be reflected in these unaudited interim consolidated financial statements related to environmental contingencies.

Management believes the Company is in compliance, in all material respects, with environmental laws and regulations and maintains insurance coverage to mitigate exposure to environmental liabilities. Management does not believe any environmental matters will have a material adverse effect on the Company’s future consolidated results of operations, financial position or cash flows.

Guarantees

We issue bank guarantees from time to time for various purposes that arise out of the normal course of business. These amounts are immaterial for all periods presented.

 i 

Note 14 Stock-Based Compensation

We expense the fair value of grants of various stock-based compensation programs over the vesting period of the awards. Stock compensation expense is recorded in selling, general, and administrative expenses in the condensed consolidated statements of operations. Awards granted are recognized as compensation expense based on the grant date fair value, estimated in accordance with ASC 718, Compensation – Stock Compensation. The grant date fair value is the closing price of our stock on the grant date. Failure to satisfy the threshold service or performance conditions results in the forfeiture of shares. Forfeiture of share awards with service conditions or performance-based restrictions results in a reversal of previously recognized share-based compensation expense so long as the awards were probable of vesting. Stock compensation expense includes actual forfeitures incurred.

 i 

The table below summarizes certain data for our stock-based compensation plans:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Stock-based compensation expense

 

$

 i 5.3

 

 

$

 i 4.7

 

 

$

 i 14.1

 

 

$

 i 7.4

 

Tax benefit for stock-based compensation

 

 

 i 0.5

 

 

 

 i 0.8

 

 

 

 i 0.8

 

 

 

 i 1.2

 

Stock-based compensation expense, net of tax

 

$

 i 5.8

 

 

$

 i 5.5

 

 

$

 i 14.9

 

 

$

 i 8.6

 

 / 

 

The Ranpak Holdings Corp. 2019 Omnibus Incentive Plan (the “2019 Plan”) rewards employees and other individuals to perform at their highest level and contribute significantly to the success of the Company. The 2019 Plan is an omnibus plan that may provide these incentives through grants of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSU” or “RSUs”), performance awards, other cash-based awards and other stock-based awards to employees, directors, or consultants of the Company.

At the annual meeting in May 2021, shareholders approved an amendment to the 2019 Plan (the “Amended Plan”) that authorized an additional  i 9.0 million shares for issuance for future awards.  i As of June 30, 2022, the pool of shares in the 2019 Plan is summarized as follows:

 

2019 Plan

 

Quantity

 

Maximum allowed for issuance

 

 

 i 13,118,055

 

Awards granted

 

 

( i 6,282,806

)

Awards forfeited

 

 

 i 1,003,137

 

Available for future awards

 

 

 i 7,838,386

 

 

 

 

 

Awards vested

 

 

 i 2,012,092

 

 

19


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

Restricted Stock Units RSUs represent a right to receive one share of our common stock that is both nontransferable and forfeitable unless and until certain conditions are satisfied. Typically, RSUs vest ratably over a  i two-year period. The fair value of RSUs is determined on the grant date and is amortized over the vesting period on a ratable basis.

Performance-Based Restricted Stock Units Performance-based restricted stock units (“PRSU” or “PRSUs”) represent a right to receive, to the extent vested and earned, one share of our common stock. Our PRSUs generally follow two forms. One form of PRSU vests over a three-year period with the number of the awards to be earned determined at the end of the initial one-year performance period, based upon attainment of specific business performance goals during such initial one-year performance period. If certain minimum performance levels are not attained in the initial one-year performance period, the awards will be automatically forfeited before vesting. The awards are variable in that PRSUs earned could range from  i 0% to  i 150% of the target number of PRSUs granted, contingent on the performance level attained.

In connection with the shareholders approving the Amended Plan, certain executive officers and key employees received a special long-term incentive PRSU award (the “2021 LTIP PRSUs”). The 2021 LTIP PRSUs are generally eligible to be earned based on performance against pre-established performance metrics during our 2023, 2024 and 2025 fiscal years. One-third of the 2021 LTIP PRSUs are eligible to be earned and vest on each of January 1, 2024, January 1, 2025, and January 1, 2026 based on the achievement of performance goals during the one-year period immediately preceding the vesting date (each such one-year period, a “2021 LTIP PRSU Measurement Period”), subject to continued employment on each such vesting date. The number of PRSUs eligible to be earned in respect of each such 2021 LTIP PRSU Measurement Period will be equal to one-third of the target number of PRSUs multiplied by a percentage that corresponds to the level of achievement of our performance goals. The awards are variable in that the PRSUs earned could range from  i 0% to  i 300% of the target number of PRSUs granted contingent on the performance level attained.

The fair value of our PRSUs is determined on the grant date. Compensation cost for these awards is recognized based on the probability of achievement of the performance-based conditions.

 i 

Activity of our RSUs and PRSUs is as follows:

 

 

 

RSUs

 

 

PRSUs

 

 

 

Quantity

 

 

Weighted Average Grant Date Fair Value

 

 

Quantity

 

 

Weighted Average Grant Date Fair Value

 

Restricted at December 31, 2021

 

 

 i 508,871

 

 

$

 i 15.61

 

 

 

 i 2,818,257

 

 

$

 i 22.38

 

Granted

 

 

 i 118,149

 

 

 

 i 22.91

 

 

 

 i 611,267

 

 

 

 i 22.15

 

Vested

 

 

( i 264,915

)

 

 

 i 15.29

 

 

 

( i 466,059

)

 

 

 i 14.24

 

Forfeited

 

 

( i 15,816

)

 

 

 i 26.01

 

 

 

( i 93,417

)

 

 

 i 22.41

 

Outstanding at June 30, 2022

 

 

 i 346,289

 

 

$

 i 17.87

 

 

 

 i 2,870,048

 

 

$

 i 23.65

 

 / 

 

Director Stock Units Members of the Company’s Board of Directors (“Director(s)”) may elect to receive their quarterly retainer fees in the form of Class A common shares that are covered by an active shelf registration statement. The retainers are paid quarterly, in arrears in the form of cash or stock at the Director’s election, and vest upon issuance. These shares are priced at the closing price of the last business day of the calendar quarter. Additionally, Directors are granted an annual award of RSUs of $ i 0.1 million on the date of the annual shareholder meeting. The number of RSUs is determined by the closing price of Ranpak stock on that date. These RSUs vest at the earlier of the (i) anniversary of the grant date or (ii) the following annual shareholder meeting.  i The following table includes the number of shares granted and vested for Directors electing to receive retainer payments in shares:

 

Director Stock Units

 

Quantity

 

 

Weighted Average Grant Date Fair Value

 

Balance at December 31, 2021

 

 

 i 28,364

 

 

$

 i 24.69

 

Granted

 

 

 i 58,325

 

 

 

 i 13.50

 

Vested

 

 

( i 35,449

)

 

 

 i 25.04

 

Balance at June 30, 2022

 

 

 i 51,240

 

 

$

 i 11.71

 

 / 

 

20


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 i 

Note 15 — Earnings (Loss) per Share

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution, if any, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the more dilutive of the two-class method or if-converted method. Diluted EPS excludes potential shares of common stock if their effect is anti-dilutive. If there is a net loss in any period, basic and diluted EPS are computed in the same manner.

The two-class method determines net income (loss) per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between different classes of common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. We apply the two-class method for EPS when computing net income (loss) per Class A and Class C common shares.

As of June 30, 2022, we have not issued any instruments that are considered to be participating securities.  i Weighted average shares of Class A and Class C common stock have been combined in the denominator of basic and diluted earnings (loss) per share because they have equivalent economic rights. The following table sets forth the computation of our earnings (loss) per share:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

( i 11.3

)

 

$

( i 5.2

)

 

$

( i 25.4

)

 

$

 i 1.1

 

Net income (loss) attributable to common stockholders for basic and diluted EPS

 

$

( i 11.3

)

 

$

( i 5.2

)

 

$

( i 25.4

)

 

$

 i 1.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

 i 81,943,235

 

 

 

 i 77,653,610

 

 

 

 i 81,759,372

 

 

 

 i 75,617,785

 

Dilutive effect of assumed vesting of RSUs and PRSUs

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

 

 

 i 388,030

 

Dilutive effect of Class A and Class C earnout shares

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

 

 

 i 1,022,504

 

Diluted weighted average common shares outstanding

 

 

 i 81,943,235

 

 

 

 i 77,653,610

 

 

 

 i 81,759,372

 

 

 

 i 77,028,319

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.01

 

Diluted

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Two-class method:

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

 i 79,022,136

 

 

 

 i 74,673,332

 

 

 

 i 78,838,273

 

 

 

 i 70,968,631

 

Dilutive effect of assumed vesting of RSUs and PRSUs

 

 

-

 

 

 

 i -

 

 

 

-

 

 

 

 i 388,030

 

Dilutive effect of Class A earnout shares

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

 

 

 i 935,627

 

Diluted weighted average common shares outstanding

 

 

 i 79,022,136

 

 

 

 i 74,673,332

 

 

 

 i 78,838,273

 

 

 

 i 72,292,288

 

Proportionate share of net income (loss)

 

$

( i 10.9

)

 

$

( i 5.0

)

 

$

( i 24.5

)

 

$

 i 1.0

 

Class A – basic earnings (loss) per share

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.01

 

Class A – diluted earnings (loss) per share

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class C Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

 i 2,921,099

 

 

 

 i 2,980,278

 

 

 

 i 2,921,099

 

 

 

 i 4,649,154

 

Dilutive effect of assumed vesting of RSUs and PRSUs

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

Dilutive effect of Class C earnout shares

 

 

 i -

 

 

 

 i -

 

 

 

 i -

 

 

 

 i 86,877

 

Diluted weighted average common shares outstanding

 

 

 i 2,921,099

 

 

 

 i 2,980,278

 

 

 

 i 2,921,099

 

 

 

 i 4,736,031

 

Proportionate share of net income (loss)

 

$

( i 0.4

)

 

$

( i 0.2

)

 

$

( i 0.9

)

 

$

 i 0.1

 

Class C – basic earnings (loss) per share

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.02

 

Class C – diluted earnings (loss) per share

 

$

( i 0.14

)

 

$

( i 0.07

)

 

$

( i 0.31

)

 

$

 i 0.02

 

 

The dilutive effect of  i 0.3 million and  i 0.4 million shares in the three months ended June 30, 2022 and 2021, respectively, and  i 0.9 million shares in the six months ended June 30, 2022 was omitted from the calculation of diluted weighted-average shares outstanding and diluted earnings per share because we were in a loss position.  i The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive or because milestones were not yet achieved for awards contingent on the achievement of performance milestones:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

RSUs and PRSUs

 

 

 i 3,128,260

 

 

 

 i 1,887,894

 

 

 

 i 3,094,946

 

 

 

 i 782,288

 

Total antidilutive securities

 

 

 i 3,128,260

 

 

 

 i 1,887,894

 

 

 

 i 3,094,946

 

 

 

 i 782,288

 

 / 

 

21


Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

 

 i 

Note 16 Transactions with Related Parties

On June 3, 2019, upon the closing of Ranpak’s business combination with One Madison Corporation, Ranpak entered into a shared services agreement (the “Shared Services Agreement”) with One Madison Group LLC (the “Sponsor”), pursuant to which the Sponsor may provide, or cause to be provided, certain services to Ranpak. The Shared Services Agreement provides for a broad array of potential services, including administrative and “back office” or corporate-type services and requires Ranpak to indemnify the Sponsor in connection with the services provided by the Sponsor to Ranpak. Total fees under the agreement were  i not material in the second quarter of 2022 and $ i 0.1 million for the second quarter of 2021, respectively. Total fees under the agreement amounted to approximately $ i 0.1 million and $ i 0.2 million for the six months ended June 30, 2022 and 2021, respectively.

 / 
 i 

Note 17 Subsequent Event

On July 26, 2022, the Directors authorized a general share repurchase program of the Company’s Class A common stock of up to $ i 50.0 million, with a  i 36-month expiration. These Class A common stock repurchases may occur in transactions that may include, without limitation, tender offers, open market purchases, accelerated share repurchases, negotiated block purchases, and transactions effected through plans under Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and actual amount of shares repurchased will depend on a variety of different factors and may be modified, suspended or terminated at any time at the discretion of the Directors.

 / 

22


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are not historical facts are forward-looking statements. 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. 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.

The forward-looking statements contained in this Quarterly Report on Form 10-Q 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:

our inability to secure a sufficient supply of paper to meet our production requirements;
the impact of rising prices on production inputs, including labor, energy, and freight on our results of operations;
the impact of the price of kraft paper on our results of operations;
our reliance on third party suppliers;
the COVID-19 pandemic and associated response;
the high degree of competition in the markets in which we operate;
consumer sensitivity to increases in the prices of our products;
changes in consumer preferences with respect to paper products generally;
continued consolidation in the markets in which we operate;
the loss of significant end-users of our products or a large group of such end-users;
our failure to develop new products that meet our sales or margin expectations;
our future operating results fluctuating, failing to match performance or to meet expectations;
our ability to fulfill our public company obligations; and
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.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with the sections entitled “Risk Factors” and “Forward-Looking Statements,” and our financial statements and related notes included in this Quarterly Report on Form 10-Q as well as the section entitled, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Ranpak included in our 2021 10-K, filed with the SEC on February 28, 2022. Capitalized terms used and not defined herein have the meanings disclosed elsewhere in the Quarterly Report on Form 10-Q.

The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of the Company's control. The Company’s actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk

23


 

Factors” and “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q.

Overview

Ranpak is a leading provider of environmentally sustainable, systems-based, product protection solutions for e-commerce and industrial supply chains. Since inception in 1972, we have delivered high quality protective packaging solutions, while maintaining commitment to environmental sustainability. We assemble our PPS systems and provide the PPS systems and paper consumables to customers, which include direct end-users and our network of exclusive paper packaging solution distributors, who in turn place the systems with and sell paper to commercial and industrial users for the conversion of paper into packaging materials. We operate manufacturing facilities in the United States and Europe. For our Automation product lines, we currently have dedicated facilities in Virginia and the Netherlands. R Squared Robotics, a division of Ranpak, uses three-dimensional computer vision and artificial intelligence technologies to improve end-of-line packaging and logistics functions. We are currently building one facility in the Netherlands, with dedicated space for Automation functions, and renovating or building two facilities in the United States, one of which will be primarily dedicated to Automation functions. We also maintain sales and administrative offices in Brazil, France, China, Japan, and Singapore. We are a global business that generated approximately 64.9% of our 2021 net revenue outside of the United States.

As of June 30, 2022, we had an installed base of approximately 136.5 thousand PPS systems serving a diverse set of distributors and end-users. We generated net revenue of $169.3 million and $177.7 million in the six months ended June 30, 2022 and 2021, respectively.

Effect of Currency Fluctuations. As a result of the geographic diversity of our operations, we are exposed to the effects of currency translation, which has affected the comparability of our results of operations between the periods presented in this report and may affect the comparability of our results of operations in future periods. Currency transaction exposure results when we generate net revenue in one currency at one time and incur expenses in another currency at another time, or when we realize gain or loss on intercompany transfers. While we seek to limit currency transaction exposure by matching the currencies in which we incur sales and expenses, we may not always be able to do so.

In addition, we are subject to currency translation exposure because the operations of our subsidiaries are measured in their functional currency which is the currency of the primary economic environment in which the subsidiary operates. Any currency balances that are denominated in currencies other than the functional currency of the subsidiary are re-measured into the functional currency, with the resulting gain or loss recorded in the foreign currency (gains) losses line-item in our Unaudited Condensed Consolidated Statements of Operations. In turn, subsidiary income statement balances that are denominated in currencies other than USD are translated into USD, our functional currency, in consolidation using the average exchange rate in effect during each fiscal month during the period, with any related gain or loss recorded as foreign currency translation adjustments in other comprehensive income (loss). The assets and liabilities of subsidiaries that use functional currencies other than the USD are translated into USD in consolidation using period end exchange rates, with the effects of foreign currency translation adjustments included in accumulated other comprehensive income.

We hedge some of our exposure to foreign currency translation with a cross-currency swap. However, significant currency fluctuations could impact the comparability of results between periods, while such fluctuations coupled with material mismatches in net revenue and expenses could also adversely impact our cash flows. See “Qualitative and Quantitative Disclosures About Market Risk.

Seasonality. Approximately 33.8% of our net revenue in 2021, either directly or to distributors, was destined for end-users in the e-commerce sectors, whose businesses frequently follow traditional retail seasonal trends, including a concentration of sales in the holiday period in the fourth quarter. Our results tend to follow similar patterns, with the highest net revenue typically recorded in our fourth fiscal quarter and the slowest sales in our first fiscal quarter of each fiscal year. We expect this seasonality to continue in the future and, as a result, our results of operations between fiscal quarters in a given year may not be directly comparable.

Impact of the COVID-19 Pandemic. The COVID-19 pandemic has resulted in changes in market and economic conditions around the world. We believe that these impacts are not unique to us and that our industry competitors have been impacted in a similar fashion. We are deemed an essential business under the Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response issued by the United States Cybersecurity and Infrastructure Security Agency and pursuant to state decisions in states where our domestic production and distribution facilities are located. We continue to operate our production and distribution facilities, both domestically and internationally, albeit subject to measures designed to promote a safe operating environment. While we have experienced limited delays in receiving certain supplies we use to assemble our packaging systems, to date, these measures have not materially impacted the cost of producing and distributing our products, the cost and availability of raw

24


 

materials and components, and we have encountered minimal disruption in our ability to fulfill customer orders. We continue to monitor our liquidity position closely and have extended payment terms to certain of our customers when necessary. While we do not currently expect COVID-19 to have a material impact on our business, results of operations, financial condition or liquidity, at the time of this filing, we cannot predict the extent to which we will ultimately be impacted due to the uncertain nature and duration of the COVID-19 pandemic. See “Risk Factors” in the 2021 10-K. We will continue to evaluate the nature and extent of the impact to our business, results of operations, financial condition, and cash flows.

Key Performance Indicators and Other Factors Affecting Performance

We use the following key performance indicators and monitor the following other factors to analyze our business performance, determine financial forecasts, and help develop long-term strategic plans.

PPS Systems Base — We closely track the number of PPS systems installed with end-users as it is a leading indicator of underlying business trends and near-term and ongoing net sales expectations. Our installed base of PPS systems also drives our capital expenditure budgets. The following table presents our installed base of PPS systems by product line as of June 30, 2022 and 2021:

 

 

 

June 30, 2022

 

 

June 30, 2021

 

 

Change

 

 

% Change

 

PPS Systems

 

(in thousands)

 

 

 

 

Cushioning machines

 

 

35.2

 

 

 

34.3

 

 

 

0.9

 

 

 

2.6

 

Void-Fill machines

 

 

80.0

 

 

 

71.8

 

 

 

8.2

 

 

 

11.4

 

Wrapping machines

 

 

21.3

 

 

 

17.5

 

 

 

3.8

 

 

 

21.7

 

Total

 

 

136.5

 

 

 

123.6

 

 

 

12.9

 

 

 

10.4

 

 

Paper and Other Costs. Paper is a key component of our cost of goods sold and paper costs can fluctuate significantly between periods. We purchase both 100% virgin and 100% recycled paper, as well as blends, from various suppliers for conversion into the paper consumables we sell. The cost of paper supplies is our largest input cost, and we historically have negotiated supply and pricing arrangements with most of our paper suppliers annually, with a view towards mitigating fluctuations in paper cost. Nevertheless, as paper is a commodity, its price on the open market, and in turn the prices we negotiate with suppliers at a given point in time, can fluctuate significantly, and is affected by several factors outside of our control, including supply and demand and the cost of other commodities that are used in the manufacture of paper, including wood, energy and chemicals. The market for our solutions is competitive and it may be difficult to pass on increases in paper prices to our customers immediately, or at all, which has in the past, and could in the future, adversely affect our operating results. In 2021 and 2022, global inflation and other macroeconomic factors, including COVID-19 and the conflict in Ukraine, have contributed to the increases in the cost of paper. Further, the conflict in Ukraine has caused certain headwinds, including (i) increased energy costs, particularly in Europe; (ii) shipping variabilities due to truck driver shortages; (iii) increased pricing for paper products as a result of decreased availability of paper products previously sourced from Russian paper mills; and (iv) increased shipping times for paper products sourced from Russian paper mills. We are beginning to see stabilization of inflationary conditions regarding paper in North America, however, inflationary pricing conditions in Europe remain unsteady, primarily due to the volatility in energy markets. Where we can, we will look to pass these increased market costs on to our customers to mitigate the impact of these costs. We are unable to predict our ability to pass these costs on to our customers and how much of these increases we will be able to pass on to our customers. As such, we expect some pressure on our gross margin in the medium term relative to our historical margin profile.

Results of Operations

The following tables set forth our results of operations for the three and six months ended June 30, 2022 and 2021 with line items presented in millions of dollars.

Our condensed consolidated financial statements are prepared in accordance with GAAP. We have, however, also presented below Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and adjusted EBITDA (“AEBITDA”), each on a constant currency basis, which are non-GAAP financial measures. We have included EBITDA and AEBITDA on a constant currency basis 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 and AEBITDA can provide a useful measure for period-to-period comparisons of our primary business operations. Adjusting these non-GAAP measures for comparability for constant currency also assists in this comparison as allows a better insight into the performance of our businesses that operate in currencies other than our reporting currency. Before consolidation, our Europe/Asia data is derived in Euros. We multiply this Euro-derived data by 1.15 to reflect an exchange rate of 1 Euro to 1.15 USD, which we believe is a reasonable figure to use to give a stable depiction of the business without currency fluctuations, to calculate Europe/Asia data in constant currency USD. We combine the constant currency USD data for Europe/Asia with the USD North America data to create combined constant currency figures and adjust our non-GAAP figures by the respective amounts. In sum, we believe that constant currency EBITDA and AEBITDA provide useful information to

25


 

investors and others in understanding and evaluating the Company’s operating results in the same manner as our management and Board of Directors.

However, EBITDA and 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 and 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 and AEBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
EBITDA and AEBITDA do not reflect changes in, or cash requirements for, our working capital needs;
AEBITDA does not consider the potentially dilutive impact of equity-based compensation;
EBITDA and 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;
AEBITDA does not take into account any restructuring and integration costs; and
other companies, including companies in our industry, may calculate EBITDA and AEBITDA differently, which reduces their usefulness as comparative measures.

EBITDA — EBITDA 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; and depreciation and amortization.

AEBITDA — 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.

In addition, in our discussion below, we include certain other unaudited, non-GAAP constant currency data for the three and six months ended June 30, 2022 and 2021. This data is based on our historical financial statements included elsewhere in this Quarterly Report on Form 10-Q, 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 under “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for the three and six months ended June 30, 2022 and 2021.

Comparison of Second Quarter of 2022 to Second Quarter of 2021

 

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

% Net revenue

 

 

2021

 

 

% Net revenue

 

Net revenue

 

$

86.8

 

 

 

 

$

90.0

 

 

 

Cost of goods sold

 

 

58.5

 

 

 

67.4

 

 

 

54.3

 

 

 

60.3

 

Gross profit

 

 

28.3

 

 

 

32.6

 

 

 

35.7

 

 

 

39.7

 

Selling, general and administrative expenses

 

 

30.3

 

 

 

34.9

 

 

 

24.6

 

 

 

27.3

 

Depreciation and amortization expense

 

 

8.0

 

 

 

9.2

 

 

 

8.7

 

 

 

9.7

 

Other operating expense, net

 

 

1.4

 

 

 

1.6

 

 

 

1.3

 

 

 

1.4

 

Income (loss) from operations

 

 

(11.4

)

 

 

(13.1

)

 

 

1.1

 

 

 

1.2

 

Interest expense

 

 

4.9

 

 

 

5.6

 

 

 

6.0

 

 

 

6.7

 

Foreign currency (gain) loss

 

 

(2.3

)

 

 

(2.6

)

 

 

1.2

 

 

 

1.3

 

Loss before income tax benefit

 

 

(14.0

)

 

 

(16.1

)

 

 

(6.1

)

 

 

(6.8

)

Income tax benefit

 

 

(2.7

)

 

 

(3.1

)

 

 

(0.9

)

 

 

(1.0

)

Net loss

 

$

(11.3

)

 

 

(13.0

)

 

$

(5.2

)

 

 

(5.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Constant Currency

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

8.8

 

 

 

 

 

$

17.6

 

 

 

 

AEBITDA

 

$

18.2

 

 

 

 

 

$

25.6

 

 

 

 

 

26


 

Net Revenue

The following tables and the discussion that follows compare our net revenue by geographic region and by product line for the second quarter of 2022 and 2021 on a GAAP basis and on a non-GAAP constant currency basis as described above and in the discussion below. See also “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for further detail:

 

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

% Net revenue

 

 

2021

 

 

% Net revenue

 

North America

 

$

34.3

 

 

 

39.5

 

 

$

35.7

 

 

 

39.7

 

Europe/Asia

 

 

52.5

 

 

 

60.5

 

 

 

54.3

 

 

 

60.3

 

Net revenue

 

$

86.8

 

 

 

100.0

 

 

$

90.0

 

 

 

100.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cushioning machines

 

$

38.2

 

 

 

44.0

 

 

$

38.3

 

 

 

42.6

 

Void-Fill machines

 

 

34.3

 

 

 

39.5

 

 

 

35.5

 

 

 

39.4

 

Wrapping machines

 

 

10.2

 

 

 

11.8

 

 

 

12.1

 

 

 

13.4

 

Other

 

 

4.1

 

 

 

4.7

 

 

 

4.1

 

 

 

4.6

 

Net revenue

 

$

86.8

 

 

 

100.0

 

 

$

90.0

 

 

 

100.0

 

 

 

 

Non-GAAP Constant Currency

 

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

% Net revenue

 

 

2021

 

 

% Net revenue

 

 

$ Change

 

 

% Change

 

North America

 

$

34.3

 

 

 

37.7

 

 

$

35.7

 

 

 

40.8

 

 

$

(1.4

)

 

 

(3.9

)

Europe/Asia

 

 

56.7

 

 

 

62.3

 

 

 

51.8

 

 

 

59.2

 

 

 

4.9

 

 

 

9.5

 

Net revenue

 

$

91.0

 

 

 

100.0

 

 

$

87.5

 

 

 

100.0

 

 

$

3.5

 

 

 

4.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cushioning machines

 

$

40.3

 

 

 

44.3

 

 

$

37.1

 

 

 

42.4

 

 

$

3.2

 

 

 

8.6

 

Void-Fill machines

 

 

35.6

 

 

 

39.1

 

 

 

34.5

 

 

 

39.4

 

 

 

1.1

 

 

 

3.2

 

Wrapping machines

 

 

10.5

 

 

 

11.5

 

 

 

11.9

 

 

 

13.6

 

 

 

(1.4

)

 

 

(11.8

)

Other

 

 

4.6

 

 

 

5.1

 

 

 

4.0

 

 

 

4.6

 

 

 

0.6

 

 

 

15.0

 

Net revenue

 

$

91.0

 

 

 

100.0

 

 

$

87.5

 

 

 

100.0

 

 

$

3.5

 

 

 

4.0

 

 

Net revenue for the second quarter of 2022 was $86.8 million compared to net revenue of $90.0 million in the second quarter of 2021, a decrease of $3.2 million or 3.6% year over year. Net revenue was negatively impacted by decreases in cushioning, void-fill, and wrapping. In addition to currency headwinds, revenue from all product categories was negatively affected by lower economic activity; lower e-Commerce use due to the opening up of economies; the impact inflationary pressures are having on consumer and corporate budgets; and tightening inventory management in response to uncertainties in the European economic environment. Most, but not all, of the transition issues we experienced in the first quarter of 2022 related to the transition to our new enterprise resource planning (“ERP”) system were corrected in the second quarter of 2022. Additionally, the impact of the Omicron variant of COVID-19 that previously limited customer visits waned during the second quarter of 2022. Cushioning decreased $0.1 million, or 0.3%, to $38.2 million from $38.3 million; void-fill decreased $1.2 million, or 3.4%, to $34.3 million from $35.5 million; wrapping decreased $1.9 million, or 15.7%, to $10.2 million from $12.1 million; and other sales was flat at $4.1 million for the second quarter of 2022 compared to the second quarter of 2021. Other net revenue includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field, such as systems accessories. The decrease in net revenue is quantified by a decrease in the volume of sales of our paper consumable products of approximately 16.1 percentage points (“pp”), partially offset by a 19.3 pp increase in the price or mix of our paper consumable products, and an increase of 0.8 pp in sales of automated box sizing equipment. Constant currency net revenue was $91.0 million for the second quarter of 2022, a $3.5 million, or 4.0%, increase from constant currency net revenue of $87.5 million for the second quarter of 2021.

Net revenue in North America for the second quarter of 2022 totaled $34.3 million compared to net revenue in North America of $35.7 million in the second quarter of 2021. The decrease of $1.4 million, or 3.9%, was primarily attributable to decreases in wrapping, void-fill, and other sales, partially offset by increases in cushioning sales.

Net revenue in Europe/Asia for the second quarter of 2022 totaled $52.5 million compared to net revenue in Europe/Asia of $54.3 million in the second quarter of 2021. The decrease of $1.8 million, or 3.3%, was driven primarily by currency headwinds, as well as lower wrapping sales. Constant currency net revenue in Europe/Asia was $56.7 million for the second quarter of 2022, a $4.9 million, or 9.5%, increase from constant currency net revenue of $51.8 million for the second quarter of 2021.

27


 

Cost of Goods Sold

Cost of goods sold for the second quarter of 2022 totaled $58.5 million, an increase of $4.2 million, or 7.7%, compared to $54.3 million in the second quarter of 2021. The change was primarily due to increased paper costs and an increase in depreciation of $0.4 million over the prior year. Constant currency cost of goods sold increased by $8.5 million, or 16.1%, to $61.3 million in the second quarter of 2022 from $52.8 million for the second quarter of 2021. As a result, on a constant currency basis, net revenue minus cost of goods sold as a percentage of net revenue decreased by 7.0 pp to 32.6% in the second quarter of 2022 from 39.7% for the second quarter of 2021. We continued to experience increased manufacturing input costs during the second quarter of 2022, primarily driven by increases in the price of paper in North America and Europe. This has resulted in our implementation of additional pricing actions beginning in the third quarter of 2022.

Selling, General and Administrative Expenses (“SG&A”)

SG&A for the second quarter of 2022 was $30.3 million, an increase of $5.7 million, or 23.2%, from $24.6 million in the second quarter of 2021. Constant currency SG&A increased by $7.2 million, or 29.9%, to $31.3 million in the second quarter of 2022 from $24.1 million for the second quarter of 2021, largely due to increases in stock compensation expense from the 2021 LTIP PRSUs, increased headcount and associated compensation, and ERP system implementation costs. Our lower volumes and continued pressure on margins led us to cost containment actions in the second quarter of 2022, which included a headcount reduction and deferral of certain initiatives. As a percentage of constant currency net revenue, constant currency SG&A increased to 34.4% in the second quarter of 2022 from 27.5% in the second quarter of 2021.

Depreciation and Amortization

Depreciation and amortization expenses for the second quarter of 2022 were $8.0 million, a decrease of $0.7 million, or 8.0%, from $8.7 million in the second quarter of 2021 primarily due to a decrease in depreciation of computer software. Constant currency depreciation and amortization expenses decreased by $0.4 million, or 4.7%, to $8.1 million in the second quarter of 2022 from $8.5 million in the first quarter of 2021. As a percentage of constant currency net revenue, constant currency depreciation and amortization expenses decreased to 8.9% in the second quarter of 2022 from 9.7% in the second quarter of 2021.

Other Operating Expense (Income), Net

Other operating expense, net for the second quarter of 2022 was $1.4 million, a change of $0.1 million, or 7.7%, from $1.3 million in the second quarter of 2021. Constant currency other operating expense, net, was $1.9 million in the second quarter of 2022, however, was not materially impacted by constant currency adjustments in the second quarter of 2021. The change in other operating expense (income), net primarily consists of research and development costs, however, was not material. As a percentage of constant currency net revenue, constant currency other operating expense, net, increased to 2.1% in the second quarter of 2022 from 1.5% in the second quarter of 2021.

Interest Expense

Interest expense for the second quarter of 2022 was $4.9 million, a decrease of $1.1 million, or 18.3%, from $6.0 million in the second quarter of 2021. The change was due to a decrease in debt in the second quarter of 2022 compared to the second quarter of 2021. Constant currency interest expense was not materially impacted by constant currency adjustments in the second quarter of 2022 or 2021. As a percentage of constant currency net revenue, constant currency interest expense decreased to 5.5% in the second quarter of 2022 from 6.7% in the second quarter of 2021.

Foreign Currency (Gain) Loss

Foreign currency gain for the second quarter of 2022 was $2.3 million, a change of $3.5 million, or 291.7%, from foreign currency loss of $1.2 million in the second quarter of 2021 due to a decline in Euro exchange rates compared to USD. Constant currency foreign currency gain was $2.1 million in the second quarter of 2022 compared to constant currency foreign currency loss of $0.9 million in the second quarter of 2021. As a percentage of constant currency net revenue, constant currency foreign currency gain increased to 2.3% in the second quarter of 2022 from 1.0% in the second quarter of 2021.

Income Tax Benefit

Income tax benefit for the second quarter of 2022 was $2.7 million, or an effective tax rate of 19.1%. Income tax benefit was $0.9 million in the second quarter of 2021, or an effective tax rate of 15.6%. The fluctuation in the effective tax rate between periods was primarily attributable to a jurisdictional mix of income. The effective tax rate differs from the U.S. federal statutory rate due primarily to benefits derived from stock-based compensation, the U.S. foreign derived intangible income deduction, tax credits available in the U.S., and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax rate.

28


 

Net Loss

Net loss for the second quarter of 2022 increased $6.1 million to $11.3 million from a net loss of $5.2 million in the second quarter of 2021. Constant currency net loss was $11.6 million in the second quarter of 2022 compared to constant currency net loss of $5.1 million for the second quarter of 2021. The change was due to the reasons discussed above.

Constant Currency EBITDA and AEBITDA

EBITDA for the second quarter of 2022 was $8.8 million, a decrease of $8.8 million, or 50.0%, compared to $17.6 million in the second quarter of 2021. Adjusting for one-time costs, constant currency AEBITDA for the second quarter of 2022 and 2021 totaled $18.2 million and $25.6 million, respectively, a decrease of $7.4 million, or 28.9%.

Comparison of Six Months Ended June 30, 2022 to Six Months Ended June 30, 2021

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

% Net revenue

 

 

2021

 

 

% Net revenue

 

Net revenue

 

$

169.3

 

 

 

 

$

177.7

 

 

 

Cost of goods sold

 

 

116.4

 

 

 

68.8

 

 

 

105.7

 

 

 

59.5

 

Gross profit

 

 

52.9

 

 

 

31.2

 

 

 

72.0

 

 

 

40.5

 

Selling, general and administrative expenses

 

 

60.0

 

 

 

35.4

 

 

 

43.7

 

 

 

24.6

 

Transaction costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Depreciation and amortization expense

 

 

16.2

 

 

 

9.6

 

 

 

17.4

 

 

 

9.8

 

Other operating expense, net

 

 

1.9

 

 

 

1.1

 

 

 

2.1

 

 

 

1.2

 

Income (loss) from operations

 

 

(25.2

)

 

 

(14.9

)

 

 

8.8

 

 

 

5.0

 

Interest expense

 

 

9.9

 

 

 

5.8

 

 

 

11.6

 

 

 

6.5

 

Foreign currency gain

 

 

(2.9

)

 

 

(1.7

)

 

 

(2.4

)

 

 

(1.4

)

Loss before income tax benefit

 

 

(32.2

)

 

 

(19.0

)

 

 

(0.4

)

 

 

(0.2

)

Income tax benefit

 

 

(6.8

)

 

 

(4.0

)

 

 

(1.5

)

 

 

(0.8

)

Net income (loss)

 

$

(25.4

)

 

 

(15.0

)

 

$

1.1

 

 

 

0.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Constant Currency

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

14.5

 

 

 

 

 

$

46.1

 

 

 

 

AEBITDA

 

$

37.3

 

 

 

 

 

$

53.6

 

 

 

 

Net Revenue

The following tables and the discussion that follows compare our net revenue by geographic region and by product line for the six months ended June 30, 2022 and 2021 on a GAAP basis and on a non-GAAP constant currency basis as described above and in the discussion below. See also “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for further detail:

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

% Net revenue

 

 

2021

 

 

% Net revenue

 

North America

 

$

65.2

 

 

 

38.5

 

 

$

63.8

 

 

 

35.9

 

Europe/Asia

 

 

104.1

 

 

 

61.5

 

 

 

113.9

 

 

 

64.1

 

Net revenue

 

$

169.3

 

 

 

100.0

 

 

$

177.7

 

 

 

100.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cushioning machines

 

$

73.8

 

 

 

43.6

 

 

$

78.0

 

 

 

43.9

 

Void-Fill machines

 

 

66.1

 

 

 

39.0

 

 

 

69.8

 

 

 

39.3

 

Wrapping machines

 

 

21.2

 

 

 

12.5

 

 

 

23.7

 

 

 

13.3

 

Other

 

 

8.2

 

 

 

4.8

 

 

 

6.2

 

 

 

3.5

 

Net revenue

 

$

169.3

 

 

 

99.9

 

 

$

177.7

 

 

 

100.0

 

 

29


 

 

 

Non-GAAP Constant Currency

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

% Net revenue

 

 

2021

 

 

% Net revenue

 

 

$ Change

 

 

% Change

 

North America

 

$

65.2

 

 

 

37.3

 

 

$

63.8

 

 

 

37.0

 

 

$

1.4

 

 

 

2.2

 

Europe/Asia

 

 

109.7

 

 

 

62.7

 

 

 

108.7

 

 

 

63.0

 

 

 

1.0

 

 

 

0.9

 

Net revenue

 

$

174.9

 

 

 

100.0

 

 

$

172.5

 

 

 

100.0

 

 

$

2.4

 

 

 

1.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cushioning machines

 

$

76.6

 

 

 

43.8

 

 

$

75.3

 

 

 

43.7

 

 

$

1.3

 

 

 

1.7

 

Void-Fill machines

 

 

67.9

 

 

 

38.8

 

 

 

67.9

 

 

 

39.4

 

 

 

-

 

 

 

-

 

Wrapping machines

 

 

21.6

 

 

 

12.3

 

 

 

23.2

 

 

 

13.4

 

 

 

(1.6

)

 

 

(6.9

)

Other

 

 

8.8

 

 

 

5.0

 

 

 

6.1

 

 

 

3.5

 

 

 

2.7

 

 

 

44.3

 

Net revenue

 

$

174.9

 

 

 

99.9

 

 

$

172.5

 

 

 

100.0

 

 

$

2.4

 

 

 

1.4

 

Net revenue for the six months ended June 30, 2022 was $169.3 million compared to net revenue of $177.7 million in the six months ended June 30, 2021, a decrease of $8.4 million or 4.7%. Net revenue was negatively impacted by currency headwinds, as well as decreases in cushioning, void-fill, wrapping, slightly offset by an increase in other sales. Revenue from all product categories was negatively affected by lower economic activity; lower e-Commerce use due to the opening up of economies; the impact inflationary pressures are having on consumer and corporate budgets; and tightening inventory management in response to uncertainties in the European economic environment. In addition to currency headwinds, revenue from all product categories was negatively affected by our global transition to a new cloud-based ERP system, particularly in the first quarter of 2022. The ERP system transition created certain obstacles that affected operations, including scheduled downtime for cutting over to the new ERP system; processing and shipping inefficiencies associated with using a new ERP system; and, while transitioning to the new ERP system, the delay of pricing increases to help offset input cost pressures. Additionally, the impact of the Omicron variant of COVID-19 limited customer visits in the first quarter of 2022, however, waned during the second quarter of 2022. Cushioning decreased $4.2 million, or 5.4%, to $73.8 million from $78.0 million; void-fill decreased $3.7 million, or 5.3%, to $66.1 million from $69.8 million; wrapping decreased $2.5 million, or 10.5%, to $21.2 million from $23.7 million; and other sales increased $2.0 million, or 32.3%, to $8.2 million from $6.2 million, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The decrease in net revenue is quantified by a decrease in the volume of sales of our paper consumable products of approximately 18.5 pp, offset by a 18.2 pp increase in the price or mix of our paper consumable products, and an increase of 1.7 pp in sales of automated box sizing equipment. Constant currency net revenue was $174.9 million for the six months ended June 30, 2022, a $2.4 million, or 1.4%, increase from constant currency net revenue of $172.5 million for the six months ended June 30, 2021.

Net revenue in North America for the six months ended June 30, 2022 totaled $65.2 million compared to net revenue in North America of $63.8 million in the six months ended June 30, 2021. The increase of $1.4 million, or 2.2%, was primarily attributable to an increase in cushioning, void-fill, and wrapping sales, partially offset by a decrease in other sales.

Net revenue in Europe/Asia for the six months ended June 30, 2022 totaled $104.1 million compared to net revenue in Europe/Asia of $113.9 million in the six months ended June 30, 2021. The decrease of $9.8 million, or 8.6%, was driven primarily by currency headwinds. Constant currency net revenue in Europe/Asia was $109.7 million for the six months ended June 30, 2022, a $1.0 million, or 0.9%, increase from constant currency net revenue of $108.7 million for the six months ended June 30, 2021.

Cost of Goods Sold

Cost of goods sold for the six months ended June 30, 2022 totaled $116.4 million, an increase of $10.7 million, or 10.1%, compared to $105.7 million in the six months ended June 30, 2021. The change was primarily due to increased paper costs and an increase in depreciation of $1.9 million over the prior year. Constant currency cost of goods sold increased by $17.5 million, or 17.0%, to $120.2 million in the six months ended June 30, 2022 from $102.7 million for the six months ended June 30, 2021. As a result, on a constant currency basis, net revenue minus cost of goods sold as a percentage of net revenue decreased by 9.2 pp to 31.3% in the six months ended June 30, 2022 from 40.5% for the comparable period in 2021. We experienced increased manufacturing input costs during the first half of 2022, primarily driven by increased paper costs compared to the first half of 2021. As previously noted, we implemented additional pricing actions beginning in the third quarter of 2022.

SG&A

SG&A for the six months ended June 30, 2022 was $60.0 million, an increase of $16.3 million, or 37.3%, from $43.7 million in the six months ended June 30, 2021. Constant currency SG&A increased by $18.5 million, or 43.2%, to $61.3 million in the six months ended June 30, 2022 from $42.8 million for the comparable period in 2021, largely due to increases in stock compensation expense from the 2021 LTIP PRSUs, increased headcount and associated compensation, and ERP system implementation costs. As previously noted, our lower volumes and continued pressure on margins led to a headcount reduction and deferral of certain initiatives in the first

30


 

half of 2022. As a percentage of constant currency net revenue, constant currency SG&A increased to 35.0% in the six months ended June 30, 2022 from 24.8% in the six months ended June 30, 2021.

Depreciation and Amortization

Depreciation and amortization expenses for the six months ended June 30, 2022 were $16.2 million, a decrease of $1.2 million, or 6.9%, from $17.4 million in the six months ended June 30, 2021, primarily due to a decrease in depreciation of computer software. Constant currency depreciation and amortization expenses decreased by $0.7 million, or 4.1%, to $16.4 million in the six months ended June 30, 2022 from $17.1 million for the six months ended June 30, 2021. As a percentage of constant currency net revenue, constant currency depreciation and amortization expenses decreased to 9.4% in the six months ended June 30, 2022 from 9.9% in the six months ended June 30, 2021.

Other Operating Expense, Net

Other operating expense, net, for the six months ended June 30, 2022 was $1.9 million, a decrease of $0.2 million, or 9.5%, from $2.1 million in the six months ended June 30, 2021. Constant currency other operating expense, net, was $2.6 million in the six months ended June 30, 2022 and was not materially impacted by constant currency adjustments in the six months ended June 30, 2021. The change in other operating expense (income), net was largely driven by decreases in research and development costs in 2022. As a percentage of constant currency net revenue, constant currency other operating expense, net, increased to 1.5% in the six months ended June 30, 2022 from 1.2% in the six months ended June 30, 2021.

Interest Expense

Interest expense for the six months ended June 30, 2022 was $9.9 million, a decrease of $1.7 million, or 14.7%, from $11.6 million in the six months ended June 30, 2021. The change was due to a decrease in debt in the first half of 2022 compared to the first half of 2021. Constant currency interest expense was $10.0 million in the six months ended June 30, 2022, a decrease of $1.5 million or 13.0%, from $11.5 million in the six months ended June 30, 2021. As a percentage of constant currency net revenue, constant currency interest expense decreased to 5.7% in the six months ended June 30, 2022 from 6.7% in the six months ended June 30, 2021.

Foreign Currency Gain

Foreign currency gain for the six months ended June 30, 2022 was $2.9 million, a change of $0.5 million, or 20.8%, from foreign currency gain of $2.4 million in the six months ended June 30, 2021 due to a decline in Euro exchange rates compared to USD. As a percentage of constant currency net revenue, constant currency foreign currency gain decreased to 1.5% in the six months ended June 30, 2022 from 1.8% in the six months ended June 30, 2021.

Income Tax Benefit

Income tax benefit for the six months ended June 30, 2022 was $6.8 million, or an effective tax rate of 21.1%. Income tax benefit was $1.5 million in the six months ended June 30, 2021, or an effective tax rate of 435.1%. The fluctuation in the effective tax rate between periods was primarily attributable to a jurisdictional mix of income. The effective tax rate differs from the U.S. federal statutory rate due primarily to benefits derived from stock-based compensation, the U.S. foreign derived intangible income deduction, tax credits available in the U.S., and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax rate.

Net Income (Loss)

Net loss for the six months ended June 30, 2022 increased $26.5 million to $25.4 million from net income of $1.1 million in the six months ended June 30, 2021. Constant currency net loss was $25.8 million in the six months ended June 30, 2022 compared to constant currency net income of $1.0 million for the six months ended June 30, 2021. The change was due to the reasons discussed above.

Constant Currency EBITDA and AEBITDA

EBITDA for the six months ended June 30, 2022 was $14.5 million, a decrease of $31.6 million, or 68.5%, from $46.1 million in the six months ended June 30, 2021. Adjusting for one-time costs, constant currency AEBITDA for the six months ended June 30, 2022 and 2021 totaled $37.3 million and $53.6 million, respectively, a decrease of $16.3 million, or 30.4%.

Presentation and Reconciliation of GAAP to Non-GAAP Measures

31


 

As noted above, we believe that in order to better understand the performance of the Company, providing non-GAAP financial measures to users of our financial information is helpful. We believe presentation of these non-GAAP measures is useful because they are many of the key measures that allow management to evaluate more effectively our operating performance and compare the results of our operations from period to period and against peers without regard to financing methods or capital structure. Management does not consider these non-GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with GAAP. The computations of EBITDA and AEBITDA may not be comparable to other similarly titled measures of other companies. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, measures of financial performance as determined in accordance with GAAP or as indicators of operating performance.

The following tables and related notes reconcile certain non-GAAP measures, including the non-GAAP constant currency measures, to GAAP information presented in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2022 and 2021:

 

 

 

Three Months Ended June 30, 2022

 

 

 

As reported

 

 

Constant Currency(4)

 

 

Non-GAAP

 

Net revenue

 

$

86.8

 

 

$

4.2

 

 

$

91.0

 

Cost of goods sold

 

 

58.5

 

 

 

2.8

 

 

 

61.3

 

Gross profit

 

 

28.3

 

 

 

1.4

 

 

 

29.7

 

Selling, general and administrative expenses

 

 

30.3

 

 

 

1.0

 

 

 

31.3

 

Depreciation and amortization expense

 

 

8.0

 

 

 

0.1

 

 

 

8.1

 

Other operating expense, net

 

 

1.4

 

 

 

0.5

 

 

 

1.9

 

Loss from operations

 

 

(11.4

)

 

 

(0.2

)

 

 

(11.6

)

Interest expense

 

 

4.9

 

 

 

0.1

 

 

 

5.0

 

Foreign currency gain

 

 

(2.3

)

 

 

0.2

 

 

 

(2.1

)

Loss before income tax benefit

 

 

(14.0

)

 

 

(0.5

)

 

 

(14.5

)

Income tax benefit

 

 

(2.7

)

 

 

(0.2

)

 

 

(2.9

)

Net loss

 

$

(11.3

)

 

$

(0.3

)

 

 

(11.6

)

 

 

 

 

 

 

 

 

 

 

Constant currency-effected add(1):

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense – COS

 

 

 

 

 

 

 

 

10.2

 

Depreciation and amortization expense – D&A

 

 

 

 

 

 

 

 

8.1

 

Interest expense

 

 

 

 

 

 

 

 

5.0

 

Income tax benefit

 

 

 

 

 

 

 

 

(2.9

)

Constant currency EBITDA

 

 

 

 

 

 

 

 

8.8

 

 

 

 

 

 

 

 

 

 

 

Constant currency-effected adjustments(2):

 

 

 

 

 

 

 

 

 

Unrealized gain translation

 

 

 

 

 

 

 

 

(2.2

)

Non-cash impairment losses

 

 

 

 

 

 

 

 

0.2

 

M&A, restructuring, severance

 

 

 

 

 

 

 

 

1.1

 

Amortization of restricted stock units

 

 

 

 

 

 

 

 

5.3

 

Amortization of cloud-based software implementation costs(3)

 

 

 

 

 

 

 

 

0.7

 

Cloud-based software implementation costs

 

 

 

 

 

 

 

 

2.4

 

Other adjustments

 

 

 

 

 

 

 

 

1.9

 

Constant currency AEBITDA

 

 

 

 

 

 

 

$

18.2

 

 

32


 

 

 

 

Three Months Ended June 30, 2021

 

 

 

As reported

 

 

Constant Currency(4)

 

 

Non-GAAP

 

Net revenue

 

$

90.0

 

 

$

(2.5

)

 

$

87.5

 

Cost of goods sold

 

 

54.3

 

 

 

(1.5

)

 

 

52.8

 

Gross profit

 

 

35.7

 

 

 

(1.0

)

 

 

34.7

 

Selling, general and administrative expenses

 

 

24.6

 

 

 

(0.5

)

 

 

24.1

 

Depreciation and amortization expense

 

 

8.7

 

 

 

(0.2

)

 

 

8.5

 

Other operating expense, net

 

 

1.3

 

 

 

-

 

 

 

1.3

 

Income from operations

 

 

1.1

 

 

 

(0.3

)

 

 

0.8

 

Interest expense

 

 

6.0

 

 

 

(0.1

)

 

 

5.9

 

Foreign currency loss

 

 

1.2

 

 

 

(0.3

)

 

 

0.9

 

Loss before income tax benefit

 

 

(6.1

)

 

 

0.0

 

 

 

(6.0

)

Income tax benefit

 

 

(0.9

)

 

 

-

 

 

 

(0.9

)

Net loss

 

$

(5.2

)

 

$

0.0

 

 

 

(5.1

)

 

 

 

 

 

 

 

 

 

 

Constant currency-effected add(1):

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense – COS

 

 

 

 

 

 

 

 

9.2

 

Depreciation and amortization expense – D&A

 

 

 

 

 

 

 

 

8.5

 

Interest expense

 

 

 

 

 

 

 

 

5.9

 

Income tax benefit

 

 

 

 

 

 

 

 

(0.9

)

Constant currency EBITDA

 

 

 

 

 

 

 

 

17.6

 

 

 

 

 

 

 

 

 

 

 

Constant currency-effected adjustments(2):

 

 

 

 

 

 

 

 

 

Unrealized gain translation

 

 

 

 

 

 

 

 

1.0

 

Non-cash impairment losses

 

 

 

 

 

 

 

 

0.5

 

M&A, restructuring, severance

 

 

 

 

 

 

 

 

0.3

 

Amortization of restricted stock units

 

 

 

 

 

 

 

 

4.7

 

Other adjustments

 

 

 

 

 

 

 

 

1.5

 

Constant currency AEBITDA

 

 

 

 

 

 

 

$

25.6

 

 

 

 

Non-GAAP Constant Currency

 

 

 

Three Months Ended June 30,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

Net revenue

 

$

91.0

 

 

$

87.5

 

 

$

3.5

 

 

 

4.0

 

Cost of goods sold

 

 

61.3

 

 

 

52.8

 

 

 

8.5

 

 

 

16.1

 

Gross profit

 

 

29.7

 

 

 

34.7

 

 

 

(5.0

)

 

 

(14.4

)

Selling, general and administrative expenses

 

 

31.3

 

 

 

24.1

 

 

 

7.2

 

 

 

29.9

 

Depreciation and amortization expense

 

 

8.1

 

 

 

8.5

 

 

 

(0.4

)

 

 

(4.7

)

Other operating expense, net

 

 

1.9

 

 

 

1.3

 

 

 

0.6

 

 

 

46.2

 

Income (loss) from operations

 

 

(11.6

)

 

 

0.8

 

 

 

(12.4

)

 

 

(1,550.0

)

Interest expense

 

 

5.0

 

 

 

5.9

 

 

 

(0.9

)

 

 

(15.3

)

Foreign currency (gain) loss

 

 

(2.1

)

 

 

0.9

 

 

 

(3.0

)

 

 

(333.3

)

Loss before income tax benefit

 

 

(14.5

)

 

 

(6.0

)

 

 

(8.5

)

 

 

141.7

 

Income tax benefit

 

 

(2.9

)

 

 

(0.9

)

 

 

(2.0

)

 

 

222.2

 

Net loss

 

 

(11.6

)

 

 

(5.1

)

 

 

(6.5

)

 

 

127.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Constant currency-effected add(1):

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense – COS

 

 

10.2

 

 

 

9.2

 

 

 

1.0

 

 

 

10.9

 

Depreciation and amortization expense – D&A

 

 

8.1

 

 

 

8.5

 

 

 

(0.4

)

 

 

(4.7

)

Interest expense

 

 

5.0

 

 

 

5.9

 

 

 

(0.9

)

 

 

(15.3

)

Income tax benefit

 

 

(2.9

)

 

 

(0.9

)

 

 

(2.0

)

 

 

222.2

 

Constant currency EBITDA

 

 

8.8

 

 

 

17.6

 

 

 

(8.8

)

 

 

(50.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Constant currency-effected adjustments(2):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (gain) loss translation

 

 

(2.2

)

 

 

1.0

 

 

 

(3.2

)

 

 

(320.0

)

Non-cash impairment losses

 

 

0.2

 

 

 

0.5

 

 

 

(0.3

)

 

 

(60.0

)

M&A, restructuring, severance

 

 

1.1

 

 

 

0.3

 

 

 

0.8

 

 

 

266.7

 

Amortization of restricted stock units

 

 

5.3

 

 

 

4.7

 

 

 

0.6

 

 

 

12.8

 

Amortization of cloud-based software implementation costs(3)

 

 

0.7

 

 

 

-

 

 

 

0.7

 

 

 

Cloud-based software implementation costs

 

 

2.4

 

 

 

-

 

 

 

2.4

 

 

 

Other adjustments

 

 

1.9

 

 

 

1.5

 

 

 

0.4

 

 

 

26.7

 

Constant currency AEBITDA

 

$

18.2

 

 

$

25.6

 

 

$

(7.4

)

 

 

(28.9

)

 

33


 

 

 

 

Six Months Ended June 30, 2022

 

 

 

As reported

 

 

Constant Currency(3)

 

 

Non-GAAP

 

Net revenue

 

$

169.3

 

 

$

5.6

 

 

$

174.9

 

Cost of goods sold

 

 

116.4

 

 

 

3.8

 

 

 

120.2

 

Gross profit

 

 

52.9

 

 

 

1.8

 

 

 

54.7

 

Selling, general and administrative expenses

 

 

60.0

 

 

 

1.3

 

 

 

61.3

 

Depreciation and amortization expense

 

 

16.2

 

 

 

0.2

 

 

 

16.4

 

Other operating expense, net

 

 

1.9

 

 

 

0.7

 

 

 

2.6

 

Loss from operations

 

 

(25.2

)

 

 

(0.4

)

 

 

(25.6

)

Interest expense

 

 

9.9

 

 

 

0.1

 

 

 

10.0

 

Foreign currency gain

 

 

(2.9

)

 

 

0.2

 

 

 

(2.7

)

Loss before income tax benefit

 

 

(32.2

)

 

 

(0.7

)

 

 

(32.9

)

Income tax benefit

 

 

(6.8

)

 

 

(0.3

)

 

 

(7.1

)

Net loss

 

$

(25.4

)

 

$

(0.4

)

 

 

(25.8

)

 

 

 

 

 

 

 

 

 

 

Constant currency-effected add(1):

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense – COS

 

 

 

 

 

 

 

 

21.0

 

Depreciation and amortization expense – D&A

 

 

 

 

 

 

 

 

16.4

 

Interest expense

 

 

 

 

 

 

 

 

10.0

 

Income tax benefit

 

 

 

 

 

 

 

 

(7.1

)

Constant currency EBITDA

 

 

 

 

 

 

 

 

14.5

 

 

 

 

 

 

 

 

 

 

 

Constant currency-effected adjustments(2):

 

 

 

 

 

 

 

 

 

Unrealized gain translation

 

 

 

 

 

 

 

 

(2.8

)

Non-cash impairment losses

 

 

 

 

 

 

 

 

0.2

 

M&A, restructuring, severance

 

 

 

 

 

 

 

 

1.6

 

Amortization of restricted stock units

 

 

 

 

 

 

 

 

14.1

 

Amortization of cloud-based software implementation costs(3)

 

 

 

 

 

 

 

 

1.4

 

Cloud-based software implementation costs

 

 

 

 

 

 

 

 

5.0

 

Other adjustments

 

 

 

 

 

 

 

 

3.3

 

Constant currency AEBITDA

 

 

 

 

 

 

 

$

37.3

 

 

 

 

Six Months Ended June 30, 2021

 

 

 

As reported

 

 

Constant Currency(3)

 

 

Non-GAAP

 

Net revenue

 

$

177.7

 

 

$

(5.2

)

 

$

172.5

 

Cost of goods sold

 

 

105.7

 

 

 

(3.0

)

 

 

102.7

 

Gross profit

 

 

72.0

 

 

 

(2.2

)

 

 

69.8

 

Selling, general and administrative expenses

 

 

43.7

 

 

 

(0.9

)

 

 

42.8

 

Depreciation and amortization expense

 

 

17.4

 

 

 

(0.3

)

 

 

17.1

 

Other operating expense, net

 

 

2.1

 

 

 

-

 

 

 

2.1

 

Income from operations

 

 

8.8

 

 

 

(1.0

)

 

 

7.8

 

Interest expense

 

 

11.6

 

 

 

(0.1

)

 

 

11.5

 

Foreign currency gain

 

 

(2.4

)

 

 

(0.7

)

 

 

(3.1

)

Loss before income tax benefit

 

 

(0.4

)

 

 

(0.2

)

 

 

(0.6

)

Income tax benefit

 

 

(1.5

)

 

 

(0.1

)

 

 

(1.6

)

Net income

 

$

1.1

 

 

$

(0.1

)

 

 

1.0

 

 

 

 

 

 

 

 

 

 

 

Constant currency-effected add(1):

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense – COS

 

 

 

 

 

 

 

 

18.1

 

Depreciation and amortization expense – D&A

 

 

 

 

 

 

 

 

17.1

 

Interest expense

 

 

 

 

 

 

 

 

11.5

 

Income tax benefit

 

 

 

 

 

 

 

 

(1.6

)

Constant currency EBITDA

 

 

 

 

 

 

 

 

46.1

 

 

 

 

 

 

 

 

 

 

 

Constant currency-effected adjustments(2):

 

 

 

 

 

 

 

 

 

Unrealized loss translation

 

 

 

 

 

 

 

 

(2.6

)

Non-cash impairment losses

 

 

 

 

 

 

 

 

0.7

 

M&A, restructuring, severance

 

 

 

 

 

 

 

 

0.4

 

Amortization of restricted stock units

 

 

 

 

 

 

 

 

7.4

 

Other adjustments

 

 

 

 

 

 

 

 

1.6

 

Constant currency AEBITDA

 

 

 

 

 

 

 

$

53.6

 

 

34


 

 

 

Non-GAAP Constant Currency

 

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

% Change

 

Net revenue

 

$

174.9

 

 

$

172.5

 

 

$

2.4

 

 

 

1.4

 

Cost of goods sold

 

 

120.2

 

 

 

102.7

 

 

 

17.5

 

 

 

17.0

 

Gross profit

 

 

54.7

 

 

 

69.8

 

 

 

(15.1

)

 

 

(21.6

)

Selling, general and administrative expenses

 

 

61.3

 

 

 

42.8

 

 

 

18.5

 

 

 

43.2

 

Depreciation and amortization expense

 

 

16.4

 

 

 

17.1

 

 

 

(0.7

)

 

 

(4.1

)

Other operating expense, net

 

 

2.6

 

 

 

2.1

 

 

 

0.5

 

 

 

23.8

 

Income (loss) from operations

 

 

(25.6

)

 

 

7.8

 

 

 

(33.4

)

 

 

(428.2

)

Interest expense

 

 

10.0

 

 

 

11.5

 

 

 

(1.5

)

 

 

(13.0

)

Foreign currency gain

 

 

(2.7

)

 

 

(3.1

)

 

 

0.4

 

 

 

(12.9

)

Loss before income tax benefit

 

 

(32.9

)

 

 

(0.6

)

 

 

(32.3

)

 

 

5,383.3

 

Income tax benefit

 

 

(7.1

)

 

 

(1.6

)

 

 

(5.5

)

 

 

343.8

 

Net income (loss)

 

 

(25.8

)

 

 

1.0

 

 

 

(26.8

)

 

 

(2,680.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Constant currency-effected add(1):

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense – COS

 

 

21.0

 

 

 

18.1

 

 

 

2.9

 

 

 

16.0

 

Depreciation and amortization expense – D&A

 

 

16.4

 

 

 

17.1

 

 

 

(0.7

)

 

 

(4.1

)

Interest expense

 

 

10.0

 

 

 

11.5

 

 

 

(1.5

)

 

 

(13.0

)

Income tax benefit

 

 

(7.1

)

 

 

(1.6

)

 

 

(5.5

)

 

 

343.8

 

Constant currency-effected EBITDA

 

 

14.5

 

 

 

46.1

 

 

 

(31.6

)

 

 

(68.5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Constant currency-effected adjustments(2):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain translation

 

 

(2.8

)

 

 

(2.6

)

 

 

(0.2

)

 

 

7.7

 

Non-cash impairment losses

 

 

0.2

 

 

 

0.7

 

 

 

(0.5

)

 

 

(71.4

)

M&A, restructuring, severance

 

 

1.6

 

 

 

0.4

 

 

 

1.2

 

 

 

300.0

 

Amortization of restricted stock units

 

 

14.1

 

 

 

7.4

 

 

 

6.7

 

 

 

90.5

 

Amortization of cloud-based software implementation costs(3)

 

 

1.4

 

 

 

-

 

 

 

1.4

 

 

 

Cloud-based software implementation costs

 

 

5.0

 

 

 

-

 

 

 

5.0

 

 

 

Other adjustments

 

 

3.3

 

 

 

1.6

 

 

 

1.7

 

 

 

106.3

 

Constant currency-effected AEBITDA

 

$

37.3

 

 

$

53.6

 

 

$

(16.3

)

 

 

(30.4

)

(see subsequent footnotes)

(1) Reconciliations of EBITDA and AEBITDA for each period presented are to net (loss) income, the nearest GAAP equivalent, and accordingly include the adjustments shown in the “Constant Currency” column to net (loss) income of each table.

(2) Adjustments are related to non-cash unusual or infrequent costs such as: effects of non-cash foreign currency remeasurement or adjustment; impairment of returned machines; costs associated with the evaluation of acquisitions; costs associated with executive severance; costs associated with restructuring actions such as plant rationalization or realignment, reorganization, and reductions in force; costs associated with the implementation of the global ERP system; and other items deemed by management to be unusual, infrequent, or non-recurring.

(3) Represents amortization of capitalized costs related to the implementation of the global ERP system, which are included in SG&A.

(4) Effect of Euro constant currency adjustment to a rate of €1.00 to $1.15 on each line item is as follows:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net revenue

 

$

4.2

 

 

$

(2.5

)

 

$

5.6

 

 

$

(5.2

)

Cost of goods sold

 

 

2.8

 

 

 

(1.5

)

 

 

3.8

 

 

 

(3.0

)

Gross profit

 

 

1.4

 

 

 

(1.0

)

 

 

1.8

 

 

 

(2.2

)

Selling, general and administrative expenses

 

 

1.0

 

 

 

(0.5

)

 

 

1.3

 

 

 

(0.9

)

Depreciation and amortization expense

 

 

0.1

 

 

 

(0.2

)

 

 

0.2

 

 

 

(0.3

)

Other operating expense, net

 

 

0.5

 

 

 

-

 

 

 

0.7

 

 

 

-

 

Loss from operations

 

 

(0.2

)

 

 

(0.3

)

 

 

(0.4

)

 

 

(1.0

)

Interest expense (income)

 

 

0.1

 

 

 

(0.1

)

 

 

0.1

 

 

 

(0.1

)

Foreign currency (gain) loss

 

 

0.2

 

 

 

(0.3

)

 

 

0.2

 

 

 

(0.7

)

Income (loss) before income tax benefit

 

 

(0.5

)

 

 

0.0

 

 

 

(0.7

)

 

 

(0.2

)

Income tax benefit

 

 

(0.2

)

 

 

-

 

 

 

(0.3

)

 

 

(0.1

)

Net income (loss)

 

$

(0.3

)

 

$

0.0

 

 

$

(0.4

)

 

$

(0.1

)

 

Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, capital expenditures, debt service, acquisitions, other commitments and contractual obligations. We evaluate liquidity in terms of cash flows from operations and other sources and the sufficiency of such cash flows to fund our operating, investing and financing activities.

35


 

We believe that our estimated cash from operations together with borrowing capacity under the revolving portion of the Facilities will provide us with sufficient resources to cover our current requirements. Our main liquidity needs relate to capital expenditures and expenses for the production and maintenance of PPS systems placed at end-user facilities, working capital, including the purchase of paper raw materials, and payments of principal and interest on our outstanding debt. We expect our capital expenditures to increase as we continue to grow our business, expand our manufacturing footprint, and upgrade our existing systems and facilities. We continue to evaluate our inventory requirements and adjust according to our volume forecasts. Our future capital requirements and the adequacy of available funds will depend on many factors, and if we are unable to obtain needed additional funds, we may have to reduce our operating costs or incur additional debt, which could impair our growth prospects and/or otherwise negatively impact our business. Further, volatility in the equity and credit markets resulting from the COVID-19 pandemic, the conflict in Ukraine, or other macroeconomic factors could make obtaining new equity or debt financing more difficult or expensive.

We had $59.2 million in cash and cash equivalents as of June 30, 2022 and $103.9 million as of December 31, 2021. We sold approximately 5.3 million shares of Class A common stock in the May 2021 Equity Offering for net proceeds of $103.4 million. We used $70.0 million of proceeds from the May 2021 Equity Offering to invest in a money market fund to generate short-term cash returns. Additionally, we prepaid $20.9 million of principal on the First Lien Dollar Term Facility in the June 2021 Prepayment.

Including finance lease liabilities and excluding deferred financing costs, we had $393.6 million in debt, $2.1 million of which was classified as short-term, as of June 30, 2022, compared to $406.5 million in debt, $2.2 million of which was classified as short-term, as of December 31, 2021. At June 30, 2022, we did not have amounts outstanding under our $45.0 million revolving credit facility, and we had no borrowings under such facility through July 28, 2022.

Share Repurchase Program

On July 26, 2022, the Directors authorized a general share repurchase program of our Class A common stock of up to $50.0 million, with a 36-month expiration. These Class A common stock repurchases may occur in transactions that may include, without limitation, tender offers, open market purchases, accelerated share repurchases, negotiated block purchases, and transactions effected through plans under Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and actual amount of shares repurchased will depend on a variety of different factors and may be modified, suspended or terminated at any time at the discretion of the Directors.

Debt Profile

The material terms of the Facilities are summarized in Note 7, Long-Term Debt” to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

In June 2019, Holdings, the U.S. Borrower, and the Dutch Borrower entered into the Facilities. The First Lien Term Facility matures in 2026 and the Revolving Facility matures in 2024. As of June 30, 2022 and December 31, 2021, no amounts were outstanding under the Revolving Facility.

Borrowings under the Facilities, at the Borrowers’ option, bear interest at either (i) an adjusted eurocurrency rate or (ii) a base rate, in each case plus an applicable margin. The applicable margin is 3.75% with respect to eurocurrency borrowings and base rate borrowings as of June 30, 2022 and December 31, 2021, (in each case, assuming a first lien net leverage ratio of less than 5.00:1.00), subject to a leverage-based step-up to an applicable margin equal to 4.00% for eurocurrency borrowings.

The Revolving Facility includes borrowing capacity available for standby letters of credit of up to $5.0 million. Any issuance of letters of credit will reduce the amount available under the Revolving Facility. As of June 30, 2022, we had $0.8 million committed to outstanding letters of credit, leaving net availability under the Revolving Facility at $44.2 million.

The Facilities will provide the Borrowers with the option to increase commitments under the Facilities in an aggregate amount not to exceed the greater of $95.0 million and 100% of trailing-twelve months Consolidated EBITDA (as defined in the definitive documentation with respect to the Facilities), plus any voluntary prepayments of the debt financing (and, in the case of the Revolving Facility, to the extent such voluntary prepayments are accompanied by permanent commitment reductions under the Revolving Facility), plus unlimited amounts subject to the relevant net leverage ratio tests and certain other conditions.

The obligations of (i) the U.S. Borrower under the Facilities and certain of its obligations under hedging arrangements and cash management arrangements are unconditionally guaranteed by Holdings and the Guarantors, in each case, other than certain excluded subsidiaries. The Facilities are secured by (i) a first priority pledge of the equity interests of the Borrowers and of each direct, wholly-owned restricted subsidiary of any Borrower or any Guarantor and (ii) a first priority security interest in substantially all of the assets of the Borrowers and the Guarantors (in each case, subject to customary exceptions), provided that obligations of the U.S. Borrower and U.S. Guarantors under the Facilities were not secured by assets of the Dutch Borrower or any Dutch Guarantor.

36


 

The Facilities impose restrictions that require the Company to comply with or maintain certain financial tests and ratios. Such agreements restrict our ability to, among other things: (i) declare dividends or redeem or repurchase capital stock, including with respect to Class A common stock; (ii) prepay, redeem or purchase other debt; (iii) incur liens; (iv) make loans, guarantees, acquisitions and other investments; (v) incur additional indebtedness; (vi) engage in sale and leaseback transactions; (vii) amend or otherwise alter debt and other material agreements; (viii) engage in mergers, acquisitions and asset sales; (ix) engage in transactions with affiliates; and (x) enter into arrangements that would prohibit us from granting liens or restrict our ability to pay dividends, make loans or transfer assets among our subsidiaries.

Amendment to First Lien Credit Facilities

On February 14, 2020, the U.S. Borrower, the Dutch Borrower, Holdings, certain other subsidiaries of Holdings, certain lenders party to Amendment No. 1 and the Administrative Agent entered into Amendment No. 1.

Among other things, the Amendment No. 1 amends the Facilities such that (x) the requirement of the Borrowers to apply a percentage of excess cash flow to mandatorily prepay term loans under the Facilities commences with the fiscal year ending December 31, 2021 (instead of the fiscal year ending December 31, 2020) and (y) the aggregate amount per fiscal year of capital stock of any parent company of the U.S. Borrower that is held by directors, officers, management, employees, independent contractors or consultants of the U.S. Borrower (or any parent company or subsidiary thereof) that the U.S. Borrower may repurchase, redeem, retire or otherwise acquire or retire for value has been increased to the greater of $10.0 million and 10% of Consolidated AEBITDA (as defined in the Facilities) (increased from the greater of $7.0 million and 7% of Consolidated AEBITDA) as of the last day of the most recently ended quarter for which financial statements have been delivered.

Borrower Assumption Agreement

On July 1, 2020, contemporaneously with the Reorganization, Ranger Packaging LLC, Ranpak Corp., Ranger Pledgor LLC, certain other subsidiaries of Ranger Pledgor LLC and Goldman Sachs Lending Partners LLC entered into the Borrower Assumption Agreement whereby, among other things, Ranpak Corp. assumed all obligations, liabilities and rights of Ranger Packaging LLC as the U.S. Borrower under the Facilities.

Permitted Exit Payment

Additionally, as a result of making the Exit Payment to our lenders, we became eligible to enter into the Permitted Exit Payment Amendment (as defined in the Credit Agreement) to the Credit Agreement which, among other things, would introduce additional exceptions to the negative covenant that restricts the ability of the Borrowers and their restricted subsidiaries from paying dividends and distributions or repurchasing capital stock. On July 28, 2021, the Permitted Exit Payment Amendment to the Credit Agreement became effective.

Cash Flows

The following table sets forth our summary cash flow information for the periods indicated:

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Net cash provided by (used in) operating activities

 

$

(16.3

)

 

$

30.8

 

Net cash used in investing activities

 

 

(23.8

)

 

 

(26.8

)

Net cash provided by (used in) financing activities

 

 

(3.7

)

 

 

73.2

 

Effect of Exchange Rate Changes on Cash

 

 

(0.9

)

 

 

(0.4

)

Net Increase (Decrease) in Cash and Cash Equivalents

 

 

(44.7

)

 

 

76.8

 

Cash and Cash Equivalents, beginning of period

 

 

103.9

 

 

 

48.5

 

Cash and Cash Equivalents, end of period

 

$

59.2

 

 

$

125.3

 

 

Cash Flows Provided by (Used in) Operating Activities

Net cash used in operating activities was $16.3 million in the six months ended June 30, 2022. Cash provided by operating activities was $30.8 million in the six months ended June 30, 2021. The changes in operating cash flows are largely due to the decreases in cash earnings due to increased input costs, increased SG&A, currency headwinds, and investments in working capital.

Cash Flows Used in Investing Activities

Net cash used in investing activities was $23.8 million in the six months ended June 30, 2022 and reflects cash used for production of converter equipment and the renovation of our global headquarters in Concord, Ohio. Cash used in investing activities was $26.8

37


 

million in the six months ended June 30, 2021 and reflects cash used for production of converter equipment and technology infrastructure improvements.

Cash Flows Provided by (Used in) Financing Activities

Net cash used in financing activities was $3.7 million in the six months ended June 30, 2022 and reflects debt repayments, payments on finance lease liabilities, and tax payments for withholdings on stock compensation. Net cash provided by financing activities was $73.2 million in the six months ended June 30, 2021 and reflects the May 2021 Equity Offering net proceeds of $103.4 million, offset by the June 2021 Prepayment of $20.9 million, and the $8.2 million Exit Payment.

Contractual Obligations and Other Commitments

We lease production and administrative facilities as well as automobiles, machinery and equipment. We have various contractual obligations and commercial commitments that are recorded as liabilities in our condensed consolidated financial statements. Other items, such as purchase obligations and other executory contracts, are not recognized as liabilities, but are required to be disclosed. There have been no significant changes outside the ordinary course of business to our “Contractual Obligations” table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2021 10-K.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2022.

Critical Accounting Policies

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe that the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and various other assumptions that we believe are reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies and estimates, are disclosed in our 2021 10-K.

We periodically review goodwill and indefinite-lived intangible assets for possible impairment whenever there is evidence that events or changes in circumstances indicate that the carrying value of our goodwill reporting units or identifiable indefinite-lived intangible assets may be less than their fair values. Additionally, we review our long-lived asset groups whenever there is evidence that events or changes in circumstances indicate the carrying value of our asset groups may not be recoverable. If events or circumstances exist, including a continuation of current market conditions, that indicate that the carrying value of our goodwill reporting units or identifiable indefinite-lived intangible assets may be less than their fair values, or the carrying amount of our long lived-asset groups may no longer be recoverable, we may recognize a non-cash impairment of goodwill, identifiable indefinite-lived intangible assets, or long-lived asset groups, which could have a material adverse effect on our consolidated financial condition or results of operations in future periods. For additional information on our accounting principles with respect to goodwill, identifiable indefinite-lived intangible assets, and long-lived assets, please see “Management Discussion & Analysis – Critical Accounting Policies” in our 2021 10-K.

Recently Issued and Adopted Accounting Pronouncements

For recently issued and adopted accounting pronouncements, see Note 2, Basis of Presentation and Summary of Significant Accounting Policies” to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

38


 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Changes in interest rates affect the amount of interest income we earn on cash, cash equivalents and short-term investments and the amount of interest expense we pay on borrowings under the floating rate portions of our Facilities. A hypothetical 100 basis point increase or decrease in the applicable base interest rates under our Facilities would have resulted in a $3.0 million impact on our cash interest expense for the six months ended June 30, 2022. We use interest rate swap agreements to manage this exposure.

In March 2020, we entered into the Second Amended January 2019 Swap, which amended the Amended January 2019 Swap to a lower rate of 2.1% and extend its maturity to June 1, 2024. In July 2020, we entered into the Borrower Assumption Agreement, which details the Reorganization and the assumption of obligations, liabilities and rights under the Facilities. In July 2021, we entered into the Permitted Exit Payment to the Credit Agreement, which, among other things, would introduce additional exceptions to the negative covenant that restricts the ability of the Borrowers and their restricted subsidiaries from paying dividends and distributions or repurchasing capital stock. Refer to Note 7, Long-Term Debt” and Note 8, Derivative Instruments” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. It is expected that most, if not all, banks currently reporting information to set LIBOR will stop doing so at such time, which could either cause LIBOR publication to stop immediately or cause LIBOR’s regulator to announce the discontinuation of its publication (and, during any such transition period, LIBOR may perform differently than in the past).

On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of LIBOR, with the support of the United States Federal Reserve and the United Kingdom’s Financial Conduct Authority, announced plans to consult on ceasing publication of USD LIBOR on December 31, 2021 for only the one week and two month USD LIBOR tenors, and on June 30, 2023 for all other USD LIBOR tenors. While this announcement extends the transition period to June 2023, the United States Federal Reserve concurrently issued a statement advising banks to stop new USD LIBOR issuances by the end of 2021.

These reforms may also result in new methods of calculating LIBOR to be established, or alternative reference rates to be established. For example, in the U.S., a group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, called the Alternative Reference Rate Committee (“ARRC”) and comprised of a diverse set of private sector entities, has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for the U.S. LIBOR and the Federal Reserve Bank of New York has begun publishing SOFR daily, and central banks in several other jurisdictions have also announced plans for alternative reference rates for other currencies. Our existing indebtedness and interest rate swaps are based on one-month and three-month USD LIBOR tenors, which will transition in June 2023, therefore, these reforms are not applicable at this time. However, the potential consequences of these changes cannot be fully predicted and could have an adverse impact on our interest payment obligations under the Facilities and related interest rate swaps.

There were no other changes to our debt and interest rate swap agreements from those disclosed in the 2021 10-K.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange risk related to our transactions and subsidiaries’ balances that are denominated in currencies other than USD, our functional currency. See “Effect of Currency Fluctuations” in Item 2 previously for more information about our foreign currency exchange rate exposure. We seek to naturally hedge our foreign exchange transaction exposure by matching the transaction currencies for our cash inflows and outflows and maintaining access to credit in the principal currencies in which we conduct business. Additionally, we hedge some of our exposure to foreign currency translation with a cross currency swap. Refer to Note 8, Derivative Instruments” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

For the six months ended June 30, 2022, net revenue denominated in currencies other than USD amounted to $103.4 million or 61.1% of our net revenue for the period. Substantially all of this amount was denominated in Euro. A 10% increase or decrease in the value of the Euro to the USD would have caused our reported net revenue for the six months ended June 30, 2022 to increase or decrease by approximately $10.4 million.

Commodity Price Risk

While our business is significantly impacted by price fluctuations related to the purchase, production and sale of paper products, we are typically not directly exposed to market price fluctuations in paper purchase or sale prices as we historically have negotiated prices with suppliers on an annual basis and negotiate prices with distributors reflecting competitive market terms. Our strategy has generally been to obtain competitive prices for our products and services and allow operating results to reflect market price

39


 

movements dictated by supply and demand. However, due to global inflation and other macroeconomic factors, including COVID-19 and the conflict in Ukraine, we may be subject to significantly more commodity price volatility than we have historically experienced.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our management, with the participation of the CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2022. Based on this evaluation of our disclosure controls and procedures, our management, with the participation of the CEO and CFO, concluded that our disclosure controls and procedures were effective as of June 30, 2022.

Changes in Internal Control Over Financial Reporting

In the first quarter of 2022, we implemented a new ERP system globally across our Company that will be used to better manage our business and summarize our operating results. This ERP system implementation affects multiple financial reporting functions, including accounts receivable, fixed assets, project accounting, accounts payable, and general ledger applications. As a result of this ERP system implementation, we revised certain existing internal controls, processes, and procedures. While we do not believe this ERP system implementation will have an adverse effect on our internal control over financial reporting, there are inherent risks in implementing an ERP system. Accordingly, we will continue to evaluate the design and operating effectiveness of these controls.

Other than this ERP system implementation, there were no changes during the second quarter of 2022 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

None.

Item 1A. Risk Factors

Information about our risk factors is contained in Item 1A of the 2021 10-K as supplemented by Item 1A of our Quarterly Report on Form 10-Q for the period ended March 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

40


 

Item 6. Exhibits

 

Exhibit No.

 

Description

 

 

 

3.1

 

Certificate of Incorporation of the Company (incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-38348), filed with the SEC on June 6, 2019)

 

 

 

3.2

 

Bylaws of the Company (incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-38348), filed with the SEC on June 6, 2019)

 

 

 

4.1

 

Specimen Common Stock Certificate (incorporated by reference to the corresponding exhibit to the Company’s Registration Statement on Form S-3, as amended (File No. 333-232105), filed with the SEC on July 26, 2019)

 

 

 

31.1*

 

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

31.2*

 

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

32*

 

Certificate of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

101.INS

 

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

 

 

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.DEF

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

 

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

104*

 

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

* Filed herewith

 

41


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

Ranpak Holdings Corp.

 

 

 

 

 

Date:

July 28, 2022

 

By:

/s/ William Drew

 

 

 

 

William Drew

 

 

 

 

Senior Vice President and Chief Financial Officer

 

42



Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing    Date    Other Filings
1/1/26
1/1/25
6/1/24
1/1/24
6/30/23
6/1/23
Filed on:7/28/228-K
7/26/22
For Period end:6/30/22
6/3/228-K
3/31/2210-Q
2/28/2210-K,  4
12/31/2110-K
9/1/21
7/28/21
6/30/2110-Q
3/31/2110-Q
12/31/2010-K
11/30/20
7/1/20
3/27/20
2/14/208-K,  SC 13G
12/31/1910-K,  NT 10-K
9/25/19
6/3/1925-NSE,  3,  4,  8-K
1/31/19
7/27/17
 List all Filings 


2 Previous Filings that this Filing References

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 7/26/19  Ranpak Holdings Corp.             S-3/A       7/25/19    5:1.2M                                   EdgarAgents LLC/FA
 6/06/19  Ranpak Holdings Corp.             8-K:1,2,3,4 5/30/19   15:2.8M                                   EdgarAgents LLC/FA
Top
Filing Submission 0000950170-22-013292   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
AboutPrivacyRedactionsHelp — Fri., Mar. 29, 3:34:48.2am ET