10-Q

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

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. 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). 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.

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 ☐ No ☒

As of May 1, 2023, the registrant had 79,486,569 of its Class A common shares, $0.0001 par value per share, outstanding and 2,921,099 of its Class C common shares, $0.0001 par value per share, outstanding.

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

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, 2022, 2021, and 2020, which are included in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 10-K”). The three months ended March 31, 2023 may be further referred to herein as the “first quarter of 2023.” The three months ended March 31, 2022 may be further referred to herein as the “first quarter of 2022.”

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.

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. All amounts are in millions, except share and per share amounts and are approximate due to rounding.

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.

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 ("USD") at period-end exchange rates into Euros, then into USD. Revenues and expenses are translated into USD using average monthly exchange rates into Euros, then into USD.

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 the first quarter of 2023.

Recently Issued Accounting Standards — In December 2022, the FASB issued Accounting Standards Update (“ASU”) No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”), which gives optional guidance to provide relief for reference rate reform, where certain transactions have transitioned or are transitioning away from the London Interbank Offered Rate (“LIBOR”) to other reference rates. Certain tenors of USD LIBOR are transferring from LIBOR by June 30, 2023, including one-month and three-month USD LIBOR, on which our existing indebtedness and interest rate swap agreements are based as of March 31, 2023. ASU 2022-06 defers the sunset date of ASC Topic 848, Reference Rate Reform (“ASC 848”) from December 31, 2022 to December 31, 2024 to ensure the relief in ASC 848 covers the period of time during which a significant number of modifications may take place. As further disclosed in Note 7, "Long-Term Debt", we amended the terms of our Credit Agreement to replace the interest rate based on LIBOR and related LIBOR-based mechanics with an interest rate based on the secured overnight

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

financing rate ("SOFR") and related SOFR-based mechanics. As a result of the amendment, we are evaluating the effects of ASC 848 and its effects on our condensed consolidated financial statements, which will be complete by June 30, 2023.

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. We are 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. Unrealized gains were $0.3 million in the first quarter of 2023 and were immaterial in the first quarter of 2022. The balance was approximately $27.8 million and $30.5 million at March 31, 2023 and December 31, 2022, 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.

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


	March 31, 2023			December 31, 2022
Accounts receivable	$	34.8		$	33.7
Allowance for doubtful accounts		(0.4	)		(0.7	)
Accounts receivable, net	$	34.4		$	33.0

At March 31, 2023 and December 31, 2022, no customer’s accounts receivable balance exceeded 10.0% of our accounts receivable balance.

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


	March 31, 2023			December 31, 2022
Raw materials	$	9.8		$	12.4
Work-in-process		6.7			5.7
Finished goods		6.3			7.2
Total inventories		22.8			25.3
Reserve for obsolescence		(0.2	)		(0.3	)
Inventories, net	$	22.6		$	25.0

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


	March 31, 2023			December 31, 2022
Land	$	4.0		$	4.0
Buildings and improvements		13.4			13.3
Machinery and equipment		41.0			34.0
Computer and office equipment		11.8			11.5
Converting machines		187.7			182.8
Total property, plant, and equipment		257.9			245.6
Accumulated depreciation		(130.9	)		(121.6	)
Property, plant, and equipment, net	$	127.0		$	124.0

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 March 31,
Depreciation expense included in	2023		2022
Cost of goods sold	$	8.3	$	10.6
Depreciation and amortization expense		0.8		0.9
Total depreciation expense	$	9.1	$	11.5

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

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)


	March 31, 2023		December 31, 2022
Employee compensation	$	2.7	$	2.1
Taxes		3.8		3.4
Professional fees		1.6		0.8
Bonus		2.3		0.7
Interest		1.8		1.9
Other		3.1		1.7
Accrued liabilities and other	$	15.3	$	10.6

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


	Three Months Ended March 31,
	2023		2022
Supplemental cash flow information
Interest paid	$	5.8	$	5.1
Income taxes paid	$	0.8	$	0.7
Non-cash investing activities
Right-of-use assets obtained in exchange for lease liabilities	$	18.1	$	0.1
Capital expenditures in accounts payable	$	0.8	$	0.7

Note 4 — Segment and Geographic Information

In accordance with ASC 280, Segment Reporting (“ASC 280”), we determined we have two operating segments which are aggregated into 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.

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 March 31,
	2023			2022
Revenue
North America	$	31.1		$	30.9
Europe/Asia		50.1			51.6
Net revenue		81.2			82.5

Segment gross profit
North America		9.4			9.9
Europe/Asia		18.1			14.7
Gross profit		27.5			24.6

Expenses excluded from segment gross profit
Selling, general and administrative expenses		27.2			29.7
Depreciation and amortization expense		8.0			8.2
Other operating expense, net		1.2			0.5
Interest expense		5.7			5.0
Foreign currency (gain) loss		0.2			(0.6	)
Other non-operating income, net		(0.3	)		-
Loss before income tax benefit	$	(14.5	)	$	(18.2	)

Our customers are not concentrated in any specific geographic region. During the three months ended March 31, 2023 and 2022, no customers exceeded 10% of net revenue.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

The following table presents our long-lived assets by geographic region. Refer to Note 11, “Leases” for additional detail on our new leased facility in Eygelshoven, The Netherlands:


	March 31, 2023		December 31, 2022
North America	$	67.4	$	65.4
Europe/Asia		81.5		64.6
Total long-lived assets	$	148.9	$	130.0

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 Automation equipment sales is recognized based on an input method of cost and effort incurred over time. 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 on a straight-line basis over the terms of the PPS systems agreements with customers, which have durations of less than one year.

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.

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. The transfer of control of our products results in an unconditional right to receive consideration. Accordingly, we did not have any material contract assets as of December 31, 2022. Contract assets arise as revenue is recognized prior to billing the customer in accordance with the terms of the contract. Changes in contract assets were as follows:


	Three Months Ended March 31,
	2023
Beginning balance	$	-
Revenue recognized in excess of billings		1.6
Ending balance	$	1.6

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 that are amortized over the next quarter. 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:


	Three Months Ended March 31,
	2023
Beginning balance	$	0.9
Deferral of revenue		2.3
Recognition of revenue		(1.6	)
Ending balance	$	1.6

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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 March 31,
	2023		2022
ASC 606
North America	$	25.3	$	25.6
Europe/Asia		43.1		44.7
Total paper and other revenue	$	68.4	$	70.3
ASC 842
Machine lease revenue	$	12.8	$	12.2
Net revenue	$	81.2	$	82.5

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.

Note 6 — Goodwill, Long-Lived Assets, Intangible Assets and Impairment

Goodwill, Indefinite-Lived Intangible Assets and Impairment

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.

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, 2022	$	338.8	$	107.9	$	446.7
Currency translation		-		2.0		2.0
Balance at March 31, 2023	$	338.8	$	109.9	$	448.7

Finite-Lived or Amortizable 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; property, plant and equipment; and lease right-of-use assets 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 March 31, 2023, there were no indicators of impairment present for property, plant and equipment or amortizable intangible assets that required us to test for recoverability.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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


	March 31, 2023							December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Customer/distributor relationships	$	197.5	$	(50.2	)	$	147.3	$	195.5	$	(46.5	)	$	149.0
Patented/unpatented technology		171.6		(59.0	)		112.6		171.6		(55.0	)		116.6
Intellectual property		0.5		(0.2	)		0.3		0.5		(0.2	)		0.3
Total definite-lived intangible assets		369.6		(109.4	)		260.2		367.6		(101.7	)		265.9
Trademarks/tradenames with indefinite lives		106.2		-			106.2		106.2		-			106.2
Identifiable intangible assets, net	$	475.8	$	(109.4	)	$	366.4	$	473.8	$	(101.7	)	$	372.1

The following table shows the remaining estimated amortization expense for our definite-lived intangible assets at March 31, 2023:


Year	Amount
2023	$	21.8
2024		29.1
2025		28.6
2026		28.2
2027		28.1
Thereafter		124.4
	$	260.2

Amortization expense was $7.2 million and $7.3 million in the first quarter of 2023 and 2022, respectively.

The following table shows the remaining weighted-average useful life of our definite lived intangible assets as of March 31, 2023:


	Remaining Weighted-Average Useful Life
	March 31, 2023	December 31, 2022
Customer/distributor relationships	11 years	11 years
Patented/unpatented technology	7 years	8 years
Intellectual property	7 years	7 years
Total identifiable assets, net with definite lives	10 years	10 years

Note 7 — Long-Term Debt

In connection with Ranpak's business combination with One Madison Corporation, Ranger Pledgor LLC, a Delaware limited liability company (“Holdings”), Ranger Packaging LLC, a Delaware limited liability company (the “U.S. Borrower” prior to the Reorganization (as defined below)), 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”), the lenders and issuing banks party thereto and Goldman Sachs Lending Partners LLC (the "Administrative Agent") entered into a First Lien Credit Agreement on June 3, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"). The aggregate principal amount of the senior secured credit facilities consists of a $378.2 million dollar-denominated first lien term facility (the “First Lien Dollar Term Facility”), a €140.0 million ($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 $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 June

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

2026 and the Revolving Facility matures in 2024. As of March 31, 2023 and December 31, 2022, no amounts were outstanding under the Revolving Facility.

Long-term debt consisted of the following:


	March 31, 2023			December 31, 2022
First Lien Dollar Term Facility	$	250.0		$	250.0
First Lien Euro Term Facility		147.7			145.4
Finance lease liabilities		1.5			1.5
Equipment financing		0.8			-
Deferred financing costs, net		(3.6	)		(3.9	)
Total debt		396.4			393.0
Less: current portion of long-term debt		(0.7	)		(0.6	)
Less: current portion of finance lease liabilities		(0.7	)		(0.7	)
Long-term debt	$	395.0		$	391.7

Borrowings under the Facilities, at the Borrowers’ option, bear interest at either (1) an adjusted eurocurrency rate or, as of the effectiveness of Amendment No. 2 (as defined below), the SOFR rate, or (2) a base rate, in each case plus an applicable margin. The applicable margin is 3.75% with respect to eurocurrency borrowings or SOFR borrowings, as applicable, 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 and SOFR borrowings, as applicable, and 3.00% with respect to base rate borrowings. The interest rate for the First Lien Dollar Term Facility as of March 31, 2023 and December 31, 2022 was 8.42% and 7.88%, respectively. The interest rate for the First Lien Euro Term Facility as of March 31, 2023 and December 31, 2022 was 6.18% and 5.25%, respectively.

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 March 31, 2023, we had $2.4 million committed to outstanding letters of credit, leaving net availability under the Revolving Facility at $42.6 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 Consolidated EBITDA (as defined in the definitive documentation with respect to the Facilities) for the four consecutive fiscal quarters most recently ended, plus any voluntary prepayments of the First Lien Term Facility (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 the Borrowers under the Facilities and certain of their 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, solely with respect to the obligations of the Dutch Borrower or any Dutch Guarantor, 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 notwithstanding the foregoing, 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 March 31, 2023.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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 the First Lien Credit Agreement ("Amendment No. 1").

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 $10.0 million and 10% of Consolidated Adjusted EBITDA (as defined in the Credit Agreement) (increased from the greater of $7.0 million and 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, (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 the Administrative Agent entered into a borrower assumption agreement ("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 $8.2 million exit payment (the “Exit Payment”), which was paid in the first quarter of 2021. This amount is included in interest expense, net in 2020.

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, introduced 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.

On April 4, 2023, the Borrowers, Holdings, certain other subsidiaries of Holdings, certain lenders party to Amendment No. 2 (as defined below) and the Administrative Agent entered into the Amendment No. 2 to First Lien Credit Agreement (“Amendment No. 2”) to amend the Credit Agreement. Pursuant to the terms of Amendment No. 2, the parties agreed, among other things, to replace the interest rate based on the LIBOR and related LIBOR-based mechanics applicable to borrowings under the Credit Agreement with an interest rate based on the SOFR (including a customary spread adjustment) and related SOFR-based mechanics. Except as amended by Amendment No. 2, the remaining terms of the Credit Agreement remain in full force and effect.

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 $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 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 2.31% (the “Amended January 2019 Swap”). We concurrently entered into an incremental $50.0 million notional swap at 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

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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 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.

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
March 31, 2023
September 2019 Swap	Cash flow hedge	June 1, 2023	1.50%	$	50.0	First Lien Dollar Term Facility	20%
Second Amended January 2019 Swap	Cash flow hedge	June 1, 2024	2.09%		200.0	First Lien Dollar Term Facility	80%
				$	250.0		100%

December 31, 2022
September 2019 Swap	Cash flow hedge	June 1, 2023	1.50%	$	50.0	First Lien Dollar Term Facility	20%
Second Amended January 2019 Swap	Cash flow hedge	June 1, 2024	2.09%		200.0	First Lien Dollar Term Facility	80%
				$	250.0		100%

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

As of March 31, 2023, we anticipate having to reclassify $5.7 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. 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 1.1835, we converted notional amounts of approximately $80.0 million at 5.84% for €67.6 million at 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 $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 1.1345, we converted notional amounts of approximately $80.0 million at 5.84% for €70.5 million at 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 $2.8 million, which is recorded within other comprehensive income. 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 1.0827, we converted notional amounts of approximately $80.0 million at 5.84% for €73.9 million at 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 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

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

on June 1, 2024. In July 2022, we terminated the April 2022 Swap, resulting in a cash inflow of approximately $5.1 million, which is recorded within other comprehensive income.

In November 2022, we entered into a cross currency swap (the “November 2022 Swap”) and designated it as a net investment hedge. The November 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 1.0205, we converted notional amounts of approximately $80.0 million at 5.84% for €78.4 million at 3.95%. The change in fair value of the November 2022 Swap is recorded in currency translation in other comprehensive income (loss) and accumulated other comprehensive income (loss). Components of the November 2022 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 November 2022 Swap to maturity on June 1, 2024.

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 March 31, 2023 and December 31, 2022. 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	March 31, 2023			December 31, 2022
Interest Rate Swap Agreements
Designated as cash flow hedges	Prepaid expenses and other current assets	$	5.8		$	6.3
Designated as cash flow hedges	Other assets		0.4			1.8
		$	6.2		$	8.1

Cross-Currency Swap Agreement
Designated as net investment hedge	Derivative instruments	$	(4.7	)	$	(3.7	)
		$	(4.7	)	$	(3.7	)

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 March 31,
	2023			2022
Total interest expense presented in the statement of operations	$	5.7		$	5.0
Interest rate swap agreements designated as cash flow hedges		(1.8	)		1.0
Cross-currency swap agreement designated as net investment hedge, amounts excluded from effectiveness testing	$	(0.3	)	$	(0.3	)

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). The components of accumulated other comprehensive income (loss) at March 31, 2023 and December 31, 2022 were as follows:


	March 31, 2023
	Gross Balance			Tax Effect			Net Balance
Foreign currency translation	$	(4.9	)	$	-		$	(4.9	)
Unrealized gain (loss) on interest rate swaps		8.7			(1.8	)		6.9
Unrealized gain (loss) on cross-currency swap		(4.7	)		1.1			(3.6	)
Realized gain (loss) on cross-currency swap		10.0			(2.4	)		7.6
Total	$	9.1		$	(3.1	)	$	6.0


	December 31, 2022
	Gross Balance			Tax Effect			Net Balance
Foreign currency translation	$	(8.0	)	$	-		$	(8.0	)
Unrealized gain (loss) on interest rate swaps		11.0			(2.4	)		8.6
Unrealized gain (loss) on cross-currency swap		(3.9	)		0.9			(3.0	)
Realized gain (loss) on cross-currency swap		10.0			(2.4	)		7.6
Total	$	9.1		$	(3.9	)	$	5.2

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:


	Three Months Ended March 31, 2023
	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	$	(8.0	)	$	8.6		$	(3.0	)	$	7.6	$	5.2
Other comprehensive income (loss) before reclassifications		3.1			(4.0	)		(1.1	)		-		(2.0	)
Amounts reclassified from accumulated other comprehensive income (loss)		-			2.3			0.5			-		2.8
Ending balance	$	(4.9	)	$	6.9		$	(3.6	)	$	7.6	$	6.0

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 March 31, 2023 and December 31, 2022.

The following table provides the carrying amounts, estimated fair values and the respective fair value measurements of our financial instruments as of March 31, 2023 and December 31, 2022:


			Fair Value Measurements
	Carrying Amount		Level 1		Level 2		Level 3
March 31, 2023
Money market fund	$	27.8	$	27.8	$	-	$	-
Current and long-term debt		400.0		-		396.2		-
Interest rate swap agreements		6.2		-		6.2		-
Cross-currency swap agreement	$	4.7	$	-	$	4.7	$	-

December 31, 2022
Money market fund	$	30.5	$	30.5	$	-	$	-
Current and long-term debt		396.9		-		388.7		-
Interest rate swap agreements		8.1		-		8.1		-
Cross-currency swap agreement	$	3.7	$	-	$	3.7	$	-

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 fair value 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.

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.

In the first quarter of 2023, we commenced a 15-year operating lease for our new regional headquarters in Eygelshoven, the Netherlands. We recorded an operating right-of-use asset and corresponding operating lease liabilities of approximately €13.8 million (equivalent to approximately $14.8 million). This facility is used for both administrative and production purposes.

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


	Classification	March 31, 2023		December 31, 2022
Lease assets
Operating lease right-of-use assets, net	Assets	$	21.9	$	6.0
Finance lease right of use assets, net	Property, plant, and equipment, net		1.4		1.4
Total lease assets		$	23.3	$	7.4
Lease liabilities
Operating lease liabilities, current	Current liabilities	$	2.7	$	2.0
Operating lease liabilities, non-current	Non-current liabilities		19.2		4.0
Finance lease liabilities, current	Current portion of long-term debt		0.7		0.7
Finance lease liabilities, non-current	Long-term debt		0.8		0.8
Total lease liabilities		$	23.4	$	7.5

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:

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)


	Three Months Ended March 31,
	2023		2022
Operating leases
Operating lease costs	$	1.0	$	0.8
Variable lease costs		0.1		-
Short-term lease costs		0.2		-
Total operating lease costs	$	1.3	$	0.8
Finance leases
Amortization of right-of-use asset	$	0.2	$	0.2
Interest on finance lease liabilities		-		-
Total finance lease costs	$	0.2	$	0.2

Maturities of lease liabilities as of March 31, 2023 are as follows:


	Operating			Finance			Total
2023	$	3.4		$	0.6		$	4.0
2024		4.2			0.6			4.8
2025		4.0			0.3			4.3
2026		2.6			0.1			2.7
2027		2.1			-			2.1
2028 and Thereafter		19.8			-			19.8
Total lease payments		36.1			1.6			37.7
Less lease interest		(14.2	)		(0.1	)		(14.3	)
Total lease liabilities	$	21.9		$	1.5		$	23.4

Additional information related to leases is presented as follows:


	March 31, 2023	December 31, 2022
Operating leases
Weighted average remaining lease term	11.3 years	3.3 years
Weighted average discount rate	9.4%	5.4%
Finance leases
Weighted average remaining lease term	2.4 years	2.5 years
Weighted average discount rate	4.5%	3.4%


	Three Months Ended March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1.0	$	0.7
Financing cash flows from finance leases		0.2		0.2
Total cash paid	$	1.2	$	0.9

Leased assets obtained in exchange for new operating lease liabilities	$	18.0	$	-
Leased assets obtained in exchange for new finance lease liabilities		0.1		0.1
Right-of-use assets obtained in exchange for lease liabilities	$	18.1	$	0.1

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.

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.

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.

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


	Three Months Ended March 31,
	2023		2022
Stock-based compensation expense	$	2.8	$	8.8
Tax (expense) benefit for stock-based compensation		0.7		0.3
Stock-based compensation expense, net of tax	$	2.1	$	9.1

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 9.0 million shares for issuance for future awards. As of March 31, 2023, the pool of shares in the 2019 Plan is summarized as follows:


2019 Plan	Quantity
Maximum allowed for issuance		13,118,055
Awards granted		(7,646,474	)
Awards forfeited		1,359,944
Available for future awards		6,831,525

Awards vested		2,611,028

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 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 0% to 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 0% to 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.

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, 2022		351,945		$	15.78		2,560,551		$	23.52
Granted		24,474			6.30		1,251,870			6.30
Vested		(103,565	)		27.97		(435,219	)		18.38
Forfeited		(7,513	)		27.81		(18,281	)		34.22
Outstanding at March 31, 2023		265,341		$	9.81		3,358,921		$	17.71

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 $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. 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, 2022		51,240		$	11.72
Granted		14,084			5.77
Vested		(14,084	)		5.77
Balance at March 31, 2023		51,240		$	11.72

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 March 31, 2023, we have not issued any instruments that are considered to be participating securities. 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 March 31,
	2023			2022
Numerator:
Net loss	$	(12.4	)	$	(14.1	)
Net loss attributable to common stockholders for basic and diluted EPS	$	(12.4	)	$	(14.1	)

Denominator:
Basic weighted average common shares outstanding		82,136,793			81,573,467
Dilutive effect of assumed vesting of RSUs and PRSUs		-			-
Dilutive effect of Class A and Class C earnout shares		-			-
Diluted weighted average common shares outstanding		82,136,793			81,573,467

Loss per share attributable to common stockholders
Basic	$	(0.15	)	$	(0.17	)
Diluted	$	(0.15	)	$	(0.17	)

Two-class method:
Class A Common Stock
Basic weighted average common shares outstanding		79,215,694			78,652,368
Dilutive effect of assumed vesting of RSUs and PRSUs		-			-
Dilutive effect of Class A earnout shares		-			-
Diluted weighted average common shares outstanding		79,215,694			78,652,368
Proportionate share of net loss	$	(12.0	)	$	(13.6	)
Class A – basic earnings (loss) per share	$	(0.15	)	$	(0.17	)
Class A – diluted earnings (loss) per share	$	(0.15	)	$	(0.17	)

Class C Common Stock
Basic weighted average common shares outstanding		2,921,099			2,921,099
Dilutive effect of assumed vesting of RSUs and PRSUs		-			-
Dilutive effect of Class C earnout shares		-			-
Diluted weighted average common shares outstanding		2,921,099			2,921,099
Proportionate share of net loss	$	(0.4	)	$	(0.5	)
Class C – basic earnings (loss) per share	$	(0.14	)	$	(0.17	)
Class C – diluted earnings (loss) per share	$	(0.14	)	$	(0.17	)

The dilutive effect of 0.1 and 1.2 million shares in the first quarter of 2023 and 2022, respectively, was omitted from the calculation of diluted weighted-average shares outstanding and diluted earnings per share because we were in a loss position. 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 March 31,
	2023		2022
RSUs and PRSUs		2,902,389		3,270,039
Total antidilutive securities		2,902,389		3,270,039

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

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:

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 2022 10-K, filed with the SEC on March 31, 2023. 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 Factors” and “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q.

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, with another facility in the United States currently under construction. 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 also maintain sales and administrative offices in Brazil, France, China, Japan, and Singapore. We are a global business that generated approximately 58.3% of our 2022 net revenue outside of the United States.

As of March 31, 2023, we had an installed base of approximately 139.6 thousand PPS systems serving a diverse set of distributors and end-users. We generated net revenue of $81.2 million and $82.5 million in the three months ended March 31, 2023 and 2022, 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 reporting 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. 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 31.0% of our net revenue in 2022, 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.

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 March 31, 2023 and 2022:

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 inflationary pressures, 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. Further, the conflict in Ukraine has increased pricing for paper products as a result of decreased availability of paper products previously sourced from Russian paper mills. During 2022, we eliminated our paper sourcing from Russian suppliers and reallocated our purchases to other mills across the globe. As previously noted, we have seen some stabilization of paper and other costs in North America, however, pricing conditions in Europe remain unsteady, primarily due to the volatility in energy markets. Where we can, we will look to pass 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 continued pressure on our gross margin in the medium term relative to our historical margin profile.

Inflationary Pressures and Other Costs. We experienced inflationary pressures in 2022, increasing the costs of paper as well as shipping and logistics, energy and wages, among other costs. In addition, inflationary pressures have adversely impacted some of our end-users, such as automotive companies; distributors; electronic manufacturers; machinery manufacturers; home goods manufacturers; e-commerce and mail order fulfillment firms; and other end-users that are particularly sensitive to reductions in business and consumer spending by their respective customers, and which in turn have impacted our net revenue. The conflict in Ukraine caused certain headwinds, including (i) increased energy costs, particularly in Europe; (ii) shipping variabilities due to truck driver shortages and (iii) increased shipping times for paper products sourced from Russian paper mills, in addition to increased paper costs discussed above. Higher costs due to inflation and the conflict in Ukraine during 2022 were partially offset by price increases, which mitigated the impact on our operating results. However, our ability to predict or further offset inflationary cost increases in the future or during economic downturns or recessions may be limited or impacted by heightened competition for net revenue, an unwillingness by our customers to accept price increase or pressure to reduce selling prices if end-users reduce their volume of purchases. Inflationary pressures and associated increases in interest rates and borrowing costs may also impact the ability of some of our end-users and suppliers to obtain funds for operations and capital expenditures, which could negatively impact our ability to obtain necessary supplies as well as the sales of materials and equipment to affected end-users. This could also result in reduced or delayed collections of outstanding accounts receivable from end-users, which could impact our cash flows. As a result, to the extent inflationary pressures continue, we expect additional pressure on our net revenue and gross margin. We will continue to evaluate the impact of inflationary pressures on our profitability and cash flows as well as our end-users.

Impact of the COVID-19 Pandemic. The COVID-19 pandemic has resulted in changes in market and economic conditions around the world. We continue to operate our production and distribution facilities, both domestically and internationally, albeit subject to measures designed to promote a safe operating environment. During the COVID-19 pandemic, our assembly and distribution operations have experienced disruptions, including lockdowns; port congestion; component-related supply-related challenges (including from China); increased shipping and logistics costs; and delayed availability of supplies. Additionally, social distancing and similar measures adopted in many jurisdictions around the world impacted our ability to demonstrate and install our protective packaging systems and Automation products and, as a result, such demonstrations and installations were delayed. The COVID-19 pandemic and associated shutdown measures also contributed to an increase in e-commerce activity and our net revenue, and the subsequent reopening of economies has had a negative impact on e-commerce activity and our net revenues. While we do not currently expect COVID-19 to have a material impact on our business, results of operations, financial condition or liquidity, 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” located in the 2022 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.

The following tables set forth our results of operations for the three months ended March 31, 2023 and 2022 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”), which are non-GAAP financial measures. We have included EBITDA and AEBITDA 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 AEBITDA for comparability for constant currency also assists in this comparison as it allows a better insight into the performance of our businesses that operate in currencies other than our reporting currency. Before consolidation, our Europe/Asia financial data is derived in Euros. To calculate the adjustment that we apply to present AEBITDA on a constant currency basis, 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 exchange rate to use to give a stable depiction of the business without currency fluctuations between periods, to calculate Europe/Asia data in constant currency USD. An exchange rate of 1.15 approximates the average exchange rate of the Euro to USD over the past five years. We also present non-GAAP constant currency net revenue and derive it in the same manner. We believe that EBITDA and AEBITDA provide useful information to 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:

EBITDA — EBITDA is a non-GAAP financial measure that we 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; as further adjusted to reflect the performance of the business on a constant currency basis.

In addition, in our discussion below, we include certain other unaudited, non-GAAP constant currency data for the three months ended March 31, 2023 and 2022. 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 months ended March 31, 2023 and 2022.

The following tables and the discussion that follows compare our net revenue by geographic region and by product line for the first quarter of 2023 and 2022 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:

Net revenue for the first quarter of 2023 was $81.2 million compared to net revenue of $82.5 million in the first quarter of 2022, a decrease of $1.3 million or 1.6% year over year. Net revenue was negatively impacted by decreases in void-fill and wrapping, partially offset by increases in cushioning and other products. In addition to currency headwinds, which contributed 2.7 points of pressure, revenue was negatively affected by increased business sponsoring costs; lower economic activity; and the impact inflationary pressures are having on consumer and corporate budgets. Cushioning increased $2.0 million, or 5.6%, to $37.6 million from $35.6 million; void-fill decreased $1.6 million, or 5.0%, to $30.2 million from $31.8 million; wrapping decreased $1.7 million, or 15.5%, to $9.3 million from $11.0 million; and other sales were flat at $4.1 million for the first quarter of 2023 compared to the first quarter of 2022. 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 3.5 percentage points (“pp”), partially offset by a 4.2 pp increase in the price or mix of our paper consumable products, and an increase of 0.3 pp in sales of automated box sizing equipment. Constant currency net revenue was $84.8 million for the first quarter of 2023, a 1.1% increase from constant currency net revenue of $83.9 million for the first quarter of 2022.

Net revenue in North America for the first quarter of 2023 totaled $31.1 million compared to net revenue in North America of $30.9 million in the first quarter of 2022. The increase of $0.2 million, or 0.6%, was primarily attributable to increases in cushioning, void-fill, and other sales, partially offset by decreases in wrapping sales.

Net revenue in Europe/Asia for the first quarter of 2023 totaled $50.1 million compared to net revenue in Europe/Asia of $51.6 million in the first quarter of 2022. The decrease of $1.5 million, or 2.9%, was driven by lower void-fill, wrapping, and other sales as well as currency headwinds, partially offset by increases in cushioning sales. Constant currency net revenue in Europe/Asia was $53.7 million for the first quarter of 2023, a $0.7 million, or 1.3%, increase from constant currency net revenue of $53.0 million for the first quarter of 2022.

Cost of goods sold for the first quarter of 2023 totaled $53.7 million, a decrease of $4.2 million, or 7.3%, compared to $57.9 million in the first quarter of 2022. The change was primarily due to lower input costs and a decrease in depreciation of $2.3 million over the prior year. Additionally, currency rate fluctuations accounted for approximately 2.4% of the decrease over prior year. Paper pricing has begun to ease and we began to see relief in the first quarter of 2023 compared to the inflationary pressures in 2022.

SG&A for the first quarter of 2023 was $27.2 million, a decrease of $2.5 million, or 8.4%, from $29.7 million in the first quarter of 2022. The change in SG&A was primarily due to a decrease in stock compensation expense, primarily related to reductions in expense associated with the 2021 LTIP PRSUs. Additionally, currency rate fluctuations accounted for approximately 2.0% of the decrease over prior year.

Depreciation and amortization expenses for the first quarter of 2023 were $8.0 million, a decrease of $0.2 million, or 2.4%, from $8.2 million in the first quarter of 2022 primarily due to a decrease in depreciation of computer software. Additionally, currency rate fluctuations accounted for approximately 1.2% of the decrease over prior year.

Other operating expense, net for the first quarter of 2023 was $1.2 million, a change of $0.7 million from expense of $0.5 million in the first quarter of 2022. The change in other operating expense, net was primarily due to an increase in research and development costs.

Interest expense for the first quarter of 2023 was $5.7 million, an increase of $0.7 million, or 14.0%, from $5.0 million in the first quarter of 2022. The change was due to increases in interest rates associated with our first lien credit facilities during the first quarter. Additionally, currency rate fluctuations accounted for approximately 2.0% of the increase over prior year.

Foreign currency loss for the first quarter of 2023 was $0.2 million, a change of $0.8 million, or 133.3%, from foreign currency gain of $0.6 million in the first quarter of 2022 due to the volatility in Euro exchange rates compared to USD.

Other non-operating income, net for the first quarter of 2023 was $0.3 million and represents the unrealized gain on our investment in a money market fund. Other non-operating income, net was not material for the first quarter of 2022.

Income tax benefit for the first quarter of 2023 was $2.1 million, or an effective tax rate of 14.4%. Income tax benefit was $4.1 million in the first quarter of 2022, or an effective tax rate of 22.7%. The fluctuation in the effective tax rate between periods was primarily attributable to the impact of a shortfall related to stock-based compensation. The effective tax rate differs from the U.S. federal statutory rate due primarily to expense from stock-based compensation, which is partially offset by 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 loss for the first quarter of 2023 decreased $1.7 million to $12.4 million from a net loss of $14.1 million in the first quarter of 2022. The change was due to the reasons discussed above.

EBITDA for the first quarter of 2023 was $7.5 million, an increase of $1.9 million, or 33.9%, compared to $5.6 million in the first quarter of 2022. Adjusting for one-time costs, AEBITDA for the first quarter of 2023 and 2022 totaled $15.1 million and $19.1 million, respectively, a decrease of $4.0 million, or 20.9%.

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 months ended March 31, 2023 and 2022:

(1) Reconciliations of EBITDA and AEBITDA for each period presented are to net loss, the nearest GAAP equivalent.

(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.

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.

We believe that our cash balances 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 $58.6 million in cash and cash equivalents as of March 31, 2023 and $62.8 million as of December 31, 2022. Including finance lease liabilities and excluding deferred financing costs, we had $399.2 million in debt, $2.5 million of which was classified as short-term, as of March 31, 2023, compared to $396.9 million in debt, $2.4 million of which was classified as short-term, as of December 31, 2022. At March 31, 2023, we did not have amounts outstanding under our $45.0 million revolving credit facility, and we had no borrowings under such facility through May 8, 2023.

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.

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 June 2024. As of March 31, 2023 and December 31, 2022, 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, as of the effectiveness of Amendment No. 2, the SOFR 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 March 31, 2023 and December 31, 2022, (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 and SOFR borrowings, as applicable and 3.00% with respect to base rate borrowings. Global interest rates have risen meaningfully in 2022 and we expect interest on our Facilities to increase.

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) for the four consecutive fiscal quarters most recently ended, plus any voluntary prepayments of the First Lien Term Facility (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 the Borrowers under the Facilities and certain of their obligations under hedging arrangements and cash management arrangements are unconditionally guaranteed by Holdings and the U.S. Guarantors, and solely with respect to the obligations of the Dutch Borrower or any Dutch Guarantor, the Dutch 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 notwithstanding the foregoing, 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.

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.

On April 4, 2023, the Borrowers, Holdings, certain other subsidiaries of Holdings, certain lenders and the Administrative Agent entered into the Amendment No. 2 to amend the Credit Agreement. Pursuant to the terms of Amendment No. 2, the parties agreed, among other things, to replace the interest rate based on the LIBOR and related LIBOR-based mechanics applicable to borrowings under the Credit Agreement with an interest rate based on SOFR (including a customary spread adjustment) and related SOFR-based mechanics. Except as amended by Amendment No. 2, the remaining terms of the Credit Agreement remain in full force and effect.

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.

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

Net cash provided by operating activities was $7.5 million in the three months ended March 31, 2023. Cash used in operating activities was $9.4 million in the three months ended March 31, 2022. The changes in operating cash flows are largely due to the increases in cash earnings due to decreased input costs and decreased SG&A.

Net cash used in investing activities was $11.8 million in the three months ended March 31, 2023 and reflects cash used for production of converter equipment and leasehold improvements for our new facilities in Connecticut and The Netherlands. Cash used in investing activities was $10.7 million in the three months ended March 31, 2022 and reflects cash used for production of converter equipment; cash used for the renovation of our global headquarters in Concord, Ohio; and cash used for leasehold improvements for our new facilities in Connecticut and The Netherlands.

Net cash used in financing activities was $0.3 million in the three months ended March 31, 2023 and reflects debt repayments, payments on finance lease liabilities, and tax payments for withholdings on stock compensation, partially offset by proceeds received from an equipment financing arrangement. Net cash used in financing activities was $3.1 million in the three months ended March 31, 2022 and reflects debt repayments, payments on finance lease liabilities, and tax payments for withholdings on stock compensation.

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 2022 10-K.

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 2022 10-K.

Impairment of Goodwill, Indefinite-Lived Intangible Assets, and Long-Lived Assets

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 2022 10-K.

As of March 31, 2023, there were no indicators to suggest that it is more likely than not that the fair value of our reporting units and indefinite-lived intangible assets were below their carrying values. As of March 31, 2023, there were no indicators of impairment present for long-lived assets that required us to test for recoverability.

If we fail an impairment test, any non-cash impairment charge may have an adverse effect on our results of operations and financial condition. We will continue to monitor events and circumstances for indicators of impairment in our reporting units, indefinite-lived intangible assets, and asset groups.

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.

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 $1.0 million impact on our cash interest expense for the three months ended March 31, 2023. 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, introduced 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.

As of March 31, 2023, there were no other changes to our debt and interest rate swap agreements from those disclosed in the 2022 10-K.

We are exposed to foreign currency exchange risk related to our transactions and subsidiaries’ balances that are denominated in currencies other than USD, our reporting 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 three months ended March 31, 2023, net revenue denominated in currencies other than USD amounted to $48.6 million or 59.9% 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 three months ended March 31, 2023 to increase or decrease by approximately $5.0 million.

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 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.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that material information required to be disclosed in our reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no

evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting that are described in the 2022 10-K.

Notwithstanding such material weaknesses in internal control over financial reporting, our management, including our CEO and CFO, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of our operations and our cash flows for the periods presented in this Quarterly Report, in conformity with U.S. generally accepted accounting principles.

As previously described in Part II – Item 9A – Controls and Procedures of the 2022 10-K, we continue to implement a remediation plan to address the material weaknesses mentioned above. The weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

In response to the material weaknesses described in the 2022 10-K, the Company reviewed the design of its controls and began remediation activities to alleviate the noted control deficiencies. Other than these items, there was no change in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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.


Delaware	98-1377160
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Ordinary Shares, par value $0.0001 per share	PACK	New York Stock Exchange


		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		34
Item 4. Controls and Procedures		34
Part II – Other Information		35
Item 1. Legal Proceedings		35
Item 1A. Risk Factors		35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		35
Item 3. Defaults Upon Senior Securities		35
Item 4. Mine Safety Disclosures		35
Item 5. Other Information		35
Item 6. Exhibits		36
Signatures		37


	Three Months Ended March 31,
	2023			2022
Cash Flows from Operating Activities
Net loss	$	(12.4	)	$	(14.1	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		16.3			18.8
Amortization of deferred financing costs		0.4			0.4
Loss on disposal of fixed assets		0.3			-
Deferred income taxes		2.0			(1.4	)
Amortization of initial value of interest rate swap		(0.2	)		(0.2	)
Currency (gain) loss on foreign denominated debt and notes payable		0.2			(0.2	)
Amortization of restricted stock units		2.8			8.8
Amortization of cloud-based software implementation costs		0.7			-
Changes in operating assets and liabilities:
(Increase) decrease in receivables, net		(1.2	)		(4.8	)
(Increase) decrease in inventory		2.7			(7.6	)
(Increase) decrease in prepaid expenses and other assets		(2.7	)		(1.2	)
Increase (decrease) in accounts payable		(2.1	)		2.9
Increase (decrease) in accrued liabilities		3.2			(4.9	)
Change in other assets and liabilities		(2.5	)		(5.9	)
Net cash provided by (used in) operating activities		7.5			(9.4	)

Cash Flows from Investing Activities
Capital expenditures:
Converter equipment		(4.5	)		(8.4	)
Other capital expenditures		(7.3	)		(1.4	)
Total capital expenditures		(11.8	)		(9.8	)
Patent and trademark expenditures		-			(0.9	)
Net cash used in investing activities		(11.8	)		(10.7	)

Cash Flows from Financing Activities
Proceeds from equipment financing		0.8			-
Principal payments on term loans		(0.4	)		(0.4	)
Payments on finance lease liabilities		(0.2	)		(0.2	)
Tax payments for withholdings on stock-based awards distributed		(0.5	)		(2.5	)
Net cash used in financing activities		(0.3	)		(3.1	)

Effect of Exchange Rate Changes on Cash		0.4			(0.2	)
Net Decrease in Cash and Cash Equivalents		(4.2	)		(23.4	)
Cash and Cash Equivalents, beginning of period		62.8			103.9
Cash and Cash Equivalents, end of period	$	58.6		$	80.5


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)

10.1		Amendment No. 2, dated April 4, 2023, which amends that certain First Lien Credit Agreement, dated June 3, 2019, among Ranpak Corp., Ranpak B.V., Ranger Pledgor LLC, the lenders and issuing banks from time to time party thereto and Goldman Sachs Lending Partners LLC, as administrative agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (No. 0001-38348), filed with the SEC on April 4, 2023)

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)


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


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


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


	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, 2021		78,482,024	$	-		2,921,099	$	-	$	688.9		$	(55.3	)	$	2.6	$	636.2
Stock-based awards vested and distributed		521,719		-		-		-		(2.9	)		-			-		(2.9	)
Issue Director shares		2,495		-		-		-		-			-			-		-
Amortization of restricted stock units		-		-		-		-		8.8			-			-		8.8
Net loss		-		-		-		-		-			(14.1	)		-		(14.1	)
Other comprehensive income		-		-		-		-		-			-			3.4		3.4
Balance at March 31, 2022		79,006,238	$	-		2,921,099	$	-	$	694.8		$	(69.4	)	$	6.0	$	631.4

Balance at December 31, 2022		79,086,372	$	-		2,921,099	$	-	$	704.3		$	(96.7	)	$	5.2	$	612.8
Stock-based awards vested and distributed		368,153		-		-		-		(0.4	)		-			-		(0.4	)
Issue Director shares		14,084		-		-		-		-			-			-		-
Amortization of restricted stock units		-		-		-		-		2.8			-			-		2.8
Net loss		-		-		-		-		-			(12.4	)		-		(12.4	)
Other comprehensive loss		-		-		-		-		-			-			0.8		0.8
Balance at March 31, 2023		79,468,609	$	-		2,921,099	$	-	$	706.7		$	(109.1	)	$	6.0	$	603.6


	March 31, 2023		March 31, 2022		Change			% Change
PPS Systems	(in thousands)
Cushioning machines		35.0		35.3		(0.3	)		(0.8	)
Void-Fill machines		82.3		78.3		4.0			5.1
Wrapping machines		22.3		20.9		1.4			6.7
Total		139.6		134.5		5.1			3.8


	Three Months Ended March 31,
	2023			% Net revenue			2022			% Net revenue
Net revenue	$	81.2		―			$	82.5		―
Cost of goods sold		53.7			66.1			57.9			70.2
Gross profit		27.5			33.9			24.6			29.8
Selling, general and administrative expenses		27.2			33.5			29.7			36.0
Depreciation and amortization expense		8.0			9.9			8.2			9.9
Other operating expense, net		1.2			1.5			0.5			0.6
Loss from operations		(8.9	)		(11.0	)		(13.8	)		(16.7	)
Interest expense		5.7			7.0			5.0			6.1
Foreign currency gain		0.2			0.2			(0.6	)		(0.7	)
Other non-operating income, net		(0.3	)		(0.4	)		-			-
Loss before income tax benefit		(14.5	)		(17.9	)		(18.2	)		(22.1	)
Income tax benefit		(2.1	)		(2.6	)		(4.1	)		(5.0	)
Net loss	$	(12.4	)		(15.3	)	$	(14.1	)		(17.1	)

Non-GAAP
EBITDA	$	7.5					$	5.6
AEBITDA (Constant Currency)	$	15.1					$	19.1


	Non-GAAP Constant Currency
	Three Months Ended March 31,
	2023		% Net revenue		2022		% Net revenue		$ Change			% Change
North America	$	31.1		36.7	$	30.9		36.8	$	0.2			0.6
Europe/Asia		53.7		63.3		53.0		63.2		0.7			1.3
Net revenue	$	84.8		100.0	$	83.9		100.0	$	0.9			1.1

Cushioning machines	$	39.5		46.6	$	36.3		43.3	$	3.2			8.8
Void-Fill machines		31.3		36.9		32.3		38.5		(1.0	)		(3.1	)
Wrapping machines		9.6		11.3		11.1		13.2		(1.5	)		(13.5	)
Other		4.4		5.2		4.2		5.0		0.2			4.8
Net revenue	$	84.8		100.0	$	83.9		100.0	$	0.9			1.1


		Ranpak Holdings Corp.

Date:	May 8, 2023	By:	/s/ William Drew
			William Drew
			Senior Vice President and Chief Financial Officer