Executive Summary / Key Takeaways

• Strategic Transformation Underway: Ranpak is strategically pivoting from a traditional paper packaging provider to a leader in sustainable, automated end-of-line solutions, driven by significant investments in cutting-edge technology and deepening enterprise partnerships.
• Automation Reaching Inflection: After years of investment, the automation segment, which grew 34% in Q2 2025, is poised for a significant ramp-up in the second half of 2025, targeting breakeven profitability by Q4 2025 and a long-term goal of over $100 million in annual revenue with a $20 million positive Adjusted EBITDA contribution.
• North America Fuels PPS Growth: The Protective Packaging Solutions (PPS) business continues to see strong volume growth, particularly in North America, driven by large enterprise accounts and the ongoing plastic-to-paper transition, despite some short-term margin pressures.
• Financial Outlook and Deleveraging: While Q2 2025 Adjusted EBITDA declined due to input costs and inefficiencies, management forecasts a meaningful improvement in H2 2025, with total 2025 net revenue projected at $406.5 million and Adjusted EBITDA at $83.3 million. The company remains focused on deleveraging to a 2.5x-3x net debt target within 18-24 months.
• Hidden Value in Technology: Ranpak's integrated suite of AI-powered vision, data, and robotics solutions, including its 8.8% stake in Pickle Robot Co., represents substantial, currently undervalued growth potential and a strong competitive moat.

A Sustainable Packaging Innovator Forges a New Path

Ranpak Holdings Corp., founded in 1972, has long been a stalwart in environmentally sustainable, systems-based product protection. The company built its foundation on proprietary paper-based Protective Packaging Solutions (PPS), with established brands like FillPak for void-fill, PadPak for cushioning, and WrapPak, Geami, and ReadyRoll for wrapping. This core business has consistently served diverse e-commerce and industrial supply chains across North America, Europe, and Asia.

The industry landscape is currently shaped by powerful secular trends: the relentless growth of e-commerce, the increasing imperative for industrial automation to counter rising labor costs, and a strong global shift from plastic to paper packaging driven by sustainability mandates. Ranpak's overarching strategy is to capitalize on these trends by accelerating top-line growth, achieving double-digit Adjusted EBITDA expansion, and significantly deleveraging its capital structure. This involves a strategic pivot, leveraging its deep history in paper packaging to become a leader in integrated, automated end-of-line solutions.

Technological Edge: The Engine of Differentiation

Ranpak's competitive advantage is increasingly rooted in its differentiated technology, extending beyond its traditional paper conversion systems into advanced automation and artificial intelligence. Its core PPS technology offers tangible benefits: the FillPak system efficiently converts paper to fill empty spaces, while PadPak creates robust cushioning pads, and WrapPak, Geami, and ReadyRoll provide versatile wrapping solutions. These systems deliver eco-friendly, customizable packaging that reduces material waste and fosters customer loyalty through recurring consumable revenue.

The company's significant investments have yielded a sophisticated suite of automation and AI-powered solutions. R2 Robotics, a division of Ranpak, employs 3D computer vision and AI in its "Decision Tower" technology, enhancing quality assurance, maximizing throughput, and enabling precision void filling. This technology provides customers with real-time actionable insights to improve efficiency and reduce waste. Furthermore, Ranpak's exclusive commercial partnership with Rabot integrates AI directly into pack stations for similar benefits.

In data analytics, Precube'it, Ranpak's proprietary cartonization software, uses historical order data to simulate machine utilization and optimize box fill rates, directly translating into material savings and operational efficiency for customers. Complementing these are hardware and robotic solutions like Cut'it, auto fill, and pad it, designed to reduce manual touches and labor, offering attractive returns on investment. A strategic 8.8% ownership stake in Pickle Robot Co., a leader in generative AI and machine learning for autonomous truck and trailer unloading, further extends Ranpak's technological reach into critical warehouse operations. This comprehensive technological ecosystem provides a significant competitive moat, driving higher efficiency, substantial labor savings, and a strong market position in the evolving packaging automation landscape.

Competitive Landscape: Differentiating in a Dynamic Market

Ranpak operates in a competitive environment, facing both direct and indirect rivals. Direct competitors include diversified packaging giants like Sealed Air Corporation (SEE), specialized component providers such as UFP Technologies, Inc. (UFPT), and broad packaging solution providers like Berry Global Group, Inc. (BERY). Ranpak differentiates itself through its unwavering focus on sustainable, paper-based solutions and its integrated approach to automation.

Compared to Sealed Air, which offers a broader range of materials including foam and bubble wrap, Ranpak's paper-only focus appeals strongly to environmentally conscious customers, potentially commanding a premium in this growing segment. While Sealed Air benefits from greater scale and diversified product lines, Ranpak's specialized paper conversion technology and integrated automation offer superior efficiency in specific applications, fostering customer loyalty through its proprietary systems. Ranpak's TTM Gross Profit Margin of 35.62% is notably higher than Sealed Air's 30%, suggesting a more favorable product mix or cost structure within its niche.

Against UFP Technologies, which excels in custom-engineered foam solutions, Ranpak's scalable paper-based void-fill and wrapping systems, like WrapPak and Geami, offer ease of deployment and sustainability benefits, particularly for high-volume e-commerce. Ranpak's strategy of integrating automated line solutions provides a competitive edge in streamlining entire packaging operations, contrasting with UFP's more component-level focus. Ranpak's TTM Operating Profit Margin of -5.38% lags UFP's 16%, indicating that while Ranpak is investing heavily in growth, UFP benefits from a more mature, profitable niche.

Berry Global, a cost-focused provider of plastic packaging, represents a different competitive challenge. Ranpak's solutions offer a materially lower environmental impact, aligning with global sustainability trends that Berry Global, with its plastic-heavy portfolio, struggles to match. Ranpak's technological innovation in paper conversion allows for faster processing and adaptability, which can be critical for e-commerce, though Berry Global's economies of scale may offer pricing advantages in bulk production. Ranpak's TTM P/S ratio of 0.99 is higher than Berry Global's 0.59, suggesting the market may be assigning a higher growth premium to Ranpak's specialized offerings.

Ranpak's customer dynamics are increasingly centered on large enterprise accounts, including a significant partnership with Amazon.com, Inc. (AMZN). This concentration, while driving substantial volume, introduces the non-cash impact of Amazon warrants, which reduces reported revenue and Adjusted EBITDA. However, this strategic alignment deepens relationships with key customers, providing a platform for further growth in both PPS and automation. On the supplier side, Ranpak manages input cost volatility, particularly for kraft paper, through local sourcing and strategic negotiations, mitigating some of the pressures faced by the broader industry.

Recent Performance: Strategic Execution Amidst Headwinds

Ranpak's second quarter 2025 results, filed on August 5, 2025, demonstrated continued volume momentum despite a challenging operating environment. Consolidated net revenue increased 3.8% year-over-year to $92.3 million, or 5.2% on a constant currency basis excluding the non-cash impact of Amazon warrants, driven by 5.2% volume growth. North America was a key driver, with sales up 12.2% and volumes up 14.8% over Q2 2024, largely fueled by enterprise accounts.

Conversely, Europe and Asia Pacific volumes were flat year-over-year, impacted by trade and tariff uncertainty. The Asia Pacific region experienced a $1 million to $2 million destocking event as the new Malaysia factory ramped up SKU production, a short-term headwind but a long-term benefit for regional access and cost. Automation revenue, a critical growth engine, increased 34% in Q2 2025.

Profitability faced headwinds, with gross profit declining 12% on a constant currency basis (or 8.2% excluding Amazon warrants) in Q2 2025. This was attributed to increased input costs, temporary inefficiencies in North America, and an unfavorable mix shift towards void-fill. North American gross margins, in particular, have been challenged, but management anticipates a 300 to 500 basis point improvement in the second half of the year due to pricing actions, optimized warehousing, and freight logistics. Adjusted EBITDA for Q2 2025 decreased 15.8% (12.4% excluding warrants) to $16.5 million.

The company has proactively implemented cost improvement initiatives, including a 3% headcount reduction since April and deferred nonessential spending, targeting $8 million in annualized cost savings, with a full run rate of $2 million per quarter expected by Q4 2025. An organizational realignment in July 2025, transitioning to a global functional structure with new leadership, aims to further enhance efficiency and execution.

Financial Health and Capital Allocation: Deleveraging for Future Offense

Ranpak maintains a strong liquidity position, with $49.2 million in cash and cash equivalents as of June 30, 2025, and $46.5 million available under its $50 million revolving credit facility. Total debt stood at $412.3 million, resulting in a reported net leverage of 4.6x on an LTM basis (3.8x on a bank leverage ratio). The company remains in compliance with all financial covenants.

Capital expenditures for Q2 2025 were $9.8 million, with $7.9 million allocated to PPS converter equipment. This follows a significant reduction in CapEx in 2024 to $33.1 million, marking the completion of a multi-year investment cycle in world-class digital and physical infrastructure, including the Malaysia production facility which went live in August 2024. The company expects to reduce inventory levels in the second half of 2025, converting working capital into cash.

Ranpak's capital allocation strategy prioritizes deleveraging, with a target of 2.5x to 3x net debt to Adjusted EBITDA within the next 18 to 24 months. The company expects to generate approximately $20 million in cash in 2025, enabling a paydown of roughly $50 million in debt, thereby lowering its interest burden and gross leverage profile. Cross-currency swaps are utilized to hedge $210 million of the capital structure, mitigating foreign currency risk and generating interest expense savings by swapping SOFR exposure with EURIBOR.

Outlook and Guidance: An Inflection Point for Growth and Profitability

Management remains confident in a meaningful improvement in financial performance for the second half of 2025. The updated guidance, reflecting a challenging start to the year and currency movements, forecasts H2 2025 net revenue between $216 million and $230 million, and Adjusted EBITDA between $44.5 million and $54.5 million (including an estimated $4 million warrant expense). This implies a total 2025 net revenue of $406.5 million (within original guidance) and Adjusted EBITDA of $83.3 million (slightly below original guidance).

Automation is projected to be a key growth driver, with full-year 2025 revenue expected to reach $40 million to $45 million, representing over 50% growth from $30 million in 2024. Critically, automation is anticipated to transition from an Adjusted EBITDA drag in Q3 2025 to approximately breakeven by Q4 2025. The company is actively working on a strategic multi-year deal, valued at over $100 million in equipment, with a major North American customer, which is expected to be transformational for the automation business. PPS is expected to achieve mid to high-single-digit volume growth.

The outlook is underpinned by assumptions of the full benefit of cost improvement initiatives, the ramp-up of enterprise customer activity, and a potential stabilization in Europe following tariff clarity. Capital expenditures for 2025 are guided between $36 million and $38 million, reflecting the shift from an investment cycle to cash generation.

Risks and Challenges

Despite the optimistic outlook, Ranpak faces several pertinent risks. Macroeconomic uncertainty, persistent inflation, and higher interest rates could impact consumer and business spending, potentially affecting demand for packaging solutions. Geopolitical factors and trade uncertainty, particularly in Europe and regarding tariffs on converter parts, remain a concern, though a recent EU trade deal offers some stability. Input cost volatility for kraft paper and energy could pressure margins, despite mitigation efforts. The competitive landscape is intense, and the ability to pass on price increases may be limited by market dynamics. Finally, the non-cash impact of Amazon warrants will continue to create "noise" in reported financials, requiring investors to focus on underlying cash flow performance.

Conclusion

Ranpak Holdings Corp. stands at a pivotal juncture, transforming from a legacy paper packaging provider into a forward-thinking leader in sustainable, automated end-of-line solutions. The company's strategic investments in advanced AI-powered vision, data, and robotics, coupled with its deep enterprise partnerships, are creating a formidable competitive moat. While short-term macroeconomic headwinds and initial automation investments have impacted recent profitability, the second half of 2025 marks a critical inflection point, particularly for the automation segment, which is poised for significant growth and a transition to profitability.

The company's disciplined focus on deleveraging, supported by strong cash generation from its core PPS business and the scaling of its automation offerings, positions it for long-term financial health. For discerning investors, Ranpak represents an opportunity to invest in a company leveraging sustainability and automation mega-trends, with significant hidden value in its technological assets and a clear path to enhanced profitability and reduced leverage in the coming years.