Ranpak (NYSE:PACK) reported second-quarter revenue growth driven by a sharp increase in automation equipment sales, while management said it remains on track to meet its full-year outlook and generate roughly $60 million in automation revenue in 2026.
Chairman and CEO Omar Asali said automation revenue rose 139% year over year on a constant-currency basis, excluding the impact of warrants. The company saw strong automation activity in both North America and Europe, including continued deployments with Walmart and Medline as well as new customer activity.
Revenue Growth and Regional Performance
Consolidated net revenue increased 12.2% year over year on a constant-currency basis during the second quarter. Excluding the impact of warrants, constant-currency revenue growth was 12.6%. Foreign exchange added 1.8 percentage points to reported top-line growth, resulting in reported revenue growth of 14% for the quarter, according to management.
North American revenue increased 8.5%, or 9.4% excluding warrants. The region’s automation revenue grew more than 250% excluding warrants, while the company’s protective packaging systems, or PPS, business was a slight detractor as its distribution channel faced difficult comparisons against prior-year growth.
In Europe and Asia-Pacific, net revenue increased 15.4% on a constant-currency basis. Automation revenue rose 103.7%, while PPS volume grew 4.2%, led largely by strength in Europe, management said.
Overall PPS volumes increased 2.4% year over year, marking volume growth in 11 of the past 12 quarters. Asali said Europe again outperformed, while North America continued to see stronger results from large enterprise customers than from the distribution channel. He said distribution-channel conditions improved somewhat late in the quarter and should improve further in the second half as comparisons normalize and new products gain traction.
Ranpak cited positive customer reception for Guardian 24, a compact packaging unit that the company said can offer cost savings compared with foam. The company is also pursuing growth in cushioning, void fill, wrapping and cold-chain packaging.
Margins, Costs and Automation Profitability
Adjusted EBITDA increased by $2.6 million to $19.1 million on a reported basis. On a constant-currency basis, adjusted EBITDA increased 13.9%, or 15.8% excluding the effect of warrants.
Gross profit increased 17.6% on a constant-currency basis, or 18.6% excluding a $1.7 million non-cash provision associated with warrants. Gross margin improved 150 basis points from the prior-year quarter.
Chief Financial Officer Bill Drew said North American PPS margins improved by more than 250 basis points excluding depreciation, supported by efficiency gains. During the question-and-answer session, he said North American PPS margins improved by more than 300 basis points, describing continued progress from cost reductions and operating efficiencies.
In Europe, margins were pressured by the timing of higher input costs relative to the implementation of a customer surcharge. Management said European paper producers began passing along price increases early in the second quarter, and Ranpak introduced a temporary surcharge to protect its margins. Asali said the company intends to remove the surcharge when market conditions normalize.
Management also cited a shift by some European customers toward lower-priced, lower-margin void-fill products as a source of product-mix pressure. Still, Drew said the company expects continued gross-margin improvement in the second half through efficiency efforts, pricing actions and surcharge management.
Automation carries a lower current margin profile than Ranpak’s other businesses, but Drew said the company expects margins to improve as automation scales. Management said the existing automation footprint can support more than $100 million in revenue without substantial additional capital expenditures.
Ranpak expects its automation segment to reach adjusted EBITDA breakeven late in 2026 and become an EBITDA-positive contributor in 2027. Asali said much of the revenue required to support the company’s approximately $60 million automation target this year is already contracted.
Market Conditions and Portfolio Actions
Asali characterized the macroeconomic backdrop as volatile, citing movements in oil and natural-gas prices, consumer confidence and geopolitical tensions. He said customers remain focused on cost reduction amid concerns about elevated energy costs, inflation and consumer demand.
In North America, Ranpak said paper markets have tightened as producers seek price increases. The company also sees an opportunity to accelerate the transition from plastic packaging to paper-based alternatives as resin-based products experienced meaningful price increases in the second quarter.
Management said it expects to take pricing actions in North America during the second half, which Asali said should support margins. The company also plans to continue Lean, Six Sigma, quality and productivity initiatives.
Ranpak is pruning portions of its North American PPS portfolio to improve profitability. Asali said the company may reduce some lower-margin business, including areas involving warrants, while continuing to pursue higher-value accounts and opportunities. He said the moves are not expected to be materially noticeable in reported revenue.
Liquidity and 2027 Growth Investments
Ranpak ended the second quarter with $43.2 million of cash and no borrowings under its revolving credit facility. Reported net leverage was 4.5 times on a last-12-month basis, down 0.2 turns from the first quarter.
The company said it expects cash to improve meaningfully in the second half due to seasonality and working-capital improvements. Its long-term goal is to reduce leverage to between 2.5 and 3 times over the next 24 months.
Second-quarter capital expenditures totaled $6.6 million, down $3.2 million from the prior-year period. The company said it remains disciplined on spending while investing in production capacity for growth areas such as cold chain and enterprise-customer initiatives.
Asali said Ranpak is expanding cold-chain capacity in the second half and believes its Climaliner Plus offering, positioned as an alternative to EPS foam, has reached an inflection point. He also reiterated the company’s longer-term target of $800 million in revenue by 2030, supported by automation, cold chain and other value-added warehouse solutions.
About Ranpak (NYSE:PACK)
Ranpak Holdings Corp. (NYSE: PACK) is a leading provider of sustainable, paper-based packaging solutions designed to protect products during transit. The company’s core business centers on the design, manufacture and distribution of automated systems and consumable paper packaging materials that offer an eco-friendly alternative to plastic-based void-fill and protective packaging. Ranpak’s solutions include crumpled paper fillers, paper wrap systems and tailored automation equipment that serve diverse end markets such as e-commerce, industrial parts, electronics and retail.
Founded in 1972 and headquartered in Concord Township, Ohio, Ranpak has built a global presence by combining innovation in paper converting technology with a commitment to sustainability.
