Ranpak Holdings Corp. - Quarter Report: 2021 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2021


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

For the transition period from __________ to __________.

Commission File Number 001-38348

RANPAK HOLDINGS CORP.

(Exact name of registrant as specified in its charter)


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

7990 Auburn Road

Concord Township, Ohio 44077

(Address of principal executive offices) (Zip Code)

(440) 354-4445

(Registrant’s telephone number, including area code)

N/A

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

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


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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.


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

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 October 26, 2021, the registrant had 78,478,624 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.

Ranpak Holdings Corp.

Quarterly Report on Form 10-Q

For the Period Ended September 30, 2021

Table of Contents


		Page
Part I – Financial Information		1
Item 1. Condensed Consolidated Financial Statements (Unaudited)		1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3. Quantitative and Qualitative Disclosures About Market Risk		42
Item 4. Controls and Procedures		42
Part II – Other Information		43
Item 1. Legal Proceedings		43
Item 1A. Risk Factors		43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 3. Defaults Upon Senior Securities		43
Item 4. Mine Safety Disclosures		43
Item 5. Other Information		43
Item 6. Exhibits		44
Signatures		45

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Index to Unaudited Condensed Consolidated Financial Statements

Ranpak Holdings Corp.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2021 and 2020

Unaudited Condensed Consolidated Balance Sheets – September 30, 2021 and December 31, 2020

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020

Notes to the Unaudited Condensed Consolidated Financial Statements

Ranpak Holdings Corp.

Unaudited Condensed Consolidated Statements of Operations

and Comprehensive Income (Loss)

(in millions, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Paper revenue	$	81.2		$	64.9		$	229.5		$	171.2
Machine lease revenue		11.8			10.4			35.0			28.3
Other revenue		4.1			1.5			10.3			6.8
Net revenue		97.1			76.8			274.8			206.3
Cost of goods sold		59.1			46.6			164.8			122.3
Gross profit		38.0			30.2			110.0			84.0
Selling, general and administrative expenses		27.1			16.6			70.8			56.9
Transaction costs		-			1.2			-			1.2
Depreciation and amortization expense		8.7			7.7			26.1			22.9
Other operating expense (income), net		(0.1	)		1.9			2.0			2.9
Income from operations		2.3			2.8			11.1			0.1
Interest expense		5.5			4.9			17.1			16.6
Foreign currency (gain) loss		(1.5	)		3.2			(3.9	)		3.1
Loss before income tax expense (benefit)		(1.7	)		(5.3	)		(2.1	)		(19.6	)
Income tax expense (benefit)		(0.3	)		0.8			(1.8	)		(1.4	)
Net loss	$	(1.4	)	$	(6.1	)	$	(0.3	)	$	(18.2	)

Two-class method
Loss per share
Basic	$	(0.02	)	$	(0.08	)	$	-		$	(0.25	)
Diluted	$	(0.02	)	$	(0.08	)	$	-		$	(0.25	)
Class A – earnings (loss) per share
Basic	$	(0.02	)	$	(0.08	)	$	-		$	(0.25	)
Diluted	$	(0.02	)	$	(0.08	)	$	-		$	(0.25	)
Class C – earnings (loss) per share
Basic	$	(0.03	)	$	(0.08	)	$	-		$	(0.26	)
Diluted	$	(0.03	)	$	(0.08	)	$	-		$	(0.26	)

Weighted average number of shares outstanding - Class A and C
Basic		81,396,832			72,396,183			77,579,205			71,401,580
Diluted		81,396,832			72,396,183			77,579,205			71,401,580

Other comprehensive income (loss), before tax
Foreign currency translation adjustments	$	(4.9	)	$	8.4		$	(11.1	)	$	7.9
Interest rate swap adjustments		0.8			(0.5	)		4.0			(12.2	)
Cross currency swap adjustments		1.4			-			1.4			-
Total other comprehensive income (loss), before tax		(2.7	)		7.9			(5.7	)		(4.3	)
Provision (benefit) for income taxes related to other comprehensive income (loss)		0.5			0.1			1.3			(2.1	)
Total other comprehensive income (loss), net of tax		(3.2	)		7.8			(7.0	)		(2.2	)
Comprehensive income (loss), net of tax	$	(4.6	)	$	1.7		$	(7.3	)	$	(20.4	)

See notes to unaudited condensed consolidated financial statements.

Ranpak Holdings Corp.

Unaudited Condensed Consolidated Balance Sheets

(in millions, except share data)


	September 30, 2021			December 31, 2020
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	110.4		$	48.5
Accounts receivable, net		44.8			39.1
Inventories, net		30.2			16.1
Income tax receivable		9.2			0.1
Prepaid expenses and other current assets		4.1			3.4
Total current assets		198.7			107.2

Property, plant and equipment, net		126.5			124.4
Operating lease right-of-use assets, net		6.8			-
Goodwill		452.1			458.4
Intangible assets, net		413.9			440.6
Other assets		24.6			2.9
Total assets	$	1,222.6		$	1,133.5

Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$	34.7		$	24.9
Accrued liabilities and other		31.6			30.7
Current portion of long-term debt		1.1			0.5
Operating lease liabilities, current		2.4			-
Deferred machine fee revenue		1.7			1.4
Total current liabilities		71.5			57.5

Long-term debt		403.9			432.7
Deferred tax liabilities		105.4			109.6
Derivative instruments		4.9			9.6
Operating lease liabilities, non-current		4.4			-
Other liabilities		0.9			1.2
Total liabilities		591.0			610.6

Commitments and contingencies – Note 13
Shareholders' equity
Class A common stock, $0.0001 par, 200,000,000 shares
authorized at September 30, 2021 and December 31, 2020
Shares issued and outstanding: 78,475,824 and 69,005,059
at September 30, 2021 and December 31, 2020, respectively		-			-
Class C common stock, $0.0001 par, 200,000,000 shares
authorized at September 30, 2021 and December 31, 2020
Shares issued and outstanding: 2,921,099 and 6,511,293
at September 30, 2021 and December 31, 2020, respectively		-			-
Additional paid-in capital		680.7			564.7
Accumulated deficit		(52.8	)		(52.5	)
Accumulated other comprehensive income		3.7			10.7
Total shareholders' equity		631.6			522.9
Total liabilities and shareholders' equity	$	1,222.6		$	1,133.5

See notes to unaudited condensed consolidated financial statements.

Ranpak Holdings Corp.

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

(in millions, except share data)


	Common Stock
	Class A				Class C
	Shares		Amount		Shares			Amount		Additional Paid-In Capital			Accumulated Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2019		64,293,741	$	-		6,511,293		$	-	$	557.5		$	(29.1	)	$	3.4		$	531.8
Stock-based awards vested and distributed		51,603		-		-			-		-			-			-			-
Issue Director shares		6,903		-		-			-		-			-			-			-
Amortization of restricted stock units		-		-		-			-		2.2			-			-			2.2
Net loss		-		-		-			-		-			(3.6	)		-			(3.6	)
Other comprehensive loss		-		-		-			-		-			-			(11.8	)		(11.8	)
Balance at March 31, 2020		64,352,247	$	-		6,511,293		$	-	$	559.7		$	(32.7	)	$	(8.4	)	$	518.6
Stock-based awards vested and distributed		143,048		-		-			-		-			-			-			-
Issue Director shares		61,164		-		-			-		-			-			-			-
Amortization of restricted stock units		-		-		-			-		2.0			-			-			2.0
Net loss		-		-		-			-		-			(8.5	)		-			(8.5	)
Other comprehensive income		-		-		-			-		-			-			1.8			1.8
Balance at June 30, 2020		64,556,459	$	-		6,511,293		$	-	$	561.7		$	(41.2	)	$	(6.6	)	$	513.9
Warrant exchange		4,422,564		-		-			-		-			-			-			-
Stock-based awards vested and distributed		2,048		-		-			-		-			-			-			-
Issue Director shares		10,084		-		-			-		-			-			-			-
Amortization of restricted stock units		-		-		-			-		1.7			-			-			1.7
Net loss		-		-		-			-		-			(6.1	)		-			(6.1	)
Other comprehensive income		-		-		-			-		-			-			7.8			7.8
Balance at September 30, 2020		68,991,155	$	-		6,511,293		$	-	$	563.4		$	(47.3	)	$	1.2		$	517.3

Balance at December 31, 2020		69,005,059	$	-		6,511,293		$	-	$	564.7		$	(52.5	)	$	10.7		$	522.9
Stock-based awards vested and distributed		332,718		-		-			-		(1.7	)		-			-			(1.7	)
Issue Director shares		5,584		-		-			-		-			-			-			-
Amortization of restricted stock units		-		-		-			-		2.7			-			-			2.7
Net income		-		-		-			-		-			6.3			-			6.3
Other comprehensive loss		-		-		-			-		-			-			(6.4	)		(6.4	)
Balance at March 31, 2021		69,343,361	$	-		6,511,293		$	-	$	565.7		$	(46.2	)	$	4.3		$	523.8
Shareholder conversion of Class C to Class A		3,590,194		-		(3,590,194	)		-		-			-			-			-
May 2021 Equity Offering		5,250,000		-		-			-		103.4			-			-			103.4
Stock-based awards vested and distributed		202,414		-		-			-		-			-			-			-
Issue Director shares		83,954		-		-			-		-			-			-			-
Amortization of restricted stock units		-		-		-			-		4.7			-			-			4.7
Net loss		-		-		-			-		-			(5.2	)		-			(5.2	)
Other comprehensive income		-		-		-			-		-			-			2.6			2.6
Balance at June 30, 2021		78,469,923	$	-		2,921,099		$	-	$	673.8		$	(51.4	)	$	6.9		$	629.3
Stock-based awards vested and distributed		2,901		-		-			-		-			-			-			-
Issue Director shares		3,000		-		-			-		-			-			-			-
Amortization of restricted stock units		-		-		-			-		6.9			-			-			6.9
Net loss		-		-		-			-		-			(1.4	)		-			(1.4	)
Other comprehensive loss		-		-		-			-		-			-			(3.2	)		(3.2	)
Balance at September 30, 2021		78,475,824	$	-		2,921,099		$	-	$	680.7		$	(52.8	)	$	3.7		$	631.6

See notes to unaudited condensed consolidated financial statements.

Ranpak Holdings Corp.

Unaudited Condensed Consolidated Statements of Cash Flows

(in millions)


	Nine Months Ended September 30,
	2021			2020
Cash Flows from Operating Activities
Net loss	$	(0.3	)	$	(18.2	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		54.4			45.3
Amortization of deferred financing costs		1.5			1.2
Loss on disposal of fixed assets		1.0			1.7
Deferred income taxes		(4.0	)		(0.9	)
Amortization of initial value of hedging instrument		(0.6	)		(1.2	)
Currency (gain) loss on foreign denominated debt and notes payable		(4.1	)		3.2
Amortization of restricted stock units		14.3			5.9
Changes in operating assets and liabilities:
(Increase) decrease in receivables, net		(4.5	)		(9.4	)
(Increase) decrease in inventory		(14.3	)		(2.7	)
(Increase) decrease in prepaid expenses and other assets		(0.7	)		(1.0	)
Increase (decrease) in accounts payable		8.0			8.2
Increase (decrease) in accrued liabilities		5.5			6.5
Change in other assets and liabilities		(15.4	)		(0.8	)
Net cash provided by operating activities		40.8			37.8

Cash Flows from Investing Activities
Capital expenditures:
Converter equipment		(32.9	)		(21.1	)
Other capital expenditures		(7.7	)		(3.9	)
Total capital expenditures		(40.6	)		(25.0	)
Cash paid for investments in small private businesses		(9.2	)		-
Patent and trademark expenditures		(0.9	)		(0.5	)
Net cash used in investing activities		(50.7	)		(25.5	)

Cash Flows from Financing Activities
Proceeds from equity offering, gross		104.0			-
Prepayments on term loan		(20.9	)		-
Financing costs of equity offering		(0.6	)		-
Principal payments on term loans		(1.2	)		(1.2	)
Payments on finance lease liabilities		(0.5	)		-
Exit Payment		(8.2	)		-
Net cash provided by (used in) financing activities		72.6			(1.2	)

Effect of Exchange Rate Changes on Cash		(0.8	)		0.5
Net Increase in Cash and Cash Equivalents		61.9			11.6
Cash and Cash Equivalents, beginning of period		48.5			19.7
Cash and Cash Equivalents, end of period	$	110.4		$	31.3

See notes to unaudited condensed consolidated financial statements.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 1 — Nature of Operations

Ranpak Holdings Corp. (formerly known as One Madison Corporation) is a leading provider of environmentally sustainable, systems-based, product protection solutions for e-Commerce and industrial supply chains. Through proprietary protective packaging systems and paper consumables, the Company offers a full suite of protective packaging solutions. The Company’s business is global, with a strong presence in the United States and Europe. Throughout this report, when we refer to “Ranpak,” the “Company,” “we,” “our,” or “us,” we are referring to Ranpak Holdings Corp. and all of our subsidiaries, except where the context indicates otherwise.

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, 2020, 2019, and 2018, which are included in our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 10-K”). The three months ended September 30, 2021 may be further referred to herein as the “third quarter of 2021.” The three months ended September 30, 2020 may be further referred to herein as the “third quarter of 2020.”

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 and certain immaterial prior year amounts have been reclassified consistent with current year presentation. All amounts are in millions, except share and per share amounts and are approximate due to rounding.

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 at period-end exchange rates and revenues and expenses are translated into U.S. dollars using average monthly exchange rates.

Emerging Growth Company (“EGC”) — Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) exempts EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, as amended, registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an EGC, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company, which is neither an EGC nor an EGC which has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

As of June 30, 2021, our aggregate worldwide market value of voting and non-voting common equity held by non-affiliates exceeded $700 million. As we meet all other applicable criteria in the Securities Exchange Act of 1934, as amended, we will lose EGC status and become a large accelerated filer as of December 31, 2021.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Investments in Small Private Businesses — In the third quarter of 2021, we paid consideration of $9.2 million in exchange for minority ownership interests in two small private businesses. We do not have power to direct the activities of these businesses and do not have significant economic exposure related to these investments. These investments do not require consolidation and are individually and collectively immaterial to our condensed consolidated financial statements.

Recently Adopted Accounting Standards — On January 1, 2021, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), which requires an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than twelve months and recognize expense over the lease term.

We elected to transition to ASC 842 using the modified retrospective method. Prior period amounts are not adjusted and continue to be reported in accordance with historic accounting under previous lease guidance, ASC Topic 840, Leases (“ASC 840”). We elected to use the package of practical expedients permitted under the transition guidance. We did not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases. For lease agreements that include lease and non-lease components, we elected to use the practical expedient on all leases entered into or modified after January 1, 2021 to combine lease and non-lease components for all classes of assets. Additionally, we elected to not record on the balance sheet leases with a term of twelve months or less.

Adopting ASC 842 did not result in a material impact to our financial statements and disclosures. Refer to Note 12, “Leases” for further detail.

Recently Issued Accounting Standards — In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the FASB’s guidance on the impairment of financial instruments. ASU 2016-13 adds to GAAP an impairment model (known as the “current expected credit loss model”) that is based on expected losses rather than incurred losses. ASU 2016-13 was originally effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. In October 2019, the FASB delayed the implementation of ASU 2016-13 for private companies until fiscal years beginning January 1, 2023. Given our status as an EGC at the time, we had planned to adopt ASU 2016-13 in accordance with private company guidance. However, as we will lose EGC status, we will adopt ASU 2016-13 on January 1, 2022. We are currently evaluating the impact that this new guidance will have on our financial position, results of operations, cash flows and related disclosures.

Note 3 — Supplemental Balance Sheet Data and Cash Flow Information

Cash and cash equivalents — Cash and cash equivalents include securities with original maturities of three months or less and cash in banks. In June 2021, we invested $70.0 million in a money market fund. A money market fund 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 expense (income), net and were immaterial in the nine months ended September 30, 2021. The balance was approximately $70.0 million at September 30, 2021. The fair value of money market funds is considered Level 1 in the fair value hierarchy because they are securities traded in active markets. Refer to Note 10, “Fair Value Measurement” for further detail.

In May 2021, we completed a public offering of 4.5 million shares of Class A common stock. Additionally, the underwriters completed the exercise of an allotment option to sell an additional 0.8 million shares (the public offering and the allotment option collectively referred to as the “May 2021 Equity Offering”). Cash proceeds received in the May 2021 Equity Offering, net of underwriting fees, commissions, and transaction expenses, were $103.4 million. We used the proceeds to prepay debt and invest in a money market fund. The balance will be used for general corporate purposes. Refer to Note 7, “Long-Term Debt” for further detail.

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


	September 30, 2021			December 31, 2020
Accounts receivable	$	45.6		$	39.6
Allowance for doubtful accounts		(0.8	)		(0.5	)
Accounts receivable, net	$	44.8		$	39.1

At September 30, 2021, no customer’s accounts receivable balances exceeded 10.0% of our accounts receivable balance. At December 31, 2020, one customer accounted for approximately 12.9% of our accounts receivable balance.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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


	September 30, 2021			December 31, 2020
Raw materials	$	16.1		$	9.8
Work-in-process		1.7			0.5
Finished goods		13.4			6.8
Total inventories		31.2			17.1
Reserve for obsolescence		(1.0	)		(1.0	)
Inventories, net	$	30.2		$	16.1

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


	September 30, 2021			December 31, 2020
Land	$	4.1		$	4.2
Buildings and improvements		8.7			8.7
Machinery and equipment		19.9			15.3
Computer and office equipment		12.0			10.7
Converting machines		158.8			134.7
Total property, plant, and equipment		203.5			173.6
Accumulated depreciation		(77.0	)		(49.2	)
Property, plant, and equipment, net	$	126.5		$	124.4

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 September 30,				Nine Months Ended September 30,
Depreciation expense included in	2021		2020		2021		2020
Cost of goods sold	$	9.8	$	8.0	$	28.3	$	22.4
Depreciation and amortization expense		1.4		0.6		4.1		1.6
Total depreciation expense	$	11.2	$	8.6	$	32.4	$	24.0

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


	September 30, 2021		December 31, 2020
Employee compensation	$	2.4	$	2.6
Taxes		6.2		3.5
Professional fees		5.8		1.2
Bonus		7.1		6.0
Interest		1.7		1.9
Exit Payment		-		8.2
Interest rate swap liability, current portion		4.6		4.6
Other		3.8		2.7
Accrued liabilities and other	$	31.6	$	30.7

Under our credit 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.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Supplemental cash flow information
Interest paid	$	5.6	$	5.5	$	16.5	$	17.0
Taxes paid		2.1		1.2		7.1		2.7
Non-cash investing activities
Right-of-use assets obtained in exchange for lease liabilities	$	0.1	$	-	$	10.7	$	-
Equipment purchased under capital leases (ASC 840)		-		-		-		0.3
Capital expenditures in accounts payable	—		—		$	0.3	$	2.3

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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 September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenue
North America	$	37.3		$	33.3		$	101.1		$	88.6
Europe/Asia		59.8			43.5			173.7			117.7
Net revenue		97.1			76.8			274.8			206.3

Segment gross profit
North America		14.4			12.7			37.5			34.8
Europe/Asia		23.6			17.5			72.5			49.2
Gross profit		38.0			30.2			110.0			84.0

Expenses excluded from segment gross profit
Selling, general and administrative expenses		27.1			16.6			70.8			56.9
Transaction costs		-			1.2			-			1.2
Depreciation and amortization expense		8.7			7.7			26.1			22.9
Other operating expense (income), net		(0.1	)		1.9			2.0			2.9
Interest expense		5.5			4.9			17.1			16.6
Foreign currency (gain) loss		(1.5	)		3.2			(3.9	)		3.1
Loss before income tax expense (benefit)	$	(1.7	)	$	(5.3	)	$	(2.1	)	$	(19.6	)

Our customers are not concentrated in any specific geographic region. During the nine months ended September 30, 2021 and 2020, no customers exceeded 10% of net revenue.

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


	September 30, 2021		December 31, 2020
North America	$	61.9	$	59.4
Europe/Asia		64.6		65.0
Total long-lived assets	$	126.5	$	124.4

Note 5 — Revenue Recognition, Contracts with Customers

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

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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

Our paper consumables, automation equipment, and maintenance services are determined to be distinct performance obligations. Free on loan and leased equipment is typically identified as a separate lease component in scope of ASC 842. In association to the sale of automation equipment, we sell other goods and services, such as extended warranties, preventative maintenance services, spare parts and spare part packages, and consulting services. These other goods and services do not represent performance obligations because they are neither separate nor distinct, or they are not material.

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

The time between when a performance obligation is satisfied and when billing and payment occur is closely aligned and performance obligations do not extend beyond one year. As the transfer of control of our products results in an unconditional right to receive consideration, we did not record contract assets as of September 30, 2021 and December 31, 2020.

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. During the nine months ended September 30, 2021 and 2020, substantially all of the beginning balance of deferred revenue was recognized into revenue. Beginning and ending balances of deferred revenue were as follows:


	Nine Months Ended September 30,
	2021		2020
Beginning balance	$	1.4	$	2.5
Ending balance	$	1.7	$	0.8

In addition to the disaggregation of revenue between paper, machine lease, and other revenue, we further 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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
ASC 606
North America	$	32.0	$	29.0	$	86.2	$	76.6
Europe/Asia		53.3		37.4		153.6		101.4
Total paper and other revenue	$	85.3	$	66.4	$	239.8	$	178.0
ASC 842
Machine lease revenue	$	11.8	$	10.4	$	35.0	$	28.3
Net revenue	$	97.1	$	76.8	$	274.8	$	206.3

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

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

Goodwill and Indefinite-Lived Intangible Assets

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

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

We assessed whether events or circumstances indicate that it was more likely than not that our goodwill and indefinite-lived intangible assets were impaired as of September 30, 2021. The goodwill and indefinite-lived intangible assets assessments included consideration of key factors such as macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity-and reporting unit-specific events. We concluded that it is more likely than not that the fair value of our reporting units and indefinite-lived intangible assets exceeded their carrying values at September 30, 2021.

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, 2020	$	338.8	$	119.6		$	458.4
Currency translation		-		(6.3	)		(6.3	)
Balance at September 30, 2021	$	338.8	$	113.3		$	452.1

Finite-Lived Intangible Assets, net

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

Impairment of Long-lived Assets

We review our long-lived assets, including amortizable intangible assets and property, plant and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. For long-lived assets, an impairment loss is indicated when the undiscounted cash flows estimated to be generated by the asset group are not sufficient to recover the unamortized balance of the asset group. If indicators exist, the loss is measured as the excess of carrying value over the asset group’s fair value, as determined based on discounted future cash flows, asset appraisal and market values of similar assets. As of September 30, 2021, there were no indicators of impairment present for property, plant and equipment or amortizable intangible assets that required us to test for recoverability.

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


	September 30, 2021							December 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Customer/distributor relationships	$	202.9	$	(31.7	)	$	171.2	$	209.2	$	(22.2	)	$	187.0
Patented/unpatented technology		170.0		(35.4	)		134.6		169.2		(23.7	)		145.5
Intellectual property		0.5		(0.1	)		0.4		0.4		-			0.4
In-process research and development		1.6		-			1.6		1.6		-			1.6
Total definite-lived intangible assets		375.0		(67.2	)		307.8		380.4		(45.9	)		334.5
Trademarks/tradenames with indefinite lives		106.1		-			106.1		106.1		-			106.1
Identifiable intangible assets, net	$	481.1	$	(67.2	)	$	413.9	$	486.5	$	(45.9	)	$	440.6

The following table shows the remaining estimated amortization expense for our definite-lived intangible assets at September 30, 2021:


Year	Amount
2021	$	7.3
2022		29.2
2023		29.2
2024		29.1
2025		28.6
Thereafter		182.8
	$	306.2

Amortization expense was $7.3 million and $7.1 million in the third quarter of 2021 and 2020, respectively. Amortization expense was $22.0 million and $21.3 million in the nine months ended September 30, 2021 and 2020, respectively.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

The following table shows the remaining weighted-average useful life of our definite lived intangible assets as of September 30, 2021:


	Remaining Weighted-Average Useful Life
	September 30, 2021	December 31, 2020
Customer/distributor relationships	13 years	13 years
Patented/unpatented technology	9 years	10 years
Intellectual property	7 years	6 years
Total identifiable assets, net with definite lives	11 years	12 years

Note 7 — Long-Term Debt

Ranger Pledgor LLC, a Delaware limited liability company (“Holdings”), Ranger Packaging LLC, a Delaware limited liability company (the “U.S. Borrower”), and Ranpak B.V., a private limited liability company under the laws of the Netherlands (the “Dutch Borrower” and together with the U.S. Borrower, the “Borrowers”), entered into a First Lien Credit Agreement on June 3, 2019 that provided for senior secured credit facilities to, in part, (i) fund the business combination, (ii) repay and terminate the existing indebtedness of Rack Holdings, and (iii) pay all fees, premiums, expenses and other transaction costs incurred in connection with the foregoing. The aggregate principal amount of the senior secured credit facilities consists of a $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 2026 and the Revolving Facility matures in 2024. In December 2019, we prepaid approximately $107.7 million of principal on the First Lien Dollar Term Facility. In June 2021, we prepaid $20.9 million of principal on the First Lien Dollar Term Facility (the “June 2021 Prepayment”). As of September 30, 2021 and December 31, 2020, no amounts were outstanding under the Revolving Facility.

Long-term debt consisted of the following:


	September 30, 2021			December 31, 2020
First Lien Dollar Term Facility	$	250.0		$	270.9
First Lien Euro Term Facility		158.8			168.9
Finance lease liabilities		1.6			-
Deferred financing costs, net		(5.4	)		(6.6	)
Total debt		405.0			433.2
Less: current portion of long-term debt		(0.5	)		(0.5	)
Less: current portion of finance lease liabilities		(0.6	)		-
Long-term debt	$	403.9		$	432.7

Borrowings under the Facilities, at the Borrowers’ option, bear interest at either (1) an adjusted eurocurrency rate or (2) a base rate, in each case plus an applicable margin. The applicable margin is 3.75% with respect to eurocurrency borrowings, 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 400 basis points for eurocurrency borrowings. The interest rate for the First Lien Dollar Term Facility as of September 30, 2021 and December 31, 2020 was 3.84% and 3.91%, respectively. The interest rate for the First Lien Euro Term Facility as of September 30, 2021 and December 31, 2020 was 3.75% and 3.75%, 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.

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

The obligations of (i) the U.S. Borrower under the Facilities and certain of its obligations under hedging arrangements and cash management arrangements are unconditionally guaranteed by Holdings and 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

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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

The Facilities impose restrictions that require the Company to comply with or maintain certain financial tests and ratios. Such agreements restrict our ability to, among other things: (i) declare dividends or redeem or repurchase capital stock, including with respect to Class A common stock; (ii) prepay, redeem or purchase other debt; (iii) incur liens; (iv) make loans, guarantees, acquisitions and other investments; (v) incur additional indebtedness; (vi) engage in sale and leaseback transactions; (vii) amend or otherwise alter debt and other material agreements; (viii) engage in mergers, acquisitions and asset sales; (ix) engage in transactions with affiliates; and (x) enter into arrangements that would prohibit us from granting liens or restrict our ability to pay dividends, make loans or transfer assets among our subsidiaries. We were in compliance with all financial covenants as of September 30, 2021.

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

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

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

As a result of the June 2021 Prepayment, we accelerated the amortization of approximately $0.3 million of deferred financing costs, which is included in interest expense in the nine months ended September 30, 2021. Additionally, as a result of making the Exit Payment to our lenders, we became eligible to enter into the Permitted Exit Payment Amendment (as defined in the Credit Agreement) to the Credit Agreement which, among other things, would introduce additional exceptions to the negative covenant that restricts the ability of the Borrowers and their restricted subsidiaries from paying dividends and distributions or repurchasing capital stock. On July 28, 2021, the Permitted Exit Payment Amendment to the Credit Agreement became effective.

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.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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 will terminate 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 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
September 30, 2021
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, 2020
September 2019 Swap	Cash flow hedge	June 1, 2023	1.50%	$	50.0	First Lien Dollar Term Facility	18%
Second Amended January 2019 Swap	Cash flow hedge	June 1, 2024	2.09%		200.0	First Lien Dollar Term Facility	74%
				$	250.0		92%

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

As of September 30, 2021, we anticipate having to reclassify $4.6 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

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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.

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 September 30, 2021 and December 31, 2020. The net amount of derivatives can be reconciled to the tabular disclosure of fair value in Note 10, “Fair Value Measurement”:


	Balance Sheet Classification	September 30, 2021		December 31, 2020
Interest Rate Swap Agreements
Designated as cash flow hedges	Accrued liabilities and other	$	4.6	$	4.6
Designated as cash flow hedges	Derivative instruments		4.9		9.6
		$	9.5	$	14.2

Cross Currency Swap Agreement
Designated as net investment hedge	Other assets	$	1.4	$	-
		$	1.4	$	-

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 September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
Total interest expense presented in the statement of operations	$	5.5		$	4.9	$	17.1		$	16.6
Interest rate swap agreements designated as cash flow hedges		1.0			1.2		2.9			1.6
Cross currency swap agreement designated as net investment hedge, amounts excluded from effectiveness testing	$	(0.1	)	$	-	$	(0.1	)	$	-

Note 9 — Accumulated Other Comprehensive Income

Accumulated other comprehensive income 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 at September 30, 2021 and December 31, 2020 were as follows:


	September 30, 2021
	Gross Balance			Tax Effect			Net Balance
Foreign currency translation	$	6.8		$	-		$	6.8
Unrealized gain (loss) on interest rate swaps		(5.8	)		1.7			(4.1	)
Unrealized gain (loss) on cross currency swap		1.3			(0.3	)		1.0
Total	$	2.3		$	1.4		$	3.7


	December 31, 2020
	Gross Balance			Tax Effect		Net Balance
Foreign currency translation	$	17.9		$	-	$	17.9
Unrealized gain (loss) on interest rate swaps		(9.9	)		2.7		(7.2	)
Total	$	8.0		$	2.7	$	10.7

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


	Nine Months Ended September 30, 2021
	Foreign currency translation			Unrealized gain (loss) on interest rate swaps			Unrealized gain (loss) on cross currency swap			Total
Beginning balance	$	17.9		$	(7.2	)	$	-		$	10.7
Other comprehensive income (loss) before reclassifications		(11.1	)		7.0			1.2			(2.9	)
Amounts reclassified from accumulated other comprehensive income (loss)		-			(3.9	)		(0.2	)		(4.1	)
Ending balance	$	6.8		$	(4.1	)	$	1.0		$	3.7

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.



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 September 30, 2021 and December 31, 2020. The carrying value of borrowings under the credit facilities approximates fair value due to the variable interest rates associated with those borrowings.

The following table provides the carrying amounts, estimated fair values and the respective fair value measurements of our financial instruments as of September 30, 2021 and December 31, 2020:


			Fair Value Measurements
	Carrying Amount		Level 1		Level 2		Level 3
September 30, 2021
Money market fund	$	70.0	$	70.0	$	-	$	-
Current and long-term debt		410.4		-		410.4		-
Interest rate swap agreements liability		9.5		-		9.5		-
Cross currency swap asset	$	1.4	$	-	$	1.4	$	-

December 31, 2020
Current and long-term debt	$	439.8	$	-	$	439.8	$	-
Interest rate swap agreements liability	$	14.2	$	-	$	14.2	$	-

The valuation techniques and inputs used for fair value measurements categorized within Level 1 include quoted prices in active markets that are readily and regularly available.

The valuation techniques and inputs used for fair value measurements categorized within Level 2 include quoted comparable prices from market inputs. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows or option pricing models using our own estimates and assumptions or those expected to be used by market participants. We determine our valuation policies and procedures and analyze changes in fair value measurements from period to period by using an industry standard market approach, in which prices and other relevant information are generated by market transactions involving identical or comparable assets or liabilities. No financial instruments were measured using unobservable inputs.

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. The interest rate swaps are valued utilizing an income approach, which discounts future cash flow based upon current market expectations and adjustments for credit risk, each of which are considered Level 2 inputs. The cross currency swap is valued utilizing forward and spot prices for currencies and LIBOR forward curves, which are considered Level 2 inputs.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 11 — Income Taxes

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


	Three Months Ended September 30,			Nine Months Ended September 30,
	2021	2020	2021		2020
Effective tax rate	16.1%	(15.7)%	89.1%		7.1%

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

We are subject to taxation in the United States (federal, state, local) and foreign jurisdictions. As of September 30, 2021, tax years 2018 through 2021 are subject to examination by the tax authorities.

Pursuant to ASC 740, Income Taxes (“ASC 740”), as of each balance sheet date, the Company assesses its uncertain tax positions to determine whether factors underlying the sustainability assertion have changed.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act includes several significant business tax provisions that, among other things, eliminated the taxable income limit for certain net operating losses (“NOL”) and allow businesses and individuals to carry back NOLs arising in 2018, 2019, and 2020 to the five prior tax years; suspend the excess business loss rules under section 461(l); accelerate refunds of previously generated corporate AMT credits; generally loosen the business interest limitation under section 163(j) from 30 percent to 50 percent (special partnership rules apply); and fix the “retail glitch” for qualified improvement property in the 2017 tax code overhaul known informally as the Tax Cuts and Jobs Act (the “TCJA”) (TCJA, Public Law 115-97). ASC 740 requires that the tax effects of changes in tax laws or rates be recorded discretely as a component of the income tax provision related to continuing operations in the period of enactment. We recorded any applicable impact from the CARES Act in the first quarter of 2020.

Note 12 — Leases

We lease automobiles, machinery, equipment, and warehouse 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.

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


	Classification	September 30, 2021
Lease assets
Operating lease right-of-use assets, net	Assets	$	6.8
Finance lease right of use assets, net	Property, plant, and equipment, net		1.6
Total lease assets		$	8.4
Lease liabilities
Operating lease liabilities, current	Current liabilities	$	2.4
Operating lease liabilities, non-current	Liabilities		4.4
Finance lease liabilities, current	Current portion of long-term debt		0.6
Finance lease liabilities, non-current	Long-term debt		1.0
Total lease liabilities		$	8.4

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021		2021
Operating leases
Operating lease costs	$	0.7	$	2.1
Variable lease costs		0.1		0.2
Total operating lease costs	$	0.8	$	2.3
Finance leases
Amortization of right-of-use asset	$	0.2	$	0.4
Interest on finance lease liabilities		-		-
Total finance lease costs	$	0.2	$	0.4

Under ASC 840, rental expense was $0.6 million and $1.6 million in the three and nine months ended September 30, 2020.

Maturities of lease liabilities as of September 30, 2021 are as follows:


	Operating			Finance			Total
2021	$	0.7		$	0.2		$	0.9
2022		2.5			0.6			3.1
2023		1.7			0.4			2.1
2024		1.2			0.2			1.4
2025		1.0			0.1			1.1
2026 and Thereafter		0.2			0.2			0.4
Total lease payments		7.3			1.7			9.0
Less lease interest		(0.5	)		(0.1	)		(0.6	)
Total lease liabilities	$	6.8		$	1.6		$	8.4

Minimum lease payments under ASC 840, as of December 31, 2020, were as follows:


Year Ended	Amount
2021	$	2.8
2022		2.3
2023		1.4
2024		1.0
2025		0.8
Thereafter		0.2
Total	$	8.5

Additional information related to leases is presented as follows:


		September 30, 2021
Operating leases
Weighted average remaining lease term		3.5 years
Weighted average discount rate		3.9%
Finance leases
Weighted average remaining lease term		3.1 years
Weighted average discount rate		3.3%

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	0.7	$	2.0
Operating cash flows from finance leases		-		-
Financing cash flows from finance leases		0.2		0.5
Total cash paid	$	0.9	$	2.5

Leased assets obtained in exchange for new operating lease liabilities	$	-	$	8.6
Leased assets obtained in exchange for new finance lease liabilities		0.1		2.1
ROU assets obtained in exchange for lease liabilities	$	0.1	$	10.7

Note 13 — Commitments and Contingencies

Litigation

We are subject to legal proceedings and claims that arise in the ordinary course of our business. Management evaluates each claim and provides for potential loss when the claim is probable to be paid and reasonably estimable. While adverse decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any future accruals with respect to these currently known contingencies would not have a material effect on the financial condition, liquidity or cash flows of the Company. There are no amounts required to be reflected in these unaudited interim condensed consolidated financial statements related to contingencies for the three and nine months ended September 30, 2021.

Environmental Matters

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

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

Guarantees

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

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.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock-based compensation expense	$	6.9	$	1.7	$	14.3	$	5.9
Tax benefit for stock-based compensation		-		0.4		1.2		1.1
Fair value of vested awards	$	6.9	$	2.1	$	15.5	$	7.0

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 September 30, 2021, the pool of shares in the 2019 Plan is summarized as follows:


2019 Plan	Quantity
Maximum allowed for issuance		13,118,055
Awards granted		(5,358,958	)
Awards forfeited		889,971
Available for future awards		8,649,068

Awards vested		1,239,469

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. Certain RSUs vest ratably over a two-year period while others vest over a one-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.

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

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, 2020		669,855		$	8.60		550,496		$	8.09
Granted		295,160			24.19		2,677,695			22.10
Vested		(459,149	)		11.67		(386,508	)		8.90
Forfeited		(11,369	)		13.30		(135,026	)		8.35
Outstanding at September 30, 2021		494,497		$	14.95		2,706,657		$	21.82

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, 2020		80,214		$	7.48
Granted		40,688			22.74
Vested		(92,538	)		8.92
Balance at September 30, 2021		28,364		$	24.67

Note 15 — Shareholders’ Equity

Capital Stock — The Company is authorized to issue 426.0 million shares of capital stock, consisting of (i) 200.0 million shares of Class A common stock, par value $0.0001 per share, (ii) 25.0 million shares of Class B common stock, par value $0.0001 per share, and (iii) 200.0 million shares of Class C common stock, par value $0.0001 per share and (iv) 1.0 million shares of preferred stock, par value $0.0001 per share.

Common Shares — Each holder of Class A Common Stock (“Class A”) is entitled to one vote for each Class A share held of record. Holders of shares of Class C Common Stock (“Class C”) have no such voting rights and, as such, shall not have the right to receive notice of, attend at or vote on any matters on which stockholders generally are entitled to vote. Class C shares have a right of conversion that upon sale or other transfer convert to Class A shares. In April 2021, a shareholder exercised such right of conversion and converted 3.6 million Class C shares for 3.6 million Class A shares. As previously noted, we sold approximately 5.3 million shares of Class A common stock in the May 2021 Equity Offering for net proceeds of $103.4 million.

Preferred Shares — The Company’s charter authorizes 1.0 million shares of preferred stock and provides that shares of preferred stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board of Directors is able, without stockholder approval, to issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. As of September 30, 2021, the Company had no preferred stock outstanding.

Warrants — On August 6, 2020, we commenced (i) an offer to each holder of our outstanding public warrants, forward purchase warrants, and private placement warrants (collectively, the “Warrants”), each to purchase shares of Class A common stock, par value $0.0001 per share (“Class A common stock”), the opportunity to receive 0.22 shares of Class A common stock in exchange for each outstanding warrant tendered by the holder and exchanged pursuant to the offer (the “Offer”), and (ii) the solicitation of consents (the “Consent Solicitation”) from holders of the public warrants and the forward purchase warrants to amend the Warrant Agreement, dated as of January 17, 2018, by and between the Company and Continental Stock Transfer & Trust Company, which governs all of the Warrants (the “Warrant Amendment”). The approved Warrant Amendment permitted the Company to require that each warrant that is outstanding subsequent to the expiration of the Offer be converted into 0.198 shares of Class A common stock. The Offer

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

resulted in a valid tendering of 20.0 million Warrants, or approximately 99.7% of the Warrants, resulting in 4.4 million shares of Class A common stock issued in exchange for said Warrants. As a result of the low number of Warrants remaining outstanding following the Offer, the NYSE delisted the remaining Warrants. The remaining 60,493 Warrants were exchanged at the 0.198 ratio for 11,977 shares of Class A common stock on September 21, 2020. We paid an immaterial amount for fractional shares converted to cash. No Warrants remained after the exchanges.

Outstanding Shares — At September 30, 2021 and December 31, 2020, the Company had the following shares of common stock outstanding:


	September 30, 2021						December 31, 2020
	Class A		Class C		Total Common		Class A		Class C		Total Common
Shares outstanding not subject to an earn-out agreement		78,475,824		2,921,099		81,396,923		62,888,606		5,779,910		68,668,516
Shares subject to $15.00 earn-out		-		-		-		2,940,336		-		2,940,336
Shares subject to $12.50 earn-out		-		-		-		3,018,617		731,383		3,750,000
Shares subject to $12.25 earn-out		-		-		-		157,500		-		157,500
Total		78,475,824		2,921,099		81,396,923		69,005,059		6,511,293		75,516,352

Translation adjustment—Translation adjustments recorded are a component of accumulated other comprehensive income in shareholders’ equity. The effects of translating financial statements of foreign operations into the Company’s reporting currency are recognized as a cumulative translation adjustment in accumulated other comprehensive income (loss) which is net of tax, where applicable.

Note 16 — 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 September 30, 2021, we have not issued any instruments that were 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 tables set forth the computation of our earnings (loss) per share:

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Numerator:
Net loss	$	(1.4	)	$	(6.1	)	$	(0.3	)	$	(18.2	)
Net loss attributable to common stockholders for basic and diluted EPS	$	(1.4	)	$	(6.1	)	$	(0.3	)	$	(18.2	)

Denominator:
Basic weighted average common shares outstanding		81,396,832			72,396,183			77,579,205			71,401,580
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		81,396,832			72,396,183			77,579,205			71,401,580

Loss per share attributable to common stockholders
Basic	$	(0.02	)	$	(0.08	)	$	-		$	(0.25	)
Diluted	$	(0.02	)	$	(0.08	)	$	-		$	(0.25	)

Two-class method:
Class A Common Stock
Basic weighted average common shares outstanding		78,475,733			65,884,890			73,512,399			64,890,287
Dilutive effect of assumed vesting of RSUs and PRSUs		-			-			-			-
Dilutive effect of Class A earnout shares		-			-			-			-
Diluted weighted average common shares outstanding		78,475,733			65,884,890			73,512,399			64,890,287
Proportionate share of net loss	$	(1.3	)	$	(5.6	)	$	(0.3	)	$	(16.5	)
Class A – basic loss per share	$	(0.02	)	$	(0.08	)	$	-		$	(0.25	)
Class A – diluted loss per share	$	(0.02	)	$	(0.08	)	$	-		$	(0.25	)

Class C Common Stock
Basic weighted average common shares outstanding		2,921,099			6,511,293			4,066,806			6,511,293
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			6,511,293			4,066,806			6,511,293
Proportionate share of net loss	$	(0.1	)	$	(0.5	)	$	-		$	(1.7	)
Class C – basic earnings per share	$	(0.03	)	$	(0.08	)	$	-		$	(0.26	)
Class C – diluted loss per share	$	(0.03	)	$	(0.08	)	$	-		$	(0.26	)

The dilutive effect of 1.2 million and 0.4 million shares in the three and nine months ended September 30, 2021, respectively, and 0.6 million and 0.3 million shares in the three and nine months ended September 30, 2020, 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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
RSUs and PRSUs		3,290,689		1,230,024		1,920,875		982,473
Total antidilutive securities		3,290,689		1,230,024		1,920,875		982,473

Note 17 — Transactions with Related Parties

Shared Services Agreement

On June 3, 2019, upon the closing of Ranpak’s business combination with One Madison Corporation, Ranpak entered into a shared services agreement (the “Shared Services Agreement”) with One Madison Group LLC (the “Sponsor”), pursuant to which the Sponsor may provide, or cause to be provided, certain services to Ranpak. The Shared Services Agreement provides for a broad array of potential services, including administrative and “back office” or corporate-type services and requires Ranpak to indemnify the Sponsor in connection with the services provided by the Sponsor to Ranpak. Total fees under the agreement amounted to approximately $0.1 million and $0.1 million for the third quarter of 2021 and 2020, respectively. Total fees under the agreement amounted to approximately $0.3 million and $0.3 million for the nine months ended September 30, 2021 and 2020, respectively.

Advisory Relationship

A director of the Company, prior to being elected as a director, served in an advisory role to Rhône Capital IV L.P., the former majority shareholder of Rack Holdings, Inc., on the sale of Rack Holdings, Inc. The director was compensated for the advisory role through an increase to his indirect equity interest in Rack Holdings, Inc., and reported to Ranpak that the compensation was not significant (less than $50 thousand).

Ranpak Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Registration Rights Agreement

Ranpak is a party to a registration rights agreement with certain security holders. The agreement requires Ranpak to maintain an effective resale shelf registration statement for the benefit of such security holders until they are permitted by law to freely sell their securities without registration or no longer hold Ranpak securities.

Stock Purchase Agreement

Ranpak is subject to certain continuing obligations to indemnify the former directors and officers of Rack Holdings Inc. for certain costs, damages and liabilities pursuant to the Stock Purchase Agreement dated December 12, 2018, pursuant to which One Madison Corporation purchased Rack Holdings Inc.

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

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are not historical facts are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to estimates, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us taking into account information currently available to us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks include, but are not limited to: (i) our inability to secure a sufficient supply of paper to meet our production requirements; (ii) the impact of the price of kraft paper on our results of operations; (iii) our reliance on third party suppliers; (iv) the COVID-19 pandemic and associated response; (v) the high degree of competition in the markets in which we operate; (vi) consumer sensitivity to increases in the prices of our products; (vii) changes in consumer preferences with respect to paper products generally; (viii) continued consolidation in the markets in which we operate; (ix) the loss of significant end-users of our products or a large group of such end-users; (x) our failure to develop new products that meet our sales or margin expectations; (xi) our future operating results fluctuating, failing to match performance or to meet expectations; (xii) our ability to fulfill our public company obligations; and (xiii) other risks and uncertainties indicated from time to time in filings made with the SEC.

Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from the forward-looking statements. We are not undertaking any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. You should not take any statement regarding past trends or activities as a representation that the trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements.

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

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with the sections entitled “Risk Factors” and “Forward-Looking Statements,” and our financial statements and related notes included in this Quarterly Report on Form 10-Q as well as the section entitled, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Ranpak included in our 2020 10-K, filed with the SEC on March 4, 2021. 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.

Overview

Ranpak is a leading provider of environmentally sustainable, systems-based, product protection solutions for e-commerce and industrial supply chains. Since inception in 1972, we have delivered high quality protective packaging solutions, while maintaining commitment to environmental sustainability. We assemble our protective packaging systems and provide the 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 Concord Township, Ohio; Kansas City, Missouri; Raleigh, North Carolina; and Reno, Nevada in the United States, in Heerlen, the Netherlands and Nyrany, Czech Republic. We have a dedicated Ranpak Automation facility in Kerkrade, the Netherlands and an automation research and development facility in Christiansburg, Virginia. We also maintain sales and administrative offices in Sao Paulo, Brazil; Shanghai, China; Laoshan, China; Paris, France; Tokyo, Japan; and Singapore. We are a global business that generated approximately 61.0% of our net revenue for the fiscal year 2020 outside of the United States.

As of September 30, 2021, we had an installed base of approximately 129.2 thousand protective packaging systems serving a diverse set of distributors and end-users. We generated net revenue of $274.8 million and $206.3 million in the nine months ended September 30, 2021 and 2020, respectively.

Effect of Currency Fluctuations. As a result of the geographic diversity of our operations, we are exposed to the effects of currency translation. Currency transaction exposure results when we generate 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 revenue 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 (gain) losses line-item in our condensed consolidated statements of income (loss). In turn, subsidiary income statement balances that are denominated in currencies other than the USD are translated into USD, our functional currency, in consolidation using the average exchange rate in effect during each fiscal month during the period, with any related gain or loss recorded as foreign currency translation adjustments in other comprehensive income (loss). The assets and liabilities of subsidiaries that use functional currencies other than the USD are translated into USD in consolidation using period end exchange rates, with the effects of foreign currency translation adjustments included in accumulated other comprehensive income (loss).

Beginning in September 2021, we hedge some of our exposure to foreign currency translation with a cross currency swap. However, significant currency fluctuations could impact the comparability of results between periods, while such fluctuations coupled with material mismatches in net revenue and expenses could also adversely impact our cash flows. See “Qualitative and Quantitative Disclosures About Market Risk.”

Seasonality. Approximately 34.9% of our net revenue in 2020, 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 the fourth fiscal quarter and the slowest sales in the first fiscal quarter of each fiscal year. We expect this seasonality to continue in the future, as a result of which our results of operations between fiscal quarters in a given year may not be directly comparable.

Impact of the COVID-19 Pandemic. The COVID-19 pandemic has resulted in rapid changes in market and economic conditions around the world as COVID-19 continues to spread. We derive a significant portion of our revenue from sales of Void-Fill, Cushioning and Wrapping solutions to e-commerce end-users and demand from these end-users has been strong, offsetting reductions in demand for these products from customers in other industries. However, social distancing and similar measures adopted in many jurisdictions around the world have impacted our ability to demonstrate and install our protective packaging systems and Automation products and, as a result, such demonstrations and installations have been delayed. If social distancing measures continue for an extended period of time, growth in our protective packaging system base, acquisition of new customers and sales of Automation products may be adversely affected. We believe that these impacts are not unique to us and that our industry competitors have been impacted in a similar fashion. We are deemed an essential business under the Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response issued by the United States Cybersecurity and Infrastructure Security Agency and pursuant to state decisions in states where our domestic production and distribution facilities are located. We continue to operate our production and distribution facilities, both domestically and internationally, albeit subject to social distancing and other measures to promote a safe operating environment. While we have experienced limited delays in receiving certain supplies we use to assemble our packaging systems, to date, these measures have not materially impacted the cost of producing and distributing our products, the cost and availability of raw materials and components, and we have encountered minimal disruption in our ability to fulfill customer orders. We continue to monitor our liquidity position closely and have extended payment terms to certain of our customers when necessary, while correspondingly seeking extended terms from our key suppliers. While we do not currently expect COVID-19 to have a material impact on our business, results of operations, financial condition or liquidity, at the time of this filing, we cannot predict the extent to which we will ultimately be impacted due to the evolving and highly uncertain nature and duration of the COVID-19 pandemic. See “Risk Factors” in the 2020 10-K. We will continue to evaluate the nature and extent of the impact to our business, results of operations, financial condition, and cash flows.

Key Performance Indicators and Other Factors Affecting Performance

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

Protective Packaging Systems Base — We closely track the number of protective packaging 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 protective packaging systems also drives our capital expenditure budgets. The following table presents our installed base of protective packaging systems by product line as of September 30, 2021 and 2020:


	September 30, 2021		September 30, 2020		Change		% Change
Protective Packaging Systems	(in thousands)
Cushioning machines		34.9		33.2		1.7		5.1
Void-fill machines		75.1		65.5		9.6		14.7
Wrapping machines		19.2		14.4		4.8		33.3
Total		129.2		113.1		16.1		14.2

Paper 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 negotiate supply and pricing arrangements with most of our paper suppliers annually, with a view towards mitigating fluctuations in paper cost. Nevertheless, as paper is a commodity, its price on the open market, and in turn the prices we negotiate with suppliers at a given point in time, can fluctuate significantly, and is affected by several factors outside of our control, including supply and demand and the cost of other commodities that are used in the manufacture of paper, including wood, energy and chemicals. The market for our solutions is competitive and it may be difficult to pass on increases in paper prices to our customers immediately, or at all, which has in the past, and could in the future, adversely affect our operating results. In recent months, the cost of paper has increased, though we have not experienced the full impact of the increases to date because of existing purchase arrangements. However, as we renegotiate our paper purchase arrangements in the ordinary course over the coming months, we expect our cost of goods sold to increase. Energy costs, particularly in Europe, and freight costs are also increasing, which we expect will further impact our cost of goods sold. Where we can, we will look to pass these increased market costs on to our customers to mitigate the impact of these costs. We are unable to predict how much of these increases that we will be able to pass on to our customers and our ability to pass these costs on to our customers. As such, we expect some pressure on our gross margin.

Results of Operations

The following tables set forth our results of operations for the three and nine months ended September 30, 2021 and 2020 with line items presented in millions of dollars.

Our condensed consolidated financial statements are prepared in accordance with GAAP. We have, however, also presented below Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and adjusted EBITDA (“AEBITDA”), each on a constant currency basis, which are non-GAAP financial measures. We have included EBITDA and AEBITDA on a constant currency basis because they are key measures used by our management and Board of Directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA and AEBITDA can provide a useful measure for period-to-period comparisons of our primary business operations. Adjusting these non-GAAP measures for comparability for constant currency also assists in this comparison as allows a better insight into the performance of our businesses that operate in currencies other than our reporting currency. Before consolidation, our Europe/Asia data is derived in Euros. We multiply this Euro-derived data by 1.15 to reflect an exchange rate of 1 Euro to 1.15 USD, which we believe is a reasonable figure to use to give a stable depiction of the business without currency fluctuations, to calculate Europe/Asia data in constant currency USD. We combine the constant currency USD data for Europe/Asia with the USD North America data to create combined constant currency figures and adjust our non-GAAP figures by the respective amounts. In sum, we believe that constant currency EBITDA and AEBITDA provide useful information to investors and others in understanding and evaluating the Company’s operating results in the same manner as our management and Board of Directors.

However, EBITDA and AEBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. In particular, EBITDA and AEBITDA should not be viewed as substitutes for, or superior to, net income (loss) prepared in accordance with GAAP as a measure of profitability or liquidity. Some of these limitations are:



although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA and AEBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;



EBITDA and AEBITDA do not reflect changes in, or cash requirements for, our working capital needs;



AEBITDA does not consider the potentially dilutive impact of equity-based compensation;



EBITDA and AEBITDA do not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to us;



AEBITDA does not take into account any restructuring and integration costs; and



other companies, including companies in our industry, may calculate EBITDA and AEBITDA differently, which reduces their usefulness as comparative measures.

EBITDA — EBITDA is a non-GAAP financial measure that we present on a constant currency basis and calculate as net income (loss), adjusted to exclude: benefit from (provision for) income taxes; interest expense; and depreciation and amortization.

AEBITDA — AEBITDA is a non-GAAP financial measure that we present on a constant currency basis and calculate as net income (loss), adjusted to exclude: benefit from (provision for) income taxes; interest expense; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items.

In addition, in our discussion below, we include certain other unaudited, non-GAAP constant currency data for the three and nine months ended September 30, 2021 and 2020. This data is based on our historical financial statements included elsewhere in this Quarterly Report on Form 10-Q, adjusted (where applicable) to reflect a constant currency presentation between periods for the convenience of readers. We reconcile this data to our GAAP data for the same period under “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for the three and three and nine months ended September 30, 2021 and 2020 .

Comparison of Three Months Ended September 30, 2021 to Three Months Ended September 30, 2020


	Three Months Ended September 30,
	2021			% Net revenue			2020			% Net revenue
Net revenue	$	97.1		―			$	76.8		―
Cost of goods sold		59.1			60.9			46.6			60.7
Gross profit		38.0			39.1			30.2			39.3
Selling, general and administrative expenses		27.1			27.9			16.6			21.6
Transaction costs		-			-			1.2			1.6
Depreciation and amortization expense		8.7			9.0			7.7			10.0
Other operating expense (income), net		(0.1	)		(0.1	)		1.9			2.5
Income from operations		2.3			2.4			2.8			3.6
Interest expense		5.5			5.7			4.9			6.4
Foreign currency (gain) loss		(1.5	)		(1.5	)		3.2			4.2
Loss before income tax benefit		(1.7	)		(1.8	)		(5.3	)		(6.9	)
Income tax expense (benefit)		(0.3	)		(0.3	)		0.8			1.0
Net loss	$	(1.4	)		(1.4	)	$	(6.1	)		(7.9	)

Non-GAAP Constant Currency
EBITDA	$	22.1					$	15.2
AEBITDA	$	28.5					$	23.7

Net Revenue

The following tables and the discussion that follows compare Ranpak’s net revenue by geographic region and by product line for the third quarter of 2021 and 2020 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:


	Three Months Ended September 30,
	2021		% Net revenue		2020		% Net revenue
North America	$	37.3		38.4	$	33.3		43.4
Europe/Asia		59.8		61.6		43.5		56.6
Net revenue	$	97.1		100.0	$	76.8		100.0

Cushioning machines	$	40.9		42.1	$	31.8		41.4
Void-fill machines		39.5		40.7		33.3		43.4
Wrapping machines		12.6		13.0		10.1		13.2
Other		4.1		4.2		1.6		2.0
Net revenue	$	97.1		100.0	$	76.8		100.0


	Non-GAAP Constant Currency
	Three Months Ended September 30,
	2021		% Net revenue		2020		% Net revenue		$ Change		% Change
North America	$	37.3		39.0	$	33.3		43.8	$	4.0		12.0
Europe/Asia		58.3		61.0		42.8		56.2		15.5		36.2
Net revenue	$	95.6		100.0	$	76.1		100.0	$	19.5		25.6

Cushioning machines	$	40.2		42.1	$	31.4		41.3	$	8.8		28.0
Void-fill machines		39.1		40.9		33.0		43.4		6.1		18.5
Wrapping machines		12.5		13.1		10.1		13.3		2.4		23.8
Other		3.8		3.9		1.6		2.0		2.2		137.5
Net revenue	$	95.6		100.0	$	76.1		100.0	$	19.5		25.6

Net revenue for the third quarter of 2021 was $97.1 million compared to net revenue of $76.8 million in the third quarter of 2020, an increase of $20.3 million or 26.4% year over year. Net revenue was positively impacted by increases in cushioning, void-fill, wrapping, and other sales. Cushioning increased $9.1 million, or 28.6%, to $40.9 million from $31.8 million; void-fill increased $6.2 million, or 18.6%, to $39.5 million from $33.3 million; wrapping increased $2.5 million, or 24.8%, to $12.6 million from $10.1 million; and other sales increased $2.5 million, or 156.3%, to $4.1 million from $1.6 million, for the third quarter of 2021 compared to the third quarter of 2020. Other net revenue includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field. Constant currency net revenue was $95.6 million for the third quarter of 2021, a $19.5 million, or 25.6%, increase from constant currency net revenue of $76.1 million for the third quarter of 2020. The increase in net revenue was primarily a result of an increase in the volume of our paper consumable products of approximately 16.7 percentage points (“pp”), a 5.9 pp increase in the price or mix of our paper consumable products, and an increase of 3.0 pp in sales of automated box sizing equipment.

Net revenue in North America for the third quarter of 2021 totaled $37.3 million compared to net revenue in North America of $33.3 million in the third quarter of 2020. The increase of $4.0 million, or 12.0%, was attributable to an increase in cushioning, void-fill, wrapping, and other sales.

Net revenue in Europe/Asia for the third quarter of 2021 totaled $59.8 million compared to net revenue in Europe/Asia of $43.5 million in the third quarter of 2020. The increase of $16.3 million, or 37.5%, was driven primarily by increases in cushioning, void-fill and wrapping product categories, partially offset by a decline in automation revenue. Constant currency net revenue in Europe/Asia was $58.3 million for the third quarter of 2021, a $15.5 million, or 36.2%, increase from constant currency net revenue of $42.8 million for the third quarter of 2020.

Cost of Goods Sold

Cost of goods sold for the third quarter of 2021 totaled $59.1 million, an increase of $12.5 million, or 26.8%, compared to $46.6 million in the third quarter of 2020. The change was due to higher volumes associated with higher paper sales, as well as increased paper and freight costs, and an increase in depreciation of $1.8 million over the prior year. Constant currency cost of goods sold increased by $12.0 million, or 26.0%, to $58.2 million in the third quarter of 2021 from $46.2 million for the third quarter of 2020. As a result, on a constant currency basis, net revenue minus cost of goods sold as a percentage of net revenue decreased by 0.2 pp to 39.1% in the third quarter of 2021 from 39.3% for the third quarter of 2020.

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

SG&A expenses for the third quarter of 2021 was $27.1 million, an increase of $10.5 million, or 63.3%, from $16.6 million in the third quarter of 2020. Constant currency SG&A expenses increased by $10.3 million, or 62.4%, to $26.8 million in the third quarter of 2021 from $16.5 million for the third quarter of 2020, largely due to increases in stock compensation expense from the 2021 LTIP PRSUs, as well as increased growth headcount and associated compensation. As a percentage of constant currency net revenue, constant currency SG&A increased to 28.0% in the third quarter of 2021 from 21.7% in the third quarter of 2020.

Depreciation and Amortization

Depreciation and amortization expenses for the third quarter of 2021 were $8.7 million, an increase of $1.0 million, or 13.0%, from $7.7 million in the third quarter of 2020 due to an increase in capital expenditures. Constant currency depreciation and amortization expenses were not impacted by constant currency adjustments in the third quarter of 2021 or the third quarter of 2020. As a percentage of constant currency net revenue, constant currency depreciation and amortization expenses decreased to 9.1% in the third quarter of 2021 from 10.1% in the third quarter of 2020.

Other Operating Expense (Income), Net

Other operating income, net for the third quarter of 2021 was $0.1 million, a change of $2.0 million, or 105.3%, from expense of $1.9 million in the third quarter of 2020. Constant currency other operating expense, net, was not impacted by constant currency adjustments in the third quarter of 2021. However, constant currency other operating expense, net was $1.8 million in the third quarter of 2020. The change in other operating expense (income), net was largely driven by capitalization of certain research and development costs in the third quarter of 2021. As a percentage of constant currency net revenue, constant currency other operating expense, net, decreased to 0.1% in the third quarter of 2021 from 2.4% in the third quarter of 2020.

Interest Expense

Interest expense for the third quarter of 2021 was $5.5 million, an increase of $0.6 million, or 12.2%, from $4.9 million in the third quarter of 2020. Although debt levels decreased in the third quarter of 2021 compared to the third quarter of 2020, interest expense in the third quarter of 2021 increased due to higher foreign currency exchange rates compared to the third quarter of 2020. Additionally, interest expense in the third quarter of 2020 was reduced by one-time non-cash adjustments related to our interest rate swap agreements. Constant currency interest expense was not impacted by constant currency adjustments in the third quarter of 2021 or the third quarter of 2020. As a percentage of constant currency net revenue, constant currency interest expense decreased to 5.8% in the third quarter of 2021 from 6.4% in the third quarter of 2020.

Foreign Currency (Gain) Loss

Foreign currency gain for the third quarter of 2021 was $1.5 million, a change of $4.7 million, or 146.9%, from foreign currency loss of $3.2 million in the third quarter of 2020 due to favorable movements in Euro exchange rates. Constant currency foreign currency gain was $1.8 million in the third quarter of 2021. Constant currency foreign currency loss was not impacted by constant currency adjustments in the third quarter of 2020. As a percentage of constant currency net revenue, constant currency foreign currency gain decreased to 1.9% in the third quarter of 2021 from 4.2% in the third quarter of 2020.

Income Tax Benefit

Income tax benefit for the third quarter of 2021 was $0.3 million, or an effective tax rate of 16.1%. Income tax expense was $0.8 million in the third quarter of 2020, or an effective tax rate of negative 15.7%. The fluctuation in the effective tax rate between periods was primarily attributable to a jurisdictional mix of income. The effective tax rate differs from the U.S. federal statutory rate due primarily to benefits derived from stock-based compensation, return to provision adjustments, and 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

Net loss for the third quarter of 2021 decreased $4.7 million to $1.4 million from a net loss of $6.1 million in the third quarter of 2020. Constant currency net loss was $1.4 million in the third quarter of 2021 compared to constant currency net loss of $6.2 million for the third quarter of 2020. The change was due to the reasons discussed above.

Constant Currency EBITDA and AEBITDA

EBITDA for the third quarter of 2021 was $22.1 million, an increase of $6.9 million, or 45.4%, compared to $15.2 million in the third quarter of 2020. Adjusting for one-time costs, constant currency AEBITDA for the third quarter of 2021 and 2020 totaled $28.5 million and $23.7 million, respectively, an increase of $4.8 million, or 20.3%.

Comparison of Nine Months Ended September 30, 2021 to Nine Months Ended September 30, 2020


	Nine Months Ended September 30,
	2021			% Net revenue			2020			% Net revenue
Net revenue	$	274.8		―			$	206.3		―
Cost of goods sold		164.8			60.0			122.3			59.3
Gross profit		110.0			40.0			84.0			40.7
Selling, general and administrative expenses		70.8			25.8			56.9			27.6
Transaction costs		-			-			1.2			0.6
Depreciation and amortization expense		26.1			9.5			22.9			11.1
Other operating expense, net		2.0			0.7			2.9			1.4
Income from operations		11.1			4.0			0.1			0.0
Interest expense		17.1			6.2			16.6			8.0
Foreign currency (gain) loss		(3.9	)		(1.4	)		3.1			1.5
Loss before income tax benefit		(2.1	)		(0.8	)		(19.6	)		(9.5	)
Income tax benefit		(1.8	)		(0.7	)		(1.4	)		(0.7	)
Net loss	$	(0.3	)		(0.1	)	$	(18.2	)		(8.8	)

Non-GAAP Constant Currency
EBITDA	$	68.2					$	42.2
AEBITDA	$	82.1					$	60.8

Net Revenue

The following tables and the discussion that follows compare Ranpak’s net revenue by geographic region and by product line for the nine months ended September 30, 2021 and 2020 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:


	Nine Months Ended September 30,
	2021		% Net revenue		2020		% Net revenue
North America	$	101.1		36.8	$	88.6		42.9
Europe/Asia		173.7		63.2		117.7		57.1
Net revenue	$	274.8		100.0	$	206.3		100.0

Cushioning machines	$	118.9		43.3	$	86.1		41.7
Void-fill machines		109.3		39.8		86.8		42.1
Wrapping machines		36.3		13.2		25.9		12.6
Other		10.3		3.7		7.5		3.6
Net revenue	$	274.8		100.0	$	206.3		100.0


	Non-GAAP Constant Currency
	Nine Months Ended September 30,
	2021		% Net revenue		2020		% Net revenue		$ Change		% Change
North America	$	101.1		37.7	$	88.6		42.5	$	12.5		14.1
Europe/Asia		167.0		62.3		120.1		57.5		46.9		39.1
Net revenue	$	268.1		100.0	$	208.7		100.0	$	59.4		28.5

Cushioning machines	$	115.5		43.1	$	87.3		41.8	$	28.2		32.3
Void-fill machines		107.0		39.9		87.5		41.9		19.5		22.3
Wrapping machines		35.7		13.3		26.1		12.5		9.6		36.8
Other		9.9		3.7		7.8		3.8		2.1		26.9
Net revenue	$	268.1		100.0	$	208.7		100.0	$	59.4		28.5

Net revenue for the nine months ended September 30, 2021 was $274.8 million compared to net revenue of $206.3 million in the nine months ended September 30, 2020, an increase of $68.5 million or 33.2%. Net revenue was positively impacted by increases in cushioning, void-fill, wrapping, and other sales. Cushioning increased $32.8 million, or 38.1%, to $118.9 million from $86.1 million; void-fill increased $22.5 million, or 25.9%, to $109.3 million from $86.8 million; wrapping increased $10.4 million, or 40.2%, to $36.3 million from $25.9 million; and other sales increased $2.8 million, or 37.3%, to $10.3 million from $7.5 million, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Other net revenue includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field. Constant currency net revenue was $268.1 million for the nine months ended September 30, 2021, a $59.4 million, or 28.5%, increase from constant currency net revenue of $208.7 million for the nine months ended September 30, 2020. The increase in net revenue was a result of an increase in the volume of our paper consumable products of approximately 28.4 pp and a 0.9 pp increase in the sales of automated box sizing equipment, partially offset by a 0.9 pp decrease in the price or mix of our paper consumable products.

Net revenue in North America for the nine months ended September 30, 2021 totaled $101.1 million compared to net revenue in North America of $88.6 million in the nine months ended September 30, 2020. The increase of $12.5 million, or 14.1%, was attributable to an increase in cushioning, void-fill, wrapping; and other sales.

Net revenue in Europe/Asia for the nine months ended September 30, 2021 totaled $173.7 million compared to net revenue in Europe/Asia of $117.7 million in the nine months ended September 30, 2020. The increase of $56.0 million, or 47.6%, was driven primarily by increases in cushioning, void-fill and wrapping product categories, partially offset by a decline in automation revenue. Constant currency net revenue in Europe/Asia was $167.0 million for the nine months ended September 30, 2021, a $46.9 million, or 39.1%, increase from constant currency net revenue of $120.1 million for the nine months ended September 30, 2020.

Cost of Goods Sold

Cost of goods sold for the nine months ended September 30, 2021 totaled $164.8 million, an increase of $42.5 million, or 34.8%, compared to $122.3 million in the nine months ended September 30, 2020. The change was due to higher volumes associated with higher paper sales, as well as increased paper and freight costs, and an increase in depreciation of $5.9 million over the prior year. Constant currency cost of goods sold increased by $37.2 million, or 30.1%, to $160.9 million in the nine months ended September 30, 2021 from $123.7 million for the nine months ended September 30, 2020. As a result, on a constant currency basis, net revenue minus cost of goods sold as a percentage of net revenue decreased by 0.7 pp to 40.0% in the nine months ended September 30, 2021 from 40.7% for the comparable period in 2020.

SG&A

SG&A expenses for the nine months ended September 30, 2021 was $70.8 million, an increase of $13.9 million, or 24.4%, from $56.9 million in the nine months ended September 30, 2020. Constant currency SG&A expenses increased by $12.1 million, or 21.0%, to $69.6 million in the nine months ended September 30, 2021 from $57.5 million for the comparable period in 2020, largely due to increases in stock compensation expense from the 2021 LTIP PRSUs, as well as increased growth headcount and associated compensation. As a percentage of constant currency net revenue, constant currency SG&A decreased to 26.0% in the nine months ended September 30, 2021 from 27.6% in the nine months ended September 30, 2020.

Depreciation and Amortization

Depreciation and amortization expenses for the nine months ended September 30, 2021 were $26.1 million, an increase of $3.2 million, or 14.0%, from $22.9 million in the nine months ended September 30, 2020 due to an increase in capital expenditures. Constant currency depreciation and amortization expenses increased by $2.7 million, or 11.7%, to $25.8 million in the nine months ended September 30, 2021 from $23.1 million for the nine months ended September 30, 2020. As a percentage of constant currency net revenue, constant currency depreciation and amortization expenses decreased to 9.6% in the nine months ended September 30, 2021 from 11.1% in the nine months ended September 30, 2020.

Other Operating Expense, Net

Other operating expense, net, for the nine months ended September 30, 2021 was $2.0 million, a decrease of $0.9 million, or 31.0%, from $2.9 million in the nine months ended September 30, 2020. Constant currency other operating expense, net, was not impacted by constant currency adjustments in the nine months ended September 30, 2021. However, constant currency other operating expense, net was $3.2 million in the nine months ended September 30, 2020. The change in other operating expense, net was largely driven by capitalization of certain research and development costs in the nine months ended September 30, 2021. As a percentage of constant currency net revenue, constant currency other operating expense, net, decreased to 0.7% in the nine months ended September 30, 2021 from 1.5% in the nine months ended September 30, 2020.

Interest Expense

Interest expense for the nine months ended September 30, 2021 was $17.1 million, an increase of $0.5 million, or 3.0%, from $16.6 million in the nine months ended September 30, 2020. Although debt levels decreased in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, interest expense in the nine months ended September 30, 2021 increased due to higher foreign currency exchange rates compared to the nine months ended September 30, 2020, as well as accelerated amortization of approximately $0.3 million of deferred financing costs in the June 2021 Prepayment. Additionally, interest expense in the nine months ended September 30, 2020 was reduced by one-time non-cash adjustments related to our interest rate swap agreements. The Exit Payment, which was accrued in 2020, was paid in the first quarter of 2021. Constant currency interest expense was $17.0 million in the nine months ended September 30, 2021. Constant currency interest expense was not impacted by constant currency adjustments in the nine months ended September 30, 2020. As a percentage of constant currency net revenue, constant currency interest expense decreased to 6.3% in the nine months ended September 30, 2021 from 8.0% in the nine months ended September 30, 2020.

Foreign Currency (Gain) Loss

Foreign currency gain for the nine months ended September 30, 2021 was $3.9 million, a change of $7.0 million, or 225.8%, from foreign currency loss of $3.1 million in the nine months ended September 30, 2020 due to favorable movements in Euro exchange rates. Constant currency foreign currency gain was $4.9 million in the nine months ended September 30, 2021. Constant currency foreign currency loss was not impacted by constant currency adjustments in the nine months ended September 30, 2020. As a percentage of constant currency net revenue, constant currency foreign currency gain increased to 1.8% in the nine months ended September 30, 2021 from 1.5% in the nine months ended September 30, 2020.

Income Tax Benefit

Income tax benefit for the nine months ended September 30, 2021 was $1.8 million, or an effective tax rate of 89.1%. Income tax benefit was $1.4 million in the nine months ended September 30, 2020, or an effective tax rate of 7.1%. The fluctuation in the effective tax rate between periods was primarily attributable to a jurisdictional mix of income. The effective tax rate differs from the U.S. federal statutory rate due primarily to benefits derived from stock-based compensation, return to provision adjustments, and 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

Net loss for the nine months ended September 30, 2021 decreased $17.9 million to $0.3 million from a net loss of $18.2 million in the nine months ended September 30, 2020. Constant currency net loss was $0.4 million in the nine months ended September 30, 2021 compared to constant currency net loss of $18.4 million for the nine months ended September 30, 2020. The change was due to the reasons discussed above.

Constant Currency EBITDA and AEBITDA

EBITDA for the nine months ended September 30, 2021 was $68.2 million, an increase of $26.0 million, or 61.6%%, from $42.2 million in the nine months ended September 30, 2020. Adjusting for one-time costs, constant currency AEBITDA for the nine months ended September 30, 2021 and 2020 totaled $82.1 million and $60.8 million, respectively, an increase of $21.3 million, or 35.0%.

Presentation and Reconciliation of GAAP to Non-GAAP Measures

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

The following tables and related notes reconcile certain non-GAAP measures, including the non-GAAP constant currency measures, to GAAP information presented in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30, 2021
	As reported			Constant Currency(3)			Non-GAAP
Net revenue	$	97.1		$	(1.5	)	$	95.6
Cost of goods sold		59.1			(0.9	)		58.2
Gross profit		38.0			(0.6	)		37.4
Selling, general and administrative expenses		27.1			(0.3	)		26.8
Depreciation and amortization expense		8.7			-			8.7
Other operating income, net		(0.1	)		-			(0.1	)
Income from operations		2.3			(0.3	)		2.0
Interest expense		5.5			-			5.5
Foreign currency gain		(1.5	)		(0.3	)		(1.8	)
Loss before income tax benefit		(1.7	)		-			(1.7	)
Income tax benefit		(0.3	)		-			(0.3	)
Net loss	$	(1.4	)	$	-			(1.4	)

Constant currency-effected add(1):
Depreciation and amortization expense - COS								9.6
Depreciation and amortization expense - D&A								8.7
Interest expense								5.5
Income tax benefit								(0.3	)
Constant currency EBITDA								22.1

Constant currency-effected adjustments(2):
Unrealized gain translation								(1.5	)
Non-cash impairment losses								0.3
M&A, restructuring, severance								0.1
Amortization of restricted stock units								6.9
Other non-core and non-cash adjustments								0.6
Constant currency AEBITDA							$	28.5


	Three Months Ended September 30, 2020
	As reported			Constant Currency(3)			Non-GAAP
Net revenue	$	76.8		$	(0.7	)	$	76.1
Cost of goods sold		46.6			(0.4	)		46.2
Gross profit		30.2			(0.3	)		29.9
Selling, general and administrative expenses		16.6			(0.1	)		16.5
Transaction costs		1.2			-			1.2
Depreciation and amortization expense		7.7			-			7.7
Other operating expense, net		1.9			(0.1	)		1.8
Income from operations		2.8			(0.1	)		2.7
Interest expense		4.9			-			4.9
Foreign currency loss		3.2			-			3.2
Loss before income tax expense		(5.3	)		(0.1	)		(5.4	)
Income tax expense		0.8			-			0.8
Net loss	$	(6.1	)	$	(0.1	)		(6.2	)

Constant currency-effected add(1):
Depreciation and amortization expense - COS								8.0
Depreciation and amortization expense - D&A								7.7
Interest expense								4.9
Income tax expense								0.8
Constant currency EBITDA								15.2

Constant currency-effected adjustments(2):
Unrealized loss translation								3.3
Constant currency								(0.2	)
Non-cash impairment losses								0.7
M&A, restructuring, severance								1.2
Amortization of restricted stock units								1.7
Warrant Exchange costs								1.2
Other non-core and non-cash adjustments								0.6
Constant currency AEBITDA							$	23.7


	Non-GAAP Constant Currency
	Three Months Ended September 30,
	2021			2020			$ Change			% Change
Net revenue	$	95.6		$	76.1		$	19.5			25.6
Cost of goods sold		58.2			46.2			12.0			26.0
Gross profit		37.4			29.9			7.5			25.1
Selling, general and administrative expenses		26.8			16.5			10.3			62.4
Transaction costs		-			1.2			(1.2	)		(100.0	)
Depreciation and amortization expense		8.7			7.7			1.0			13.0
Other operating expense (income), net		(0.1	)		1.8			(1.9	)		(105.6	)
Income (loss) from operations		2.0			2.7			(0.7	)		(25.9	)
Interest expense		5.5			4.9			0.6			12.2
Foreign currency (gain) loss		(1.8	)		3.2			(5.0	)		(156.3	)
Loss before income tax expense (benefit)		(1.7	)		(5.4	)		3.7			(68.5	)
Income tax expense (benefit)		(0.3	)		0.8			(1.1	)		(137.5	)
Net loss		(1.4	)		(6.2	)		4.8			(77.4	)

Constant currency-effected add(1):
Depreciation and amortization expense - COS		9.6			8.0			1.6			20.0
Depreciation and amortization expense - D&A		8.7			7.7			1.0			13.0
Interest expense		5.5			4.9			0.6			12.2
Income tax expense (benefit)		(0.3	)		0.8			(1.1	)		(137.5	)
Constant currency EBITDA		22.1			15.2			6.9			45.4

Constant currency-effected adjustments(2):
Unrealized (gain) loss translation		(1.5	)		3.3			(4.8	)		(145.5	)
Constant currency		-			(0.2	)		0.2			(100.0	)
Non-cash impairment losses		0.3			0.7			(0.4	)		(57.1	)
M&A, restructuring, severance		0.1			1.2			(1.1	)		(91.7	)
Amortization of restricted stock units		6.9			1.7			5.2			305.9
Warrant Exchange costs		-			1.2			(1.2	)		(100.0	)
Other non-core and non-cash adjustments		0.6			0.6			-			-
Constant currency AEBITDA	$	28.5		$	23.7		$	4.8			20.3


	Nine Months Ended September 30, 2021
	As reported			Constant Currency(3)			Non-GAAP
Net revenue	$	274.8		$	(6.7	)	$	268.1
Cost of goods sold		164.8			(3.9	)		160.9
Gross profit		110.0			(2.8	)		107.2
Selling, general and administrative expenses		70.8			(1.2	)		69.6
Depreciation and amortization expense		26.1			(0.3	)		25.8
Other operating expense, net		2.0			-			2.0
Income from operations		11.1			(1.3	)		9.8
Interest expense		17.1			(0.1	)		17.0
Foreign currency gain		(3.9	)		(1.0	)		(4.9	)
Loss before income tax benefit		(2.1	)		(0.2	)		(2.3	)
Income tax benefit		(1.8	)		(0.1	)		(1.9	)
Net loss	$	(0.3	)	$	(0.1	)		(0.4	)

Constant currency-effected add(1):
Depreciation and amortization expense - COS								27.7
Depreciation and amortization expense - D&A								25.8
Interest expense								17.0
Income tax benefit								(1.9	)
Constant currency EBITDA								68.2

Constant currency-effected adjustments(2):
Unrealized gain translation								(4.1	)
Non-cash impairment losses								1.0
M&A, restructuring, severance								0.5
Amortization of restricted stock units								14.3
Other non-core and non-cash adjustments								2.2
Constant currency AEBITDA							$	82.1


	Nine Months Ended September 30, 2020
	As reported			Constant Currency(3)			Non-GAAP
Net revenue	$	206.3		$	2.4		$	208.7
Cost of goods sold		122.3			1.4			123.7
Gross profit		84.0			1.0			85.0
Selling, general and administrative expenses		56.9			0.6			57.5
Transaction costs		1.2			-			1.2
Depreciation and amortization expense		22.9			0.2			23.1
Other operating expense, net		2.9			0.3			3.2
Income from operations		0.1			(0.1	)		-
Interest expense		16.6			-			16.6
Foreign currency loss		3.1			-			3.1
Loss before income tax benefit		(19.6	)		(0.1	)		(19.7	)
Income tax benefit		(1.4	)		0.1			(1.3	)
Net loss	$	(18.2	)	$	(0.2	)		(18.4	)

Constant currency-effected add(1):
Depreciation and amortization expense - COS								22.4
Depreciation and amortization expense - D&A								23.0
Interest expense								16.6
Income tax benefit								(1.4	)
Constant currency EBITDA								42.2

Constant currency-effected adjustments(2):
Unrealized loss translation								3.1
Constant currency								0.4
Non-cash impairment losses								1.5
M&A, restructuring, severance								4.8
Amortization of restricted stock units								5.9
Warrant Exchange costs								1.2
Other non-core and non-cash adjustments								1.7
Constant currency AEBITDA							$	60.8


	Non-GAAP Constant Currency
	Nine Months Ended September 30,
	2021			2020			$ Change			% Change
Net revenue	$	268.1		$	208.7		$	59.4			28.5
Cost of goods sold		160.9			123.7			37.2			30.1
Gross profit		107.2			85.0			22.2			26.1
Selling, general and administrative expenses		69.6			57.5			12.1			21.0
Transaction costs		-			1.2			(1.2	)		(100.0	)
Depreciation and amortization expense		25.8			23.1			2.7			11.7
Other operating expense, net		2.0			3.2			(1.2	)		(37.5	)
Income from operations		9.8			-			9.8		―
Interest expense		17.0			16.6			0.4			2.4
Foreign currency (gain) loss		(4.9	)		3.1			(8.0	)		(258.1	)
Loss before income tax benefit		(2.3	)		(19.7	)		17.4			(88.3	)
Income tax benefit		(1.9	)		(1.3	)		(0.6	)		46.2
Net loss		(0.4	)		(18.4	)		18.0			(97.8	)

Constant currency-effected add(1):
Depreciation and amortization expense - COS		27.7			22.4			5.3			23.7
Depreciation and amortization expense - D&A		25.8			23.0			2.8			12.2
Interest expense		17.0			16.6			0.4			2.4
Income tax benefit		(1.9	)		(1.4	)		(0.5	)		35.7
Constant currency-effected EBITDA		68.2			42.2			26.0			61.6

Constant currency-effected adjustments(2):
Unrealized (gain) loss translation		(4.1	)		3.1			(7.2	)		(232.3	)
Constant currency		-			0.4			(0.4	)		(100.0	)
Non-cash impairment losses		1.0			1.5			(0.5	)		(33.3	)
M&A, restructuring, severance		0.5			4.8			(4.3	)		(89.6	)
Amortization of restricted stock units		14.3			5.9			8.4			142.4
Warrant Exchange costs		-			1.2			(1.2	)		(100.0	)
Other non-core and non-cash adjustments		2.2			1.7			0.5			29.4
Constant currency-effected AEBITDA	$	82.1		$	60.8		$	21.3			35.0

(see subsequent footnotes)

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

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

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Net revenue	$	(1.5	)	$	(0.7	)	$	(6.7	)	$	2.4
Cost of goods sold		(0.9	)		(0.4	)		(3.9	)		1.4
Gross profit		(0.6	)		(0.3	)		(2.8	)		1.0
Selling, general and administrative expenses		(0.3	)		(0.1	)		(1.2	)		0.6
Depreciation and amortization expense		-			-			(0.3	)		0.2
Other operating expense, net		-			(0.1	)		-			0.3
Loss from operations		(0.3	)		(0.1	)		(1.3	)		(0.1	)
Interest expense		-			-			(0.1	)		-
Foreign currency gain		(0.3	)		-			(1.0	)		-
Loss before income tax expense (benefit)		-			(0.1	)		(0.2	)		(0.1	)
Income tax expense (benefit)		-			-			(0.1	)		0.1
Net loss	$	-		$	(0.1	)	$	(0.1	)	$	(0.2	)

Liquidity and Capital Resources

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

We believe that our estimated cash from operations together with borrowing capacity under the revolving portion of the Facilities will provide us with sufficient resources to cover our current requirements. Our main liquidity needs relate to capital expenditures and expenses for the production and maintenance of protective packaging 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. To the extent that we execute acquisitions or partnerships as part of our growth strategy, we would expect to fund those with a combination of cash on hand, borrowings, and issuances of equity. 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 could make obtaining new equity or debt financing more difficult or expensive.

We had $110.4 million in cash and cash equivalents as of September 30, 2021 and $48.5 million as of December 31, 2020. We sold approximately 5.3 million shares of Class A common stock in the May 2021 Equity Offering for net proceeds of $103.4 million. We used $70.0 million of proceeds from the May 2021 Equity Offering to invest in a money market fund to generate short-term cash returns. Additionally, we prepaid $20.9 million of principal on the First Lien Dollar Term Facility in the June 2021 Prepayment.

Including finance lease liabilities and excluding deferred financing costs, we had $410.4 million in debt, $2.2 million of which was classified as short-term, as of September 30, 2021, compared to $439.8 million in debt, $1.7 million of which was classified as short-term, as of December 31, 2020. At September 30, 2021, we did not have amounts outstanding under our $45.0 million revolving credit facility, and we had no borrowings under such facility through October 28, 2021.

Debt Profile

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

The aggregate commitment of the senior secured credit facilities consists of a $289.2 million dollar-denominated first lien term facility and a €140.0 million euro-denominated first lien term facility (with the ability to reduce the dollar-denominated first lien term facility and correspondingly increase the euro-denominated first lien term facility in an amount of up to €60.0 million), a $45.0 million revolving facility (including the right to bring in additional lenders to provide commitments with respect to the Revolving Facility in an amount of up to $30.0 million and additional borrowing capacity available for letters of credit in an amount of up to $5.0 million), a $100.0 million first lien contingency term facility and a $100.0 million second lien contingency term facility. Our credit facilities are secured by substantially all of Ranpak’s assets.

Each of the First Lien Term Facility, and the first lien contingency term facility accrue interest at a rate of LIBOR plus 3.75% (assuming a first lien net leverage ratio of less than 5.00:1.00). The second lien contingency term facility accrues interest at a rate of LIBOR plus 7.50%. No amounts have been drawn on under the second lien contingency. The first lien term facility and first lien contingency term facility mature on the seventh anniversary of the date of the closing of the Ranpak Business Combination, June 3, 2026. The Revolving Facility matures on the fifth anniversary of the date of the Closing June 3, 2024. The second lien contingency term facility matures on the eighth anniversary of the date of the Closing, June 3, 2027 but was not available for us to borrow against at September 30, 2021.

The Revolving Facility includes borrowing capacity available for letters of credit of up to $5 million. Any issuance of letters of credit will reduce the amount available under the Revolving Facility.

In addition, the debt financing provides the borrowers with the option to increase commitments under the debt financing in an aggregate amount not to exceed the greater of $95 million and 100% of trailing-twelve months consolidated EBITDA, plus any voluntary prepayments of the debt financing (and, in the case of the Revolving Facility, to the extent such voluntary prepayments are accompanied by permanent commitment reductions under the Revolving Facility), plus unlimited amounts subject to the relevant net leverage ratio tests and certain other conditions.

The obligations of the borrowers under the debt financing and certain of their respective obligations under hedging arrangements and cash management arrangements are unconditionally guaranteed by the Guarantors, in each case, other than certain excluded subsidiaries and subject to other customary limitations set forth in the definitive documentation with respect to the debt financing. The debt financing is secured by a security interest in substantially all of the assets of the borrowers and the guarantors (and including a pledge of the equity interests of each borrower and of each guarantor and of their respective direct, wholly-owned restricted subsidiaries), in each case subject to customary exceptions.

The Revolving Facility requires the borrowers to maintain a maximum first lien net leverage ratio 9.10:1.00 based on the amount of the initial first lien term loans under the debt financing actually borrowed on the closing date based on providing at least a 35% cushion to consolidated EBITDA for the most recent four fiscal quarter periods ending prior to the date of the closing. This “springing” financial covenant is tested on the last day of each fiscal quarter, but only if on such date the sum of (i) the principal amount of outstanding revolving loans under the Revolving Facility, (ii) drawings on letters of credit under the Revolving Facility and (iii) the face amount of non-cash collateralized letters of credit under the Revolving Facility in excess of an amount to be set forth in the definitive documentation with respect to the debt financing exceeds 35% of the total revolving commitments under the Revolving Facility.

The senior secured credit facilities also contain a number of customary negative covenants. Such covenants, among other things, will limit or restrict the ability of each of the borrowers, their restricted subsidiaries, and where applicable, the direct parent holding companies of the borrowers, to:



incur additional indebtedness, issue disqualified stock and make guarantees;



incur liens on assets;



engage in mergers or consolidations or fundamental changes;



sell assets;



pay dividends and distributions or repurchase capital stock;



make investments, loans and advances, including acquisitions;



amend organizational documents;



enter into certain agreements that would restrict the ability to pay dividends;



repay certain junior indebtedness;



engage in transactions with affiliates; and



in the case of the direct parent holding companies of the borrowers, engage in activities other than passively holding the equity interests in the borrowers.

The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the borrowers continued flexibility to operate and develop their businesses. The senior secured credit facilities also contain certain customary representations and warranties, affirmative covenants and events of default.

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 fee (the “Exit Payment”), which was paid in the first quarter of 2021.

Amendment to First Lien Credit Facilities

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

Among other things, the Amendment No. 1 amends the Facilities such that (x) the requirement of the Borrowers to apply a percentage of excess cash flow to mandatorily prepay term loans under the Facilities commences with the fiscal year ending December 31, 2021 (instead of the fiscal year ending December 31, 2020) and (y) the aggregate amount per fiscal year of capital stock of any parent company of the U.S. Borrower that is held by directors, officers, management, employees, independent contractors or consultants of the U.S. Borrower (or any parent company or subsidiary thereof) that the U.S. Borrower may repurchase, redeem, retire or otherwise acquire or retire for value has been increased to the greater of $10,000,000 and 10% of Consolidated AEBITDA (as defined in the Facilities) (increased from the greater of $7,000,000 and 7% of Consolidated AEBITDA) as of the last day of the most recently ended quarter for which financial statements have been delivered.

Borrower Assumption Agreement

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

Permitted Exit Payment

On July 28, 2021, we entered into the Permitted Exit Payment to the Credit Agreement, which, among other things, would introduce additional exceptions to the negative covenant that restricts the ability of the Borrowers and their restricted subsidiaries from paying dividends and distributions or repurchasing capital stock. On July 28, 2021, the Permitted Exit Payment Amendment to the Credit Agreement became effective.

Cash Flows

The following table sets forth Ranpak’s summary cash flow information for the periods indicated:


	Nine Months Ended September 30,
	2021			2020
Net cash provided by operating activities	$	40.8		$	37.8
Net cash used in investing activities		(50.7	)		(25.5	)
Net cash provided by (used in) financing activities		72.6			(1.2	)
Effect of Exchange Rate Changes on Cash		(0.8	)		0.5
Net Increase in Cash and Cash Equivalents		61.9			11.6
Cash and Cash Equivalents, beginning of period		48.5			19.7
Cash and Cash Equivalents, end of period	$	110.4		$	31.3

Cash Flows Provided by Operating Activities

Net cash provided by operating activities was $40.8 million in the nine months ended September 30, 2021. Cash provided by operating activities was $37.8 million in the nine months ended September 30, 2020. The changes in operating cash flows are largely due to cash earnings and increases in working capital.

Cash Flows Used in Investing Activities

Net cash used in investing activities was $50.7 million in the nine months ended September 30, 2021. Cash used in investing activities was $25.5 million in the nine months ended September 30, 2020. The changes are primarily due to cash used for capital expenditures for converter equipment and our investments in small private businesses.

Cash Flows Provided by (Used in) Financing Activities

Net cash provided by financing activities was $72.6 million in the nine months ended September 30, 2021 and reflects the May 2021 Equity Offering net proceeds of $103.4 million, offset by the June 2021 Prepayment of $20.9 million, and the $8.2 million Exit Payment. Net cash used in financing activities was $1.2 million in the nine months ended September 30, 2020 and reflects debt repayments.

Contractual Obligations and Other Commitments

We lease production and administrative facilities as well as automobiles, machinery and equipment. We have various contractual obligations and commercial commitments that are recorded as liabilities in our condensed consolidated financial statements. Other items, such as purchase obligations and other executory contracts, are not recognized as liabilities, but are required to be disclosed. There have been no significant changes outside the ordinary course of business to our “Contractual Obligations” table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2020 10-K. Included in that table are operating lease obligations, which are now recorded on our condensed consolidated balance sheets as a result of the adoption of ASC 842, effective January 1, 2021. See Note 12, “Leases” for further detail.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, 2021.

Critical Accounting Policies

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe that the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and various other assumptions that we believe are reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies and estimates, are disclosed in our 2020 10-K.

Recently Issued and Adopted Accounting Pronouncements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Changes in interest rates affect the amount of interest income we earn on cash, cash equivalents and short-term investments and the amount of interest expense we pay on borrowings under the floating rate portions of our credit facilities. A hypothetical 100 basis point increase or decrease in the applicable base interest rates under our credit facilities would have resulted in a $6.5 million impact on our cash interest expense for the nine months ended September 30, 2021. We use interest rate swap agreements to manage this exposure.

In March 2020, we entered into the Second Amended January 2019 Swap, which amended the Amended January 2019 Swap to a lower rate of 2.1% and extend its maturity to June 1, 2024. In July 2020, we entered into the Borrower Assumption Agreement, which details the Reorganization and the assumption of obligations, liabilities and rights under the Facilities. In July 2021, we entered into the Permitted Exit Payment to the Credit Agreement, which, among other things, would introduce additional exceptions to the negative covenant that restricts the ability of the Borrowers and their restricted subsidiaries from paying dividends and distributions or repurchasing capital stock. Refer to Note 7, “Long-Term Debt” and Note 8, “Derivative Instruments” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information. There were no other changes to our debt and interest rate swap agreements from those disclosed in the 2020 10-K.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange risk related to our transactions and subsidiaries’ balances that are denominated in currencies other than the U.S. dollar, our functional currency. See “—Factors Affecting the Comparability of Ranpak’s Results of Operations – 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 nine months ended September 30, 2021, net revenue denominated in currencies other than U.S. dollars amounted to $181.9 million or 66.2% 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 U.S. dollar would have caused our reported net revenue for the nine months ended September 30, 2021 to increase or decrease by approximately $17.4 million.

Commodity Price Risk

While our business is significantly impacted by price fluctuations related to the purchase, production and sale of paper products, we are typically not directly exposed to market price fluctuations in paper purchase or sale prices as we historically have negotiated prices with suppliers on an annual basis and negotiate prices with distributors reflecting competitive market terms. Our strategy has generally been to obtain competitive prices for our products and services and allow operating results to reflect market price movements dictated by supply and demand. However, due to global inflationary pressures that have increased in 2021, we may be subject to more commodity price volatility than historically achieved.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our management, with the participation of the CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021. Based on this evaluation of our disclosure controls and procedures, our management, with the participation of the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 30, 2021.

Changes in Internal Control Over Financial Reporting

There were no changes during the third quarter of 2021 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Information about our risk factors is contained in Item 1A of the 2020 10-K.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits


Exhibit No.		Description

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

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

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

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

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

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

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

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

* Filed herewith

SIGNATURES

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


		Ranpak Holdings Corp.

Date:	October 28, 2021	By:	/s/ William Drew
			William Drew
			Senior Vice President and Chief Financial Officer