Ranpak Holdings Corp. (PACK) Bundle
Understanding Ranpak Holdings Corp. (PACK) Revenue Streams
Understanding Ranpak Holdings Corp.’s Revenue Streams
The financial health of Ranpak Holdings Corp. (PACK) can be significantly evaluated through its revenue streams. The company primarily generates revenue from various product lines, including cushioning, void-fill, wrapping machines, and other services. Below is a detailed analysis of these revenue sources and their performance in recent periods.
Breakdown of Primary Revenue Sources
| Product Line | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (in millions) | Percentage Change |
|---|---|---|---|---|
| Cushioning Machines | $32.5 | $35.7 | $(3.2) | (9.0%) |
| Void-Fill Machines | $43.9 | $34.2 | $9.7 | 28.4% |
| Wrapping Machines | $8.5 | $8.1 | $0.4 | 4.9% |
| Other Revenue | $7.3 | $4.8 | $2.5 | 52.1% |
Year-over-Year Revenue Growth Rate
For the third quarter of 2024, net revenue reached $92.2 million, reflecting an increase of $9.4 million or 11.4% compared to $82.8 million in the third quarter of 2023. The year-to-date revenue for the nine months ended September 30, 2024, was $263.9 million, up $18.0 million or 7.3% from $245.9 million during the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
In the third quarter of 2024, North America contributed $40.3 million to net revenue, an increase of 15.5% from $34.9 million in the previous year. Meanwhile, Europe/Asia generated $51.9 million, marking an 8.4% increase from $47.9 million.
Analysis of Significant Changes in Revenue Streams
The revenue from void-fill machines showed a remarkable increase of $9.7 million, primarily driven by heightened demand due to e-commerce activity. Conversely, cushioning machines experienced a decline in revenue of $3.2 million, attributed to a decrease in sales volume. Other revenue categories, including automated box sizing equipment and non-paper revenue, saw a significant uptick, with an increase of 52.1%.
Overall, the diverse revenue streams reflect a dynamic response to market demands, particularly in the shifting landscape towards sustainable packaging solutions, as evidenced by the growth in void-fill and other sales.
A Deep Dive into Ranpak Holdings Corp. (PACK) Profitability
Profitability Metrics
In analyzing the profitability of the company, key metrics such as gross profit, operating profit, and net profit margins provide insight into financial health. The following table summarizes these metrics for the most recent financial periods:
| Metric | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Net Revenue | $92.2 million | $82.8 million | +11.4% |
| Gross Profit | $34.4 million | $31.5 million | +9.2% |
| Operating Profit (Loss) | $(4.2) million | $1.6 million | -362.5% |
| Net Loss | $(8.1) million | $(3.3) million | +145.5% |
| Gross Margin | 37.3% | 38.0% | -0.7% |
| Operating Margin | -4.6% | 1.9% | -6.5% |
| Net Margin | -8.8% | -4.0% | -4.8% |
Trends in profitability over time indicate fluctuations in operational performance. In Q3 2024, the company reported a net revenue increase of 11.4% compared to Q3 2023, attributed primarily to growth in void-fill and other sales. However, this growth did not translate into positive operating profit, which resulted in a loss of $4.2 million, compared to a profit of $1.6 million in the previous year.
In terms of margins, the gross margin slightly decreased from 38.0% in Q3 2023 to 37.3% in Q3 2024, reflecting increased costs associated with goods sold. The operating margin turned negative, indicating operational challenges, while the net margin also worsened, reflecting the overall financial strain with a reported loss of $(8.1) million.
When comparing the profitability ratios with industry averages, the company’s gross margin of 37.3% falls below the industry average of approximately 40%, highlighting potential areas for improvement in cost management and pricing strategies. The operating and net margins are also significantly below industry benchmarks, which typically range from 5% to 15% for similar companies.
Operational efficiency analysis reveals a substantial increase in selling, general and administrative expenses (SG&A), which rose to $28.8 million in Q3 2024 from $20.9 million in Q3 2023, marking a significant increase of 37.8%. This increase has contributed to the decline in operating profit, emphasizing the need for tighter cost controls and improved operational efficiency.
Overall, while revenue growth is a positive sign, the profitability metrics indicate significant challenges that need to be addressed to enhance financial health moving forward.
Debt vs. Equity: How Ranpak Holdings Corp. (PACK) Finances Its Growth
Debt vs. Equity: How Ranpak Holdings Corp. Finances Its Growth
As of September 30, 2024, Ranpak Holdings Corp. reported total debt of $408.2 million, which includes $2.7 million classified as short-term debt. This reflects a slight increase from $407.4 million in total debt and $2.5 million in short-term debt as of December 31, 2023.
Debt Levels
The company’s long-term debt is primarily comprised of:
- First Lien Dollar Term Facility: $250.0 million
- First Lien Euro Term Facility: $148.9 million
- Finance lease liabilities: $4.2 million
- Equipment financing: $1.1 million
As of September 30, 2024, the total long-term debt, after accounting for current portions and deferred financing costs, stood at $400.5 million, compared to $397.8 million at the end of 2023.
Debt-to-Equity Ratio
The debt-to-equity ratio is an important measure of financial leverage. As of September 30, 2024, the total shareholders' equity was reported at $564.3 million. This results in a debt-to-equity ratio of:
Debt-to-Equity Ratio = Total Debt / Shareholders' Equity = $408.2 million / $564.3 million = 0.72
This ratio is within typical industry standards, indicating a balanced approach to financing growth through both debt and equity.
Recent Debt Issuances and Credit Ratings
Ranpak has maintained a revolving credit facility of $45.0 million, with no amounts outstanding as of September 30, 2024. The facility includes $5.0 million available for standby letters of credit. The company’s credit agreements include a first lien credit facility maturing in June 2026 and are subject to an interest rate margin of 3.75% for eurocurrency borrowings.
Balancing Debt Financing and Equity Funding
Ranpak’s strategy involves balancing its debt financing with equity funding to maintain operational flexibility. As of the latest reporting, the company had $69.5 million in cash and cash equivalents, allowing it to cover operational needs while managing its debt obligations.
| Debt Component | Amount (in millions) |
|---|---|
| First Lien Dollar Term Facility | $250.0 |
| First Lien Euro Term Facility | $148.9 |
| Finance Lease Liabilities | $4.2 |
| Equipment Financing | $1.1 |
| Total Debt | $408.2 |
| Shareholders' Equity | $564.3 |
| Debt-to-Equity Ratio | 0.72 |
Assessing Ranpak Holdings Corp. (PACK) Liquidity
Assessing Ranpak Holdings Corp.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 2.36, calculated as total current assets of $153.0 million divided by total current liabilities of $64.8 million.
Quick Ratio: The quick ratio stands at 1.92, with cash and cash equivalents of $69.5 million, accounts receivable of $40.2 million, and inventories of $22.5 million (excluding inventory) against current liabilities of $64.8 million.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $88.2 million, calculated as current assets of $153.0 million minus current liabilities of $64.8 million. This shows an increase from $76.9 million at December 31, 2023.
Cash Flow Statements Overview
Below is an overview of the cash flow trends for the nine months ended September 30, 2024:
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $34.9 | $23.0 |
| Net Cash Used in Investing Activities | ($24.7) | ($32.0) |
| Net Cash Used in Financing Activities | ($2.3) | ($1.4) |
| Net Increase in Cash and Cash Equivalents | $7.5 | ($10.7) |
| Cash and Cash Equivalents, End of Period | $69.5 | $52.1 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents are $69.5 million, showing an improvement from $62.0 million at the end of 2023. The total debt stands at $408.2 million, with $2.7 million classified as short-term. The company has no borrowings under its $45.0 million revolving credit facility, leaving a net availability of $43.5 million after accounting for $1.5 million committed to outstanding letters of credit .
Overall, the liquidity position appears robust, supported by a healthy current ratio and a significant amount of cash on hand to meet obligations as they arise.
Is Ranpak Holdings Corp. (PACK) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial indicator of valuation. As of September 30, 2024, the company's diluted loss per share was $(0.10). Given a stock price of approximately $5.55, the P/E ratio is not applicable, as the company is currently not profitable.
Price-to-Book (P/B) Ratio
The book value per share can be calculated from total shareholders' equity, which was $564.3 million as of September 30, 2024, with 80,309,764 shares outstanding. Therefore, the book value per share is:
Book Value per Share = Total Shareholders' Equity / Total Shares Outstanding
Book Value per Share = $564.3 million / 80,309,764 = $7.03
With a current stock price of $5.55, the P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share = $5.55 / $7.03 = 0.79
This indicates that the stock is trading at 79% of its book value, suggesting it may be undervalued.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) as of September 30, 2024, can be calculated as:
- Market Capitalization: $5.55 80,309,764 = $447.7 million
- Long-term Debt: $400.5 million
- Cash and Cash Equivalents: $69.5 million
EV = Market Capitalization + Long-term Debt - Cash
EV = $447.7 million + $400.5 million - $69.5 million = $778.7 million
For the nine months ended September 30, 2024, EBITDA was $(14.2) million. Hence, the EV/EBITDA ratio is:
EV/EBITDA = EV / EBITDA = $778.7 million / $(14.2) million = N/A
Since EBITDA is negative, this ratio cannot be computed, indicating the company is currently not generating positive cash flow.
Stock Price Trends
Over the past 12 months, the stock has experienced considerable volatility. The stock price ranged from a low of $4.50 to a high of $8.00. As of now, it stands at $5.55, indicating a decline from its peak.
Dividend Yield and Payout Ratios
As of September 30, 2024, the company does not pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus
According to recent analyst reports, the consensus rating for the stock is a Hold, reflecting caution among analysts due to the company's current financial challenges and lack of profitability.
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 0.79 |
| EV/EBITDA Ratio | N/A |
| Stock Price | $5.55 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Ranpak Holdings Corp. (PACK)
Key Risks Facing Ranpak Holdings Corp.
Ranpak Holdings Corp. faces a variety of internal and external risks that impact its financial health. Key risk factors include:
- Industry Competition: The company operates in a highly competitive market with ongoing consolidation. This can affect pricing and market share.
- Regulatory Changes: Changes in regulations, especially those related to environmental standards, can impose additional costs or operational constraints.
- Market Conditions: Economic volatility, including inflation, can impact consumer demand and operational costs.
As of September 30, 2024, the company reported a net loss of $8.1 million for the third quarter, compared to a loss of $3.3 million in the same period in 2023. This reflects a significant increase in operational challenges.
Operational Risks
Operational risks highlighted in recent filings include:
- Supply Chain Dependencies: Reliance on third-party suppliers can create vulnerabilities, especially in times of geopolitical instability.
- Customer Retention: The loss of key customers can significantly impact revenue. One customer accounted for 10.6% of total net revenue in the third quarter of 2024.
- Product Development Failures: Failure to develop new products that meet market expectations can hinder growth.
Financial Risks
The financial risks include:
- Debt Obligations: As of September 30, 2024, the company has total long-term debt of $400.5 million, with a significant portion maturing in June 2026.
- Interest Rate Fluctuations: The interest rate for the First Lien Dollar Term Facility was 9.05% as of September 30, 2024, which can impact profitability.
Strategic Risks
Strategic risks identified in the company's reports include:
- ESG Compliance: The ability to meet environmental, social, and governance goals is increasingly scrutinized, with evolving standards like the EU’s Corporate Sustainability Reporting Directive (CSRD).
- Market Acceptance: New products must achieve market acceptance to be financially viable.
Mitigation Strategies
To address these risks, Ranpak has implemented several strategies:
- Diversification: Expanding the product portfolio to reduce reliance on a limited number of products or customers.
- Cost Management: Continuous evaluation of operational efficiencies to manage costs in a volatile economic environment.
- Investment in Technology: Leveraging technology to improve supply chain management and customer engagement.
Financial Overview Table
| Financial Metric | September 30, 2024 | June 30, 2024 | December 31, 2023 |
|---|---|---|---|
| Net Revenue | $92.2 million | $85.7 million | $263.9 million |
| Net Loss | ($8.1 million) | ($5.5 million) | ($10.7 million) |
| Total Assets | $1,133.3 million | $1,122.7 million | $1,122.7 million |
| Total Liabilities | $569.0 million | $550.7 million | $550.7 million |
| Long-term Debt | $400.5 million | $397.8 million | $397.8 million |
These risk factors highlight the complex landscape in which the company operates, and the ongoing adjustments it must make to navigate these challenges effectively.
Future Growth Prospects for Ranpak Holdings Corp. (PACK)
Future Growth Prospects for Ranpak Holdings Corp.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers, including:
- Product Innovations: The introduction of new eco-friendly packaging solutions has been a significant focus. The market is seeing a shift from plastic to paper-based solutions, with a reported 20.1% increase in void-fill machines revenue, rising from $95.5 million to $114.7 million for the nine months ended September 30, 2024.
- Market Expansions: Geographic expansion remains a priority. For the nine months ended September 30, 2024, net revenue from North America was $109.9 million, up from $98.2 million in the previous year, reflecting an increase of 11.9%.
- Acquisitions: The company is evaluating strategic acquisitions to enhance its product offerings and market reach.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected at approximately 6.9% year-over-year, with total net revenue of $272.8 million for the nine months ended September 30, 2024, compared to $255.1 million in the same period of 2023. Earnings estimates suggest a gradual recovery with expectations of reduced net losses, which were $10.7 million for the nine months ended September 30, 2024, compared to $17.8 million in 2023.
Strategic Initiatives and Partnerships
Strategic initiatives include:
- Investment in automation technology, which has seen a 19.6% increase in sales of automated box sizing equipment, contributing to overall sales growth.
- Partnerships with companies like Pickle Robot Co. and Creapaper GmbH, focusing on robotics and sustainable materials, respectively. The carrying value of investments in these companies as of September 30, 2024, was $13.8 million and $4.9 million.
Competitive Advantages
The company benefits from several competitive advantages:
- Strong Brand Recognition: Established reputation in the packaging industry enhances customer loyalty.
- Innovative Product Lines: The ability to adapt to market trends, particularly in sustainability, positions the company favorably within the industry.
- Operational Efficiency: The company has seen improvements in gross profit margins, with gross profit of $98.4 million for the nine months ended September 30, 2024, compared to $89.2 million in the previous year.
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Revenue | $92.2 million | $82.8 million | $9.4 million | 11.4% |
| Gross Profit | $34.4 million | $31.5 million | $2.9 million | 9.2% |
| Net Loss | $(8.1 million) | $(3.3 million) | $(4.8 million) | 145.5% |
| Cash and Cash Equivalents | $69.5 million | $62.0 million | $7.5 million | 12.1% |
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Article updated on 8 Nov 2024
Resources:
- Ranpak Holdings Corp. (PACK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Ranpak Holdings Corp. (PACK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Ranpak Holdings Corp. (PACK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.