Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). 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. Statements that are not
historical facts, including statements about the parties, perspectives and
expectations, are forward-looking statements. 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. Forward-looking
statements in this Quarterly Report on Form 10-Q may include, for example,
statements about: our expectations around the performance of the business; our
success in retaining or recruiting, or changes required in, our officers, key
employees or directors following our initial business combination; our officers
and directors allocating their time to other businesses and potentially having
conflicts of interest with our business; our public securities' potential
liquidity and trading; the lack of a market for our securities.
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: (1) our inability to secure a
sufficient supply of paper to meet our production requirements; (2) the impact
of the price of kraft paper on our results of operations; (3) our reliance on
third party suppliers; (4) the COVID-19 pandemic and associated response; (5)
the high degree of competition in the markets in which we operate; (6) consumer
sensitivity to increases in the prices of our products; (7) changes in consumer
preferences with respect to paper products generally; (8) continued
consolidation in the markets in which we operate; (9) the loss of significant
end-users of our products or a large group of such end-users; (10) our failure
develop new products that meet our sales or margin expectations; (11) our future
operating results fluctuating, failing to match performance or to meet
expectations; (12) our ability to fulfill our public company obligations; and
(13) 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 Annual Report on
Form 10-K, filed with the SEC on March 17, 2020. For purposes of this section,
"Ranpak", "the Company", "we", or "our" refer to (i) Rack Holdings and its
subsidiaries (the "Predecessor") for the periods from January 1, 2019 through
June 2, 2019 and April 1, 2019 through June 2, 2019 (each referred to herein as
a "2019 Predecessor Period") prior to the consummation of the Ranpak Business
Combination and (ii) Ranpak Holdings Corp. and its subsidiaries (the
"Successor") for all periods subsequent to June 3, 2019 after the consummation
of the Ranpak Business Combination, unless the context otherwise requires.
Capitalized terms used and not defined herein have the meanings disclosed
elsewhere in the Quarterly Report on Form 10-Q.
The following discussion and analysis has been revised for the effects of
certain restatements, as detailed in Note 18 to the unaudited condensed
consolidated financial statements in this 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.
                                       29
--------------------------------------------------------------------------------

Overview

Ranpak is a leading provider of environmentally sustainable, systems-based,
product protection solutions for e-commerce and industrial supply chains. Since
its inception in 1972, Ranpak has delivered high quality protective packaging
solutions, while maintaining its commitment to environmental sustainability.
Ranpak assembles its protective packaging systems and provides the systems and
paper consumables to customers, which include direct end-users and its 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. Ranpak operates 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. In the second quarter of 2020, we opened a new
production facility for our automation business in Kerkrade, the Netherlands,
located approximately three miles from our Heerlen location, to enhance our
production capacity in our automation business. Ranpak also maintains sales and
administrative offices in Shanghai, China; Tokyo, Japan; and Singapore. Ranpak
is a global business that generates approximately 54.8% of its net revenue for
the fiscal year 2019 outside of the United States.
As of June 30, 2020, Ranpak had an installed base of approximately
109.5 thousand protective packaging systems serving a diverse set of
distributors and end-users. Ranpak generated net revenue of $129.5 million in
the six months ended June 30, 2020. Additionally, Ranpak generated net revenue
of $16.3 million in the Successor period June 3, 2019 through June 30, 2019 and
$106.4 million in the Predecessor period January 1, 2019 through June 2, 2019.
The Ranpak Business Combination
On June 3, 2019, we consummated the acquisition of all outstanding and issued
equity interests of Rack Holdings, Inc. ("Rack Holdings") pursuant to a stock
purchase agreement for consideration of $794.9 million, which reflects a
post-closing adjustment of $0.7 million for net working capital and additional
consideration, and €140.0 million ($160.8 million) in cash, (A) $341.5 million
and €140.0 million of which, respectively, was used by the Seller to repay
outstanding indebtedness and unpaid transaction expenses as contemplated by the
stock purchase agreement and (B) the remainder of which was paid to Rack
Holdings L.P. ("Seller").
The Company (then One Madison Corporation) was deemed to be the accounting
acquirer in the Ranpak Business Combination, as a result of which the Company
allocated its purchase price to Rack Holdings' assets and liabilities at fair
value, which created a new basis of accounting. Until the consummation of the
Ranpak Business Combination, Rack Holdings operated as a separate business
holding all of the historical assets and liabilities related to our business.
The Ranpak Business Combination was financed, in part, with debt of
approximately $534.6 million, which became Ranpak's direct obligation upon the
consummation of the Ranpak Business Combination. Upon the consummation of the
Ranpak Business Combination on June 3, 2019, Rack Holdings' then-existing debt,
which amounted to approximately $487.6 million as of such date, was repaid in
full. In December 2019, the Company closed a public offering of its Class A
common stock generating net proceeds of approximately $107.7 million that was
used to pay down the First Lien Dollar Term Facility.
Following the Ranpak Business Combination, we have hired, and expect to hire
additional staff and implement procedures and processes to address regulatory
and other customary requirements applicable to operating public companies. We
have incurred additional annual expenses for, among other things, directors' and
officers' liability insurance, director fees, and additional internal and
external accounting, legal and administrative resources, including increased
audit and legal fees. We estimated that these incremental costs on an annual
basis would amount to approximately $2.0 million or more per year, resulting in
higher operating expenses in future periods. The closing of the Ranpak Business
Combination also resulted in the elimination of certain non-recurring expenses
incurred prior to the Ranpak Business Combination, which amounted to $35.4
million for the year ended December 31, 2019.
The following factors may have affected the comparability of Ranpak's results of
operations between the periods presented in this Quarterly Report on Form 10-Q
and may affect the comparability of its results of operations in future periods.
Effect of Currency Fluctuations.  As a result of the geographic diversity of
Ranpak's operations, it is exposed to the effects of currency translation.
Currency transaction exposure results when Ranpak generates net sales in one
currency at one time and incurs expenses in another currency at another time, or
when it realizes gain or loss on intercompany transfers. While Ranpak seeks to
limit its currency transaction exposure by matching the currencies in which it
incurs sales and expenses, it may not always be able to do so.
In addition, Ranpak is subject to currency translation exposure because the
operations of its 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
                                       30
--------------------------------------------------------------------------------

functional currency, with the resulting gain or loss recorded in the foreign
currency (gains) losses line-item in Ranpak's income statement. In turn,
subsidiary income statement balances that are denominated in currencies other
than the U.S. dollar are translated into U.S. dollars, Ranpak's 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 U.S. dollar are translated into U.S. dollars in consolidation using
period end exchange rates, with the effects of foreign currency translation
adjustments included in accumulated other comprehensive income (loss).
Ranpak does not currently hedge its foreign currency transaction or translation
exposure. As a result, significant currency fluctuations could impact the
comparability of its results between periods, while such fluctuations coupled
with material mismatches in net revenues and expenses could also adversely
impact its cash flows. See "Qualitative and Quantitative Disclosures About
Market Risk."
Acquisitions. On February 28, 2017, Ranpak acquired e3NEO for total
consideration of $3.3 million, including contingent consideration of
$1.1 million which was paid in full in 2018, plus an earn-out opportunity, which
was not earned and, in April 2020, we entered into a settlement arrangement with
the former majority owner of e3NEO to provide, among other things, for a payment
to the earn-out counterparties in the amount of approximately $1.6 million.
Approximately $0.2 million was expensed in the second quarter of 2020 after
certain approvals were obtained by French authorities. Approximately
$0.8 million was paid in the second quarter of 2020. Approximately $0.6 million
was accrued for at June 30, 2020. See Note 7, "Acquisition" to the condensed
consolidated financial statements included elsewhere in this Quarterly Report on
Form 10-Q. While recent acquisitions, such as e3NEO, have been relatively small,
any significant future business acquisitions may impact the comparability of
Ranpak's results in future periods with those for prior periods.
Seasonality.  Ranpak estimates that approximately one-third of its net revenue,
either directly or to distributors, are 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. Ranpak's results tend to follow similar patterns, with the
highest net revenue typically recorded in its fourth fiscal quarter and the
slowest sales in its first fiscal quarter of each fiscal year. Ranpak expects
this seasonality to continue in the future, as a result of which its 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 products 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 of the COVID-19 pandemic. 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
Ranpak uses the following key performance indicators and monitors the following
other factors to analyze its business performance, determine financial
forecasts, and help develop long-term strategic plans:
Protective Packaging Systems Base - Ranpak closely tracks 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. Ranpak's
                                       31
--------------------------------------------------------------------------------

installed base of protective packaging systems also drives its capital
expenditure budgets. The following table presents Ranpak’s installed base of
protective packaging systems by product line as of June 30, 2020 and 2019:

                                          June 30, 2020      June 30, 2019      Change      % Change
     Protective Packaging Systems                        (in thousands)
     Cushioning machines                         33.1               31.9         1.2           3.8
     Void-fill machines                          62.9               58.3         4.6           7.9
     Wrapping machines                           13.5               10.1         3.4          33.7
     Total                                      109.5              100.3         9.2           9.2


Paper Costs.  Paper is a key component of Ranpak's cost of sales and paper costs
can fluctuate significantly between periods. Ranpak purchases both 100% virgin
and 100% recycled paper, as well as blends, from various suppliers for
conversion into the paper consumables it sells. The cost of paper supplies is
Ranpak's largest input cost, and it negotiates supply and pricing arrangements
with most of its 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 Ranpak negotiates with suppliers at a
given point in time, can fluctuate significantly, and is affected by several
factors outside of Ranpak's 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 Ranpak's solutions is competitive and it
may be difficult for Ranpak to pass on increases in paper prices to its
customers immediately, or at all, which has in the past and could in the future
adversely affect its operating results.
Results of Operations
The following tables sets forth Ranpak's results of operations for the Successor
three and six month periods ended June 30, 2020, the period June 3, 2019 through
June 30, 2019, and the Predecessor periods April 1, 2019 through June 2, 2019
and January 1, 2019 through June 2, 2019, with line items presented in millions
of dollars.
The Ranpak Business Combination is accounted for under the scope of business
combination guidance in ASC 805 as One Madison Corporation was deemed to be the
accounting acquirer while Rack Holdings was deemed the "Predecessor."
Accordingly, the business combination is accounted for using the acquisition
method which requires the Company to record the fair value of assets acquired
and liabilities assumed from Rack Holdings (see Note 7, "Acquisition").
The financial statements separate the Company's presentation into distinct
periods. The periods before the Closing of the Ranpak Business Combination
(labeled Predecessor) depict the financial statements of Rack Holdings, and the
period after the Closing (labeled Successor) depicts the financial statements of
the Company, including the consolidation of One Madison Corporation with Rack
Holdings and application of acquisition method of accounting. As a result of the
application of the acquisition method of accounting as of the Closing, the
financial statements for the Predecessor Periods and for the Successor Periods
are presented on a different basis of accounting and are, therefore not
comparable.
Our condensed consolidated financial statements are prepared in accordance with
GAAP. We have, however, also disclosed below Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA") and adjusted EBITDA, which are non-GAAP
financial measures. We have included EBITDA and adjusted EBITDA 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 adjusted EBITDA can
provide a useful measure for period-to-period comparisons of our primary
business operations. Accordingly, we believe that EBITDA and adjusted EBITDA
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.
EBITDA and adjusted EBITDA 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 adjusted EBITDA 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
adjusted EBITDA do not reflect all cash capital expenditure requirements for
such replacements or for new capital expenditure requirements;
•EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for,
our working capital needs;
•adjusted EBITDA does not consider the potentially dilutive impact of
equity-based compensation;
                                       32
--------------------------------------------------------------------------------

•EBITDA and adjusted EBITDA 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;
•adjusted EBITDA does not take into account any restructuring and integration
costs; and
•other companies, including companies in our industry, may calculate EBITDA and
adjusted EBITDA differently, which reduces their usefulness as comparative
measures.
EBITDA - EBITDA is a non-GAAP financial measure that we calculate as net income
(loss), adjusted to exclude: benefit from (provision for) income taxes; interest
expense; and depreciation and amortization.
Adjusted EBITDA - Adjusted EBITDA is a non-GAAP financial measure that we
calculate as net income (loss), adjusted to exclude: benefit from (provision
for) income taxes; interest expense; depreciation and amortization; stock-based
compensation expense; expenses related to the Ranpak Business Combination and,
in certain periods, certain other income and expense items.
We also believe that adjusting these non-GAAP measures for comparability between
the Predecessor, Successor and Pro Forma periods is useful to the user of our
financial statements.
In addition, in our discussion below, we include certain unaudited, non-GAAP pro
forma data for the Successor three and six months ended June 30, 2020 and the
Predecessor and Successor Periods in 2019. This data is based on our historical
financial statements included elsewhere in this Quarterly Report on Form 10-Q,
adjusted (where applicable) to remove the effect of costs incurred to consummate
the Ranpak Business Combination, other one-time costs incurred due to the
Company entering into the Ranpak Business Combination and for purchase
accounting adjustments related to the Ranpak Business Combination as well as to
reflect a constant currency presentation between periods for the convenience of
readers.  We refer to these data as pro forma data in our discussion. However,
such pro forma data have not been prepared in accordance with Article 11 of
Regulation S-X. 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 six months ended June 30, 2020 and 2019.
Comparison of Successor Period Three Months Ended June 30, 2020, June 3, 2019 to
June 30, 2019 ("June 2019 Successor Period"), 2019 Predecessor Period April 1,
2019 through June 2, 2019 ("Second Quarter 2019 Predecessor Period"), and Pro
Forma Three Months Ended June 30, 2019

                                                                    Successor                                                                                           Predecessor
                                                                                                 June 3, 2019 - June 30,                                      April 1, 2019
                                        Three Months Ended June 30,                                        2019                                               - June 2, 2019
                                         2020             % Net revenue           2019          % Net revenue                 2019          % Net revenue
Net revenue                         $    66.1                          -       $  16.3                       -             $  40.3                       -
Cost of goods sold                       39.1                    59.2             13.0                 79.8                   23.2                 57.6
Gross profit                             27.0                    40.8              3.3                 20.2                   17.1                 42.4
Selling, general and
administrative expenses                  20.7                    31.3              4.9                 30.1                   10.0                 24.8
Transaction costs                           -                       -              0.3                  1.8                    7.0                 17.4
Depreciation and amortization
expense                                   7.7                    11.6              3.0                 18.4                    7.1                 17.6
Other operating expense, net              0.7                     1.1              0.2                  1.2                    1.2                  3.0
Income (loss) from operations            (2.1)                   (3.2)            (5.1)               (31.3)                  (8.2)               

(20.3)

Interest expense                          5.5                     8.3              8.0                 49.1                   12.1                 30.0
Foreign currency (gain) loss              1.4                     2.1              1.7                 10.4                   (0.2)                (0.5)
Loss before income tax
expense                                  (9.0)                  (13.6)           (14.8)               (90.8)                 (20.1)               (49.9)
Income tax benefit                       (0.5)                   (0.8)            (2.4)               (14.7)                  (4.3)               (10.7)
Net loss                            $    (8.5)                  (12.9)         $ (12.4)               (76.1)               $ (15.8)               (39.2)

Non-GAAP
EBITDA                              $    11.5$   0.5$   2.6
Adjusted EBITDA                     $    19.0                                  $     -                                     $     -



                                       33
--------------------------------------------------------------------------------
                                                                                        Pro Forma
                                                                               Three Months Ended June 30,
                                          2020           % Net revenue          2019          % Net revenue         $ Change           % Change
Net revenue                           $   67.8                        -       $ 59.9                       -       $   7.9                  13.2
Cost of goods sold                        40.1                  59.1            34.5                 57.6              5.6                  16.2
Gross profit                              27.7                  40.9            25.4                 42.4              2.3                   9.1
Selling, general and
administrative expenses                   21.1                  31.1            13.8                 23.0              7.3                  52.9

Depreciation and amortization
expense                                    7.8                  11.5             9.7                 16.2             (1.9)                (19.6)
Other operating expense, net               0.9                   1.3             1.5                  2.5             (0.6)                (40.0)
Income (loss) from operations             (2.1)                 (3.1)            0.4                  0.7             (2.5)               (625.0)
Interest expense                           5.5                   8.1             8.5                 14.2             (3.0)                (35.3)
Foreign currency (gain) loss               1.4                   2.1             1.5                  2.5             (0.1)                 (6.7)
Loss before income tax expense            (9.0)                (13.3)           (9.6)               (16.0)             0.6                  (6.3)
Income tax benefit                        (0.4)                 (0.6)           (1.0)                (1.7)             0.6                 (60.0)
Net loss                              $   (8.6)                (12.7)         $ (8.6)               (14.4)         $     -                     -

Non-GAAP
EBITDA                                $   11.5$ 13.7$  (2.2)                (16.1)
Adjusted EBITDA                       $   19.0$ 16.8$   2.2                  13.1



Net Revenue
The following tables and the discussion that follows compare Ranpak's net
revenue by geographic region and by product line for the three months ended June
30, 2020 and 2019 on a GAAP basis and on a non-GAAP, pro forma basis as
described above and in the discussion below. See also "Presentation and
Reconciliation of GAAP to Non-GAAP Measures" for further:
                                                                 Successor                                                                                             Predecessor
                                                                                               June 3, 2019 - June 30,                                       April 1, 2019
                                    Three Months Ended June 30,                                         2019                                                 - June 2, 2019
                                     2020              % Net revenue           2019           % Net revenue                 2019           % Net
revenue
North America                  $     28.2                     42.7          $   9.3                  57.1                $  20.2                  50.1
Europe/Asia                          37.9                     57.3              7.0                  42.9                   20.1                  49.9
Net revenue                    $     66.1                    100.0          $  16.3                 100.0                $  40.3                 100.0

Cushioning machines            $     25.8                     39.0          $   8.0                  49.1                $  16.8                  41.7
Void-fill machines                   28.8                     43.6              8.0                  49.1                   16.2                  40.2
Wrapping machines                     7.9                     12.0              1.4                   8.6                    3.8                   9.4
Other                                 3.6                      5.4             (1.1)                 (6.8)                   3.5                   8.7
Net revenue                    $     66.1                    100.0          $  16.3                 100.0                $  40.3                 100.0



                                                                   Pro Forma
                                                          Three Months Ended June 30,
                              2020         % Net revenue       2019        % Net revenue      $ Change      % Change
 North America            $   28.2                41.6       $ 29.8               49.7       $  (1.6)         (5.4)
 Europe/Asia                  39.6                58.4         30.1               50.3           9.5          31.6
 Net revenue              $   67.8               100.0       $ 59.9              100.0       $   7.9          13.2

 Cushioning machines      $   26.6                39.2       $ 27.8               46.4       $  (1.2)         (4.3)
 Void-fill machines           29.4                43.4         24.9               41.6           4.5          18.1
 Wrapping machines             8.0                11.8          5.4                9.0           2.6          48.1
 Other                         3.8                 5.6          1.8                3.0           2.0         111.1
 Net revenue              $   67.8               100.0       $ 59.9              100.0       $   7.9          13.2


Net revenue for the three months ended June 30, 2020 was $66.1 million. Net
revenue for the June 2019 Successor Period was $16.3 million, and $40.3 million
in the Second Quarter 2019 Predecessor Period, for a combined $56.6 million in
the three month
                                       34
--------------------------------------------------------------------------------

period ended June 30, 2019. Net revenue increased $9.5 million or 16.8% as a
result of an increase in the volume of Ranpak's paper consumable products of
approximately 19.3 pp and an increase of approximately 6.5 pp in sales of
automated box sizing equipment, partially offset by a decrease in the price of
Ranpak's paper consumable products which contributed a 7.6 pp decrease in sales.
Net revenue was positively impacted by increases in wrapping, void-fill, and
automation, partially offset by decreases in cushioning. Cushioning decreased
$1.2 million, or 4.3%, to $26.6 million from $27.8 million, void-fill increased
$4.5 million, or 18.1%, to $29.4 million from $24.9 million, wrapping increased
$2.6 million, or 48.1%, to $8.0 million from $5.4 million, while other sales
increased $2.0 million, or 111.1% to $3.8 million from $1.8 million, for the
three months ended June 30, 2020 compared to the three months ended June 30,
2019.  Other net revenue includes automated box sizing equipment and non-paper
revenue from packaging systems installed in the field. Net revenue was $67.8
million for the three months ended June 30, 2020, a $7.9 million, or 13.2%,
increase on a constant currency basis from pro forma net revenue of $59.9
million for the three months ended June 30, 2019 after purchase accounting
adjustments of $2.6 million related to deferred revenue in the three months
ended June 30, 2019.
Net revenue in North America for the three months ended June 30, 2020 totaled
$28.2 million. Net revenue in North America was $9.3 million in the June 2019
Successor Period, $20.2 million in the Second Quarter 2019 Predecessor Period
for a combined $29.5 million in the three month period ended June 30, 2019. Net
revenue in North America decreased $1.3 million, or 4.4% attributable to a
decline in cushioning and void-fill volumes, partially offset by an increase in
wrapping sales. Net revenue in North America was $28.2 million for the three
months ended June 30, 2020, a $1.6 million, or 5.4%, decrease from pro forma net
revenue of $29.8 million for the three months ended June 30, 2019 after purchase
accounting adjustments.
Net revenue in Europe/Asia for the three months ended June 30, 2020 totaled
$37.9 million. Net revenue in Europe/Asia was $7.0 million in the June 2019
Successor Period, $20.1 million in the Second Quarter 2019 Predecessor Period,
for a combined $27.1 million in the three month period ended June 30, 2019. Net
revenue in Europe/Asia increased $10.8 million or 39.9% driven primarily by
increases cushioning, void-fill, and wrapping product categories. Net revenue in
Europe/Asia was $39.6 million for the three months ended June 30, 2020, a $9.5
million, or 31.6%, increase from pro forma net revenue of $30.1 million for the
three months ended June 30, 2019 after purchase accounting adjustments and
adjusting for constant currency.
Cost of Sales
Cost of sales for the three months ended June 30, 2020 totaled $39.1 million.
Cost of sales was $13.0 million in the June 2019 Successor Period, $23.2 million
in the Second Quarter 2019 Predecessor Period, for a combined $36.2 million in
the three month period ended June 30, 2019. Cost of sales increased $2.9 million
or 8.0% due to higher sales of consumables and an increase in depreciation of
$2.2 million over the prior year, offset by lower price of paper. Pro forma cost
of sales increased by $5.6 million, or 16.2%, to $40.1 million in the three
months ended June 30, 2020 from $34.5 million for the three month period ended
June 30, 2019 after adjusting to a constant currency in both periods and $2.1
million in purchase accounting adjustments in the three months ended June 30,
2019. As a result, on a pro forma basis, net sales minus cost of sales as a
percentage of net sales decreased by 1.5 pp to 40.9% in the three months ended
June 30, 2020 from 42.4% for the comparable period in 2019.
Selling, General and Administrative Expenses (SG&A)
SG&A expenses for the three months ended June 30, 2020 was $20.7 million. SG&A
was $4.9 million in the June 2019 Successor Period, $10.0 million in the Second
Quarter 2019 Predecessor Period, for a combined $14.9 million in the three month
period ended June 30, 2019. SG&A expenses increased $5.8 million or 38.9% due to
severance costs, non-cash equity compensation costs, increased support of growth
initiatives and increased costs associated with being a public company. Pro
forma SG&A expenses increased by $7.3 million, or 52.9%, to $21.1 million in the
three months ended June 30, 2020 from $13.8 million for the comparable period in
2019 after adjusting to a constant currency in both periods. As a percentage of
pro forma net sales, pro forma SG&A increased to 31.1% in the three months ended
June 30, 2020 from 23.0% in the three months ended June 30, 2019 on a constant
currency basis.
Transaction Costs
We incurred transaction costs related to the Ranpak Business Combination of
approximately $0.3 million in the June 2019 Successor Period, $7.0 million in
the Second Quarter 2019 Predecessor Period for a combined $7.3 million. All of
these costs were related to the Ranpak Business Combination.
Depreciation and Amortization
Depreciation and amortization expenses for the three months ended June 30, 2020
were $7.7 million. Depreciation and amortization expenses were $3.0 million in
the June 2019 Successor Period, $7.1 million in the Second Quarter 2019
Predecessor Period, for a combined $10.1 million in the three month period ended
June 30, 2019. Depreciation and amortization expenses decreased $2.4 million, or
23.8% due to the Ranpak Business Combination fair value adjustments, their
related amortizable lives and changes in currency rates. Pro forma depreciation
and amortization expenses decreased by $1.9 million, or 19.6%, to $7.8
                                       35
--------------------------------------------------------------------------------

million in the three months ended June 30, 2020 from $9.7 million for the three
months ended June 30, 2019 on a constant currency basis. As a percentage of pro
forma net sales, pro forma depreciation and amortization expenses decreased to
11.5% in the three months ended June 30, 2020 from 16.2% in the three months
ended June 30, 2019 on a constant currency basis.
Other Operating Expense (Income), Net
Other operating expenses (income), net, for the three months ended June 30, 2020
was $0.7 million. Other operating expenses (income), net, was $0.2 million in
the June 2019 Successor Period, $1.2 million in the Second Quarter 2019
Predecessor Period, for a combined $1.4 million. Other operating expense
decreased $0.7 million, or 50.0%. Pro forma other operating expenses (income),
net, was $0.9 million in the three months ended June 30, 2020 compared to $1.5
million for the three months ended June 30, 2019 on a constant currency basis,
largely driven by decreases in research and development. As a percentage of pro
forma net sales, pro forma other operating expenses (income), net, decreased to
1.3% in the three months ended June 30, 2020 from 2.5% in the three months ended
June 30, 2019 on a constant currency basis.
Interest Expense
Interest expense for the three months ended June 30, 2020 was $5.5 million.
Interest expense was $8.0 million in the June 2019 Successor Period, $12.1
million in the Second Quarter 2019 Predecessor Period, for a combined $20.1
million. Interest expense decreased $14.6 million, or 72.6%. Interest expense
decreased due to transaction-related expenses in June 2019, which included a
write-off of deferred financing fees and the termination of an interest rate
swap. Pro forma interest expense decreased by $3.0 million, or 35.3%, to $5.5
million in the three months ended June 30, 2020 compared to $8.5 million for the
three months ended June 30, 2019 on a constant currency basis due to decreased
debt levels and lower interest rates. As a percentage of pro forma net sales,
pro forma interest expense decreased to 8.1% in the three months ended June 30,
2020 from 14.2% in the three months ended June 30, 2019.
Foreign Currency (Gain) Loss
Foreign currency loss for the three months ended June 30, 2020 was $1.4 million.
Foreign currency loss was $1.7 million in the June 2019 Successor Period, and a
gain of $0.2 million in the Second Quarter 2019 Predecessor Period, for a
combined loss of $1.5 million. Foreign currency loss decreased $0.1 million, or
6.7% due to the net impact of the re-measurement of Ranpak's Euro-denominated
term facility and its Euro-denominated intercompany note to a Dutch subsidiary
in the Predecessor Periods. Pro forma foreign currency loss was $1.4 million in
the three months ended June 30, 2020 compared to $1.5 million for the three
months ended June 30, 2019 on a constant currency basis. As a percentage of pro
forma net sales, pro forma foreign currency loss decreased to 2.1% in the three
months ended June 30, 2020 from 2.5% in the three months ended June 30, 2019 on
a constant currency basis.
Income Tax Benefit
Income tax benefit for the three months ended June 30, 2020 was $0.5 million, or
an effective tax rate of 5.7%. Income tax benefit was $2.4 million in the June
2019 Successor Period, $4.3 million in the Second Quarter 2019 Predecessor
Period, for a combined benefit of $6.7 million in the three months ended June
30, 2019. The effective tax rate was 16.2% in the June 2019 Successor Period and
21.5% in the Second Quarter 2019 Predecessor Period. 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 the U.S. foreign
derived intangible income deduction, tax credits available in the United States,
and income in foreign jurisdictions that are taxed at different rates than the
U.S. statutory tax rate.
Net Loss
Net loss for the three months ended June 30, 2020 was $8.5 million. Net loss was
$12.4 million in the June 2019 Successor Period, $15.8 million in the Second
Quarter 2019 Predecessor Period, for a combined net loss of $28.2 million in the
three months ended June 30, 2019. Net loss decreased $19.7 million, or 69.9%.
Net loss was $8.6 million in the three months ended June 30, 2020 compared to
pro forma net loss of $8.6 million for the three month period ended June 30,
2019 on a constant currency basis. The change was due to the reasons discussed
above.
EBITDA and Adjusted EBITDA
EBITDA for the three months ended June 30, 2020 was $11.5 million. EBITDA was
$0.5 million in the June 2019 Successor Period, $2.6 million in the second
quarter 2019 Predecessor Period, for a combined $3.1 million. Adjusting for
transaction costs associated with the Ranpak Business Combination, constant
currency and other one-time costs, pro forma Adjusted EBITDA for the three
months ended June 30, 2020 and 2019 totaled $19.0 million and $16.8 million,
respectively, an increase of $2.2 million, or 13% on a constant currency basis.
                                       36
--------------------------------------------------------------------------------

Comparison of Successor Period Six Months Ended June 30, 2020, June 2019
Successor Period, 2019 Predecessor Period January 1, 2019 through June 2, 2019
("1H 2019 Predecessor Period"), and Pro Forma Six Months Ended June 30, 2019
                                                                    Successor                                                                                           Predecessor
                                                                                                June 3, 2019 - June 30,                                      January 1, 2019
                                         Six Months Ended June 30,                                        2019                                               - June 2, 2019
                                         2020            % Net revenue           2019          % Net revenue                 2019          % Net
revenue
Net revenue                         $   129.5                         -       $  16.3                       -             $ 106.4                       -
Cost of goods sold                       75.7                   58.5             13.0                 79.8                   61.2                 57.5
Gross profit                             53.8                   41.5              3.3                 20.2                   45.2                 42.5
Selling, general and
administrative expenses                  40.3                   31.1              4.9                 30.1                   23.8                 22.4
Transaction costs                           -                      -              0.3                  1.8                    7.4                  7.0
Depreciation and amortization
expense                                  15.2                   11.7              3.0                 18.4                   17.7                 16.6
Other operating expense, net              1.0                    0.8              0.2                  1.2                    2.2                  2.1
Income (loss) from operations            (2.7)                  (2.1)            (5.1)               (31.3)                  (5.9)                (5.5)
Interest expense                         11.7                    9.0              8.0                 49.1                   20.2                 19.0
Foreign currency (gain) loss             (0.1)                  (0.1)             1.7                 10.4                   (2.2)                (2.1)
Loss before income tax
expense                                 (14.3)                 (11.0)           (14.8)               (90.8)                 (23.9)               (22.5)
Income tax benefit                       (2.2)                  (1.7)            (2.4)               (14.7)                  (4.9)                (4.6)
Net loss                            $   (12.1)                  (9.3)         $ (12.4)               (76.1)               $ (19.0)               (17.9)

Non-GAAP
EBITDA                              $    27.0$   0.5$  22.9
Adjusted EBITDA                     $    37.1                                 $     -                                     $     -



                                                                                        Pro Forma
                                                                                Six Months Ended June 30,
                                        2020           % Net revenue           2019           % Net revenue         $ Change             % Change
Net revenue                          $ 132.6                        -       $ 127.9                        -       $    4.7                    3.7
Cost of goods sold                      77.5                  58.4             73.6                  57.5               3.9                    5.3
Gross profit                            55.1                  41.6             54.3                  42.5               0.8                    1.5
Selling, general and
administrative expenses                 41.0                  30.9             27.0                  21.1              14.0                   51.9

Depreciation and amortization
expense                                 15.4                  11.6             20.3                  15.9              (4.9)                 (24.1)
Other operating expense, net             1.4                   1.1              2.6                   2.0              (1.2)                 (46.2)
Income (loss) from operations           (2.7)                 (2.0)             4.4                   3.4              (7.1)                (161.4)
Interest expense                        11.7                   8.8             16.6                  13.0              (4.9)                 (29.5)
Foreign currency (gain) loss            (0.1)                 (0.1)            (0.5)                 (0.4)              0.4                  (80.0)
Loss before income tax expense         (14.3)                (10.8)           (11.7)                 (9.1)             (2.6)                  22.2
Income tax benefit                      (2.1)                 (1.6)            (2.0)                 (1.6)             (0.1)                   5.0
Net loss                             $ (12.2)                 (9.2)         $  (9.7)                 (7.6)         $   (2.5)                  25.8

Non-GAAP
EBITDA                               $  27.0$  35.9$   (8.9)                 (24.8)
Adjusted EBITDA                      $  37.1$  36.5$    0.6                    1.6


Net Revenue
The following table and the discussion that follows compares Ranpak's net
revenue by geographic region and by product line for the six months ended June
30, 2020 and 2019 on a GAAP basis and on a non-GAAP, pro forma basis as
described above and in the discussion below. See also "Presentation and
Reconciliation of GAAP to Non-GAAP Measures" for further:

                                       37
--------------------------------------------------------------------------------

                                                               Successor                                                                                             Predecessor
                                                                                            June 3, 2019 - June 30,                                       January 1, 2019
                                   Six Months Ended June 30,                                         2019                                                 - June 2, 2019
                                   2020             % Net revenue           2019           % Net revenue                 2019           % Net revenue
North America                 $    55.3                    42.7          $   9.3                  57.1                $  50.1                  47.1
Europe/Asia                        74.2                    57.3              7.0                  42.9                   56.3                  52.9
Net revenue                   $   129.5                   100.0          $  16.3                 100.0                $ 106.4                 100.0

Cushioning machines           $    54.3                    41.9          $   8.0                  49.1                $  46.4                  43.6
Void-fill machines                 53.5                    41.3              8.0                  49.1                   42.7                  40.1
Wrapping machines                  15.8                    12.2              1.4                   8.6                    8.8                   8.3
Other                               5.9                     4.6             (1.1)                 (6.8)                   8.5                   8.0
Net revenue                   $   129.5                   100.0          $  16.3                 100.0                $ 106.4                 100.0



                                                                  Pro Forma
                                                          Six Months Ended June 30,
                             2020        % Net revenue        2019        % Net revenue      $ Change      % Change
 North America            $  55.3               41.7       $  59.8               46.8       $  (4.5)         (7.5)
 Europe/Asia                 77.3               58.3          68.1               53.2           9.2          13.5
 Net revenue              $ 132.6              100.0       $ 127.9              100.0       $   4.7           3.7

 Cushioning machines      $  55.9               42.2       $  57.4

44.9 $ (1.5) (2.6)

 Void-fill machines          54.5               41.1          51.5               40.3           3.0           5.8
 Wrapping machines           16.0               12.1          10.4                8.1           5.6          53.8
 Other                        6.2                4.6           8.6                6.7          (2.4)        (27.9)
 Net revenue              $ 132.6              100.0       $ 127.9              100.0       $   4.7           3.7



Net revenue for the six months ended June 30, 2020 was $129.5 million. Net
revenue for the June 2019 Successor Period was $16.3 million, and $106.4 million
in the 1H 2019 Predecessor Period, for a combined $122.7 million in the six
month period ended June 30, 2019. Net revenue increased $6.8 million or 5.5% as
a result of an increase in the volume of Ranpak's paper consumable products of
approximately 8.3 pp and an increase of approximately 3.6 pp in sales of
automated box sizing equipment, partially offset by a decrease in the price of
Ranpak's paper consumable products which contributed a 5.8 pp decrease in sales.
Net revenue was positively impacted by increases in wrapping, void-fill, and
partially offset by decreases in cushioning. Cushioning decreased $1.5 million,
or 2.6%, to $55.9 million from $57.4 million, void-fill increased $3.0 million,
or 5.8%, to $54.5 million from $51.5 million, wrapping increased $5.6 million,
or 53.8%, to $16.0 million from $10.4 million, while other sales decreased $2.4
million, or 27.9% to $6.2 million from $8.6 million, in each case for the six
months ended June 30, 2020 compared to the six months ended June 30, 2019. Other
net revenue includes automated box sizing equipment and non-paper revenue from
packaging systems installed in the field. Net revenue was $132.6 million for the
six months ended June 30, 2020, a $4.7 million, or 3.7%, increase on a constant
currency basis pro forma net revenue of $127.9 million for the six months ended
June 30, 2019 after adjusting to a constant currency in both periods and
purchase accounting adjustments related to revenue recognition in the six months
ended June 30, 2019.
Net revenue in North America for the six months ended June 30, 2020 totaled
$55.3 million. Net revenue in North America was $9.3 million in the June 2019
Successor Period, $50.1 million in the 1H 2019 Predecessor Period for a combined
$59.4 million in the six month period ended June 30, 2019. Net revenue in North
America decreased $4.1 million, or 6.9% attributable to a decline in cushioning
and void-fill volumes, partially offset by an increase in wrapping sales. Net
revenue in North America was $55.3 million for the six months ended June 30,
2020, a $4.5 million, or 7.5%, decrease from pro forma net revenue of $59.8
million for the six months ended June 30, 2019 after purchase accounting
adjustments.
Net revenue in Europe/Asia for the six months ended June 30, 2020 totaled $74.2
million. Net revenue in Europe/Asia was $7.0 million in the June 2019 Successor
Period, $56.3 million in the 1H 2019 Predecessor Period, for a combined $63.3
million in the six month period ended June 30, 2019. Net revenue in Europe/Asia
increased $10.9 million or 17.2% driven primarily by growth in wrapping and
void-fill sales, partially offset by a decline in cushioning. Net revenue in
Europe/Asia was $77.3 million for the six months ended June 30, 2020, a $9.2
million, or 13.5%, increase from pro forma net revenue of $68.1 million for the
six months ended June 30, 2019 after purchase accounting adjustments and
adjusting for constant currency.
                                       38
--------------------------------------------------------------------------------

Cost of Sales
Cost of sales for the six months ended June 30, 2020 totaled $75.7 million. Cost
of sales was $13.0 million in the June 2019 Successor Period, $61.2 million in
the 1H 2019 Predecessor Period, for a combined $74.2 million in the six month
period ended June 30, 2019. Cost of sales increased $1.5 million or 2.0% due to
increases in sales year over year and higher depreciation expense of $3.8
million, offset by a decrease in the price of paper. Pro forma cost of sales
increased by $3.9 million, or 5.3%, to $77.5 million in the six months ended
June 30, 2020 from $73.6 million for the six month period ended June 30, 2019
after adjusting to a constant currency in both periods and purchase accounting
adjustments of $2.1 million for the six months ended June 30, 2019. As a result,
on a pro forma basis, net sales minus cost of sales as a percentage of net sales
decreased by 0.9 pp to 41.6% in the six months ended June 30, 2020 from 42.5%
for the comparable period in 2019.
Selling, General, and Administrative Expenses
SG&A expenses for the six months ended June 30, 2020 was $40.3 million. SG&A was
$4.9 million in the June 2019 Successor Period, $23.8 million in the 1H 2019
Predecessor Period, for a combined $28.7 million in the six month period ended
June 30, 2019. SG&A expenses increased $11.6 million or 40.4% due to severance
costs, non-cash equity compensation costs, increased support of growth
initiatives and increased costs associated with being a public company. Pro
forma SG&A expenses increased by $14.0 million, or 51.9%, to $41.0 million in
the six months ended June 30, 2020 from $27.0 million for the comparable period
in 2019 after adjusting to a constant currency in both periods. As a percentage
of pro forma net sales, pro forma SG&A increased to 30.9% in the six months
ended June 30, 2020 from 21.1% in the six months ended June 30, 2019 on a
constant currency basis.
Transaction Costs
We incurred transaction costs related to the Ranpak Business Combination of
approximately $0.3 million in the June 2019 Successor Period, $7.4 million in
the 1H 2019 Predecessor Period for a combined $7.7 million. All of these costs
were related to the Ranpak Business Combination.
Depreciation and Amortization
Depreciation and amortization expenses for the six months ended June 30, 2020
were $15.2 million. Depreciation and amortization expenses were $3.0 million in
the June 2019 Successor Period, $17.7 million in the 1H 2019 Predecessor Period,
for a combined $20.7 million in the six month period ended June 30, 2019.
Depreciation and amortization expenses decreased $5.5 million, or 26.6% due to
the Ranpak Business Combination fair value adjustments, their related
amortizable lives and changes in currency rates. Pro forma depreciation and
amortization expenses decreased by $4.9 million, or 24.1%, to $15.4 million in
the six months ended June 30, 2020 from $20.3 million for the six months ended
June 30, 2019 on a constant currency basis. As a percentage of pro forma net
sales, pro forma depreciation and amortization expenses decreased to 11.6% in
the six months ended June 30, 2020 from 15.9% in the six months ended June 30,
2019 on a constant currency basis.
Other Operating Expense (Income), Net
Other operating expenses (income), net, for the six months ended June 30, 2020
was $1.0 million. Other operating expenses (income), net, was $0.2 million in
the June 2019 Successor Period, $2.2 million in the 1H 2019 Predecessor Period,
for a combined $2.4 million. Other operating expense decreased $1.4 million, or
58.3% due to the loss on sale of machines recognized in the prior year period as
well as decreased research and development expense in the current year period.
Pro forma other operating expenses (income), net, was $1.4 million in the six
months ended June 30, 2020 compared to $2.6 million for the six months ended
June 30, 2019 on a constant currency basis. As a percentage of pro forma net
sales, pro forma other operating expenses (income), net, decreased to 1.1% in
the six months ended June 30, 2020 from 2.0% in the six months ended June 30,
2019 on a constant currency basis.
Interest Expense
Interest expense for the six months ended June 30, 2020 was $11.7 million.
Interest expense was $8.0 million in the June 2019 Successor Period, $20.2
million in the 1H 2019 Predecessor Period, for a combined $28.2 million.
Interest expense decreased $16.5 million, or 58.5%. Interest expense decreased
due to transaction-related expenses in June 2019, which included a write-off of
deferred financing fees and the termination of an interest rate swap. Pro forma
interest expense decreased by $4.9 million, or 29.5%, to $11.7 million in the
six months ended June 30, 2020 compared to $16.6 million for the six months
ended June 30, 2019 on a constant currency basis due to decreased debt levels
and lower interest rates. As a percentage of pro forma net sales, pro forma
interest expense decreased to 8.8% in the six months ended June 30, 2020 from
13.0% in the six months ended June 30, 2019.
Foreign Currency (Gain) Loss
                                       39
--------------------------------------------------------------------------------

Foreign currency gain for the six months ended June 30, 2020 was $0.1 million.
Foreign currency loss was $1.7 million in the June 2019 Successor Period, and a
gain of $2.2 million in the 1H 2019 Predecessor Period, for a combined gain of
$0.5 million. Foreign currency loss decreased $0.4 million, or 80% due to the
net impact of the re-measurement of Ranpak's Euro-denominated term facility and
its Euro-denominated intercompany note to a Dutch subsidiary in the Predecessor
Periods. Pro forma foreign currency gain was $0.1 million in the six months
ended June 30, 2020 compared to $0.5 million for the six months ended June 30,
2019 on a constant currency basis. As a percentage of pro forma net sales, pro
forma foreign currency (gain) loss was less than one percent in the six months
ended June 30, 2020 and 2019.
Income Tax Provision (Benefit)
Income tax benefit for the six months ended June 30, 2020 was $2.2 million, or
an effective tax rate of 15.7%. Income tax benefit was $2.4 million in the June
2019 Successor Period, $4.9 million in the 1H 2019 Predecessor Period, for a
combined benefit of $7.3 million in the six months ended June 30, 2019. 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 the U.S. foreign
derived intangible income deduction, tax credits available in the United States,
and income in foreign jurisdictions that are taxed at different rates than the
U.S. statutory tax rate.
Net Income (Loss)
Net loss for the six months ended June 30, 2020 was $12.1 million. Net loss was
$12.4 million in the June 2019 Successor Period, $19.0 million in the 1H 2019
Predecessor Period, for a combined net loss of $31.4 million in the six months
ended June 30, 2019. Net loss decreased $19.3 million, or 61.5%. Net loss was
$12.2 million in the six months ended June 30, 2020 compared to pro forma net
loss of $9.7 million for the six month period ended June 30, 2019 on a constant
currency basis. The change was primarily due to the $2.6 million in purchase
accounting adjustments.
EBITDA and Adjusted EBITDA
EBITDA for the six months ended June 30, 2020 was $27.0 million compared to a
combined $35.4 million in the six months ended June 30, 2019. Adjusting for
transaction costs associated with the Ranpak Business Combination, constant
currency and other one-time costs, pro forma Adjusted EBITDA for the six months
ended June 30, 2020 totaled $37.1 million, an increase of $0.6 million, or 1.6%
on a constant currency basis from $36.5 million in the six months ended June 30,
2019.
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. Ranpak believes presentation of these non-GAAP measures
is useful because they are many of the key measures that allow management to
evaluate more effectively its operating performance and compare the results of
its operations from period to period and against its 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. Additionally, as a result of the
Ranpak Business Combination, we believe that users of our financial information
will find that non-GAAP, pro forma data for the three and six months ended June
30, 2020 is useful when comparing the current and prior periods. The
computations of EBITDA and adjusted EBITDA 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 pro forma measures, to GAAP information presented in this
Quarterly Report on Form 10-Q for the three and six months ended June 30, 2020
and 2019:

                                       40
--------------------------------------------------------------------------------

                                                                             Successor
                                                                  Three Months Ended June 30, 2020
                                                     As reported           Adjustments(6)            Pro Forma
Net revenue                                       $        66.1           $         1.7           $        67.8
Cost of goods sold                                         39.1                     1.0                    40.1
Gross profit                                               27.0                     0.7                    27.7
Selling, general and administrative
expenses                                                   20.7                     0.4                    21.1

Depreciation and amortization expense                       7.7                     0.1                     7.8
Other operating expense, net                                0.7                     0.2                     0.9
Income (loss) from operations                              (2.1)                      -                    (2.1)
Interest expense                                            5.5                       -                     5.5
Foreign currency (gain) loss                                1.4                       -                     1.4
Loss before income tax expense                             (9.0)                      -                    (9.0)
Income tax provision (benefit)                             (0.5)                    0.1                    (0.4)
Net loss                                          $        (8.5)$        (0.1)                   (8.6)

Add(4):
Depreciation and amortization expense - COS                                                                 7.4
Depreciation and amortization expense -
SG&A                                                                                                        7.7
Interest expense                                                                                            5.5
Income tax benefit                                                                                         (0.5)
EBITDA                                                                                                     11.5

Adjustments(5):
Unrealized (gain) loss translation                                                                          1.3
Constant currency                                                                                           0.5
Non-cash impairment losses                                                                                  0.6
M&A, restructuring, severance                                                                               2.3
Amortization of restricted stock units                                                                      2.0

Other non-core and non-cash adjustments                                                                     0.8
Adjusted EBITDA                                                                                   $        19.0
(see subsequent footnotes)



                                       41
--------------------------------------------------------------------------------
                                           Successor              Predecessor
                                         June 3, 2019            April 1, 2019
                                        - June 30, 2019         - June 2, 2019                     Three Months Ended June 30, 2019
                                          As reported             As reported             Combined            Adjustments(6)         Pro Forma
Net revenue                            $         16.3          $         40.3          $      56.6$        3.3     (1)   $    59.9
Cost of goods sold                               13.0                    23.2                 36.2                   (1.7)    (2)        34.5
Gross profit                                      3.3                    17.1                 20.4                    5.0                25.4
Selling, general and
administrative expenses                           4.9                    10.0                 14.9                   (1.1)               13.8
Transaction costs                                 0.3                     7.0                  7.3                   (7.3)                  -
Depreciation and amortization
expense                                           3.0                     7.1                 10.1                   (0.4)                9.7
Other operating expense, net                      0.2                     1.2                  1.4                    0.1                 1.5
Income (loss) from operations                    (5.1)                   (8.2)               (13.3)                  13.7                 0.4
Interest expense                                  8.0                    12.1                 20.1                  (11.6)                8.5
Foreign currency (gain) loss                      1.7                    (0.2)                 1.5                      -                 1.5
Loss before income tax expense                  (14.8)                  (20.1)               (34.9)                  25.3                (9.6)
Income tax provision (benefit)                   (2.4)                   (4.3)                (6.7)                   5.7     (3)        (1.0)
Net loss                               $        (12.4)$        (15.8)$     (28.2)$       19.6                (8.6)

Add(4):
Depreciation and amortization
expense - COS                                                                                                                               -
Depreciation and amortization
expense - SG&A                                                                                                                           14.8
Interest expense                                                                                                                          8.5
Income tax benefit                                                                                                                       (1.0)
EBITDA                                                                                                                                   13.7

Adjustments(5):
Unrealized (gain) loss
translation                                                                                                                               1.5

Amortization of restricted stock
units                                                                                                                                     0.2

PE monitoring fees                                                                                                                        0.5
(Gain) loss on disposal of
machines                                                                                                                                  0.8

Public company costs                                                                                                                     (0.5)
Other non-core and non-cash
adjustments                                                                                                                               0.6
Adjusted EBITDA                                                                                                                     $    16.8
(see subsequent footnotes)



                                       42
--------------------------------------------------------------------------------
                                                                                 Pro Forma
                                                  Three Months Ended June 30,
                                                    2020                 2019             $ Change               % Change
Net revenue                                   $       67.8$    59.9$      7.9                     13.2
Cost of goods sold                                    40.1                34.5                 5.6                     16.2
Gross profit                                          27.7                25.4                 2.3                      9.1
Selling, general and administrative
expenses                                              21.1                13.8                 7.3                     52.9

Depreciation and amortization expense                  7.8                 9.7                (1.9)                   (19.6)
Other operating expense, net                           0.9                 1.5                (0.6)                   (40.0)
Income (loss) from operations                         (2.1)                0.4                (2.5)                  (625.0)
Interest expense                                       5.5                 8.5                (3.0)                   (35.3)
Foreign currency (gain) loss                           1.4                 1.5                (0.1)                    (6.7)
Loss before income tax expense                        (9.0)               (9.6)                0.6                     (6.3)
Income tax benefit                                    (0.4)               (1.0)                0.6                    (60.0)
Net loss                                              (8.6)               (8.6)                  -                        -

Add(4):
Depreciation and amortization expense -
COS                                                    7.4                   -                 7.4                           -
Depreciation and amortization expense -
SG&A                                                   7.7                14.8                (7.1)                   (48.0)
Interest expense                                       5.5                 8.5                (3.0)                   (35.3)
Income tax benefit                                    (0.5)               (1.0)                0.5                    (50.0)
EBITDA                                                11.5                13.7                (2.2)                   (16.1)

Adjustments(5):
Unrealized (gain) loss translation                     1.3                 1.5                (0.2)                   (13.3)
Constant currency                                      0.5                   -                 0.5                           -
Non-cash impairment losses                             0.6                   -                 0.6                           -
M&A, restructuring, severance                          2.3                   -                 2.3                           -
Amortization of restricted stock units                 2.0                 0.2                 1.8                    900.0

PE monitoring fees                                       -                 0.5                (0.5)                  (100.0)
(Gain) loss on disposal of machines                      -                 0.8                (0.8)                  (100.0)

Public company costs                                     -                (0.5)                0.5                   (100.0)
Other non-core and non-cash adjustments                0.8                 0.6                 0.2                     33.3
Adjusted EBITDA                               $       19.0$    16.8$      2.2                     13.1
(see subsequent footnotes)



                                       43
--------------------------------------------------------------------------------

                                                                             Successor
                                                                   Six Months Ended June 30, 2020
                                                     As reported           Adjustments(6)            Pro Forma
Net revenue                                       $       129.5           $         3.1           $       132.6
Cost of goods sold                                         75.7                     1.8                    77.5
Gross profit                                               53.8                     1.3                    55.1
Selling, general and administrative
expenses                                                   40.3                     0.7                    41.0

Depreciation and amortization expense                      15.2                     0.2                    15.4
Other operating expense, net                                1.0                     0.4                     1.4
Income (loss) from operations                              (2.7)                      -                    (2.7)
Interest expense                                           11.7                       -                    11.7
Foreign currency (gain) loss                               (0.1)                      -                    (0.1)
Loss before income tax expense                            (14.3)                      -                   (14.3)
Income tax provision (benefit)                             (2.2)                    0.1                    (2.1)
Net loss                                          $       (12.1)$        (0.1)                  (12.2)

Add(4):
Depreciation and amortization expense - COS                                                                14.4
Depreciation and amortization expense -
SG&A                                                                                                       15.3
Interest expense                                                                                           11.7
Income tax benefit                                                                                         (2.2)
EBITDA                                                                                                     27.0

Adjustments(5):
Unrealized (gain) loss translation                                                                         (0.2)
Constant currency                                                                                           0.6
Non-cash impairment losses                                                                                  0.8
M&A, restructuring, severance                                                                               3.6
Amortization of restricted stock units                                                                      4.2

Other non-core and non-cash adjustments                                                                     1.1
Adjusted EBITDA                                                                                   $        37.1
(see subsequent footnotes)



                                       44
--------------------------------------------------------------------------------
                                           Successor              Predecessor
                                         June 3, 2019           January 1, 2019
                                        - June 30, 2019          - June 2, 2019                      Six Months Ended June 30, 2019
                                          As reported             As reported              Combined           Adjustments(6)         Pro Forma
Net revenue                            $         16.3          $         106.4          $    122.7$        5.2     (1)   $   127.9
Cost of goods sold                               13.0                     61.2                74.2                   (0.6)    (2)        73.6
Gross profit                                      3.3                     45.2                48.5                    5.8                54.3
Selling, general and
administrative expenses                           4.9                     23.8                28.7                   (1.7)               27.0
Transaction costs                                 0.3                      7.4                 7.7                   (7.7)                  -
Depreciation and amortization
expense                                           3.0                     17.7                20.7                   (0.4)               20.3
Other operating expense, net                      0.2                      2.2                 2.4                    0.2                 2.6
Income (loss) from operations                    (5.1)                    (5.9)              (11.0)                  15.4                 4.4
Interest expense                                  8.0                     20.2                28.2                  (11.6)               16.6
Foreign currency (gain) loss                      1.7                     (2.2)               (0.5)                     -                (0.5)
Loss before income tax expense                  (14.8)                   (23.9)              (38.7)                  27.0               (11.7)
Income tax provision (benefit)                   (2.4)                    (4.9)               (7.3)                   5.3     (3)        (2.0)
Net loss                               $        (12.4)         $         (19.0)         $    (31.4)$       21.7                (9.7)

Add(4):
Depreciation and amortization
expense - COS                                                                                                                               -
Depreciation and amortization
expense - SG&A                                                                                                                           31.0
Interest expense                                                                                                                         16.6
Income tax benefit                                                                                                                       (2.0)
EBITDA                                                                                                                                   35.9

Adjustments(5):
Unrealized (gain) loss
translation                                                                                                                              (0.5)

Amortization of restricted stock
units                                                                                                                                     0.2

PE monitoring fees                                                                                                                        1.0
(Gain) loss on disposal of
machines                                                                                                                                  1.0

Public company costs                                                                                                                     (1.2)
Other non-core and non-cash
adjustments                                                                                                                               0.1
Adjusted EBITDA                                                                                                                     $    36.5
(see subsequent footnotes)



                                       45
--------------------------------------------------------------------------------
                                                                                  Pro Forma
                                                   Six Months Ended June 30,
                                                    2020                 2019             $ Change               % Change
Net revenue                                   $      132.6$   127.9$      4.7                       3.7
Cost of goods sold                                    77.5                73.6                 3.9                       5.3
Gross profit                                          55.1                54.3                 0.8                       1.5
Selling, general and administrative
expenses                                              41.0                27.0                14.0                      51.9

Depreciation and amortization expense                 15.4                20.3                (4.9)                    (24.1)
Other operating expense, net                           1.4                 2.6                (1.2)                    (46.2)
Income (loss) from operations                         (2.7)                4.4                (7.1)                   (161.4)
Interest expense                                      11.7                16.6                (4.9)                    (29.5)
Foreign currency (gain) loss                          (0.1)               (0.5)                0.4                     (80.0)
Loss before income tax expense                       (14.3)              (11.7)               (2.6)                     22.2
Income tax benefit                                    (2.1)               (2.0)               (0.1)                      5.0
Net loss                                             (12.2)               (9.7)               (2.5)                     25.8

Add(4):
Depreciation and amortization expense -
COS                                                   14.4                   -                14.4                            -
Depreciation and amortization expense -
SG&A                                                  15.3                31.0               (15.7)                    (50.6)
Interest expense                                      11.7                16.6                (4.9)                    (29.5)
Income tax benefit                                    (2.2)               (2.0)               (0.2)                     10.0
EBITDA                                                27.0                35.9                (8.9)                    (24.8)

Adjustments(5):
Unrealized (gain) loss translation                    (0.2)               (0.5)                0.3                     (60.0)
Constant currency                                      0.6                   -                 0.6                            -
Non-cash impairment losses                             0.8                   -                 0.8                            -
M&A, restructuring, severance                          3.6                   -                 3.6                            -
Amortization of restricted stock units                 4.2                 0.2                 4.0                   2,000.0

PE monitoring fees                                       -                 1.0                (1.0)                   (100.0)
(Gain) loss on disposal of machines                      -                 1.0                (1.0)                   (100.0)

Public company costs                                     -                (1.2)                1.2                    (100.0)
Other non-core and non-cash adjustments                1.1                 0.1                 1.0                   1,000.0
Adjusted EBITDA                               $       37.1$    36.5$      0.6                       1.6
(see subsequent footnotes)


(1)    Adjust for percentage of completion revenue recognition change.
(2)    Adjust for percentage of completion revenue recognition change for cost of sales.
(3)    Adjust tax provision at 21.0% corporate rate for items adjusted above.
(4)    Reconciliations of EBITDA and Adjusted EBITDA for each period presented are to net

(loss) income, the nearest GAAP equivalent, and accordingly include the adjustments

shown in the “Adj.” column to net (loss) income of each table.
(5) Adjustments are related to non-recurring costs such as: unrealized non-cash (gains)

losses on translation of the Predecessor debt, private equity monitoring fees,

non-cash (gain) loss on the disposal of machines, acquisition costs, severance and a

revenue recognition adjustment related to e3NEO acquisition. Certain costs related to

being a public company, such as additional staff, legal and accounting costs that were

not included in the Predecessor are also included in Adjusted EBITDA.
(6) Effect of Euro constant currency adjustment to a rate of $1.15 US Dollar to €1.00 as

       follows:


                                       46
--------------------------------------------------------------------------------
                                               Three Months Ended June 30,                                Six Months Ended June 30,
                                                 2020                 2019                2020                   2019
Net revenue                                $        1.7$      0.7$      3.1          $         1.2
Cost of goods sold                                  1.0                  0.5                 1.8                    0.7
Gross profit                                        0.7                  0.2                 1.3                    0.5
Selling, general and administrative
expenses                                            0.4                  0.2                 0.7                    0.3

Depreciation and amortization
expense                                             0.1                  0.1                 0.2                    0.1
Other operating expense, net                        0.2                  0.1                 0.4                    0.2
Income (loss) from operations                         -                 (0.2)                  -                   (0.1)
Interest expense                                      -                    -                   -                      -
Foreign currency loss                                 -                    -                   -                      -
Loss before income tax expense                        -                 (0.2)                  -                   (0.1)
Income tax provision (benefit)                      0.1                    -                 0.1                      -
Net loss                                   $       (0.1)$     (0.2)$     (0.1)$        (0.1)


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. 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 $22.6 million in cash and cash equivalents as of June 30, 2020 and $19.7
million as of December 31, 2019. We also had $419.8 million in debt, $1.6
million of which was classified as short-term, as of June 30, 2020, compared to
$420.4 million in debt, $1.6 million of which was classified as short-term, as
of December 31, 2019. In December 2019, we closed a public offering of our Class
A common stock generating net proceeds of approximately $107.7 million that was
used to pay down long-term debt. At June 30, 2020, we did not have amounts
outstanding under our $45.0 million revolving credit facility, and we had no
borrowings under such facility through July 28, 2020.
Debt Profile
Ranpak's previous credit facilities were repaid in connection with the
consummation of the Ranpak Business Combination, and were replaced with the
following facilities: (i) a $378.2 million dollar-denominated first lien term
facility (the "First Lien Dollar Term Facility") and a €140.0 million
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 (ii) a $45.0 million revolving facility (together, the "New
Credit Facilities"). The material terms of the New Credit Facilities are
summarized in Note 8, Long-Term Debt to the condensed consolidated financial
statements included elsewhere in this Quarterly Report on Form 10-Q.
Debt Before the Ranpak Business Combination
Prior to the Ranpak Business Combination, the Company had two first lien credit
facilities, a United States Dollar Tranche ("US$ Tranche") and a Euro Tranche
("Euro Tranche"), a revolving credit facility and a second lien credit facility.
The first lien credit facilities included: (1) a seven-year Term Loan (US$
Tranche) facility in the amount of $233.4 million, (2) a seven-year Term Loan
(Euro Tranche) facility in the amount of €157.0 million, and (3) a five-year
$30.0 million revolving credit facility, of which the equivalent of $13.0
million may be denominated in Euros (collectively, the "Old Credit Facilities").
In March 2017, Ranpak raised $45 million of incremental First Lien (US$ Tranche)
debt and used the proceeds to pay down a portion of the Second Lien (US$
Tranche), the results of which saved Ranpak 400 basis points on the applicable
interest rate on $45 million of its outstanding debt. Borrowings under the US$
Tranche bore interest in an amount based on either the Adjusted Eurodollar rate
(the greater of
                                       47
--------------------------------------------------------------------------------

1.00% or LIBOR) plus 3.25% or a Base Rate plus 2.75% (the higher of the Federal
Funds effective rate plus ½ of 1%, prime, or the Adjusted Eurodollar rate plus
1%). Borrowings under the Euro Tranche bore interest in an amount based on the
Adjusted EURIBOR rate (the greater of 1.00% or EURIBOR) plus 3.25%. Interest on
LIBOR and EURIBOR rate loans were payable at the end of the applicable interest
periods.
Borrowings under the revolving credit facility bore interest in an amount based
on either the base rate or Adjusted Eurodollar rate plus a variable margin that
is dependent on the First Lien Net Leverage Ratio. The first lien credit
facilities were secured by a first priority security interest in substantially
all of the Company's assets. Principal payments on the first lien term loan
facilities were due quarterly and were based on 1% of the annual outstanding
balances. Additionally, per the credit agreement, Ranpak was required to make
additional annual pre-payments, based on consolidated excess cash flow
calculation results.
The second lien credit facility was an eight-year US$ Tranche in the amount of
$135.0 million. Borrowings under the US$ Tranche bore interest in an amount
based on either the Adjusted Eurodollar rate (the greater of 1.00% or LIBOR)
plus 7.25% or a base rate plus 6.25%. The second lien credit agreement was
secured by a second priority security interest in substantially all of Ranpak's
assets and includes default provisions and contained a covenant similar to the
first lien credit facility described above.
The Old Credit Facilities were repaid in full upon the consummation of the
Ranpak Business Combination and replaced with the New Credit Facilities.
Debt After the Ranpak Business Combination
In connection with the stock purchase agreement related to the Ranpak Business
Combination, One Madison obtained a debt commitment letter (as amended and
restated, supplemented or otherwise modified, the "debt commitment letter"),
pursuant to which the Goldman Sachs Lending Partners LLC and certain affiliated
investment entities thereof (collectively, the "Lenders") committed to provide
senior secured credit facilities to, in part, (i) fund the Ranpak Business
Combination, (ii) repay and terminate the existing indebtedness of Ranpak (the
"debt refinancing") and (iii) pay all fees, premiums, expenses and other
transaction costs incurred in connection with the foregoing. 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. Upon the consummation of the Ranpak Business Combination, the New
Credit Facilities became the direct obligations of certain subsidiaries of
Ranpak (collectively, the "borrowers") and were 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 June 30, 2020.
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 direct parent of each
borrower and each existing and subsequently acquired or organized direct or
indirect wholly-owned US or Dutch restricted subsidiary (collectively, 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.
                                       48
--------------------------------------------------------------------------------

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.
Amendment to First Lien Credit Facilities
On February 14, 2020, Ranger Packaging LLC, a Delaware limited liability company
("U.S. Borrower"), Ranpak B.V., a private limited liability company under the
laws of the Netherlands (the "Dutch Borrower"; the U.S. Borrower and the Dutch
Borrower, the "Borrowers"), Ranger Pledgor LLC, a Delaware limited liability
company ("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 New Credit Facilities.
Among other things, the Amendment No. 1 amends the New Credit Facilities such
that (x) the requirement of the Borrowers to apply a percentage of excess cash
flow to mandatorily prepay term loans under the New Credit 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 Adjusted EBITDA
(as defined in the New Credit Facilities) (increased from the greater of
$7,000,000 and 7% of Consolidated Adjusted EBITDA) 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
                                       49
--------------------------------------------------------------------------------

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 New Credit Facilities.
Cash Flows
The following table sets forth Ranpak's summary cash flow information for the
periods indicated:

                                                               Successor                                                     Predecessor
                                               Six Months Ended
                                                   June 30,                June 3, 2019                 January 1, 2019
                                                     2020                - June 30, 2019                - June 2, 2019
Net cash provided by (used in)
operating activities                          $        22.3             $         (13.3)               $         16.7
Net cash used in investing activities                 (18.6)                     (639.5)                        (10.8)
Net cash provided by (used in)
financing activities                                   (0.7)                      663.1                         (14.4)
Effect of Exchange Rate Changes on Cash                (0.1)                       (0.5)                          1.2
Net Increase (Decrease) in Cash and
Cash Equivalents                                        2.9                         9.8                          (7.3)
Cash and Cash Equivalents, beginning of
period                                                 19.7                         1.7                          17.5
Cash and Cash Equivalents, end of
period                                        $        22.6             $          11.5                $         10.2



Cash Flows Provided (Used in) by Operating Activities
Net cash provided by operating activities was $22.3 million in the six months
ended June 30, 2020. Cash used in operating activities in the June 2019
Successor Period of $13.3 million and cash provided by operating activities in
the 1H 2019 Predecessor Period of $16.7 million combined for $3.4 million in
cash provided by operating activities. The changes in operating cash flows are
due to cash earnings and increases in working capital.
Cash Flows Used in Investing Activities
Net cash used in investing activities was $18.6 million in the six months ended
June 30, 2020. Cash used in investing activities in the June 2019 Successor
Period of $639.5 million and $10.8 million in the 1H 2019 Predecessor Period of
$10.8 million combined for $650.3 million in cash used by investing activities.
The changes are due to cash used for the Ranpak Business Combination.
Cash Flows Provided (Used in) by Financing Activities
Net cash used in financing activities was $0.7 million in the six months ended
June 30, 2020 and reflects payment of debt. Net cash provided by financing
activities in the June 2019 Successor Period of $663.1 million and cash used in
financing activities in the 1H 2019 Predecessor Period of $14.4 million combined
for $648.7 million in cash provided by financing activities, primarily related
to the debt and stock transactions relative to the Ranpak Business Combination.
Contractual Obligations and Other Commitments
Ranpak has leased production facilities in Reno, Nevada, Kansas City, Missouri
and Raleigh, North Carolina, in the United States and in Nyrany, Czech Republic,
as well as several leased sales and administrative offices. The leases for the
four leased production facilities expire in September 2023, July 2025, December
2024 and April 2026, respectively. Ranpak recognizes rent expense on a
straight-line basis over the relevant lease period.
Ranpak has various contractual obligations and commercial commitments that are
recorded as liabilities in its audited 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 Form 10-K.
Off-Balance Sheet Arrangements
Ranpak did not have any off-balance sheet arrangements as of June 30, 2020.
                                       50
--------------------------------------------------------------------------------

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 Form 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 $2.1 million
impact on our cash interest expense for the six months ended June 30, 2020. 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 New Credit Facilities. Refer to Note 8,
Long-Term Debt and Note 9, 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 Form 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" for more
information about Ranpak's 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. Currently,
we do not hedge our foreign exchange transaction or translation exposure, but
may consider doing so in the future.
For the six months ended June 30, 2020, net revenue denominated in currencies
other than U.S. dollars amounted to $74.2 million or 57.3% 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 six months ended June 30, 2020 to
increase or decrease by approximately $7.4 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 not directly exposed
to market price fluctuations in paper purchase or sale prices as we negotiate
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.
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
                                       51
--------------------------------------------------------------------------------

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 Chief Executive Officer and Chief Financial Officer, 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 Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of our disclosure controls and procedures
as of June 30, 2020. Based on this evaluation of our disclosure controls and
procedures, our management, with the participation of the Chief Executive
Officer and Chief Financial Officer, concluded that our disclosure controls and
procedures were not effective as of June 30, 2020 because of material weaknesses
in our internal control over financial reporting, as described under "Item 9A.
Controls and Procedures-Internal Control Over Financial Reporting" in the Form
10-K.
Changes in Internal Control Over Financial Reporting
Other than the ongoing steps being taken to remediate the material weaknesses
described under "Item 9A. Controls and Procedures-Internal Control Over
Financial Reporting" in the Form 10-K, there were no changes during the six
months ended June 30, 2020 in our internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
                                       52

——————————————————————————–

© Edgar Online, source Glimpses



Source Google News