What Ranpak (PACK) Said on Its Q3 Earnings Call

Key Points

• Automation drove growth: Automation revenue rose 26.9% year over year on a constant-currency basis, helping consolidated revenue increase 3.4%. Ranpak continues to target approximately $60 million in automation revenue for 2026, up 50% from 2025.
• Profitability improved: Adjusted EBITDA increased 6.1% on a constant-currency basis to $22.5 million, while gross margin expanded 110 basis points year over year. Efficiency initiatives, favorable product mix and lower SG&A supported the gains.
• Uneven demand and strategic investments remain: North America performed well, but Europe and Asia-Pacific faced softer volumes and macroeconomic pressure, including higher energy costs. Ranpak is investing in cold chain and automation, while reducing leverage toward its goal of 2.5 to 3 times adjusted EBITDA within 24 months.

Ranpak NYSE: PACK reported third-quarter 2026 revenue and adjusted EBITDA growth, led by continued momentum in its automation business and improved performance in its North American distribution channel, while management described a more volatile macroeconomic backdrop in Europe and Asia-Pacific.

Chairman and CEO Omar Asali said automation revenue increased 26.9% year over year on a constant-currency basis, excluding the impact of warrants. The company continues to expect approximately $60 million of automation revenue in 2026, representing 50% growth from 2025. Asali said the automation pipeline remains strong in North America and Europe and that the product line is increasingly serving as a growth engine for the company.

Revenue Growth Supported by Automation

Consolidated net revenue increased 3.4% year over year on a constant-currency basis during the third quarter, or 3.8% excluding the impact of warrants. Reported revenue grew 2.3%, as currency reduced growth by 1.1 percentage points, according to management.

North American revenue rose 6.9%, or 7.9% excluding warrants, driven by more than 47% automation growth excluding warrants. Chief Financial Officer Bill Drew said the North American distribution channel returned to growth as comparisons normalized, with cushioning products performing particularly well. Asali cited adoption of the company’s Guardian 24 converter and success competing against foam-in-place packaging solutions.

In Europe and Asia-Pacific, revenue increased 0.5% on a constant-currency basis. Automation revenue grew 18.1% in the regions, along with benefits from pricing actions, but this was partly offset by a 4.9% decline in protective packaging system, or PPS, volumes. Management attributed the decline to European channel customers reducing inventory after apparent pre-buying ahead of a surcharge, as well as shorter lead times and lower e-commerce sales in Asia-Pacific.

Overall company volume declined 2.5% during the quarter. North American volumes increased 1.8%, while Europe and Asia-Pacific were softer following a strong second quarter.

Margins Improve as Company Pursues Efficiency Efforts

Adjusted EBITDA increased $1.1 million to $22.5 million on a reported basis. It rose 6.1% on a constant-currency basis, or 7.7% excluding the effect of warrants. Year to date, adjusted EBITDA increased $5.3 million to $60.5 million, representing 9.6% reported growth and 6% growth on a constant-currency basis.

Gross profit increased 7.3% on a constant-currency basis, or 8.2% excluding a $1.2 million non-cash provision for warrants. Gross margin improved 110 basis points from the prior-year quarter and 280 basis points sequentially from the second quarter.

Drew said North American PPS margins improved by more than 290 basis points, excluding depreciation, helped by efficiency gains and product mix. He estimated that mix accounted for roughly 1 to 1.5 percentage points of North American margin improvement, with the remainder coming from operational improvements and fewer one-time costs.

SG&A expenses, excluding restricted stock unit expense, declined 10.5% on a constant-currency basis from a year earlier. Asali said the company has been implementing continuous-improvement initiatives across its footprint, production lines, scrap rates and procurement operations. He characterized Ranpak as being in the “third inning” of its efficiency journey and said management sees further opportunities in 2027.

In Europe, management is prioritizing protection of gross-profit dollars rather than margin percentage as energy costs increase. Ranpak has implemented an energy-related surcharge in the region and said it intends to adjust the surcharge as needed. Drew said the company expects margin pressure in Europe in the fourth quarter at current energy-cost levels.

Macro Conditions Remain Uneven

Asali said customers remain cautious as energy costs, freight expenses and interest rates rise. He said North American customers generally expect a solid peak holiday season, while Europe has seen new-account activity alongside more cautious ordering from existing customers. Management expects Europe to improve in the fourth quarter, although it anticipates continued uneven customer behavior.

Asia-Pacific demand remains weak, according to management. However, Drew said Ranpak expects to complete local paper sourcing in the region by year-end, which it believes will reduce costs, improve margins and strengthen its competitive position in markets including Australia and Japan.

Management said it plans to continue passing through higher paper costs in North America. In Europe, the surcharge is intended to address elevated energy-driven paper costs, though the company views the measure as temporary and expects to remove it when energy prices normalize.

Automation, Cold Chain and Deleveraging Priorities

Ranpak said its automation business generated positive adjusted EBITDA during the third quarter and is expected to do so again in the fourth quarter. Management expects automation to reach adjusted EBITDA breakeven for full-year 2026 and become a positive contributor in 2027.

The company also highlighted a global strategic partnership with Element Logic. Asali said the relationship combines Element Logic’s warehouse automation, software and systems-integration capabilities with Ranpak’s packaging automation technologies, including right-sizing, box forming, closing, computer vision and paper-based protective packaging.

Ranpak is also expanding cold-chain capacity, which management expects to come online early in 2027. Asali said cold chain could become a meaningful contributor beginning in the second quarter of 2027, supported by demand for sustainable solutions and customer product approvals already in place.

The company ended the quarter with $53.4 million in cash, an increase of more than $10 million from the second quarter, and no borrowings under its revolving credit facility. Reported net leverage declined 0.4 turns from the end of the first quarter to 4.3 times last-12-month adjusted EBITDA. Management reiterated its goal of reducing net leverage to between 2.5 times and 3 times over the next 24 months.

Capital expenditures were $10.3 million in the quarter, up $2.5 million from a year earlier, as Ranpak invested in production capacity for growth areas including cold chain and enterprise customers. Management said it expects seasonal revenue growth from the third to fourth quarter and reiterated its expectation to meet its prior full-year guidance.

About Ranpak (NYSE:PACK)

Ranpak Holdings Corp. NYSE: PACK develops and manufactures sustainable, paper-based packaging solutions designed to protect products during shipping and handling. Its offerings serve e-commerce, retail, industrial, food, and other applications where cushioning, void fill, wrapping, and product protection are required.

The company's product portfolio includes paper cushioning and void-fill materials, protective wrapping systems, and packaging automation equipment. Ranpak also provides dispensing systems and related packaging solutions that help customers streamline fulfillment operations while reducing reliance on plastic-based protective packaging.

Founded in 1972, Ranpak serves customers through a global network of manufacturing, distribution, and sales operations across North America, Europe, and other international markets.

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