Ranpak Holdings Corp

Previous wording

As of June 30, 2024, we had an installed base of approximately 141.2 thousand PPS systems serving a diverse set of distributors and end-users. We generated net revenue of $171.7 million and $163.1 million in the six months ended June 30, 2024 and 2023, respectively.

Current wording

As of September 30, 2024, we had an installed base of approximately 143.6 thousand PPS systems serving a diverse set of distributors and end-users. We generated net revenue of $263.9 million and $245.9 million in the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Inflationary Pressures and Other Costs. We have continued to experience inflationary pressures in 2024, which have adversely impacted some of our end-users, such as automotive companies; distributors; electronic manufacturers; machinery manufacturers; home goods manufacturers; e-commerce and mail order fulfillment firms; and other end-users that are particularly sensitive to reductions in business and consumer spending by their respective customers, and which in turn have impacted our net revenue. Higher costs due to inflation were partially offset by price increases, which mitigated the impact on our operating results. However, our ability to predict or further offset inflationary cost increases in the future or during economic downturns or recessions may be limited or impacted by heightened competition for net revenue, an unwillingness by our customers to accept price increase or pressure to reduce selling prices if end-users reduce their volume of purchases. Inflationary pressures and associated increases in interest rates and borrowing costs may also impact the ability of some of our end-users and suppliers to obtain funds for operations and capital expenditures, which could negatively impact our ability to obtain necessary supplies as well as the sales of materials and equipment to affected end-users. This could also result in reduced or delayed collections of outstanding accounts receivable from end-users, which could impact our cash flows. As a result, to the extent inflationary pressures continue, we expect additional pressure on our net revenue and gross margin. We will continue to evaluate the impact of inflationary pressures on our profitability and cash flows as well as our end-users.

Current wording

Inflationary Pressures and Other Costs. We have continued to experience inflationary pressures in 2024, which have adversely impacted some of our end-users, such as automotive companies; distributors; electronic manufacturers; machinery manufacturers; home goods manufacturers; e-commerce and mail order fulfillment firms; and other end-users that are particularly sensitive to reductions in business and consumer spending by their respective customers, and which in turn have impacted our net revenue. Higher costs due to inflation were partially offset by price increases, which mitigated the impact on our operating results. However, our ability to predict or further offset inflationary cost increases in the future or during economic downturns or recessions may be limited or impacted by heightened competition for net revenue, an unwillingness by our customers to accept price increase or pressure to reduce selling prices if end-users reduce their volume of purchases. Inflationary pressures and associated higher interest rates and borrowing costs may also impact the ability of some of our end-users and suppliers to obtain funds for operations and capital expenditures, which could negatively impact our ability to obtain necessary supplies as well as the sales of materials and equipment to affected end-users. This could also result in reduced or delayed collections of outstanding accounts receivable from end-users, which could impact our cash flows. As a result, to the extent inflationary pressures continue, we expect additional pressure on our net revenue and gross margin. We will continue to evaluate the impact of inflationary pressures on our profitability and cash flows as well as our end-users.

Previous wording

Our condensed consolidated financial statements are prepared in accordance with GAAP. We have, however, also presented below Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and constant currency adjusted EBITDA (“Constant Currency AEBITDA”), which are non-GAAP financial measures. We have included EBITDA and Constant Currency AEBITDA 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 Constant Currency AEBITDA can provide a useful measure for period-to-period comparisons of our primary business operations. Adjusting AEBITDA for comparability for constant currency also assists in this comparison as it allows a better insight into the performance of our businesses that operate in currencies other than our reporting currency. Before consolidation, our Europe/Asia financial data is derived in Euros. To calculate the adjustment that we apply to present

Current wording

Our condensed consolidated financial statements are prepared in accordance with GAAP. We have, however, also presented below Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and constant currency adjusted EBITDA (“Constant Currency AEBITDA”), which are non-GAAP financial measures. We have included EBITDA and Constant Currency AEBITDA 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 Constant Currency AEBITDA can provide a useful measure for period-to-period comparisons of our primary business operations. Adjusting AEBITDA for comparability for constant currency also assists in this comparison as it allows a better insight into the performance of our businesses that operate in currencies other than our reporting currency. Before consolidation, our Europe/Asia financial data is derived in Euros. To calculate the adjustment that we apply to present AEBITDA on a constant currency basis, we multiply this Euro-derived data by 1.15 to reflect an exchange rate of 1 Euro to 1.15 USD, which we believe is a reasonable exchange rate to use to give a stable depiction of the business without currency fluctuations between periods, to calculate Europe/Asia data in constant currency USD. An exchange rate of 1.15 approximates the average exchange rate of the Euro to USD over the past five years. We also present non-GAAP constant currency net revenue and derive it in the same manner. We believe that EBITDA and Constant Currency AEBITDA provide useful information to investors and others in understanding and evaluating the Company’s operating results in the same manner as our management and board of directors.

Previous wording

In addition, in our discussion below, we include certain other unaudited, non-GAAP constant currency data for the three and six months ended June 30, 2024 and 2023. This data is based on our historical financial statements included elsewhere in this Quarterly Report on Form 10-Q, adjusted (where applicable) to reflect a constant currency presentation between periods for the convenience of readers. We reconcile this data to our GAAP data for the same period under “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for the three and six months ended June 30, 2024 and 2023.

Current wording

In addition, in our discussion below, we include certain other unaudited, non-GAAP constant currency data for the three and nine months ended September 30, 2024 and 2023. This data is based on our historical financial statements included elsewhere in this Quarterly Report on Form 10-Q, adjusted (where applicable) to reflect a constant currency presentation between periods for the convenience of readers. We reconcile this data to our GAAP data for the same period under “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for the three and nine months ended September 30, 2024 and 2023.

Previous wording

The following tables set forth our results of operations for the three and six months ended June 30, 2024 and 2023 with line items presented in millions of dollars.

Current wording

The following tables set forth our results of operations for the three and nine months ended September 30, 2024 and 2023 with line items presented in millions of dollars.

Previous wording

The following tables and the discussion that follows compare our net revenue by geographic region and by product line for the second quarter of 2024 and 2023 on a GAAP basis and on a non-GAAP constant currency basis as described above and in the discussion below. See also “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for further detail:

Current wording

The following tables and the discussion that follows compare our net revenue by geographic region and by product line for the third quarter of 2024 and 2023 on a GAAP basis and on a non-GAAP constant currency basis as described above and in the discussion below. See also “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for further detail:

Previous wording

Net revenue for the second quarter of 2024 was $86.4 million compared to $81.9 million in the second quarter of 2023, an increase of $4.5 million or 5.5% year over year. Net revenue was positively impacted by an increase in void-fill, partially offset by a decrease in cushioning and other net revenue. Other net revenue includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field, such as systems accessories. Cushioning decreased $1.6 million, or 4.4%, to $35.0 million from $36.6 million; void-fill increased $6.6 million, or 21.2%, to $37.7 million from $31.1 million; wrapping remained constant at $8.4 million; and other sales decreased $0.5 million, or 8.6%, to $5.3 million from $5.8 million for the second quarter of 2024 compared to the second quarter of 2023. The increase in net revenue is quantified by an increase in the volume of sales of our paper consumable products of approximately 8.8%, partially offset by a 2.5% decrease in the price or mix of our paper consumable products and a 0.4% decrease in sales of automated box sizing equipment. Constant currency net revenue was $89.6 million for the second quarter of 2024, a 5.9% increase from $84.6 million from the second quarter of 2023.

Current wording

Net revenue for the third quarter of 2024 was $92.2 million compared to $82.8 million in the third quarter of 2023, an increase of $9.4 million or 11.4% year over year. Net revenue was positively impacted by an increase in void-fill, wrapping, and other net revenue, partially offset by a decrease in cushioning. Other net revenue includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field, such as systems accessories. Cushioning decreased $3.2 million, or 9.0%, to $32.5 million from $35.7 million; void-fill increased $9.7 million, or 28.4%, to $43.9 million from $34.2 million; wrapping increased $0.4 million or 4.9% to $8.5 million from $8.1 million; and other sales increased $2.5 million, or 52.1%, to $7.3 million from $4.8 million for the third quarter of 2024 compared to the third quarter of 2023. The increase in void-fill was primarily due to increased volume from e-commerce activity in North America. The increase in net revenue is quantified by an increase in the volume of sales of our paper consumable products of approximately 14.7% and a 2.9% increase in sales of automated box sizing equipment, partially offset by a 7.0% decrease in the price or mix of our paper consumable products. Constant currency net revenue was $94.7 million for the third quarter of 2024, a 10.5% increase from $85.7 million from the third quarter of 2023.

Previous wording

Net revenue in North America for the second quarter of 2024 totaled $37.7 million compared to $32.2 million in the second quarter of 2023. The increase of $5.5 million, or 17.1%, was primarily attributable to an increase in void-fill sales, partially offset by decreases in wrapping and other sales.

Current wording

Net revenue in North America for the third quarter of 2024 totaled $40.3 million compared to $34.9 million in the third quarter of 2023. The increase of $5.4 million, or 15.5%, was primarily attributable to an increase in void-fill and other sales, partially offset by decreases in wrapping and cushioning.

Previous wording

Net revenue in Europe/Asia for the second quarter of 2024 totaled $48.7 million compared to $49.7 million in the second quarter of 2023. The decrease of $1.0 million, or 2.0%, was driven by decreases in void-fill and cushioning, partially offset by increases in wrapping and other sales. Constant currency net revenue in Europe/Asia was $51.9 million for the second quarter of 2024, a $0.5 million, or 1.0%, decrease from $52.4 million for the second quarter of 2023.

Current wording

Net revenue in Europe/Asia for the third quarter of 2024 totaled $51.9 million compared to $47.9 million in the third quarter of 2023. The increase of $4.0 million, or 8.4%, was driven by increases in void-fill, wrapping, and other sales, partially offset by a decrease in cushioning. Constant currency net revenue in Europe/Asia was $54.4 million for the third quarter of 2024, a $3.6 million, or 7.1%, increase from $50.8 million for the third quarter of 2023.

Previous wording

Cost of goods sold for the second quarter of 2024 totaled $54.7 million, an increase of $3.0 million, or 5.8%, compared to $51.7 million in the second quarter of 2023. Cost of goods sold as a percentage of net sales increased to 63.3% in the second quarter of 2024 compared to 63.1% in the second quarter of 2023. Cost of goods sold as a percentage of net sales decreased due to higher labor and overhead costs, partially offset by lower materials cost.

Current wording

Cost of goods sold for the third quarter of 2024 totaled $57.8 million, an increase of $6.5 million, or 12.7%, compared to $51.3 million in the third quarter of 2023. Cost of goods sold as a percentage of net sales increased to 62.7% in the third quarter of 2024 compared to 62.0% in the third quarter of 2023. Cost of goods sold as a percentage of net sales increased primarily due to a decrease in product price mix and higher labor and freight costs, partially offset by lower material costs and lower depreciation expense related to our leased machines.

Previous wording

SG&A for the second quarter of 2024 was $27.3 million, an increase of $11.0 million, or 67.5%, from $16.3 million in the second quarter of 2023. The change in SG&A was primarily due to an increase in stock-based compensation expense of $11.1 million compared to the three months ended June 30, 2023. This change was due to the reversal of $13.0 million of expense related to our 2021 LTIP PRSU awards during the three months ended June 30, 2023. We incurred an additional $1.7 million in employee compensation, partially offset by lower professional fees of $1.9 million during the three months ended June 30, 2024 compared to the same period in the prior year.

Current wording

SG&A for the third quarter of 2024 was $28.8 million, an increase of $7.9 million, or 37.8%, from $20.9 million in the third quarter of 2023. The change in SG&A was primarily due to an increase in stock-based compensation expense of $6.9 million compared to the three months ended September 30, 2023. This change was due to increased expense of $0.4 million from our RSU and PRSU awards for the three months ended September 30, 2024 and the reversal of $6.5 million of expense related to our 2021 LTIP PRSU awards during the three months ended September 30, 2023. We incurred an additional $0.7 million in employee compensation and $0.5 million of operating lease expense during the three months ended September 30, 2024 compared to the same period in the prior year.

Previous wording

Depreciation and amortization expense for the second quarter of 2024 was $8.3 million, an increase of $0.2 million, or 2.5%, from $8.1 million in the second quarter of 2023. The increase in depreciation and amortization expense is primarily due to the opening of our automation facility in Shelton, Connecticut, which began operations in the third quarter of 2023.

Current wording

Depreciation and amortization expense for the third quarter of 2024 was $8.2 million, an increase of $0.1 million, or 1.2%, from $8.1 million in the third quarter of 2023. The increase in depreciation and amortization expense was due to an increase in the amortization of our finance leases of $0.1 million compared to the same period in the prior year.

Previous wording

Other operating expense, net for the second quarter of 2024 was $1.3 million, a decrease of $0.1 million from $1.4 million in the second quarter of 2023. The decrease was primarily due to a $0.1 million loss on the disposal of property, plant, and equipment for the second quarter of 2024 compared to a $0.4 million loss in the second quarter of 2023. This was partially offset by an increase in research and development expense of $0.2 million for the second quarter of 2024.

Current wording

Other operating expense, net for the third quarter of 2024 was $1.6 million, an increase of $0.7 million from $0.9 million in the third quarter of 2023. The increase was due to an increase in research and development expense of $0.5 million and increased loss on the disposal of property, plant, and equipment of $0.2 million for the third quarter of 2024 compared to the third quarter of 2023.

Previous wording

Interest expense for the second quarter of 2024 was $5.3 million, a decrease of $0.6 million, or 10.2%, from $5.9 million in the second quarter of 2023. The effects of our cross currency and interest rate swaps offset a $0.5 million increase in interest expense from fluctuations in interest rates associated with our First Lien Credit Facilities during the second quarter of 2024 compared to the second quarter of 2023. On May 20, 2024, we entered into a fixed-for-fixed cross currency swap in a transaction commonly referred to as a “blend-and-extend,” which replaced our previous cross currency swap. Our $200.0 million notional interest rate swap at 2.1% matured on June 1, 2024.

Current wording

Interest expense for the third quarter of 2024 was $9.3 million, an increase of $2.5 million, or 36.8%, from $6.8 million in the third quarter of 2023. The increase was due to the expiration of our interest rate swap in the second quarter of 2024, partially offset by a $0.1 million decrease in interest expense from fluctuations in interest rates associated with our First Lien Credit Facilities during the third quarter of 2024 compared to the third quarter of 2023.

Previous wording

Foreign currency loss for the second quarter of 2024 was $0.1 million, a decrease of $0.6 million, or 85.7%, from foreign currency loss of $0.7 million in the second quarter of 2023 due to the volatility in Euro exchange rates compared to USD.

Current wording

Foreign currency loss for the third quarter of 2024 was $0.2 million, an increase of $0.9 million, from foreign currency gain of $0.7 million in the third quarter of 2023 due to the volatility in Euro exchange rates compared to USD.

Previous wording

Income tax expense for the second quarter of 2024 was $1.8 million, or an effective tax rate of 24.8%. Income tax expense was $0.3 million in the second quarter of 2023, or an effective tax rate of (15.5)%. The fluctuation in the effective tax rate between periods was primarily attributable to the litigation settlement and patent sale in the second quarter of 2024. The effective tax rate for the three months ended June 30, 2024 is consistent with the combined federal and state statutory rates. The effective tax rate is less than the U.S. federal statutory rate for the three months ended June 30, 2023 due primarily to stock-based compensation adjustments.

Current wording

Income tax benefit for the third quarter of 2024 was $2.5 million, or an effective tax rate of 23.2%. Income tax benefit was $1.1 million in the third quarter of 2023, or an effective tax rate of 26.0%. The fluctuation in the effective tax rate for the three months ended September 30, 2024 and 2023 was due to the difference in pre-tax loss as well as tax expense of $0.5 million from a stock-based compensation shortfall recognized in the three months ended September 30, 2023 and no impact from stock-based compensation for the same period of 2024. The effective tax rate is less than the U.S. federal statutory rate for the three months ended September 30, 2024 due primarily to the amount of the pre-tax loss. The effective tax rate for the three months ended September 30, 2023 is consistent with the combined federal and state statutory rates.

Previous wording

Net income for the second quarter of 2024 increased $7.6 million to $5.5 million from a net loss of $2.1 million in the second quarter of 2023. The change was due to the reasons discussed above.

Current wording

Net loss for the third quarter of 2024 increased $4.8 million to $8.1 million from a net loss of $3.3 million in the third quarter of 2023. The change was due to the reasons discussed above.

Previous wording

The following tables and the discussion that follows compare our net revenue by geographic region and by product line for the six months ended June 30, 2024 and 2023 on a GAAP basis and on a non-GAAP constant currency basis as described above and in the discussion below. See also “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for further detail:

Current wording

The following tables and the discussion that follows compare our net revenue by geographic region and by product line for the nine months ended September 30, 2024 and 2023 on a GAAP basis and on a non-GAAP constant currency basis as described above and in the discussion below. See also “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for further detail:

Previous wording

Net revenue for the six months ended June 30, 2024 was $171.7 million compared to $163.1 million in the six months ended June 30, 2023, an increase of $8.6 million or 5.3% year over year. Net revenue was positively impacted by increases in void-fill and other net revenue, partially offset by decreases in cushioning and wrapping. Cushioning decreased $1.9 million, or 2.6%, to $72.3 million from $74.2 million; void-fill increased $9.5 million, or 15.5%, to $70.8 million from $61.3 million; wrapping decreased $0.7 million, or 4.0%, to $17.0 million from $17.7 million; and other sales increased $1.7 million, or 17.2%, to $11.6 million from $9.9 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase in net revenue is quantified by an increase in the volume of sales of our paper consumable products of approximately 7.1%, partially offset by a 3.1% decrease in the price or mix of our paper consumable products and an increase of 1.1% in sales of automated box sizing equipment. Constant currency net revenue was $178.1 million for the six months ended June 30, 2024, a 5.1% increase from $169.4 million for the six months ended June 30, 2023.

Current wording

Net revenue for the nine months ended September 30, 2024 was $263.9 million compared to $245.9 million in the nine months ended September 30, 2023, an increase of $18.0 million or 7.3% year over year. Net revenue was positively impacted by increases in void-fill and other net revenue, partially offset by decreases in cushioning and wrapping. Cushioning decreased $5.1 million, or 4.6%, to $104.8 million from $109.9 million; void-fill increased $19.2 million, or 20.1%, to $114.7 million from $95.5 million; wrapping decreased $0.3 million, or 1.2%, to $25.5 million from $25.8 million; and other sales increased $4.2 million, or 28.6%, to $18.9 million from $14.7 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in void-fill was primarily due to increased volume from e-commerce activity in North America as we see more companies shifting from plastic to paper solutions. The increase in net revenue is quantified by an increase in the volume of sales of our paper consumable products of approximately 9.6% and an increase of 1.7% in sales of automated box sizing equipment, partially offset by a 4.4% decrease in the price or mix of our paper consumable products. Constant currency net revenue was $272.8 million for the nine months ended September 30, 2024, a 6.9% increase from $255.1 million for the nine months ended September 30, 2023.

Previous wording

Net revenue in North America for the six months ended June 30, 2024 totaled $69.6 million compared to $63.3 million in the six months ended June 30, 2023. The increase of $6.3 million, or 10.0%, was primarily attributable to an increase in void-fill sales, partially offset by decreases in wrapping and other sales.

Current wording

Net revenue in North America for the nine months ended September 30, 2024 totaled $109.9 million compared to $98.2 million in the nine months ended September 30, 2023. The increase of $11.7 million, or 11.9%, was primarily attributable to an increase in void-fill and other sales, partially offset by decreases in cushioning and wrapping.

Previous wording

Net revenue in Europe/Asia for the six months ended June 30, 2024 totaled $102.1 million compared to $99.8 million in the six months ended June 30, 2023. The increase of $2.3 million, or 2.3%, was driven by increased sales in void-fill, wrapping and other sales, partially offset by a decrease in cushioning sales. Constant currency net revenue in Europe/Asia was $108.5 million for the six months ended June 30, 2024, a $2.4 million, or 2.3%, increase from constant currency net revenue of $106.1 million for the six months ended June 30, 2023.

Current wording

Net revenue in Europe/Asia for the nine months ended September 30, 2024 totaled $154.0 million compared to $147.7 million in the nine months ended September 30, 2023. The increase of $6.3 million, or 4.3%, was driven by increases in void-fill, wrapping and other net revenue, partially offset by a decrease in cushioning sales. Constant currency net revenue in Europe/Asia was $162.9 million for the nine months ended September 30, 2024, a $6.0 million, or 3.8% increase from constant currency net revenue of $156.9 million for the nine months ended September 30, 2023.

Previous wording

Cost of goods sold for the six months ended June 30, 2024 totaled $107.7 million, an increase of $2.3 million, or 2.2%, compared to $105.4 million in the six months ended June 30, 2023, driven by an increase in sales volume. Cost of goods sold as a percentage of net sales decreased to 62.7% in the six months ended June 30, 2024 compared to 64.6% in 2023. Cost of goods sold as a percentage of net sales improved, primarily driven by lower material costs and partially offset by higher labor and overhead costs.

Current wording

Cost of goods sold for the nine months ended September 30, 2024 totaled $165.5 million, an increase of $8.8 million, or 5.6%, compared to $156.7 million in the nine months ended September 30, 2023, driven by an increase in sales volume. Cost of goods sold as a percentage of net sales decreased to 62.7% in the nine months ended September 30, 2024 compared to 63.7% in 2023. Cost of goods sold as a percentage of net sales improved, primarily driven by lower material costs and lower depreciation expense related to our leased machines, partially offset by higher labor, overhead and freight costs and a decrease in product price mix.

Previous wording

SG&A for the six months ended June 30, 2024 was $55.2 million, an increase of $11.7 million, or 26.9%, from $43.5 million in the six months ended June 30, 2023. The change in SG&A was primarily due to an increase in stock-based compensation expense of $9.5 million compared to the six months ended June 30, 2023, driven by the reversal of expense related to our 2021 LTIP PRSU awards during thesix months ended June 30, 2023. We incurred an additional $2.5 million in employee compensation and $0.8 million in temporary labor costs, partially offset by lower professional fees of $1.4 million during the six months ended June 30, 2024 compared to the same period in the prior year.

Current wording

SG&A for the nine months ended September 30, 2024 was $84.0 million, an increase of $19.6 million, or 30.4%, from $64.4 million in the nine months ended September 30, 2023. The change in SG&A was primarily due to an increase in stock-based compensation expense of $16.4 million compared to the nine months ended September 30, 2023, driven by the reversal of expense of $19.5 million related to our 2021 LTIP PRSU awards during the nine months ended September 30, 2023 and a decrease of expense of $3.1 million related to our RSU and PRSU awards during nine months ended September 30, 2024 compared to the same period in the prior year. We incurred an additional $3.5 million in employee compensation and $0.9 million in temporary labor costs, partially offset by lower professional fees of $1.3 million during the nine months ended September 30, 2024 compared to the same period in the prior year.

Previous wording

Depreciation and amortization expense for the six months ended June 30, 2024 was $16.7 million, an increase of $0.6 million, or 3.7%, from $16.1 million in the six months ended June 30, 2023. The increase in depreciation and amortization expense is primarily due to the opening of our automation facility in Shelton, Connecticut, which began operations in the third quarter of 2023.

Current wording

Depreciation and amortization expense for the nine months ended September 30, 2024 was $24.9 million, an increase of $0.7 million, or 2.9%, from $24.2 million in the nine months ended September 30, 2023. The increase in depreciation and amortization expense is primarily due an increase of $0.5 million of amortization related to our finance leases.

Previous wording

Other operating expense, net for the six months ended June 30, 2024 was $2.1 million, a decrease of $0.5 million from $2.6 million in the six months ended June 30, 2023. The decrease in other operating expense, net was due to lower losses on the disposal of property, plant, and equipment of $0.3 million in the current period and a $0.2 million decrease in research and development expense.

Current wording

Other operating expense, net for the nine months ended September 30, 2024 was $3.7 million, an increase of $0.2 million from $3.5 million in the nine months ended September 30, 2023. The increase in other operating expense, net was due to a $0.2 million increase in research and development expense during the nine months ended September 30, 2024 compared to 2023.

Previous wording

Interest expense for the six months ended June 30, 2024 was $11.5 million, a decrease of $0.1 million, or 0.9%, from $11.6 million in the six months ended June 30, 2023. The effects of our cross currency and interest rate swaps offset an increase in interest rates associated with our First Lien Credit Facilities and additional non-cash expense of $0.5 million from deferred financing costs associated with the amendment of our First Lien Credit Facilities during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Current wording

Interest expense for the nine months ended September 30, 2024 was $20.8 million, an increase of $2.4 million, or 13.0%, from $18.4 million in the nine months ended September 30, 2023. The effects of our cross currency and interest rate swaps offset an increase in interest rates associated with our First Lien Credit Facilities and additional expense of $0.6 million from deferred financing costs during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Previous wording

Foreign currency gain for the six months ended June 30, 2024 was $1.3 million, a change of $2.2 million, or 244.4%, from foreign currency loss of $0.9 million in the six months ended June 30, 2023 due to the volatility in Euro exchange rates compared to USD.

Current wording

Foreign currency gain for the nine months ended September 30, 2024 was $1.1 million, a change of $1.3 million from foreign currency loss of $0.2 million in the nine months ended September 30, 2023 due to the volatility in Euro exchange rates compared to USD.

Previous wording

Other non-operating income, net for the six months ended June 30, 2024 was $17.9 million and primarily represents $16.1 million in litigation proceeds and a $5.4 million gain on the sale of patents, partially offset by a $3.5 million unrealized loss on our strategic investment in Pickle. Other non-operating income, net for the six months ended June 30, 2023 was $0.7 million and represents the unrealized gain on our investment in a money market fund.

Current wording

Other non-operating income, net for the nine months ended September 30, 2024 was $21.0 million and primarily represents $16.1 million in litigation proceeds and a $5.4 million gain on the sale of patents, partially offset by a $0.4 million unrealized loss on our strategic investment in Pickle Robot Co.. Other non-operating income, net for the nine months ended September 30, 2023 was $0.8 million and represents the unrealized gain on our investment in a money market fund.

Previous wording

Income tax expense for the six months ended June 30, 2024 was $0.3 million, or an effective tax rate of (13.3)%. Income tax benefit was $1.8 million in the six months ended June 30, 2023, or an effective tax rate of 11.1%. The fluctuation in the effective tax rate between periods was primarily attributable to the litigation settlement and patent sale in the second quarter of 2024 and tax expense of $1.2 million related to stock-based compensation shortfall recognized for the six months ended June 30, 2023.

Current wording

Income tax benefit for the nine months ended September 30, 2024 was $2.2 million, or an effective tax rate of 16.8%. Income tax benefit was $2.9 million in the nine months ended September 30, 2023, or an effective tax rate of 14.2%. The fluctuation in the effective tax rate between periods was primarily attributable to the litigation settlement and patent sale in the second quarter of 2024 and tax expense of $1.8 million related to stock-based compensation shortfall recognized for the nine months ended September 30, 2023.

Previous wording

Net loss for the six months ended June 30, 2024 decreased $11.9 million to $2.6 million from a net loss of $14.5 million in the six months ended June 30, 2023. The change was due to the reasons discussed above.

Current wording

Net loss for the nine months ended September 30, 2024 decreased $7.1 million to $10.7 million from a net loss of $17.8 million in the nine months ended September 30, 2023. The change was due to the reasons discussed above.

Previous wording

EBITDA for the six months ended June 30, 2024 was $44.7 million, an increase of $16.4 million, or 58.0%, compared to $28.3 million in the six months ended June 30, 2023. Adjusting for non-recurring costs, AEBITDA for the six months ended June 30, 2024 and 2023 totaled $40.6 million and $34.1 million, respectively, representing an increase of $6.5 million, or 19.1%.

Current wording

EBITDA for the nine months ended September 30, 2024 was $57.3 million, an increase of $10.2 million, or 21.7%, compared to $47.1 million in the nine months ended September 30, 2023. AEBITDA for the nine months ended September 30, 2024 and 2023 totaled $61.1 million and $52.1 million, respectively, representing an increase of $9.0 million, or 17.3%.

Previous wording

The following tables and related notes reconcile certain non-GAAP measures, including the non-GAAP constant currency measures, to GAAP information presented in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2024 and 2022:

Current wording

The following tables and related notes reconcile certain non-GAAP measures, including the non-GAAP constant currency measures, to GAAP information presented in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2024 and 2023:

Previous wording

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 $65.1 million in cash and cash equivalents as of June 30, 2024, together with borrowing capacity under the revolving portion of our senior secured credit facilities, will provide us with sufficient resources to cover our current requirements over the next twelve months.

Current wording

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 $69.5 million in cash and cash equivalents as of September 30, 2024 and cash flows from operations and other sources will provide us with sufficient resources to cover our current requirements over the next twelve months.

Previous wording

We had $65.1 million in cash and cash equivalents as of June 30, 2024 and $62.0 million as of December 31, 2023. Including finance lease liabilities and excluding deferred financing costs, we had $401.7 million in debt, $2.6 million of which was classified as short-term, as of June 30, 2024, compared to $407.4 million in debt, $2.5 million of which was classified as short-term, as of December 31, 2023. At June 30, 2024, we did not have amounts outstanding under our $45.0 million revolving credit facility, and we had no borrowings under such facility through August 1, 2024. The Revolving Facility includes borrowing capacity available for standby letters of credit of up to $5.0 million. Any issuance of letters of credit will reduce the amount available under the Revolving Facility. As of June 30, 2024, we had $1.2 million committed to outstanding letters of credit, leaving net availability under the Revolving Facility at $43.8 million.

Current wording

We had $69.5 million in cash and cash equivalents as of September 30, 2024 and $62.0 million as of December 31, 2023. Including finance lease liabilities and excluding deferred financing costs, we had $408.2 million in debt, $2.7 million of which was classified as short-term, as of September 30, 2024, compared to $407.4 million in debt, $2.5 million of which was classified as short-term, as of December 31, 2023. At September 30, 2024, we did not have amounts outstanding under our $45.0 million revolving credit facility, and we had no borrowings under such facility through October 31, 2024. The Revolving Facility includes borrowing capacity available for standby letters of credit of up to $5.0 million. Any issuance of letters of credit will reduce the amount available under the Revolving Facility. As of September 30, 2024, we had $1.5 million committed to outstanding letters of credit, leaving net availability under the Revolving Facility at $43.5 million.

Previous wording

The material terms of the Facilities are summarized in Note 7 — Long-Term Debt to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and under the heading “Liquidity and Capital Resources - Debt Profile” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2023 10-K. The First Lien Term Facility matures in 2026 and the Revolving Facility matures in 2025. Borrowings under the Facilities, at our option, bear interest at either (1) an adjusted eurocurrency rate or, the secured-overnight financing rate (“SOFR”), or (2) a base rate, in each case plus an applicable margin. The applicable margin is 3.75% with respect to eurocurrency borrowings or SOFR borrowings, as applicable, and 2.75% with respect to base rate borrowings, in each case assuming a first lien net leverage ratio of less than 5.00:1.00, subject to a leverage-based step-up to an applicable margin equal to 4.00% for eurocurrency borrowings and SOFR borrowings, as applicable, and 3.00% with respect to base rate borrowings. The interest rate for the First Lien Dollar Term Facility as of June 30, 2024 and December 31, 2023, was 9.18% and 9.44%, respectively. The interest rate for the First Lien Euro Term Facility as of June 30, 2024 and December 31, 2022, was 7.50% and 7.86%, respectively.

Current wording

The material terms of the Facilities are summarized in Note 7 — Long-Term Debt to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and under the heading “Liquidity and Capital Resources - Debt Profile” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2023 10-K. The First Lien Term Facility matures in 2026 and the Revolving Facility matures in 2025. Borrowings under the Facilities, at our option, bear interest at either (1) an adjusted eurocurrency rate or, the secured-overnight financing rate (“SOFR”), or (2) a base rate, in each case plus an applicable margin. The applicable margin is 3.75% with respect to eurocurrency borrowings or SOFR borrowings, as applicable, and 2.75% with respect to base rate borrowings, in each case assuming a first lien net leverage ratio of less than 5.00:1.00, subject to a leverage-based step-up to an applicable margin equal to 4.00% for eurocurrency borrowings and SOFR borrowings, as applicable, and 3.00% with respect to base rate borrowings. The interest rate for the First Lien Dollar Term Facility as of September 30, 2024 and December 31, 2023, was 9.05% and 9.44%, respectively. The interest rate for the First Lien Euro Term Facility as of September 30, 2024 and December 31, 2023, was 7.36% and 7.86%, respectively.

Previous wording

Net cash provided by operating activities was $24.8 million in the six months ended June 30, 2024. Cash provided by operating activities was $16.6 million in the six months ended June 30, 2023. The changes in operating cash flows are largely due to the decreased net loss for the current period compared with prior year, which was in part due to a patent litigation settlement of $16.1 million in the current period, and partially offset by increases in inventory and accounts receivable as of June 30, 2024.

Current wording

Net cash provided by operating activities was $34.9 million in the nine months ended September 30, 2024. Cash provided by operating activities was $23.0 million in the nine months ended September 30, 2023. The changes in operating cash flows are largely due to the decreased net loss for the current period compared with prior year, which was in part due to a patent litigation settlement of $16.1 million in the current period, and partially offset by increases in inventory, accounts receivable, and income tax receivables as of September 30, 2024.

Previous wording

Net cash used in investing activities was $19.1 million in the six months ended June 30, 2024 and reflects cash used for production of converter equipment and purchases of machinery and equipment, and an additional investment in Pickle of $4.8 million. We had cash inflows from investing activities of $5.4 million from the sale of two patents. Net cash used in investing activities was $25.2 million in the six months ended June 30, 2023 and reflects cash used for production of converter equipment and leasehold improvements for our facilities in Connecticut and The Netherlands.

Current wording

Net cash used in investing activities was $24.7 million in the nine months ended September 30, 2024 and reflects cash used for production of converter equipment and purchases of machinery and equipment, and an additional investment in Pickle of $4.8 million. We had cash inflows from investing activities of $5.4 million from the sale of two patents. Net cash used in investing activities was $32.0 million in the nine months ended September 30, 2023 and reflects cash used for production of converter equipment and leasehold improvements for our facilities in Connecticut and The Netherlands, net of $2.9 million in proceeds from the sale of our building and land located in Heerlen, The Netherlands.

Previous wording

Net cash used in financing activities was $1.6 million in the six months ended June 30, 2024 and reflects debt repayments, payments on finance lease liabilities, tax payments for withholdings on stock compensation, and payments on our equipment financing arrangement. Net cash used in financing activities was $0.7 million in the six months ended June 30, 2023 and reflects debt repayments, payments on finance lease liabilities, tax payments for withholdings on stock compensation, and legal fees paid related to a modification of our debt facilities, partially offset by proceeds received from our equipment financing arrangement.

Current wording

Net cash used in financing activities was $2.3 million in the nine months ended September 30, 2024 and reflects debt repayments, payments on finance lease liabilities, tax payments for withholdings on stock compensation, and payments on our equipment financing arrangement. Net cash used in financing activities was $1.4 million in the nine months ended September 30, 2023 and reflects debt repayments, payments on finance lease liabilities, tax payments for withholdings on stock compensation, and legal fees paid related to a modification of our debt facilities, partially offset by proceeds received from our equipment financing arrangement.