Ranpak Holdings Corp

Previous wording

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 2023 10-K, filed with the SEC on March 14, 2024. Capitalized terms used and not defined herein have the meanings disclosed elsewhere in the Quarterly Report on Form 10-Q.

Current wording

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 as well as the section entitled, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Ranpak included in our 2024 10-K, filed with the SEC on March 17, 2025. Capitalized terms used and not defined herein have the meanings disclosed elsewhere in the Quarterly Report.

Previous wording

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.

Current wording

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.

Previous wording

Ranpak is a leading provider of environmentally sustainable, systems-based, product protection and end-of-line automation solutions for e-commerce and industrial supply chains. Since our inception in 1972, we have delivered high quality protective packaging solutions, while maintaining commitment to environmental sustainability. We provide our paper-based Protective Packaging Solutions (“ PPS”) systems and paper consumables to distributors and certain select end-users. We operate manufacturing facilities in the United States and Europe. For our Automation product lines, we currently have dedicated facilities in Shelton, Connecticut and the Netherlands. R Squared Robotics, a division of Ranpak, uses three-dimensional computer vision and artificial intelligence technologies to improve end-of-line packaging and logistics functions. We also maintain sales and administrative offices in Brazil, France, the Czech Republic, China, Japan, and Singapore. We are a global business that generated approximately 59% of our 2023 net revenue outside of the United States.

Current wording

Ranpak is a leading provider of environmentally sustainable, systems-based, product protection and end-of-line automation solutions for e-commerce and industrial supply chains. Since our inception in 1972, we have delivered high quality protective packaging solutions, while maintaining commitment to environmental sustainability. We provide our paper-based Protective Packaging Solutions (“ PPS”) systems and paper consumables to distributors and certain select end-users. We operate manufacturing facilities in the United States, Europe and Asia. For our Automation product lines, we currently have dedicated facilities in Shelton, Connecticut and the Netherlands. R Squared Robotics, a division of Ranpak, uses three-dimensional computer vision and artificial intelligence technologies to improve end-of-line packaging and logistics functions. We are a global business that generated approximately 56% of our 2024 net revenue outside of the United States.

Previous 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.

Current wording

As of March 31, 2025, we had an installed base of approximately 143.8 thousand PPS systems serving a diverse set of distributors and end-users. We generated net revenue of $91.2 million and $85.3 million in the three months ended March 31, 2025 and 2024, respectively.

Previous wording

PPS Systems Base —We closely track the number of PPS systems installed with end-users as it is a leading indicator of underlying business trends and near-term and ongoing net sales expectations. Our installed base of PPS systems also drives our capital expenditure budgets. The following table presents our installed base of PPS systems by product line as of September 30, 2024 and 2023:

Current wording

PPS Systems Base —We closely track the number of PPS systems installed with end-users as it is a leading indicator of underlying business trends and near-term and ongoing net revenue expectations. Our installed base of PPS systems also drives our capital expenditure budgets. The following table presents our installed base of PPS systems as of March 31, 2025 and 2024:

Previous wording

Paper and Other Costs. Paper is a key component of our cost of goods sold and paper costs can fluctuate significantly between periods. We purchase both 100% virgin and 100% recycled paper, as well as blends, from various suppliers for conversion into the paper consumables we sell. The cost of paper supplies is our largest input cost, and we historically have negotiated supply and pricing arrangements with most of our paper suppliers annually, with a view towards mitigating fluctuations in paper cost. Nevertheless, as paper is a commodity, its price on the open market, and in turn the prices we negotiate with suppliers at a given point in time, can fluctuate significantly, and is affected by several factors outside of our control, including inflationary pressures, supply and demand and the cost of other commodities that are used in the manufacture of paper, including wood, energy, and chemicals. The market for our solutions is competitive and it may be difficult to pass on increases in paper prices to our customers immediately, or at all, which has in the past, and could in the future, adversely affect our operating results. Although we look to pass increased market costs on to our customers to mitigate the impact of these costs, we are unable to predict our ability to pass these costs on to our customers and how much of these increases we will be able to pass on to our customers. As such, we expect some continued pressure on our gross margin in the medium term relative to our historical margin profile.

Current wording

Paper and Other Costs. Paper is a key component of our cost of goods sold and paper costs can fluctuate significantly between periods. We purchase both 100% virgin and 100% recycled paper, as well as blends, from various suppliers for conversion into the paper consumables we sell. The cost of paper supplies is our largest input cost, and we historically have negotiated supply and pricing arrangements with most of our paper suppliers annually, with a view towards mitigating fluctuations in paper cost. Nevertheless, as paper is a commodity, its price on the open market, and in turn the prices we negotiate with suppliers at a given point in time, can fluctuate significantly, and is affected by several factors outside of our control, including inflationary pressures, supply and demand and the cost of other commodities that are used in the manufacture of paper, including wood, energy, and chemicals. For example, energy prices in Europe have experienced recent increased volatility, and such volatility has, in the past, increased the cost of paper. The market for our solutions is competitive and it may be difficult to pass on increases in paper prices to our customers immediately, or at all, which has in the past, and could in the future, adversely affect our operating results. Although we look to pass increased market costs on to our customers to mitigate the impact of these costs, we are unable to predict our ability to pass these costs on to our customers and how much of these increases we will be able to pass on to our customers. As such, we expect some continued pressure on our gross margin in the medium term relative to our historical margin profile.

Previous wording

Effect of Currency Fluctuations. As a result of the geographic diversity of our operations, we are exposed to the effects of currency translation, which has affected the comparability of our results of operations between the periods presented in this report and may affect the comparability of our results of operations in future periods. Currency transaction exposure results when we generate net revenue in one currency at one time and incur expenses in another currency at another time, or when we realize gain or loss on intercompany transfers. While we seek to limit currency transaction exposure by matching the currencies in which we incur sales and expenses, we may not always be able to do so.

Current wording

Effect of Currency Fluctuations. As a result of the geographic diversity of our operations, we are exposed to the effects of currency translation, which has affected the comparability of our results of operations between the periods presented in this Quarterly Report and may affect the comparability of our results of operations in future periods. Currency transaction exposure results when we generate net revenue in one currency at one time and incur expenses in another currency at another time, or when we realize gain or loss on intercompany transfers. While we seek to limit currency transaction exposure by matching the currencies in which we incur sales and expenses, we may not always be able to do so.

Previous wording

We hedge some of our exposure to foreign currency translation with a cross-currency swap. Refer to Note 8 — Derivative Instruments to the Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for additional information. Significant currency fluctuations could impact the comparability of results between periods, while such fluctuations coupled with material mismatches in net revenue and expenses could also adversely impact our cash flows. See “Qualitative and Quantitative Disclosures About Market Risk.”

Current wording

We hedge some of our exposure to foreign currency translation with a cross-currency swap. Refer to Note 8 — Derivative Instruments to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information. Significant currency fluctuations could impact the comparability of results between periods, while such fluctuations coupled with material mismatches in net revenue and expenses could also adversely impact our cash flows. See “Quantitative and Qualitative Disclosures About Market Risk.”

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 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.

Current wording

Inflationary Pressures and Other Costs. We have continued to experience inflationary pressures in 2025, which have adversely impacted some of our end-users, such as automotive companies; distributors; electronic manufacturers; machinery 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 market share, 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

Seasonality. Approximately 30% of our net revenue in 2023, either directly or to distributors, was destined for end-users in the e-commerce sectors, whose businesses frequently follow traditional retail seasonal trends, including a concentration of sales in the holiday period in the fourth quarter. Our results tend to follow similar patterns, with the highest net revenue typically recorded in our fourth fiscal quarter and the slowest sales in our first fiscal quarter of each fiscal year. We expect this seasonality to continue in the future and, as a result, our results of operations between fiscal quarters in a given year may not be directly comparable.

Current wording

Seasonality. Approximately 37% of our net revenue in 2024, either directly or to distributors, was destined for end-users in the e-commerce sectors, whose businesses frequently follow traditional retail seasonal trends, including a concentration of sales in the holiday period in the fourth quarter. Our results tend to follow similar patterns, with the highest net revenue typically recorded in our fourth fiscal quarter and the slowest sales in our first fiscal quarter of each fiscal year. We expect this seasonality to continue in the future and, as a result, our results of operations between fiscal quarters in a given year may not be directly comparable.

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 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.

Current wording

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. We also present Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and adjusted EBITDA (“AEBITDA”), which are non-GAAP financial measures, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA and AEBITDA can provide a useful measure for period-to-period comparisons of our primary business operations. We believe that EBITDA and AEBITDA provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Previous wording

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.

Current wording

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

Previous wording

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

Current wording

AEBITDA is a non-GAAP financial measure that we calculate as net loss, adjusted to exclude: benefit from (provision for) income taxes; interest expense; depreciation and amortization; stock-based compensation expense; foreign currency (gain) loss; amortization of cloud-based software implementation costs; and, in certain periods, other income and expense items.

Previous wording

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

Current wording

Non-GAAP measures, such as EBITDA, AEBITDA, and constant currency change, have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. In particular, non-GAAP financial measures should not be viewed as substitutes for, or superior to, net loss prepared in accordance with U.S. GAAP as a measure of profitability or liquidity. Some of these limitations are:

Previous wording

•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 Constant Currency AEBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

•AEBITDA does not consider the potentially dilutive impact of stock-based compensation, and in certain periods, other income and expense items, such as restructuring and integration costs;

Previous wording

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

Current wording

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

Previous 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.

Current wording

The following tables set forth our consolidated results of operations for the three months ended March 31, 2025 and 2024, presented in millions of dollars.

Previous 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.

Current wording

In addition, in our discussion below, we include certain other unaudited, non-GAAP data and Constant Currency (Non-GAAP) % Change data for the three months ended March 31, 2025 and 2024. This data is based on our historical financial statements included elsewhere in this Quarterly Report. Refer to “Non-GAAP Measures” and “Reconciliation of U.S. GAAP to Non-GAAP Measures” for additional information and a reconciliation of EBITDA and AEBITDA to our net loss under U.S. GAAP.

Previous 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:

Current wording

The following table and the discussion that follows compares our net revenue by product line for three months ended March 31, 2025 and 2024 on a U.S. GAAP basis and also presents the Constant Currency (Non-GAAP) % Change. See also “Non-GAAP Measures” for further details:

Previous 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.

Current wording

Net revenue for the first quarter of 2025 was $91.2 million compared to $85.3 million in the first quarter of 2024, an increase of $5.9 million year over year or 6.9% (8.8% on a constant currency basis) and includes a reduction of $0.8 million in void-fill for the provision for common stock warrants. Net revenue was positively impacted by increases in void-fill and wrapping, partially offset by a decrease in cushioning. Cushioning decreased $7.2 million, or 19.3%, to $30.1 million from $37.3 million; void-fill increased $11.0 million, or 33.2%, to $44.1 million from $33.1 million; wrapping increased $2.1 million, or 24.4%, to $10.7 million from $8.6 million; and other net revenue remained flat at $6.3 million for the first quarter of 2025 compared to the first quarter of 2024. Other net revenue includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field, such as systems accessories.

Previous wording

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

Current wording

Selling, General, and Administrative (“SG&A”) Expenses. SG&A expenses for the first quarter of 2025 were $28.9 million, an increase of $1.0 million, or 3.6%, from $27.9 million in the first quarter of 2024. The change in SG&A was primarily due to increases in stock-based compensation expense and information technology maintenance costs of $0.8 million and $0.8 million, respectively, partially offset by a decrease in professional fees of $0.5 million compared to the first quarter of 2024.

Previous 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.

Current wording

Depreciation and Amortization. Depreciation and amortization expense for the first quarter of 2025 was $9.0 million, an increase of $0.6 million, or 7.1%, from $8.4 million in the first quarter of 2024. The increase in depreciation and amortization expense was due to an increase in depreciation expense from our building improvements and internal-use software.

Previous 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.

Current wording

Other Operating Expense, Net. Other operating expense, net for the first quarter of 2025 was $1.0 million, an increase of $0.2 million from $0.8 million in the first quarter of 2024. The increase was due to increased research and development expense of $0.6 million, partially offset by a decrease of $0.4 million on losses from disposal of property, plant, and equipment for the first quarter of 2025 compared to the first quarter of 2024.

Previous 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.

Current wording

Interest expense for the first quarter of 2025 was $8.7 million, an increase of $2.5 million, or 40.3%, from $6.2 million in the first quarter of 2024. The increase was primarily due to a decrease in interest income of $3.0 million from the effects of our swap agreements during the first quarter of 2025 compared to the first quarter of 2024, partially offset by a $0.4 million decrease in amortization of deferred financing costs.

Previous 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.

Current wording

Foreign currency gain for the first quarter of 2025 was $2.6 million, a decrease of $1.2 million, from foreign currency gain of $1.4 million in the first quarter of 2024 due to the volatility in Euro exchange rates compared to USD.

Previous 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.

Current wording

Income tax benefit for the first quarter of 2025 was $3.2 million, or an effective tax rate of 22.6%. Income tax benefit was $1.5 million in the first quarter of 2024, or an effective tax rate of 15.8%. The fluctuation in the effective tax rate between periods and the difference between the effective tax rate for the first quarter of 2025 and the combined federal and state statutory rates is primarily attributable to the impact of stock-based compensation.

Previous wording

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

Current wording

As noted above, we believe that in order to better understand the performance of the Company, providing non-GAAP financial measures to users of our financial information is helpful. We believe presentation of these non-GAAP measures is useful because they are many of the key measures that allow management to evaluate more effectively our operating performance and compare the results of our operations from period to period and against peers without regard to financing methods or capital structure. Management does not consider these non-GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with U.S. GAAP. The computations of EBITDA, AEBITDA and Constant Currency (Non-GAAP) % Change 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.

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 nine months ended September 30, 2024 and 2023:

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 for the three months ended March 31, 2025 and 2024:

Previous wording

(3)Represents amortization of capitalized costs related to the implementation of the global ERP system, which are included in SG&A.

Current wording

(3)Represents amortization of capitalized costs primarily related to the implementation of the global ERP system, which are included in SG&A.

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 $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.

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 $65.5 million in cash and cash equivalents as of March 31, 2025 and cash flows from operations, 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.

Previous wording

Our main liquidity needs relate to capital expenditures and expenses for the production and maintenance of PPS systems placed at end-user facilities, working capital, including the purchase of paper raw materials, and payments of principal and interest on our outstanding debt. We expect our capital expenditures to increase as we continue to grow our business, expand our manufacturing footprint, and upgrade our existing systems and facilities. We continue to evaluate our inventory requirements and adjust according to our volume forecasts. 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 from macroeconomic factors could make obtaining new equity or debt financing more difficult or expensive.

Current wording

Our main liquidity needs relate to capital expenditures and expenses for the production and maintenance of PPS 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. Our AS and APS businesses are for the sale of capital goods and we do not require significant capital expenditures for production equipment to support growth. We expect our capital expenditures to increase as we continue to grow our business, expand our manufacturing footprint, and upgrade our existing systems and facilities. We continue to evaluate our inventory requirements and adjust according to our volume forecasts. 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 from macroeconomic factors could make obtaining new equity or debt financing more difficult or expensive.

Previous 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.

Current wording

Including finance lease liabilities and equipment financing and excluding deferred financing costs, we had $414.3 million in debt, $5.7 million of which was classified as short-term, as of March 31, 2025, compared to $415.7 million in debt, $5.6 million of which was classified as short-term, as of December 31, 2024. At March 31, 2025, we did not have amounts outstanding under our $50.0 million revolving credit facility, and we had no borrowings under such facility through May 6, 2025. No mandatory prepayments were required under our Facilities and the Company was in compliance with all debt covenants as of March 31, 2025.

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 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.

Current wording

The material terms of the Facilities are summarized in Note 7 — Long-Term Debtto the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report 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 2024 10-K. The Term Facility matures in December 2031 and the Revolving Facility matures in December 2029. Borrowings under the Facilities, at our option, bear interest at either (1) the secured overnight financing rate (“SOFR”) plus 4.50% or (2) the base rate plus 3.50%, in each case assuming a First Lien Leverage Ratio, as defined in the 2024 Credit Agreement, of greater than 3.60:1.00, and subject to a leverage-based step-down to 4.25% for SOFR borrowings and 3.25% for base rate borrowings, respectively. The interest rate for the Term Facility as of March 31, 2025 and December 31, 2024, was 8.85%.

Previous wording

The Facilities provide us with the option to increase commitments under the Facilities in an aggregate amount not to exceed the greater of $95.0 million and 100% of Consolidated Adjusted EBITDA (as defined in the definitive documentation with respect to the Facilities) for the four consecutive fiscal quarters most recently ended, plus any voluntary prepayments of the First Lien Term Facility (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.

Current wording

The Facilities provide the Company with the option to increase commitments under the Facilities in an aggregate amount not to exceed the greater of $85.0 million and 100% of Consolidated Adjusted EBITDA (as defined in the 2024 Credit Agreement), plus certain voluntary prepayments (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.

Previous wording

Cash Flows Provided by Operating Activities

Current wording

Cash Flows Provided by (Used in) Operating Activities

Previous 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.

Current wording

Net cash used in operating activities was $1.3 million in the three months ended March 31, 2025. Cash provided by operating activities was $5.2 million in the three months ended March 31, 2024. The changes in operating cash flows are largely due to the increased net loss and decreased non-cash adjustments for depreciation expense for the current period compared with prior year and the increase in inventory, partially offset by an increase in accounts payable and a decrease in accounts receivable as of March 31, 2025.

Previous 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.

Current wording

Net cash used in investing activities was $7.5 million and $10.3 million in the three months ended March 31, 2025 and 2024, respectively, and reflects cash used for production of converter equipment and purchases of machinery and equipment. Net cash used in investing activities in the three months ended March 31, 2024 also includes an additional investment in Pickle.