UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to           .

Commission file number: 001-38348

Ranpak Holdings Corp.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	98-1377160
(State or Other Jurisdiction of  Incorporation or Organization)	(I.R.S. Employer Identification Number)

7990 Auburn Road

Concord Township, Ohio 44077

(Address of Principal Executive Offices)

Tel: 440-354-4445

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Ordinary Shares, par value $0.0001 per share	PACK	New York Stock Exchange
Warrants, each whole warrant exercisable for one Class A	PACKWS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 11, 2020, the registrant had 64,352,247 of its Class A common shares, $0.0001 par value per share, outstanding (which includes 6,116,454 Class A common shares that are subject to an earn-out provision as described in Part 1, Item 1 of this report) and 6,511,293 of its Class C common shares, $0.0001 par value per share, outstanding, of which 731,383 Class C common shares are subject to an earn-out.

RANPAK HOLDINGS CORP.

FORM 10-Q

FOR THE PERIOD ENDED MARCH 31, 2020

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION	1
Item 1. Condensed Consolidated Financial Statements (Unaudited)	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3. Quantitative and Qualitative Disclosures About Market Risk	50
Item 4. Controls and Procedures	51
PART II – OTHER INFORMATION	52
Item 1. Legal Proceedings	52
Item 1A. Risk Factors	52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	53
SIGNATURES	55

Index to Unaudited Condensed Consolidated Financial Statements

RANPAK HOLDINGS CORP.

                        1

RANPAK HOLDINGS CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(in millions, except share and per share data)

	Successor			Predecessor
	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Paper revenue	$	53.4		$	55.3
Machine lease revenue	8.5			9.0
Other revenue	1.5			1.8
Net sales	63.4			66.1
Cost of sales	36.6			37.9
Gross profit	26.8			28.2
Selling, general and administrative	19.6			14.3
Depreciation and amortization	7.5			10.7
Other operating expense, net	0.3			1.0
Income (loss) from operations	(0.6		)	2.2
Interest expense	6.2			8.1
Foreign currency gain	(1.5		)	(1.9		)
Loss before income taxes	(5.3		)	(4.0		)
Income tax benefit	(1.7		)	(0.6		)
Net loss	(3.6		)	(3.4		)
Other comprehensive loss:
Foreign currency translation adjustments	(4.0		)	(3.4		)
Interest rate swap adjustments	(7.8		)	—
Comprehensive loss	$	(15.4	)	$	(6.8	)
Net loss per share—basic and diluted
Net loss per share				$	(3,387.94	)
Weighted-average shares outstanding				995
Two-class method
Net loss per common stock, Class A and C-basic and diluted	$	(0.05	)
Weighted average number of Class A and C common stock outstanding, basic and diluted	70,862,576

__________

See notes to unaudited condensed consolidated financial statements.

                        2

RANPAK HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

	March 31, 2020			December 31, 2019
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	20.2		$	19.7
Accounts receivable, net	29.5			36.1
Inventories, net	13.5			11.6
Income tax receivable	3.2			1.5
Prepaid expenses and other current assets	2.4			2.5
Total current assets	68.8			71.4
Property, plant and equipment, net	124.0			122.5
Goodwill	446.7			448.8
Intangible assets, net	449.6			458.6
Other assets	3.2			3.1
Total Assets	$	1,092.3		$	1,104.4
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	13.0		$	12.3
Accrued liabilities and other	13.6			15.5
Current portion of long-term debt	1.5			1.6
Deferred machine fee revenue	0.8			2.5
Total current liabilities	28.9			31.9
Long-term debt	415.5			418.8
Deferred income taxes	113.9			115.0
Derivative instruments	14.7			4.6
Other liabilities	0.7			2.3
Total Liabilities	573.7			572.6
Commitments and Contingencies — Note 12
Shareholders' Equity
Class A common stock, $0.0001 par; 200,000,000 shares authorized, 64,352,247 and 64,293,741 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	—			—
Class C common stock, $0.0001 par value, 200,000,000 shares authorized, 6,511,293 issued and outstanding at March 31, 2020 and December 31, 2019	—			—
Additional paid-in capital	559.7			557.5
Accumulated deficit	(32.7		)	(29.1		)
Accumulated other comprehensive income (loss)	(8.4		)	3.4
Total Shareholders' Equity	518.6			531.8
Total Liabilities and Shareholders' Equity	$	1,092.3		$	1,104.4

__________

See notes to unaudited condensed consolidated financial statements.

                        3

RANPAK HOLDINGS CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in millions, except share data)

Successor
	Common Stock
	Class A			Class C			Additional Paid-In Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2019	64,293,741	$	—	6,511,293	$	—	$	557.5	$	(29.1	)	$	3.4		$	531.8
Additional Shares Purchased	51,603	—		—	—		—		—			—			—
Issue Director Shares	6,903	—		—	—		—		—			—			—
Amortization of restricted stock units	—	—		—	—		2.2		—			—			2.2
Foreign currency translation	—	—		—	—		—		—			(4.0		)	(4.0		)
Unrealized gain (loss) on interest rate swap, net of tax of $2.3	—	—		—	—		—		—			(7.8		)	(7.8		)
Net loss	—	—		—	—		—		(3.6		)	—			(3.6		)
Balance at March 31, 2020	64,352,247	$	—	6,511,293	$	—	$	559.7	$	(32.7	)	$	(8.4	)	$	518.6

__________

See notes to unaudited condensed consolidated financial statements.

                        4

RANPAK HOLDINGS CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in millions, except share data)

Predecessor
	Common Stock
	Shares	Amount	Additional Paid-In Capital		Accumulated Deficit			Treasury Stock			Accumulated Other Comprehensive Loss			Total Shareholders' Equity
Balance at December 31, 2018	995	—	$	291.4	$	(69.9	)	$	(1.5	)	$	(23.6	)	$	196.4
Net loss	—	—	—		(3.4		)	—			—			(3.4		)
Foreign currency translation	—	—	—		—			—			(3.4		)	(3.4		)
Balance at March 31, 2019	995	—	$	291.4	$	(73.3	)	$	(1.5	)	$	(27.0	)	$	189.6

__________

See notes to unaudited condensed consolidated financial statements.

                        5

RANPAK HOLDINGS CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	Successor			Predecessor
	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Cash Flows from Operating Activities
Net loss	$	(3.6	)	$	(3.4	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	14.5			16.1
Amortization of deferred financing costs	0.4			0.6
Loss on disposal of fixed assets	0.3			0.2
Deferred income taxes	1.7			(1.1		)
Currency (gain) on foreign denominated debt and notes payable	(1.6		)	(2.1		)
Amortization of restricted stock units	2.2			—
Changes in operating assets and liabilities:
Decrease in receivables, net	6.1			2.9
(Increase) in inventory	(2.1		)	(0.6		)
Decrease in prepaid expenses and other assets	—			1.1
Increase (decrease) in accounts payable	1.0			(3.0		)
Increase (decrease) in accrued liabilities	(1.7		)	0.9
Change in other assets and liabilities	(5.6		)	2.0
Net cash provided by operating activities	11.6			13.6
Cash Flows from Investing Activities
Capital expenditures:
Converter equipment	(8.6		)	(6.2		)
Other capital expenditures	(1.7		)	(0.3		)
Total capital expenditures	(10.3		)	(6.5		)
Patent and trademark expenditures	(0.2		)	(0.1		)
Net cash used in investing activities	(10.5		)	(6.6		)
Cash Flows from Financing Activities
Payments on term loans and credit facility	(0.4		)	(1.1		)
Net cash used in financing activities	(0.4		)	(1.1		)
Effect of Exchange Rate Changes on Cash	(0.2		)	(0.2		)
Net Increase in Cash and Cash Equivalents	0.5			5.7
Cash and Cash Equivalents, beginning of period	19.7			17.5
Cash and Cash Equivalents, end of period	$	20.2		$	23.2

__________

See notes to unaudited condensed consolidated financial statements.

                        6

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 1 — Nature of Operations

Ranpak Holdings Corp. (formerly known as One Madison Corporation) is a leading provider of environmentally sustainable, systems-based, product protection solutions for e-Commerce and industrial supply chains. Through proprietary protective packaging systems and paper consumables, the Company offers a full suite of protective packaging solutions. The Company’s business is global, with a strong presence in the United States and Europe. Throughout this report, when we refer to "Ranpak," the "Company," "we," "our," or "us," we are referring to Ranpak Holdings Corp. and all of our subsidiaries, except where the context indicates otherwise.

One Madison Corporation ("One Madison") was originally formed as a blank check company incorporated on July 13, 2017 and was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. One Madison units, Class A ordinary shares originally sold as part of the units, and warrants originally sold as part of the units sold in the Company’s initial public offering on January 22, 2018 were listed in the New York Stock Exchange (the "NYSE") under the symbols "OMAD.U", "OMAD" and "OMAD.WS", respectively. The Class A ordinary shares and warrants comprising the units began separately trading on February 26, 2018. Upon the closing of the business combination (the "Closing") as described below, these shares and warrants that were converted as part of the transaction, began trading under the symbols "PACK" and "PACK WS", respectively.

On June 3, 2019, the Company, consummated a business combination (the “Ranpak Business Combination”) pursuant to the Stock Purchase Agreement dated December 12, 2018 by and among the Company, Rack Holdings L.P., a Delaware limited partnership (“Seller”), and Rack Holdings, Inc., a Delaware corporation and a direct wholly owned subsidiary of Seller (“Rack Holdings”). The Company, through its wholly owned subsidiary, Ranger Packaging LLC (the “Acquiring Entity”), acquired all of the issued and outstanding equity interests of Rack Holdings from Seller, on the terms and subject to the conditions set forth in the Stock Purchase Agreement. Refer to Note 7, "Acquisition" for further discussion of the Ranpak Business Combination. In connection with the Ranpak Business Combination, the Company domesticated to a Delaware corporation on May 31, 2019 and changed its name to Ranpak Holdings Corp.

                        7

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

Unaudited Interim Financial Statements — These interim unaudited condensed consolidated financial statements should be read in conjunction with Ranpak Holdings Corp.'s audited consolidated financial statements and accompanying notes for each of the three years ended December 31, 2019, 2018, and 2017 and Rack Holdings' audited consolidated financial statements and accompanying notes for each of the years ended December 31, 2018, and 2017, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 ("Form 10-K") and the Company’s Registration Statement on Form S-4, as amended (File No. 333-230030) (the "Registration Statement"), respectively. Periods prior to the Ranpak Business Combination are noted as Predecessor periods and periods after the Ranpak Business Combination are noted as Successor periods, both of which are subsequently defined.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with instructions to Form 10-Q and Rule 10-01 of the Securities and Exchange Commission (“SEC”) Regulation S-X as they apply to interim financial information. Accordingly, the unaudited interim condensed consolidated financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements, although we believe that the disclosures made are adequate to make the information not misleading.

The interim condensed consolidated financial statements are unaudited but, in our opinion, include all adjustments that are necessary for a fair statement of operations and statement of financial position for the periods presented. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.

Predecessor and Successor Reporting — On June 3, 2019, the Company consummated the acquisition of all outstanding and issued equity interests of Rack Holdings, pursuant to the Stock Purchase Agreement, and now owns 100% of Rack Holdings Inc. and its wholly owned subsidiaries. The Ranpak Business Combination is accounted for under the scope of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), as One Madison was deemed to be the accounting acquirer while Rack Holdings was deemed the "Predecessor." Accordingly, the business combination is accounted for using the acquisition method which requires the Company to record the fair value of assets acquired and liabilities assumed from Rack Holdings (See Note 7, "Acquisition").

The financial statements separate the Company’s presentation into two distinct periods. The period before the Closing of the Ranpak Business Combination (labeled "Predecessor" period) depicts the financial statements of Rack Holdings, and the period after the Closing (labeled "Successor" period) depicts the financial statements of the Company, including the consolidation of One Madison with Rack Holdings and application of acquisition method of accounting. As a result of the application of the acquisition method of accounting as of the Closing, the financial statements for the Predecessor periods and for the Successor periods are presented on a different basis of accounting and are, therefore, not comparable.

Principles of Consolidation — The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries prepared in conformity with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation and certain immaterial prior year amounts have been reclassified consistent with current year presentation. All amounts are in millions, except share and per share amounts and are approximate due to rounding.

Use of Estimates — The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and such differences could be material.

Foreign Currency — The nature of business activities involves the management of various financial and market risks, including those related to changes in foreign currency exchange rates. The functional currency of our operating subsidiaries outside the U.S. is the applicable local currency. For those operations, assets and liabilities are translated into U.S. dollars at period-end exchange rates and revenues and expenses are translated into U.S. dollars using average monthly exchange rates.

Emerging Growth Company ("EGC") — Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) exempts EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, as amended, registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised

                        8

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an EGC, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company, which is neither an EGC nor an EGC which has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

Recently Adopted Accounting Standards — In August 2018, the FASB issued Accounting Standards Update ("ASU") No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). ASU 2018-13 modifies the disclosure requirements on fair value measurements. We adopted ASU 2018-13 on January 1, 2020. The adoption of ASU 2018-13 did not have an impact on our fair value disclosures.

Recently Issued Accounting Standards — In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASC 842"). The amendments in this ASU require an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. ASC 842 is effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020 with early adoption permitted. On October 16, 2019, the FASB delayed the implementation of ASC 842 for private companies until fiscal years beginning after December 15, 2020. Given our status as an EGC, we will adopt ASC 842 in accordance with the private company guidance. We have formed an implementation team, including personnel from accounting, tax, legal, information technology, and operations departments, to gather information regarding existing leases and the various processes that currently exist to procure, track, and account for leases globally. We continue to assess the potential impact of the new standard on our financial statements and disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which amends the FASB's guidance on the impairment of financial instruments. ASU 2016-13 adds to U.S. GAAP an impairment model (known as the "current expected credit loss model") that is based on expected losses rather than incurred losses. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. On October 16, 2019, the FASB delayed the implementation of ASU 2016-13 for private companies until fiscal years beginning January 1, 2023. Given our status as an EGC, we will adopt ASU 2016-13 in accordance with the private company guidance. We are currently evaluating the impact that this new guidance will have on our financial position, results of operations, cash flows and related disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. These expedients and exceptions do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has elected certain optional expedients and that are retained through the end of the hedging relationship. ASU 2020-04 is effective for all entities as of March 12, 2020 (the date of the issuance of ASU 2020-04) through December 31, 2022. An entity may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We are evaluating the impact of ASU 2020-04 on our financial statements and disclosures.

                        9

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 3 — Supplemental Balance Sheet Data and Cash Flow Information

Accounts Receivable, net — The allowance for doubtful accounts was as follows as of:

(in millions)	March 31, 2020			December 31, 2019
Allowance for doubtful accounts	$	(0.3	)	$	(0.2	)

Inventories, net — The components of inventories, net were as follows as of:

(in millions)	March 31, 2020			December 31, 2019
Raw materials	$	8.4		$	7.2
Finished goods	5.5			4.7
Total inventories	13.9			11.9
Less reserve for obsolescence	(0.4		)	(0.3		)
Total inventories, net	$	13.5		$	11.6

Property, Plant and Equipment, net — The following table details our property, plant and equipment, net, as of:

(in millions)	March 31, 2020			December 31, 2019
Land	$	4.0		$	4.1
Buildings and improvements	7.6			8.1
Machinery and equipment	14.3			13.0
Computer and office equipment	7.2			6.7
Converting machines	113.3			105.9
Property, plant and equipment	146.4			137.8
Accumulated depreciation and amortization	(22.4		)	(15.3		)
Property, plant and equipment, net	$	124.0		$	122.5

Depreciation expense is recorded in cost of sales and depreciation and amortization in the unaudited condensed consolidated statements of operations and comprehensive loss was as follows:

	Successor		Predecessor
(in millions)	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Depreciation expense included in cost of sales	$	7.0	$	5.5
Depreciation expense included in depreciation and amortization expense	0.5		0.4
Total depreciation expense	$	7.5	$	5.9

Supplemental Cash Flow Information — Supplemental cash flow information is as follows:

	Successor		Predecessor
(in millions)	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Interest Paid	$	6.2	$	8.1
Taxes Paid	$	0.6	$	0.5

                        10

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 4 — Segment and Geographic Information

In accordance with ASC 280, Segment Reporting, we determined we have two operating segments which are aggregated into one reportable segment, Ranpak. The chief operating decision maker assesses the Company’s performance and allocates resources based on the Company’s consolidated financial information. The aggregation of the two operating segments is based on the Company’s determination that, per ASC 280, the operating segments have similar economic characteristics, and are similar in all of the following areas: the nature of products and services, the nature of production processes, the type or class of customer for their products or services, and the methods used to distribute their products or provide their services. In addition, the operating segments were aggregated for purposes of determining whether segments meet the quantitative threshold for separate reporting.

We attribute revenue to individual countries based on the selling location. Our products are primarily sold from North America and Europe. The following tables present a summary of total net sales to external customers by geographic location:

	Successor		Predecessor
	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Net sales
North America	$	27.1	$	29.9
Europe	36.3		36.2
Total	$	63.4	$	66.1

Our customers are not concentrated in any specific geographic region. During the three months ended March 31, 2020 (Successor period) and 2019 (Predecessor period), one customer accounted for approximately 10.0% and 8.0% of total revenues, respectively.

                        11

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 5 — Revenue Recognition, Contracts with Customers

Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received in exchange for those goods or services. Revenue for paper consumables is recognized based on shipping terms, which is the point in time the customer obtains control of the promised goods. Revenue for equipment sales is recognized based on an input method, based on percentage of completion of cost and effort incurred. Maintenance revenue is recognized straight-line on the basis that the level of effort is consistent over the term of the contract. Lease components within contracts with customers are recognized in accordance with ASC 840, Leases.

Sales, value-added, and other taxes collected from customers and remitted to governmental authorities are excluded from revenue.

Our paper consumables, automation equipment, and maintenance services are determined to be distinct performance obligations. Free on loan and leased equipment is typically identified as a separate lease component in scope of ASC 840. In association to the sale of automation equipment, we sell other goods and services, such as extended warranties, preventative maintenance services, spare parts and spare part packages, and consulting services. These other goods and services do not represent performance obligations because they are neither separate nor distinct, or they are not material.

We have forms of variable consideration present in our contracts with customers, including rebates and other discounts. We estimate variable consideration using either the expected value method or the most likely amount method. We include in the transaction price some or all of an amount of variable consideration estimated to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The time between when a performance obligation is satisfied and when billing and payment occur is closely aligned and performance obligations do not extend beyond one year. As the transfer of control of our products results in an unconditional right to receive consideration, we did not record contract assets as of March 31, 2020 and December 31, 2019.

Deferred revenue represents contractual amounts received from customers that exceed percentage of project completion that is in excess of costs incurred for automation equipment sales. Our enforceable contractual obligations have durations of less than one year, and are included in current liabilities on the unaudited condensed consolidated balance sheets. Changes in deferred revenue were as follows:

	Three Months Ended March 31, 2020
Beginning balance	$	2.5
Deferral of revenue	—
Recognition of revenue	(1.7		)
Ending balance	$	0.8

We disaggregate our revenue by segment geography to assist in evaluating the nature, timing, and uncertainty of revenue and cash flows that may be impacted by economic factors:

	Successor		Predecessor
	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
North America	$	23.7	$	26.2
Europe	31.3		30.9
Leasing revenue	8.4		9.0
Total	$	63.4	$	66.1

North America consists of the United States, Canada and Mexico; Europe consists of European, Asian (including China), Pacific Rim, South American and African countries.

                        12

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 6 — Goodwill, Long-Lived and Intangible Assets, Net

Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of purchase price over the fair value of net assets acquired. Trademarks and trade names are accounted for as indefinite-lived intangible assets and, accordingly, are not subject to amortization. We review goodwill on a reporting unit basis and indefinite-lived assets for impairment annually on October 1^st and on an interim basis whenever events or changes in circumstances indicate the carrying value of goodwill or indefinite-lived intangible assets may be impaired.

Due to the COVID-19 outbreak, we assessed whether events or circumstances indicate that it was more likely than not that our goodwill and indefinite-lived intangible assets were impaired as of March 31, 2020. The goodwill and indefinite-lived intangible assets assessments included consideration of key factors such as macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity-and reporting unit-specific events. While the extent and duration of the economic implications from the COVID-19 pandemic remain unclear, we concluded that it is more likely than not that the fair value of our reporting unit and indefinite-lived intangible assets exceeded their carrying values at March 31, 2020.

The following table shows our goodwill balances by operating segment that are aggregated into one reportable segment:

(in millions)	North America		Europe			Total
Gross carrying value at December 31, 2019	$	343.0	$	105.8		$	448.8
Currency translation	—		(2.1		)	(2.1		)
Gross carrying value at March 31, 2020	$	343.0	$	103.7		$	446.7

Finite-Lived Intangible Assets, net

Finite-lived or amortizable intangible assets consist of patented and unpatented technology and customer/distributor relationships.

Impairment of Long-lived Assets

We review our long-lived assets, including amortizable intangible assets and property, plant and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. For long-lived assets, an impairment loss is indicated when the undiscounted cash flows estimated to be generated by the asset group are not sufficient to recover the unamortized balance of the asset group. If indicators exist, the loss is measured as the excess of carrying value over the asset group's fair value, as determined based on discounted future cash flows, asset appraisal and market values of similar assets. As of March 31, 2020, there were no indicators of impairment present for property, plant and equipment or amortizable intangible assets that required us to test for recoverability.

The following tables summarize our identifiable intangible assets, net with definite and indefinite useful lives: 

	March 31, 2020							December 31, 2019
(in millions)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Customer/distributor relationships	$	197.2	$	(11.1	)	$	186.1	$	199.5	$	(7.9	)	$	191.6
Patented/unpatented technology	164.7		(12.2		)	152.5		164.5		(8.5		)	156.0
In-process research and development	5.0		—			5.0		5.0		—			5.0
Total intangible assets with definite lives	366.9		(23.3		)	343.6		369.0		(16.4		)	352.6
Trademarks/tradenames with indefinite lives	106.0		—			106.0		106.0		—			106.0
Total identifiable intangible assets, net	$	472.9	$	(23.3	)	$	449.6	$	475.1	$	(16.4	)	$	458.6

The following table shows the remaining estimated amortization expense for our definite-lived intangible assets at March 31, 2020:

                        13

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

	(in millions)
Year	Amount
2021	$	27.9
2022	27.9
2023	27.9
2024	27.9
2025	27.9
Thereafter	199.1
	$	338.6

Amortization expense was $7.0 million and $10.2 million in the three months ended March 31, 2020 and 2019, respectively.

The following table shows the remaining weighted-average useful life of our definite lived intangible assets as of March 31, 2020:

	Remaining Weighted-Average Useful Life
Customer/distributor relationships	14 years
Patented/unpatented technology	10 years
Total identifiable assets, net with definite lives	12 years

                        14

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 7 — Acquisition

Ranpak Business Combination — On June 3, 2019, the Company consummated the acquisition of all outstanding and issued equity interests of Rack Holdings, the Ranpak Business Combination, pursuant to the Stock Purchase Agreement for consideration of $794.9 million and €140.0 million ($160.8 million) in cash, (i) $341.5 million and €140.0 million of which was used by the Seller to repay outstanding indebtedness and unpaid transaction expenses as contemplated by the Stock Purchase Agreement and (ii) the remainder of which was paid to Seller. The purchase price paid at Closing was estimated and subject to customary post-Closing adjustments which included an adjustment of $0.7 million for net working capital and as additional consideration.

The Ranpak Business Combination is accounted for under ASC 805. Pursuant to ASC 805, the Company has been determined to be the accounting acquirer. Refer to Note 1, Nature of Operations, for more information. Rack Holdings constitutes a business with inputs, processes, and outputs. Accordingly, the acquisition of Rack Holdings constitutes the acquisition of a business for purposes of ASC 805 and, due to the change in control of Rack Holdings, was accounted for using the acquisition method. The Company recorded the fair value of assets acquired and liabilities assumed from Rack Holdings.

The allocation of the consideration to the assets acquired and liabilities assumed is based on various estimates. As of December 31, 2019, the Company completed evaluation of net working capital as part of the purchase price paid at Closing and paid additional consideration of $0.7 million. The Company continues to evaluate the fair value of the acquired intangible assets and equipment. As such, to the extent of these estimates, the purchase price allocation is preliminary and subject to change within the respective measurement period which will not extend beyond one year from the acquisition date. Any adjustments will be recognized in the reporting period in which the adjustment amounts are determined.

The following represents the preliminary purchase price allocation for the Ranpak Business Combination:

(in millions)	Amount
Total consideration	$	955.7
Cash and cash equivalents	10.1
Accounts receivable	28.2
Inventories	16.1
Property, plant and equipment	119.5
Other assets	4.8
Intangible assets	473.7
Total identifiable assets acquired	652.4
Accounts payable	8.6
Accrued expenses	7.4
Other liabilities	5.0
Deferred tax liabilities	122.9
Net identifiable liabilities acquired	143.9
Goodwill	$	447.2

                        15

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Intangible assets and property, plant and equipment balances comprise the following:

	Preliminary Fair Value		Remaining Useful Lives
Patented/Unpatented Technology	$	164.1	10 years
Customer/Distributor Relationships	198.6		15 years
In-Process Research & Development	5.0		10 years
Trade Names/Trademarks	106.0		Indefinite
Total Preliminary Fair Value	$	473.7
Machinery and Equipment	$	17.6	5 years
Converting Machines	90.4		3 - 7 years
Buildings and Improvements	7.4		15 years
Land	4.1		N/A
Total Preliminary Fair Value	$	119.5

The preliminary fair values for the trade names/trademarks, patented/unpatented technology, and in-process R&D were determined using the Relief-from-Royalty Method, which is a combination of an Income Approach and Market Approach. The preliminary fair value for customer/distributor relationships was determined using the Multi-Period Excess Earnings Method, which is an Income-based Approach.

The preliminary fair value for land was determined using Sales Comparison and Cost Approaches, depending on location. The preliminary fair value for machinery and equipment, and buildings and improvements were determined using a combination of the Cost Approach and Market Approach, considering physical deterioration when determining current reproduction costs.

The preliminary estimates of remaining useful lives for the intangible assets and property, plant, and equipment were determined by assessing the period of economic benefit of the assets.

Goodwill represents the excess of the total purchase consideration over the fair value of the underlying net assets, largely arising from the assembled workforce, new customers and the replacement of customers and technology attrition. Goodwill is not amortized for tax purposes.

The following unaudited information represents the supplemental pro forma results of the Company’s condensed consolidated statement of operations as if the Ranpak Business Combination occurred on January 1, 2019, for the three months ended March 31, 2020 and 2019, after giving effect to certain adjustments, including depreciation and amortization of the assets acquired and liabilities assumed based on their estimated fair values and changes in interest expense resulting from changes in debt (in millions):

	Three Months Ended March 31,			Three Months Ended March 31,
(in millions)	2020			2019
Net Sales	$	63.4		$	66.1
Net Loss	$	(3.6	)	$	(3.4	)

These pro forma results were based on estimates and assumptions, which the Company believes are reasonable. They are not the results that would have been realized had the Company been a combined company during the periods presented and are not necessarily indicative of consolidated results of operations in future periods. The pro forma results include adjustments primarily related to purchase accounting adjustments. Acquisition costs and other non-recurring charges incurred are included in the earliest period presented.

Neopack Acquisition — On February 28, 2017, pursuant to the Share Purchase Agreement (“e3NEO Purchase Agreement”) the Predecessor acquired all of the capital stock of Neopack Solutions S.A.S. dba e3NEO.

                        16

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

The e3NEO Purchase Agreement contained a contingent consideration arrangement that required the Company to pay e3NEO a “Next Generation Machine Payment”, which was computed by the Company based on certain criteria established in the e3NEO Purchase Agreement. The criteria included, but were not limited to, the design and development by e3NEO of a prototype of the “Next Generation Machine” as defined in the e3NEO Purchase Agreement. The maximum amount payable, $1.1 million, was recorded as contingent consideration, all of which was paid in 2018.

Additionally, the e3NEO Purchase Agreement contains an earn-out provision whereby the seller may be entitled to receive an earn-out payment in an amount up to the greater of (i) $2.6 million (the “Minimum Earn-Out Amount”), and (ii) the trailing twelve (12) month earnings before income taxes, depreciation and amortization of the business calculated as of December 31, 2020 multiplied by forty-eight percent (48%). In order to be eligible to receive the Minimum Earn-Out Amount pursuant to the purchase agreement, e3NEO must have caused the business to receive purchase orders from customers and receive sign-off from customers upon completion of a successful factory acceptance test related to certain next generation machines on or before December 31, 2019 subject to reasonable approval of the Company. The conditions of the earn-out were not achieved and the Company agreed to a settlement arrangement with the former majority owner of e3NEO, which was approved by French authorities and finalized on April 21, 2020. The arrangement provides for a payment to the earn-out counterparties in the amount of approximately $1.6 million and also provides the former majority owner of e3NEO severance from the Company, including non-compete and consulting amounts under French law. Approximately $1.4 million was accrued for at March 31, 2020 and included in current liabilities in the unaudited condensed consolidated balance sheets. The remaining $0.2 million was subject to the approval by French authorities and expensed in April 2020 with approximately $0.8 million paid April 2020.

                        17

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 8 — Long-Term Debt

In connection with the Closing of the Ranpak Business Combination, Ranger Pledgor LLC ("Holdings"), Ranger Packaging LLC (the "U.S. Borrower"), and Ranpak B.V. (the "Dutch Borrower" and together with the US Borrower, the "Borrowers"), entered into a First Lien Credit Agreement that provided for senior secured credit facilities to, in part, (i) fund the business combination, (ii) repay and terminate the existing indebtedness of Rack Holdings, and (iii) pay all fees, premiums, expenses and other transaction costs incurred in connection with the foregoing. The aggregate principal amount of the senior secured credit facilities consists of a $378.2 million dollar-denominated first lien term facility (the “First Lien Dollar Term Facility”), a €140.0 million ($152.6 million equivalent) euro-denominated first lien term facility (the “First Lien Euro Term Facility” and, together with the First Lien Dollar Term Facility, the “First Lien Term Facility”) and a $45.0 million revolving facility (the “Revolving Facility” and together with the First Lien Term Facility, the “Facilities”). The First Lien Term Facility matures seven years after the Closing Date and the Revolving Facility matures five years after the Closing Date. In December 2019, the Company closed on a public offering of its Class A common stock generating net proceeds of approximately $107.7 million that was used to pay down the First Lien Dollar Term Facility. As of March 31, 2020 and December 31, 2019, no amounts were outstanding under the Revolving Facility.

Long-term debt consisted of the following:

	March 31, 2020			December 31, 2019
First Lien Dollar Term Facility	$	270.9		$	270.9
First Lien Euro Term Facility (139.7 million Euro)	153.7			157.3
Revolving Facility	—			—
Total Debt	424.6			428.2
Less deferred financing costs, net	(7.6		)	(7.8		)
Less current portion	(1.5		)	(1.6		)
Long-term Debt	$	415.5		$	418.8

Borrowings under the Facilities, at the Borrowers' option, bear interest at either (1) an adjusted eurocurrency rate or (2) a base rate, in each case plus an applicable margin. The applicable margin is 3.75% with respect to eurocurrency borrowings and 2.75% with respect to base rate borrowings as of March 31, 2020 and December 31, 2019, (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 400 basis points for eurocurrency borrowings. The interest rate at March 31, 2020 and December 31, 2019 was 4.74% and 5.46%, respectively.

The Revolving Facility includes borrowing capacity available for standby letters of credit of up to $5 million. Any issuance of letters of credit will reduce the amount available under the Revolving Facility.

The Facilities will provide the Borrowers 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 trailing-twelve months Consolidated EBITDA (as defined in the definitive documentation with respect to the Facilities), plus any voluntary prepayments of the debt financing (and, in the case of the Revolving Facility, to the extent such voluntary prepayments are accompanied by permanent commitment reductions under the Revolving Facility), plus unlimited amounts subject to the relevant net leverage ratio tests and certain other conditions.

The obligations of (i) the US Borrower under the Facilities and certain of its obligations under hedging arrangements and cash management arrangements are unconditionally guaranteed by Holdings and each existing and subsequently acquired or organized direct or indirect wholly-owned US organized restricted subsidiary of Holdings (together with Holdings, the “US Guarantors”) and (ii) the Dutch Borrower under the Facilities are unconditionally guaranteed by the US Borrower, the US Guarantors and each existing and subsequently acquired or organized direct or indirect wholly-owned Dutch organized restricted subsidiary of Holdings (the “Dutch Guarantors”, and together with the US Guarantors, the “Guarantors”), in each case, other than certain excluded subsidiaries. The Facilities are secured by (i) a first priority pledge of the equity interests of the Borrowers and of each direct, wholly-owned restricted subsidiary of any Borrower or any Guarantor and (ii) a first priority security interest in substantially all of the assets of the Borrowers and the Guarantors (in each case, subject to customary exceptions), provided that obligations of the US Borrower and US Guarantors under the Facilities were not secured by assets of the Dutch Borrower or any Dutch Guarantor.

The Facilities impose restrictions that require the Company to comply with or maintain certain financial tests and ratios. Such agreements restrict our ability to, among other things: (i) declare dividends or redeem or repurchase capital stock, including with

                        18

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

respect to Class A common stock; (ii) prepay, redeem or purchase other debt; (iii) incur liens; (iv) make loans, guarantees, acquisitions and other investments; (v) incur additional indebtedness; (vi) engage in sale and leaseback transactions; (vii) amend or otherwise alter debt and other material agreements; (viii) engage in mergers, acquisitions and asset sales; (ix) engage in transactions with affiliates; and (x) enter into arrangements that would prohibit us from granting liens or restrict our ability to pay dividends, make loans or transfer assets among our subsidiaries. We were in compliance with all financial covenants as of March 31, 2020.

On February 14, 2020, Ranger Packaging LLC, a Delaware limited liability company (“U.S. Borrower”), Ranpak B.V., (the “Dutch Borrower”; the U.S. Borrower and the Dutch Borrower, the “Borrowers”), Ranger Pledgor LLC, a Delaware limited

liability company (“Holdings”), certain other subsidiaries of Holdings, certain lenders party to Amendment No. 1 (as defined below) and Goldman Sachs Lending Partners LLC (the “Administrative Agent”) entered into the Amendment No. 1 to First Lien Credit Agreement (“Amendment No. 1”) to amend the First Lien Credit Agreement, dated as of June 3, 2019 among the Borrowers, Holdings, the lenders, the issuing banks and the Administrative Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).

Among other things, the Amendment No. 1 amends the Credit Agreement such that (i) the requirement of the Borrowers to apply excess cash flow to mandatorily prepay term loans under the Credit Agreement commences with the fiscal year ending December 31, 2021 (instead of the fiscal year ending December 31, 2020) and (ii) the aggregate amount per fiscal year of capital stock of any parent company of the U.S. Borrower that is held by directors, officers, management, employees, independent contractors or consultants of the U.S. Borrower (or any parent company or subsidiary thereof) that the U.S. Borrower may repurchase, redeem, retire or otherwise acquire or retire for value has been increased to the greater of $10,000,000 and 10% of Consolidated Adjusted EBITDA (as defined in the Credit Agreement) (increased from the greater of $7,000,000 and 7% of Consolidated Adjusted EBITDA) as of the last day of the most recently ended four fiscal quarter period for which financial statements have been delivered.

                        19

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 9 — Derivative Instruments

We use derivatives as part of the normal business operations to manage our exposure to fluctuations in interest rates associated with variable interest rate debt and decrease the volatility of cash flows affected by changes in interest rates.

On January 31, 2019, the Company entered into a business combination contingent interest rate swap in a notional amount of $200.0 million (the "January 2019 Swap") to hedge part of the floating interest rate exposure under the First Lien Dollar Term Facility. The January 2019 Swap became effective on the Closing of the Ranpak Business Combination and will terminate on the third anniversary of the Closing on June 3, 2022. The January 2019 Swap economically converts a portion of the variable rate debt to fixed rate debt. The Company receives floating interest payments monthly based on one-month LIBOR and pays a fixed rate of 2.56% to the counterparty. Prior to September 25, 2019, the Company did not apply hedge accounting to the January 2019 Swap. Changes in fair value were recorded to interest expense.

On September 25, 2019, the Company amended the January 2019 Swap to extend its term to mature on June 1, 2023 and lower the rate to 2.31% (the "Amended January 2019 Swap"). We concurrently entered into an incremental $50.0 million notional swap at 1.5% and maturing on June 1, 2023 (the "September 2019 Swap").

Additionally, on September 25, 2019, we designated as cash flow hedges the Amended January 2019 Swap and the September 2019 Swap and applied hedge accounting. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Changes in fair value are recorded in accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

On March 27, 2020, we entered into an interest rate swap that amended the Amended January 2019 Swap to a lower rate of 2.1% and extended the maturity to June 3, 2024 (the "Second Amended January 2019 Swap"). We designated the Second Amended January 2019 Swap as a cash flow hedge and applied hedge accounting.

We recognized a loss on the interest rate swaps of $0.3 million in interest expense in the unaudited condensed consolidated statement of operations and comprehensive income (loss) for the period ended March 31, 2020. No gains or losses were recognized in the three months ended March 31, 2019 (the Predecessor Period).

As of March 31, 2020, our interest rate swaps have a combined notional value of $250.0 million.

During the quarter ended March 31, 2020, unrealized losses of $7.8 million (net of tax of $2.3 million) were recorded to other comprehensive loss, and $0.3 million was reclassified out of accumulated other comprehensive loss to interest expense. As of March 31, 2020, we anticipate having to reclassify $0.4 million from accumulated other comprehensive income (loss) into earnings during the next 12 months to offset the variability of the hedged items during this period.

The following table summarizes the total fair value of derivative assets and liabilities as of March 31, 2020 and December 31, 2019:

	Fair Value as of March 31, 2020
	Other Assets		Current Liabilities		Non-current Liabilities
Interest rate swaps designated as accounting hedges	$	—	$	0.4	$	14.7
Total derivatives	$	—	$	0.4	$	14.7

	Fair Value as of December 31, 2019
	Other Assets		Current Liabilities		Non-current Liabilities
Interest rate swaps designated as accounting hedges	$	—	$	0.4	$	4.6
Total derivatives	$	—	$	0.4	$	4.6

The following table presents the effect of our derivative financial instruments on our unaudited condensed consolidated statement of operations. The income effects of our derivative activities are reflected in interest expense. There were no gains or losses recorded in the three months ended March 31, 2019 (the Predecessor Period):

                        20

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

	Successor
(in millions)	Three Months Ended March 31, 2020
Total interest expense presented in the statement of operations	$	6.2
Derivatives designated as hedging instruments:
Cash flow hedges- interest rate swaps	$	0.3

                        21

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 10 — Fair Value Measurement

Financial instruments are required to be categorized within a valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:

▪ Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

▪ Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

▪ Level 3 — Unobservable inputs that are supported by little or no market activities.

The carrying values of cash and cash equivalents (primarily consisting of bank deposits), accounts receivable and accounts payable approximate their fair values due to the short-term nature of these instruments as of March 31, 2020 and December 31, 2019. The carrying value of borrowings under the credit facilities approximates fair value due to the variable interest rates associated with those borrowings.

The following table provides the carrying amounts, estimated fair values and the respective fair value measurements of the Company's financial instruments as of March 31, 2020 and December 31, 2019:

	Carrying Amount		Fair Value		Fair Value Measurements
March 31, 2020					Level 1		Level 2		Level 3
Current and long-term debt	$	424.6	$	424.6	$	—	$	424.6	$	—
Derivative liability	$	15.1	$	15.1	$	—	$	15.1	$	—

	Carrying Amount		Fair Value		Fair Value Measurements
December 31, 2019					Level 1		Level 2		Level 3
Current and long-term debt	$	428.2	$	428.2	$	—	$	428.2	$	—
Derivative liability	$	5.0	$	5.0	$	—	$	5.0	$	—

The valuation techniques and inputs used for fair value measurements categorized within Level 2 include quoted comparable prices from market inputs. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows or option pricing models using the Company’s own estimates and assumptions or those expected to be used by market participants. The Company determines its valuation policies and procedures and analyzes changes in fair value measurements from period to period by using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities. No financial instruments were measured using unobservable inputs.

The fair value of outstanding long-term debt is based on prices and other relevant information generated by market transactions involving identical or comparable debt instruments, which represents a Level 2 measurement. Derivative positions are classified within Level 2 of the valuation hierarchy as they are valued using quoted market prices for similar assets and liabilities in active markets. These Level 2 derivatives are valued utilizing an income approach, which discounts future cash flow based upon current market expectations and adjusts for credit risk.

                        22

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 11 — Income Taxes

For each interim reporting period, we make an estimate of the effective tax rate we expect to be applicable for the full year for our operations. This estimated effective tax rate is used in providing for income taxes on a year-to-date basis. Our effective tax rate was as follows:

	Successor	Predecessor
	Three Months Ended March 31, 2020	Three Months Ended March 31, 2019
Effective Tax Rate	32.3%	15.2%

The fluctuation in the effective tax rate over the periods presented above was primarily attributable to a jurisdictional mix of income between periods. The effective tax rate differs from the U.S. federal statutory rate due primarily to benefits derived from the U.S. foreign derived intangible income deduction, tax credits available in the U.S., and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax rate.

Pursuant to the Ranpak Business Combination discussed in detail in Note 7, "Acquisition," the Company has preliminarily estimated the fair market value of assets and liabilities, including the impact on the deferred tax assets and liabilities in accordance with the guidance under ASC 805. The deferred tax assets and liabilities are provisional as the valuation analysis is not complete. The provisional deferred tax assets and liabilities will be adjusted accordingly with any changes to the fair market value of the underlying assets and liabilities. The provisional deferred tax impact was a net deferred tax liability of $122.9 million.

We are subject to taxation in the United States (federal, state, local) and foreign jurisdictions. As of March 31, 2020, tax years 2017 through 2020 are subject to examination by the tax authorities.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") into law. The CARES Act includes several significant business tax provisions that, among other things, would eliminate the taxable income limit for certain net operating losses ("NOL") and allow businesses and individuals to carry back NOLs arising in 2018, 2019, and 2020 to the five prior tax years; suspend the excess business loss rules under section 461(l); accelerate refunds of previously generated corporate AMT credits; generally loosen the business interest limitation under section 163(j) from 30 percent to 50 percent (special partnership rules apply); and fix the “retail glitch” for qualified improvement property in the 2017 tax code overhaul known informally as the Tax Cuts and Jobs Act (the "TCJA") (TCJA, Public Law 115-97). ASC 740, Income Taxes, requires that the tax effects of changes in tax laws or rates be recorded discretely as a component of the income tax provision related to continuing operations in the period of enactment. As such, we have recorded any applicable impact from the CARES Act in the first quarter of 2020.

                        23

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 12 — Commitments and Contingencies

Litigation

We are subject to legal proceedings and claims that arise in the ordinary course of our business. Management evaluates each claim and provides for potential loss when the claim is probable to be paid and reasonably estimable. While adverse decisions in certain of these litigation matters, claims and administrative proceedings could have a material effect on a particular period’s results of operations, subject to the uncertainties inherent in estimating future costs for contingent liabilities, management believes that any future accruals with respect to these currently known contingencies would not have a material effect on the financial condition, liquidity or cash flows of the Company. There are no amounts required to be reflected in these unaudited interim condensed consolidated financial statements related to contingencies for the three months ended March 31, 2020 and the year ended December 31, 2019.

Leases

Certain office and warehouse facilities, transportation vehicles and data processing equipment are leased. Total rental expense relating to these leases for the three months ended March 31, 2020 and 2019 was approximately $0.5 million and $0.4 million, respectively.

Environmental Matters

Our operations are subject to extensive and changing U.S. federal, state and local laws and regulations, as well as the laws of other countries that establish health and environmental quality standards. These standards, among others, relate to air and water pollutants and the management and disposal of hazardous substances and wastes. We are exposed to potential liability for personal injury or property damage caused by any release, spill, exposure or other accident involving such pollutants, substances or wastes. There are no amounts required to be reflected in these unaudited interim consolidated financial statements related to environmental contingencies.

Management believes the Company is in compliance, in all material respects, with environmental laws and regulations and maintains insurance coverage to mitigate exposure to environmental liabilities. Management does not believe any environmental matters will have a material adverse effect on the Company’s future consolidated results of operations, financial position or cash flows.

                        24

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 13 — Stock-Based Compensation

We expense the fair value of grants of various stock-based compensation programs over the vesting period of the awards. Stock compensation expense is recorded in selling, general, and administrative expenses in the condensed consolidated statements of operations. Awards granted are recognized as compensation expense based on the grant date fair value, estimated in accordance with ASC 718, Compensation - Stock Compensation. The grant date fair value is the closing price of our stock on the grant date. Failure to satisfy the threshold service or performance conditions results in the forfeiture of shares. Forfeiture of share awards with service conditions or performance-based restrictions results in a reversal of previously recognized share-based compensation expense so long as the awards are probable of vesting.

The table below summarizes certain data for our stock-based compensation plans:

	Successor
	Three Months Ended March 31, 2020
Compensation expense for all stock-based compensation plans	$	2.2
Tax benefits for stock-based compensation	0.2
Fair value of vested awards	$	2.4

Our shareholders approved the Ranpak Holdings Corp. 2019 Omnibus Incentive Plan (the “2019 Plan”) at the Annual Meeting of Shareholders on February 20, 2019. The purpose of the 2019 Plan is to motivate and reward employees and other individuals to perform at their highest level and contribute significantly to the success of the Company. The 2019 Plan is an omnibus plan that may provide these incentives through grants of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, other cash-based awards and other stock-based awards to employees, directors, or consultants of the Company.

As of March 31, 2020, a maximum of 4,118,055 shares may be issued under the 2019 Plan. As of March 31, 2020, 2,141,679 equity awards have been granted, 565,003 equity awards have been canceled, and 262,028 equity awards vested under the 2019 Plan, leaving 2,541,379 shares available for future awards under the 2019 Plan. Shares issued are new shares which have been authorized and designated for award under the 2019 Plan. We did not have any shares outstanding under the 2019 Plan on March 31, 2019.

Restricted Stock Units—Restricted stock units represent a right to receive one share of our common stock that is both nontransferable and forfeitable unless and until certain conditions are satisfied. Certain restricted stock units vest ratably over a three or two-year period while others vest over a one-year period. The fair value of restricted stock units is determined on the grant date and is amortized over the vesting period on a ratable basis.

Restricted Stock Units	Shares		Weighted Average Grant Date Fair Value
Restricted at January 1, 2020	483,299		$	9.30
Granted	436,783		8.07
Vested	(242,093	)	8.36
Forfeited	(5,119	)	9.43
Outstanding at March 31, 2020	672,870		$	8.84

As of March 31, 2020, there was $5.0 million of remaining unamortized deferred compensation associated with these restricted stock units that will be expensed over the remaining service period through March 3, 2022. Expense recognized due to the vesting of these awards was $2.0 million for the three months ended March 31, 2020. The Company did not have any shares outstanding under the 2019 Plan at March 31, 2019 and therefore did not incur any amortization expense for the three months ended March 31, 2019.

Performance-Based Restricted Stock Units—Performance-based restricted stock units vest over a three-year period. However, the level of the awards to be earned is determined at the end of the initial one-year performance period, based upon attainment of

                        25

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

specific business performance goals during such initial one-year performance period. If certain minimum performance levels are not attained in the initial one-year performance period, the awards will be automatically forfeited before vesting. The awards are variable in that compensation could range from zero to 150% of the award agreement's target contingent on the performance level attained. The fair value of performance-based restricted stock units is determined on the grant date. Compensation cost for these awards is recognized based on the probability of achievement of the performance-based conditions. The table below includes the maximum number of restricted stock units that may be earned under the 2019 Plan.

Performance-Based Restricted Stock Units	Shares	Weighted Average Grant Date Fair Value
Restricted at January 1, 2020	—	$	—
Granted	641,778	8.07
Vested	—	—
Forfeited	—	—
Outstanding at March 31, 2020	641,778	$	8.07

As of March 31, 2020, there was $5.0 million of remaining unamortized deferred compensation associated with these performance-based restricted stock units that may be expensed over the remaining service period through March 3, 2022. Expense recognized related to these awards was $0.2 million for the period ended on March 31, 2020. The Company did not have any shares outstanding under the 2019 Plan at March 31, 2019 and therefore did not incur any amortization expense for the three months ended March 31, 2019.

Director Stock Units—Members of the Company's Board of Directors may elect to receive their quarterly retainer fees in the form of Class A common shares that are covered by an active shelf registration statement. The retainers are paid quarterly, in arrears, and vest upon issuance. These shares are priced at the closing price of the last business day of the calendar quarter. The table below includes the number of shares granted and vested for Directors electing to receive retainer payments in shares for the periods below.

Director Stock Units	Shares		Weighted Average Grant Date Fair Value
Balance at January 1, 2020	—		$	—
Granted	6,903		8.15
Vested	(6,903	)	8.15
Balance at March 31, 2020	—		$	—

                        26

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 14 — Shareholders’ Equity

Capital Stock—The Company is authorized to issue 426,000,000 shares of capital stock, consisting of (i) 200,000,000 shares of Class A common stock, par value $0.0001 per share, (ii) 25,000,000 shares of Class B common stock, par value $0.0001 per share, and (iii) 200,000,000 shares of Class C common stock, par value $0.0001 per share and (iv) 1,000,000 shares of preferred stock, par value $0.0001 per share.

Common Shares—Each holder of Class A Common Stock ("Class A") is entitled to one vote for each Class A share held of record.  Holders of shares of Class C Common Stock ("Class C") have no such voting rights and, as such, shall not have the right to receive notice of, attend at or vote on any matters on which stockholders generally are entitled to vote.  Class C shares have a right of conversion that upon sale or other transfer convert to Class A shares.

Upon the closing of the Ranpak Business Combination, 3,854,664 of Class B shares were canceled and 7,395,336 of Class B shares were converted to 6,663,953 of Class A shares and 731,383 of Class C shares. Certain of the Class B shares were subject to forfeiture conditions that carried over to the Class A shares. At December 31, 2019, Ranpak had 6,847,836 Class A and Class C shares outstanding subject to forfeiture unless certain provisions are met as described below. These shares will not participate in cash dividends or other cash distributions payable prior to the date the conditions have been satisfied. Upon satisfaction, shareholders will be entitled to all cash dividends and other cash distributions from the closing of the Ranpak Business Combination. As of December 31, 2019, there were no such cash dividends or other cash distributions potentially payable upon these conditions.

157,500 shares of Class A common stock will be surrendered for no consideration unless, prior to the fifth anniversary of the Ranpak Business Combination, either (i) the closing price of our Class A common stock equals or exceeds $12.25 per share (in each case as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period or (ii) the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all ordinary shareholders having the right to exchange their common stock for consideration in cash, securities or other property which equals or exceeds $12.25 per share (in each case as adjusted for share splits, dividends, reorganizations, recapitalizations and the like).

2,940,336 shares of Class A common stock will be surrendered for no consideration unless, prior to the tenth anniversary of the Ranpak Business Combination, (i) the closing price of the Company’s Class A common stock equals or exceeds $15.00 per share (in each case as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period or (ii) the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all or substantially all of its shareholders having the right to exchange their shares or the Company otherwise undergoes a change of control.

A total of 3,750,000 shares of Class A and Class C common stock will be surrendered for no consideration unless, prior to the tenth anniversary of the closing of the Ranpak Business Combination, (i) the closing price of the Company’s Class A shares equals or exceeds $12.50 per share (in each case as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period or (ii) the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all or substantially all of its shareholders having the right to exchange their shares or the Company otherwise undergoes a change of control.

Preferred Shares—The Company's charter authorizes 1,000,000 shares of preferred stock and provides that shares of preferred stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The Board of Directors is able, without stockholder approval, to issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. As of March 31, 2020, the Company had no preferred stock outstanding.

Public Warrants—On January 22, 2018, the Company consummated its IPO of 30,000,000 units, each consisting of one Class A ordinary share and one half of one warrant to purchase one Class A ordinary share, i.e., 15,000,000 warrants in total (the “public warrants”).

Forward Purchase Warrants—On October 5, 2017, on a private placement basis pursuant to individual forward purchase agreements, the Company’s anchor investors agreed to purchase an aggregate of 15,000,000 Class A ordinary shares (or, at each holder’s election, Class C ordinary shares) plus 5,000,000 warrants to purchase shares of Class A ordinary shares (or, at each

                        27

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

holder’s election, warrants to purchase shares of Class C ordinary shares) (the “forward purchase warrants”) at a purchase price of $10.00 per ordinary share, with one forward purchase warrant allocated per three forward purchase shares issuable to each investor. The forward purchase shares and forward purchase warrants were issued on June 3, 2019 in connection with the closing of the Ranpak Business Combination.

Private Placement Warrants—On January 17, 2018, certain investors purchased an aggregate of 8,000,000 private placement warrants at a price of $1.00 per whole warrant in a private placement that closed simultaneously with the closing of the IPO. On March 27, 2019, the Company entered into a warrant exchange agreement with certain holders of the private placement warrants, pursuant to which 7,429,256 of the outstanding private placement warrants were canceled by the Company in exchange for 742,926 shares of Class A common stock (a 10:1 ratio) in connection with the closing of the Ranpak Business Combination. The private placement warrants (including the shares of Class A common stock or, at the holder’s election, Class C common stock issued upon exercise of the private placement warrants) were not transferable, assignable or salable until 30 days after the completion of the Ranpak Business Combination, subject to certain exceptions, and they will not be redeemable by the Company so long as they are held by the anchor investors who initially purchased such warrants or their respective permitted transferees.

Terms of the Warrants—Each warrant entitles the registered holder to purchase one share of Class A common stock (or with respect to the forward purchase and private placement warrants, at the election of the holder, one share of Class C common stock) at a price of $11.50 per share, subject to adjustment, at any time commencing 30 days after the closing of the Ranpak Business Combination, provided that the Company has an effective registration statement under the Securities Act covering the Class A common stock issuable upon exercise of the public warrants and a current prospectus relating thereto is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky laws of the state of residence of the holder. Pursuant to the warrant agreement that governs the terms of the warrants, a warrant holder may exercise its warrants only for a whole number of shares of Class A common stock (or with respect to the forward purchase warrants, at the election of the holder, one share of Class C common stock). This means only a whole warrant may be exercised at a given time by a warrant holder. The warrants will expire five years after the closing of the business combination, or earlier upon redemption or liquidation.

Once the public warrants and forward purchase warrants are exercisable, the Company may call such warrants for redemption in whole and not in part;

• At a price of $0.01 per warrant;

• Upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

• If, and only if, the reported last sales price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

Registration Rights—Certain investors were entitled to registration rights pursuant to the forward purchase agreements, subscription agreements, private placement warrant agreements, and the registration rights agreement entered into concurrently with the closing of the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a business combination. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The Company bore the expenses incurred in connection with the filing of any such registration statements.

Follow-On Offering—On December 13, 2019, the Company closed on a public offering of 16,923,077 shares of its Class A common stock at an offering price of $6.50 per share, generating gross proceeds of approximately $110.0 million ($107.7 million net of expenses). These shares were registered pursuant to the Form S-3 declared effective on July 31, 2019. The proceeds from this offering were used to pay down outstanding debt.

Outstanding Shares—At March 31, 2020 and March 31, 2019, the Company had the following shares of common stock outstanding:

                        28

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

	Successor			Predecessor
	March 31, 2020			March 31, 2019
	Class A	Class C	Total Common	Common
Shares outstanding not subject to an earn-out agreement	58,235,794	5,779,910	64,015,704	995
Shares subject to a $15.00 earn-out	2,940,336	—	2,940,336	—
Shares subject to a $12.50 earn-out	3,018,617	731,383	3,750,000	—
Shares subject to a $12.25 earn-out	157,500	—	157,500	—
Total	64,352,247	6,511,293	70,863,540	995

Translation adjustment—Translation adjustments recorded are a component of accumulated other comprehensive income (loss) in shareholders’ equity. The effects of translating financial statements of foreign operations into the Company’s reporting currency are recognized as a cumulative translation adjustment in accumulated other comprehensive loss which is net of tax, where applicable. Translation adjustments were as follows:

	Successor			Predecessor
	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Translation adjustment	$	(4.0	)	$	(3.4	)

                        29

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 15 — Earnings (Loss) per Share

Basic earnings (loss) per share ("EPS") is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution, if any, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the more dilutive of the two-class method or if-converted method. Diluted EPS excludes potential shares of common stock if their effect is anti-dilutive. If there is a net loss in any period, basic and diluted EPS are computed in the same manner.

The two-class method determines net income (loss) per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between different classes of common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. We apply the two-class method for EPS when computing net income (loss) per Class A and Class C common shares.

The Predecessor had one class of shares outstanding. As of March 31, 2020, we have not issued any instruments that were considered to be participating securities. The Successor’s weighted average shares of Class A and Class C common stock have been combined in the denominator of basic and diluted earnings (loss) per share because they have equivalent economic rights. The following tables set forth the computation of our loss per share:

	Successor			Predecessor
(in millions, except per share amounts)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Net loss	$	(3.6	)	$	(3.4	)
Income allocated to participating preferred shares	—			—
Net loss attributable to common stockholders for basic and diluted EPS	$	(3.6	)	$	(3.4	)
Basic weighted average common shares outstanding	70,862,576			995
Denominator adjustments for diluted EPS:
Assumed exercise of warrants	—			—
Assumed vesting of RSUs	—			—
Dilutive weighted average common shares outstanding	70,862,576			995
Loss per share attributable to common stockholders:
Basic	$	(0.05	)	$	(3,387.94	)
Diluted	$	(0.05	)	$	(3,387.94	)

The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive or because milestones were not yet achieved for awards contingent on the achievement of performance milestones:

                        30

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

	Successor	Predecessor
	Three Months Ended March 31, 2020	Three Months Ended March 31, 2019
Warrants on Common Stock	20,108,744	—
Restricted Stock Units
and Performance-based
Restricted Stock Units	1,314,648	—
	21,423,392	—

                        31

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 16 — Transactions with Related Parties

Shared Services Agreement

On June 3, 2019, upon the closing of Ranpak’s business combination with One Madison Corporation, Ranpak entered into a shared services agreement (the “Shared Services Agreement”) with One Madison Group LLC (the “Sponsor”), pursuant to which the Sponsor may provide, or cause to be provided, certain services to Ranpak. The Shared Services Agreement provides for a broad array of potential services, including administrative and “back office” or corporate-type services and requires Ranpak to indemnify the Sponsor in connection with the services provided by the Sponsor to Ranpak. Total fees under the agreement amounted to approximately $0.1 million for the three months ended March 31, 2020.

Advisory Relationship

A director of the Company, prior to being elected as a director, served in an advisory role to Rhône Capital IV L.P., the former majority shareholder of Rack Holdings, Inc., on the sale of Rack Holdings, Inc. The director was compensated for the advisory role through an increase to his indirect equity interest in Rack Holdings, Inc., and reported to Ranpak that the compensation was not significant (less than $50 thousand).

Registration Rights Agreement

As a result of the Ranpak Business Combination, Ranpak is a party to a registration rights agreement with certain security holders. The agreement requires Ranpak to maintain an effective resale shelf registration statement for the benefit of such security holders until they are permitted by law to freely sell their securities without registration or no longer hold Ranpak securities.

Subscription Agreements and Reallocation Agreement

One Madison Corporation entered into a subscription agreement, pursuant to which, as amended, certain shareholders, including our Chairman & CEO, another of our directors and one of our significant shareholders may be required to surrender to Ranpak certain of their shares (referred to as founder shares) if the closing price of the Class A common stock (or any successor class of listed common shares) equals or exceeds $12.50 per share (as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period or Ranpak completes a liquidation, merger, share exchange or other similar transaction that results in all of its common shareholders having the right to exchange their common equity for consideration in cash, securities or other property which equals or exceeds $12.50 per share (as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) in the five year period following the consummation of the Ranpak Business Combination (the “Earnout”).

One Madison Corporation also entered into a reallocation agreement with certain investors, including our Chairman & CEO, another of our directors and one of our significant shareholders, who provided equity financing for the Ranpak Business Combination under the forward purchase agreements and the subscription agreements, pursuant to which the shares subject to the Earnout and the rights to acquire 5,000,000 warrants to purchase Class A shares arising under the forward purchase agreements were reallocated among all equity financing investors pro rata based on the aggregate amount of equity financing provided by such equity financing investors under the forward purchase agreements and the subscription agreements. The Class B ordinary shares owned by each party to the reallocation agreement following the reallocation are subject to the provisions in the forward purchase agreement relating to Class B ordinary shares, including with respect to the voting of, transfer and forfeiture and waiver of redemption rights with respect to such Class B ordinary shares, or, for the parties to the reallocation agreement that are not party to a forward purchase agreement, the provisions substantially similar to such forward purchase agreement provisions that are set forth on an exhibit to the reallocation agreement.

Stock Purchase Agreement

Ranpak is subject to certain continuing obligations to indemnify the former directors and officers of Rack Holdings Inc. for certain costs, damages and liabilities pursuant to the Stock Purchase Agreement dated December 12, 2018, pursuant to which One Madison Corporation purchased Rack Holdings Inc.

Monitoring Fee Arrangement

Rack Holdings had a monitoring fee agreement, with Rhône Capital IV L.P., a related party, which required Rack Holdings to pay 1% of projected annual earnings before interest, taxes and depreciation and amortization in advance of each semi-annual period, adjusted retroactively up or down, plus reimbursement of other expenses. As of June 3, 2019, upon the Closing of the Ranpak

                        32

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Business Combination and change in control, this monitoring fee was eliminated. Monitoring fee and reimbursement expenses are immaterial but are included in selling, general and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2019.

                        33

RANPAK HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in millions, except share and per share data)

Note 17 — Subsequent Event

In March 2020, the World Health Organization characterized the outbreak of a novel strain of coronavirus (“COVID-19”) as a pandemic, which has resulted in rapid changes in market and economic conditions around the world as COVID-19 continues to spread. We believe that these impacts are not unique to us and that our industry competitors have been impacted in a similar fashion. We are deemed an essential business under the Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response issued by the United States Cybersecurity and Infrastructure Security Agency and pursuant to state decisions in states where our domestic production and distribution facilities are located. We continue to operate our production and distribution facilities, both domestically and internationally, albeit subject to social distancing and other measures to promote a safe operating environment. While we have experienced limited delays in receiving certain supplies we use to assemble our packaging systems, to date, these measures have not materially impacted the cost of producing and distributing our products, the cost and availability of raw materials and components, and we have encountered minimal disruption in our ability to fulfill customer orders. We cannot currently predict the extent to which we will ultimately be impacted due to the evolving and highly uncertain nature of the COVID-19 pandemic and will continue to evaluate the nature and extent of the impact to our business, results of operations and financial condition.

                        34

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.   Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. No assurance can be given that results in any forward-looking statement will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. The cautionary statements made in this Quarterly Report on Form 10-Q should be read as being applicable to all forward-looking statements whenever they appear in this Quarterly Report on Form 10-Q.  For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.  Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with the sections entitled “Risk Factors” and “Forward-Looking Statements,” and our financial statements and related notes included in this Quarterly Report on Form 10-Q as well as the section entitled, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of Ranpak included in our Annual Report on Form 10-K, filed with the SEC on March 17, 2020. For purposes of this section, "Ranpak", "the Company", "we", or "our" refer to (i) Rack Holdings and its subsidiaries (the "Predecessor") for the three months ended March 31, 2019 the "Predecessor Period," prior to the consummation of the Ranpak Business Combination and (ii) Ranpak Holdings Corp. and its subsidiaries (the "Successor ") for the three months ended March 31, 2020 the "Successor Period," after the consummation of the Ranpak Business Combination, unless the context otherwise requires. Capitalized terms used and not defined herein have the meanings disclosed elsewhere in the Quarterly Report on Form 10-Q.

The following discussion 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.

Overview

Ranpak is a leading provider of environmentally sustainable, systems-based, product protection solutions for e-commerce and industrial supply chains. Since its inception in 1972, Ranpak has delivered high quality protective packaging solutions, while maintaining its commitment to environmental sustainability. Ranpak assembles its protective packaging systems and provides the systems and paper consumables to customers, which include direct end-users and its network of exclusive paper packaging solution distributors, who in turn place the systems with and sell paper to commercial and industrial users for the conversion of paper into packaging materials. Ranpak operates manufacturing facilities in Concord Township, Ohio; Kansas City, Missouri; Raleigh, North Carolina; and Reno, Nevada in the United States, in Heerlen, the Netherlands and Nyrany, Czech Republic. Ranpak also maintains sales and administrative offices in Paris, France; Shanghai, China; Tokyo, Japan; and Singapore. Ranpak is a global business that generates approximately 54.8% of its net sales for the fiscal year 2019 outside of the United States.

As of March 31, 2020, Ranpak had an installed base of approximately 106.9 thousand protective packaging systems serving a diverse set of distributors and end-users. Ranpak generated net sales of $63.4 million and $66.1 million in the three months ended March 31, 2020 and 2019, respectively.

The Ranpak Business Combination

                        35

On June 3, 2019, we consummated the acquisition of all outstanding and issued equity interests of Rack Holdings, Inc. (“Rack Holdings”) pursuant to a stock purchase agreement for consideration of $794.9 million, which reflects a post-closing adjustment of $0.7 million for net working capital and additional consideration, and €140.0 million ($160.8 million) in cash, (A) $341.5 million and €140.0 million of which, respectively, was used by the Seller to repay outstanding indebtedness and unpaid transaction expenses as contemplated by the stock purchase agreement and (B) the remainder of which was paid to Rack Holdings L.P. ("Seller").

The Company (then One Madison Corporation) was deemed to be the accounting acquirer in the Ranpak Business Combination, as a result of which the Company allocated its purchase price to Rack Holdings' assets and liabilities at fair value, which created a new basis of accounting. Until the consummation of the Ranpak Business Combination, Rack Holdings operated as a separate business holding all of the historical assets and liabilities related to our business.

The Ranpak Business Combination was financed, in part, with debt of approximately $534.6 million, which became Ranpak’s direct obligation upon the consummation of the Ranpak Business Combination. Upon the consummation of the Ranpak Business Combination on June 3, 2019, Rack Holdings' then-existing debt, which amounted to approximately $487.6 million as of such date, was repaid in full. In December 2019, the Company closed a public offering of its Class A common stock generating net proceeds of approximately $107.7 million that was used to pay down the First Lien Dollar Term Facility.

Following the Ranpak Business Combination, we have hired, and expect to hire additional staff and implement procedures and processes to address regulatory and other customary requirements applicable to operating public companies. We have incurred additional annual expenses for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees. We estimated that these incremental costs on an annual basis amounted to approximately $2.0 million or more per year, resulting in higher operating expenses in future periods. The closing of the Ranpak Business Combination also resulted in the elimination of certain non-recurring expenses incurred prior to the Ranpak Business Combination, which amounted to $35.4 million for the year ended December 31, 2019.

The following factors may have affected the comparability of Ranpak’s results of operations between the periods presented in this Quarterly Report on Form 10-Q and may affect the comparability of its results of operations in future periods.

Effect of Currency Fluctuations.    As a result of the geographic diversity of Ranpak’s operations, it is exposed to the effects of currency translation. Currency transaction exposure results when Ranpak generates net sales in one currency at one time and incurs expenses in another currency at another time, or when it realizes gain or loss on intercompany transfers. While Ranpak seeks to limit its currency transaction exposure by matching the currencies in which it incurs sales and expenses, it may not always be able to do so.

In addition, Ranpak is subject to currency translation exposure because the operations of its subsidiaries are measured in their functional currency which is the currency of the primary economic environment in which the subsidiary operates. Any currency balances that are denominated in currencies other than the functional currency of the subsidiary are re-measured into the functional currency, with the resulting gain or loss recorded in the foreign currency (gains) losses line-item in Ranpak’s income statement. In turn, subsidiary income statement balances that are denominated in currencies other than the U.S. dollar are translated into U.S. dollars, Ranpak’s functional currency, in consolidation using the average exchange rate in effect during each fiscal month during the period, with any related gain or loss recorded as foreign currency translation adjustments in other comprehensive income (loss). The assets and liabilities of subsidiaries that use functional currencies other than the U.S. dollar are translated into U.S. dollars in consolidation using period end exchange rates, with the effects of foreign currency translation adjustments included in accumulated other comprehensive income (loss).

Ranpak does not currently hedge its foreign currency transaction or translation exposure. As a result, significant currency fluctuations could impact the comparability of its results between periods, while such fluctuations coupled with material mismatches in net sales and expenses could also adversely impact its cash flows. See “Qualitative and Quantitative Disclosures About Market Risk.”

Acquisitions.  On February 28, 2017, Ranpak acquired e3NEO for total consideration of $3.3 million, including contingent consideration of $1.1 million which was paid in full in 2018, plus an earn-out opportunity, whereby the seller may be entitled to receive an earn-out payment in an amount up to the greater of (i) $2.6 million and (ii) 48% of the trailing twelve (12) month EBITDA of e3NEO calculated as of December 31, 2020. In order to be eligible to receive the Minimum Earn-Out Amount pursuant to the purchase agreement, e3NEO must have caused the business to receive purchase orders from customers and receive sign-off from customers upon completion of a successful factory acceptance test related to certain next generation machines on or before December 31, 2019, subject to reasonable approval of the Company. The earn-out payment was not

                        36

earned and, in April 2020, we entered into a settlement arrangement with the former majority owner of e3NEO to provide, among other things, for a payment to the earn-out counterparties in the amount of approximately $1.6 million, of which $1.4 million was accrued at December 31, 2019 and March 31, 2020. The remaining $0.2 million was subject to approval by French authorities, which was obtained and expensed in April 2020. The Company paid approximately $0.8 million in April 2020. See Note 7, "Acquisition" to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. While recent acquisitions, such as e3NEO, have been relatively small, any significant future business acquisitions may impact the comparability of Ranpak’s results in future periods with those for prior periods.

Seasonality.   Ranpak estimates that approximately one-third of its net sales, either directly or to distributors, are destined for end-users in the e-commerce sectors, whose businesses frequently follow traditional retail seasonal trends, including a concentration of sales in the holiday period in the fourth quarter. Ranpak’s results tend to follow similar patterns, with the highest net sales typically recorded in its fourth fiscal quarter and the slowest sales in its first fiscal quarter of each fiscal year. Ranpak expects this seasonality to continue in the future, as a result of which its results of operations between fiscal quarters in a given year may not be directly comparable.

Impact of the COVID-19 Pandemic. The COVID-19 pandemic has resulted in rapid changes in market and economic conditions around the world as COVID-19 continues to spread. We derive a significant portion of our revenue from sales of Void-fill, Cushioning and Wrapping products to e-commerce end-users and demand from these end-users has been strong, offsetting reductions in demand for these products from customers in other industries. However, social distancing and similar measures adopted in many jurisdictions around the world have impacted our ability to demonstrate and install our protective packaging systems and Automation products and, as a result, such demonstrations and installations have been delayed. If social distancing measures continue for an extended period of time, growth in our protective packaging system base, acquisition of new customers and sales of Automation products may be adversely affected. We believe that these impacts are not unique to us and that our industry competitors have been impacted in a similar fashion. We are deemed an essential business under the Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response issued by the United States Cybersecurity and Infrastructure Security Agency and pursuant to state decisions in states where our domestic production and distribution facilities are located. We continue to operate our production and distribution facilities, both domestically and internationally, albeit subject to social distancing and other measures to promote a safe operating environment. While we have experienced limited delays in receiving certain supplies we use to assemble our packaging systems, to date, these measures have not materially impacted the cost of producing and distributing our products, the cost and availability of raw materials and components, and we have encountered minimal disruption in our ability to fulfill customer orders. While we do not currently expect COVID-19 to have a material impact on our business, results of operations, financial condition or liquidity, at the time of this filing, we cannot predict the extent to which we will ultimately be impacted due to the evolving and highly uncertain nature of the COVID-19 pandemic. We will continue to evaluate the nature and extent of the impact to our business, results of operations, financial condition, and cash flows.

Key Performance Indicators and Other Factors Affecting Performance

Ranpak uses the following key performance indicators and monitors the following other factors to analyze its business performance, determine financial forecasts, and help develop long-term strategic plans:

Protective Packaging Systems Base—Ranpak closely tracks the number of protective packaging systems installed with end-users as it is a leading indicator of underlying business trends and near-term and ongoing net sales expectations. Ranpak’s installed base of protective packaging systems also drives its capital expenditure budgets. Ranpak's installed base of protective packaging systems was approximately 106.9 thousand units as of March 31, 2020 an increase of 8.3 thousand units, or 8.5% from 98.5 thousand units as of March 31, 2019. The following table presents Ranpak’s installed base of protective packaging systems by product line as of March 31, 2020 and 2019:

(in thousands)	As of March 31,		3/31/2020 vs. 3/31/2019
Protective Packaging Systems	2020	2019	Change	% Change
Cushioning machines	32.6	31.6	1.0	3.2
Void-fill machines	61.7	57.3	4.4	7.7
Wrapping machines	12.6	9.6	3.0	30.8
Total	106.9	98.5	8.4	8.5

Paper Costs.    Paper is a key component of Ranpak’s cost of sales and paper costs can fluctuate significantly between periods. Ranpak purchases both 100% virgin and 100% recycled paper, as well as blends, from various suppliers for conversion into the paper consumables it sells. The cost of paper supplies is Ranpak’s largest input cost, and it negotiates supply and pricing

                        37

arrangements with most of its paper suppliers annually, with a view towards mitigating fluctuations in paper cost. Nevertheless, as paper is a commodity, its price on the open market, and in turn the prices Ranpak negotiates with suppliers at a given point in time, can fluctuate significantly, and is affected by several factors outside of Ranpak’s control, including supply and demand and the cost of other commodities that are used in the manufacture of paper, including wood, energy and chemicals. The market for Ranpak’s solutions is competitive and it may be difficult for Ranpak to pass on increases in paper prices to its customers immediately, or at all, which has in the past and could in the future adversely affect its operating results.

Results of Operations

The following tables sets forth Ranpak’s results of operations for the Successor Period (three months ended March 31, 2020) and Predecessor Period (three months ended March 31, 2019) with line items presented in millions of dollars.

The Ranpak Business Combination is accounted for under the scope of business combination guidance in ASC 805 as One Madison Corporation was deemed to be the accounting acquirer while Rack Holdings was deemed the "Predecessor". Accordingly, the business combination is accounted for using the acquisition method which requires the Company to record the fair value of assets acquired and liabilities assumed from Rack Holdings (see Note 7, "Acquisition").

The financial statements separate the Company's presentation into two distinct periods. The period before the Closing of the Ranpak Business Combination (labeled Predecessor Period) depicts the financial statements of Rack Holdings, and the period after the Closing (labeled Successor Period) depicts the financial statements of the Company, including the consolidation of One Madison Corporation with Rack Holdings and application of acquisition method of accounting. As a result of the application of the acquisition method of accounting as of the Closing, the financial statements for the Predecessor Periods and for the Successor Periods are presented on a different basis of accounting and are, therefore not comparable.

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). We have, however, also disclosed below Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and adjusted EBITDA, which are non-GAAP financial measures. We have included EBITDA and adjusted EBITDA because they are key measures used by our management and board of directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA and adjusted EBITDA can provide a useful measure for period-to-period comparisons of our primary business operations. Accordingly, we believe that EBITDA and adjusted EBITDA provide useful information to investors and others in understanding and evaluating the Company's operating results in the same manner as our management and board of directors.

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

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

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

• adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;

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

• adjusted EBITDA does not take into account any restructuring and integration costs; and

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

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

Adjusted EBITDA—Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income (loss), adjusted to exclude: benefit from (provision for) income taxes; interest expense; depreciation and amortization; stock-based compensation expense; expenses related to the Ranpak Business Combination and, in certain periods, certain other income and expense items.

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We also believe that adjusting these non-GAAP measures for comparability between the Predecessor, Successor and Pro Forma periods is useful to the user of our financial statements.

In addition, in our discussion below, we include certain unaudited, non-GAAP pro forma data for the three months ended March 31, 2020 and 2019. This data is based on our historical financial statements included elsewhere in this Quarterly Report on Form 10-Q, adjusted (where applicable) to remove the effect of costs incurred to consummate the Ranpak Business Combination, other one-time costs incurred due to the Company entering into the Ranpak Business Combination and for purchase accounting adjustments related to the Ranpak Business Combination as well as to reflect a constant currency presentation between periods for the convenience of readers.  We refer to these data as pro forma data in our discussion. However, such pro forma data have not been prepared in accordance with Article 11 of Regulation S-X. We reconcile this data to our GAAP data for the same period under “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for the three months ended March 31, 2020.

Comparison of Successor Period Three Months Ended March 31, 2020, Predecessor Period Three Months Ended March 31, 2019 and Pro Forma Three Months Ended March 31, 2020

	Successor					Predecessor					Pro Forma
	Three Months Ended March 31,					Three Months Ended March 31,					Three Months Ended March 31,					Change to March 31,
	2020 ($)			% Net sales		2019 ($)			% Net sales		2020 ($)			% Net sales		2019 ($)			%
Net sales	$	63.4				$	66.1				$	64.8				$	(1.3	)	(2.0	)
Cost of sales	36.6			57.7		37.9			57.3		37.4			57.7		(0.5		)	(1.3	)
Gross Profit	26.8			42.3		28.2			42.7		27.4			42.3		(0.8		)	(2.8	)
Selling, general and administrative	19.6			30.9		14.3			21.6		19.9			30.7		5.6			39.2
Depreciation and amortization	7.5			11.8		10.7			16.2		7.6			11.7		(3.1		)	(29.0	)
Other operating expense, net	0.3			0.5		1.0			1.5		0.5			0.8		(0.5		)	(50.0	)
Income (loss) from operations	(0.6		)	(0.9	)	2.2			3.3		(0.6		)	(0.9	)	(2.8		)	(127.3	)
Interest expense	6.2			9.8		8.1			12.3		6.2			9.6		(1.9		)	(23.5	)
Foreign currency (gain) loss	(1.5		)	(2.4	)	(1.9		)	(2.9	)	(1.5		)	(2.3	)	0.4			(27.4	)
Loss before income taxes	(5.3		)	(8.4	)	(4.0		)	(6.1	)	(5.3		)	(8.2	)	(1.3		)	33.1
Income tax benefit	(1.7		)	(2.7	)	(0.6		)	(0.9	)	(1.7		)	(2.6	)	(1.1		)	183.3
Net (loss) income	$	(3.6	)	(5.7	)	$	(3.4	)	(5.1	)	$	(3.6	)	(5.6	)	$	(0.2	)	21.1
Non-GAAP:
EBITDA	$	15.4				$	20.3				$	15.5				$	(4.8	)	(23.6	)%
Adjusted EBITDA	$	18.1				$	19.7				$	18.1				$	(1.6	)	(8.1	)%

Net sales

                        39

The following table and the discussion that follows compares Ranpak’s net sales by geographic region and by product line for the three months ended March 31, 2020 and 2019 on a GAAP basis and on a non GAAP, pro forma basis as described above and in the discussion below. See also “Presentation and Reconciliation of GAAP to Non-GAAP Measures” for the three months ended March 31, 2020:

	Successor		Predecessor		Pro Forma
	Three Months Ended March 31,		Three Months Ended March 31,		Three Months Ended March 31,		Change to March 31,
	2020 ($)	% Net sales	2019 ($)	% Net sales	2020 ($)	% Net sales	2019 ($)		%
North America	27.1	42.7	29.9	45.2	27.1	41.8	(2.8	)	(9.4	)
Europe/Asia	36.3	57.3	36.2	54.8	37.7	58.2	1.5		4.0
Total	63.4	100.0	66.1	100.0	64.8	100.0	(1.3	)	(2.0	)
Cushioning machines	28.5	45.0	32.2	48.7	29.3	45.2	(2.9	)	(9.1	)
Void-Fill machines	24.7	39.0	26.9	40.7	25.1	38.7	(1.8	)	(6.6	)
Wrapping machines	7.9	12.4	5.3	8.0	8.0	12.3	2.7		52.7
Other	2.3	3.6	1.7	2.6	2.4	3.8	0.7		41.2
Total	63.4	100.0	66.1	100.0	64.8	100.0	(1.3	)	(2.0	)

Net sales for the three months ended March 31, 2020 and 2019 totaled $63.4 million and $66.1 million, respectively.  Net sales decreased $2.7 million or 4.1% as a result of a decrease in the volume of Ranpak’s paper consumable products of approximately 1.2 pp, partially offset by an increase of approximately 1.2 pp in sales of automated box sizing equipment in addition to a decrease in the price of Ranpak's paper consumable products which contributed a 2.6 pp decrease in sales. Net sales were positively impacted by increases in wrapping and automation net sales, which were partially offset by decreases in cushioning, and void-fill net sales. Cushioning decreased $3.7 million, or 11.5%, to $28.5 million from $32.2 million, void-fill decreased $2.2 million, or 8.2%, to $24.7 million from $26.9 million, wrapping increased $2.6 million, or 49.1%, to $7.9 million from $5.3 million, while other sales increased $0.6 million, or 35.3% to $2.3 million from $1.7 million, in each case for the three months ended March 31, 2020 compared to the three months ended March 31, 2019.  Other net sales includes automated box sizing equipment and non-paper revenue from packaging systems installed in the field. Pro forma net sales were $64.8 million for the three months ended March 31, 2020, a $3.1 million, or 4.6%, decrease from $67.9 million for the three months ended March 31, 2019 after adjusting to a constant currency in both periods.

Net sales in North America for the three months ended March 31, 2020 and 2019 totaled $27.1 million and $29.9 million, respectively, a decrease of $2.8 million or 9.4%. The change was attributable to decreases in cushioning and void-fill sales partially offset by increases in wrapping volumes and prices.

Net sales in Europe/Asia for the three months ended March 31, 2020 and 2019, totaled $36.3 million and $36.2 million, respectively, an increase of $0.1 million or 0.3%. Pro forma net sales in Europe/Asia were $37.7 million in the three months ended March 31, 2020, a decrease of $0.3 million, or 0.8%, from $38.0 million for the three month period ended March 31, 2019, on a constant currency basis, driven primarily by decreases in cushioning, partially offset by increases in wrapping and void-fill sales.

Cost of Sales

Cost of sales for the three months ended March 31, 2020 and 2019 totaled $36.6 million and $37.9 million, respectively. Cost of sales decreased $1.3 million or 3.4% due to decreases in volume and a decrease in the price of paper, offset by an increase in depreciation of $1.5 million over the prior year. Pro forma cost of sales decreased by $1.7 million, or 4.3%, to $37.4 million in the three months ended March 31, 2020 from $39.1 million for the three month period ended March 31, 2019 after adjusting to a constant currency in both periods. As a result, on a pro forma basis, net sales minus cost of sales as a percentage of net sales decreased by 0.1 pp to 42.3% in the three months ended March 31, 2020 from 42.4% for the comparable period in 2019.

Selling, General and Administrative Expenses (SG&A)

                        40

SG&A expenses for the three months ended March 31, 2020 and 2019 totaled $19.6 million and $14.3 million, respectively. SG&A expenses increased $5.3 million or 37.1% due to severance costs, non-cash equity compensation costs, increased support of growth initiatives and increased costs associated with being a public company. Pro forma SG&A expenses increased by $5.5 million, or 38.2%, to $19.9 million in the three months ended March 31, 2020 from $14.4 million for the comparable period in 2019 after adjusting to a constant currency in both periods. As a percentage of pro forma net sales, pro forma SG&A increased to 30.7% in the three months ended March 31, 2020 from 21.2% in the three months ended March 31, 2019 on a constant currency basis.

Depreciation and Amortization

Depreciation and amortization expenses for the three months ended March 31, 2020 and 2019 totaled $7.5 million and $10.7 million, respectively. Depreciation and amortization expenses decreased $3.2 million or 29.9% due to the Ranpak Business Combination fair value adjustments, their related amortizable lives and changes in currency rates. Pro forma depreciation and amortization expenses decreased by $3.2 million, or 29.6%, to $7.6 million in the three months ended March 31, 2020 from $10.8 million for the three months ended March 31, 2019 on a constant currency basis. As a percentage of pro forma net sales, pro forma depreciation and amortization expenses decreased to 11.7% in the three months ended March 31, 2020 from 15.9% in the three months ended March 31, 2019 on a constant currency basis.

Other Operating Expense (Income), Net

Other operating expenses (income), net, for the three months ended March 31, 2020 and 2019 totaled $0.3 million and $1.0 million, respectively. Other operating expenses (income), net, decreased $0.7 million or 70.0% due to the loss on sale of machines recognized in the prior year period as well as decreased research and development expense in the current year period. Pro forma other operating expenses (income), net, was $0.5 million in the three months ended March 31, 2020 compared to $1.1 million for the three months ended March 31, 2019 on a constant currency basis. As a percentage of pro forma net sales, pro forma other operating expenses (income), net, decreased to 0.8% in the three months ended March 31, 2020 from 1.6% in the three months ended March 31, 2019 on a constant currency basis.

Interest Expense

Interest expense for the three months ended March 31, 2020 and 2019 totaled $6.2 million and $8.1 million, respectively. Interest expense decreased $1.9 million or 23.5% due to decreased debt levels and lower interest rates. Pro forma interest expense decreased by $1.9 million, or 23.5%, to $6.2 million in the three months ended March 31, 2020 compared to $8.1 million for the three months ended March 31, 2019 on a constant currency basis due to decreased debt levels and lower interest rates. As a percentage of pro forma net sales, pro forma interest expense decreased to 9.6% in the three months ended March 31, 2020 from 11.9% in the three months ended March 31, 2019.

Foreign Currency Gain

Foreign currency gain for the three months ended March 31, 2020 and 2019 totaled $1.5 million and $1.9 million, respectively. Foreign currency gain decreased $0.4 million or 21.1% due to the net impact of the re-measurement of Ranpak’s Euro-denominated term facility and its Euro-denominated intercompany note to a Dutch subsidiary in the Predecessor Periods. Pro forma foreign currency gain was $1.5 million in the three months ended March 31, 2020 compared to $1.9 million for the three months ended March 31, 2019 on a constant currency basis. As a percentage of pro forma net sales, pro forma foreign currency (gain) loss decreased to 2.3% in the three months ended March 31, 2020 from 2.8% in the three months ended March 31, 2019 on a constant currency basis.

Income Tax Benefit

Income tax benefit for the three months ended March 31, 2020 and 2019 totaled $1.7 million, or an effective tax rate of 32.3%, and $0.6 million, or an effective tax rate of 15.2%, respectively, an increase in tax benefit of $1.1 million or 17.1%. The fluctuation in the effective tax rate between periods was primarily attributable to a jurisdictional mix of income. The effective tax rate differs from the U.S. federal statutory rate due primarily to benefits derived from the U.S. foreign derived intangible income deduction, tax credits available in the United States, and income in foreign jurisdictions that are taxed at different rates than the U.S. statutory tax rate.

Net Loss

                        41

Net loss for the three months ended March 31, 2020 and 2019 totaled $3.6 million and $3.4 million, respectively, an increase of $0.2 million or 5.9%. Pro forma net loss was $3.6 million in the three months ended March 31, 2020 compared to net loss of $3.2 million for the three month period ended March 31, 2019 on a constant currency basis. The change was due to the reasons discussed above.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

EBITDA for the three months ended March 31, 2020 and 2019 totaled $15.4 million and $20.3 million, respectively, a decrease of $4.9 million or 23.9%. Adjusting for transaction costs associated with the Ranpak Business Combination, constant currency and other one-time costs, pro forma Adjusted EBITDA for the three months ended March 31, 2020 and 2019 totaled $18.1 million and $19.7 million, respectively, a decrease of $1.6 million, or 8.1% on a constant currency basis.    

Presentation and Reconciliation of US GAAP to Non-GAAP Measures

As noted above, we believe that in order to better understand the performance of the Company, providing non-GAAP financial measures to users of our financial information is helpful. Ranpak believes presentation of these non-GAAP measures is useful because they are many of the key measures that allow management to evaluate more effectively its operating performance and compare the results of its operations from period to period and against its peers without regard to financing methods or capital structure. Management does not consider these non-GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with GAAP. Additionally, as a result of the Ranpak Business Combination, we believe that users of our financial information will find that non-GAAP, pro forma data for the three months ended March 31, 2020 is useful when comparing the current and prior periods. The computations of EBITDA and adjusted EBITDA may not be comparable to other similarly titled measures of other companies. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, measures of financial performance as determined in accordance with GAAP or as indicators of operating performance.

The following tables and related notes reconcile certain non-GAAP measures including the non-GAAP pro forma measures, to GAAP information presented in this Quarterly Report on Form 10-Q for the three months ended March 31, 2020 and 2019:

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	Successor								Predecessor
	As Reported			Adjustments (6)		Pro Forma			As Reported			Adjustments (6)			Pro Forma
(in millions)	Three Months Ended March 31, 2020					Three Months Ended March 31, 2020			Three Months Ended March 31, 2019						Three Months Ended March 31, 2019
Net sales	$	63.4		$	1.4	$	64.8		$	66.1		$	1.8	(1)	$	67.9
Cost of sales (COS)	36.6			0.8		37.4			37.9			1.2		(2)	39.1
Gross Profit	26.8			0.6		27.4			28.2			0.6			28.8
Selling, general and administrative (SGA)	19.6			0.3		19.9			14.3			0.1			14.4
Depreciation and amortization	7.5			0.1		7.6			10.7			0.1			10.8
Other operating expense, net	0.3			0.2		0.5			1.0			0.1			1.1
Income (loss) from operations	(0.6		)	—		(0.6		)	2.2			0.3			2.5
Interest expense	6.2			—		6.2			8.1			—			8.1
Foreign currency (gain) loss	(1.5		)	—		(1.5		)	(1.9		)	—			(1.9		)
(Loss) Income before income taxes	(5.3		)	—		(5.3		)	(4.0		)	0.3			(3.7		)
Income tax (benefit) expense	(1.7		)	—		(1.7		)	(0.6		)	0.1		(3)	(0.5		)
Net (loss) income	$	(3.6	)	$	—	(3.6		)	$	(3.4	)	$	0.2		(3.2		)
Add (5):
COS Depreciation & amortization						7.0									5.5
SG&A Depreciation & amortization						7.6									10.7
Interest expense						6.2									8.1
Income tax (benefit) expense						(1.7		)							(0.6		)
EBITDA						15.5									20.5
Adjustments (4):
Unrealized (gain) loss translation						(1.5		)							(2.1		)
Constant currency adjustment at 1.15						0.1									0.1
Non-cash impairment losses						0.2									0.1
M&A, restructuring and severance						1.3									0.8
PE sponsor costs						—									0.5
Restricted stock unit expense						2.2									—
Other non-core and non-cash adjustments						0.3									(0.2		)
Adjusted EBITDA						$	18.1								$	19.7

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	As Reported															Pro Forma
	Successor					Predecessor					Better/(Worse) to Predecessor Three Months Ended March 31, 2019					Successor					Predecessor					Better/(Worse) to Predecessor Three Months Ended March 31, 2019
(in millions)	Three Months Ended March 31, 2020			% of net sales		Three Months Ended March 31, 2019			% of net sales							Three Months Ended March 31, 2020			% of net sales		Three Months Ended March 31, 2019			% of net sales
Net sales	$	63.4				$	66.1				$	(2.7	)	(4.1	)%	$	64.8				$	67.9				$	(3.1	)	(4.6	)%
Cost of sales (COS)	36.6			57.7	%	37.9			57.3	%	(1.3		)	(3.4	)%	37.4			57.7	%	39.1			57.6	%	(1.7		)	(4.3	)%
Gross Profit	26.8			42.3	%	28.2			42.7	%	(1.4		)	(5.0	)%	27.4			42.3	%	28.8			42.4	%	(1.4		)	(4.9	)%
Selling, general and administrative (SGA)	19.6			30.7	%	14.3			21.6	%	5.3			37.1	%	19.9			30.7	%	14.4			21.2	%	5.5			38.2	%
Depreciation and amortization	7.5			11.7	%	10.7			16.2	%	(3.2		)	(29.9	)%	7.6			11.7	%	10.8			15.9	%	(3.2		)	(29.6	)%
Other operating expense, net	0.3			0.8	%	1.0			1.5	%	(0.7		)	(70.0	)%	0.5			0.8	%	1.1			1.6	%	(0.6		)	(54.5	)%
Income (loss) from operations	(0.6		)	(0.9	)%	2.2			3.3	%	(2.8		)	(127.3	)%	(0.6		)	(0.9	)%	2.5			3.7	%	(3.1		)	(124.0	)%
Interest expense	6.2			9.6	%	8.1			12.3	%	(1.9		)	(23.5	)%	6.2			9.6	%	8.1			11.9	%	(1.9		)	(23.5	)%
Foreign currency (gain) loss	(1.5		)	(2.3	)%	(1.9		)	(2.9	)%	0.4			(21.1	)%	(1.5		)	(2.3	)%	(1.9		)	(2.8	)%	0.4			(21.1	)%
(Loss) Income before income taxes	(5.3		)	(8.2	)%	(4.0		)	(6.1	)%	(1.3		)	32.5	%	(5.3		)	(8.2	)%	(3.7		)	(5.4	)%	(1.6		)	43.2	%
Income tax (benefit) expense	(1.7		)	(2.6	)%	(0.6		)	(0.9	)%	(1.1		)	183.3	%	(1.7		)	(2.6	)%	(0.5		)	(0.7	)%	(1.2		)	240.0	%
Net (loss) income	$	(3.6	)	(5.6	)%	$	(3.4	)	(5.1	)%	$	(0.2	)	5.9	%	(3.6		)	(5.6	)%	(3.2		)	(4.7	)%	(0.4		)	12.5	%
Add (5):
COS Depreciation & amortization																7.0					5.5					1.5			27.3	%
SG&A Depreciation & amortization																7.6					10.7					(3.1		)	(29.0	)%
Interest expense																6.2					8.1					(1.9		)	(23.5	)%
Income tax (benefit) expense																(1.7		)			(0.6		)			(1.1		)	183.3	%
EBITDA																15.5					20.5					(5.0		)	(24.4	)%
Adjustments (4):
Unrealized (gain) loss translation																(1.5		)			(2.1		)			0.6			(28.6	)%
Constant currency adjustment at 1.15																0.1					0.1					—
Non-cash impairment losses																0.2					0.1					0.1			100.0	%
M&A, restructuring and severance																1.3					0.8					0.5			62.5	%
PE sponsor costs																—					0.5					(0.5		)	(100.0	)%
Restricted stock unit expense																2.2					—					2.2
Other non-core and non-cash adjustments																0.3					(0.2		)			0.5			(250.0	)%
Adjusted EBITDA																$	18.1				$	19.7				$	(1.6	)	(8.1	)%

⁽¹⁾ Adjust for percentage of completion revenue recognition change

⁽²⁾ Adjust for percentage of completion revenue recognition change for cost of sales

⁽³⁾ Adjust tax provision at 21.0% corporate rate for items adjusted above

⁽⁴⁾ Adjustments are related to non-recurring costs such as: unrealized non-cash (gains) losses on translation of the Predecessor debt, private equity monitoring fees, non-cash (gain) loss on the disposal of machines, acquisition costs, severance and a revenue recognition adjustment related to e3NEO acquisition. Certain costs related to being a public company, such as additional staff, legal and accounting costs that were not included in the Predecessor are also included in Adjusted EBITDA.

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⁽⁵⁾ Reconciliations of EBITDA and Adjusted EBITDA for each period presented are to net (loss) income, the nearest GAAP

equivalent, and accordingly include the adjustments shown in the “Adj.” column to net (loss) income of each table.

⁽⁶⁾ Effect of Euro constant currency adjustment to a rate of $1.15 US Dollar to €1.00 as follows:

(in thousands)	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
Net sales	$	1,425.8		$	481.1
Cost of sales	797.1			278.5
Gross Profit	628.7			202.7
Selling, general and administrative	342.2			101.3
Depreciation and amortization	80.9			53.3
Other operating expense, net	195.3			63.5
Income (loss) from operations	10.3			(15.4		)
Interest expense	29.8			10.5
Foreign currency (gain) loss	6.0			1.4
Loss before income taxes	(25.5		)	(27.3		)
Income tax (benefit) expense	(23.3		)	(7.6		)
Net (loss) income	$	(2.2	)	$	(19.7	)

Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, capital expenditures, debt service, acquisitions, other commitments and contractual obligations. We evaluate liquidity in terms of cash flows from operations and other sources and the sufficiency of such cash flows to fund our operating, investing and financing activities.

We believe that our estimated cash from operations together with borrowing capacity under the revolving portion of the Facilities will provide us with sufficient resources to cover our current requirements. Our main liquidity needs relate to capital expenditures and expenses for the production and maintenance of protective packaging systems placed at end-user facilities, working capital, including the purchase of paper raw materials, and payments of principal and interest on our outstanding debt. We expect our capital expenditures to increase as we continue to grow our business. Our future capital requirements and the adequacy of available funds will depend on many factors, and if we are unable to obtain needed additional funds, we may have to reduce our operating costs or incur additional debt, which could impair our growth prospects and/or otherwise negatively impact our business. Further, volatility in the equity and credit markets resulting from the COVID-19 pandemic could make obtaining new equity or debt financing more difficult or expensive.

We had $20.2 million in cash and cash equivalents as of March 31, 2020 and $19.7 million as of December 31, 2019. We also had $424.6 million in debt, $1.5 million of which was classified as short-term, as of March 31, 2020, compared to $428.2 million in debt, $1.6 million of which was classified as short-term, as of December 31, 2019. In December 2019, we closed a public offering of our Class A common stock generating net proceeds of approximately $107.7 million that was used to pay down long-term debt. At March 31, 2020, we did not have amounts outstanding under our $45.0 million revolving credit facility, and we had no borrowings under such facility at March 31, 2020 and through April 30, 2020.

Debt Profile

Ranpak’s previous credit facilities were repaid in connection with the consummation of the Ranpak Business Combination, and were replaced with the following facilities: (1) a $378.2 million dollar-denominated first lien term facility (the “First Lien Dollar Term Facility”) and a €140.0 million euro-denominated first lien term facility (the “First Lien Euro Term Facility” and, together with the First Lien Dollar Term Facility, the “First Lien Term Facility”), and (2) a $45.0 million revolving facility (together, the “New Credit Facilities”). The material terms of the New Credit Facilities are summarized in Note 8, "Long-Term Debt" to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Debt Before the Ranpak Business Combination

Prior to the Ranpak Business Combination, the Company had two first lien credit facilities, a United States Dollar Tranche (“US$ Tranche”) and a Euro Tranche (“Euro Tranche”), a revolving credit facility and a second lien credit facility. The first lien

                        45

credit facilities included: (1) a seven-year Term Loan (US$ Tranche) facility in the amount of $233.4 million, (2) a seven-year Term Loan (Euro Tranche) facility in the amount of €157.0 million, and (3) a five-year $30.0 million revolving credit facility, of which the equivalent of $13.0 million may be denominated in Euros (collectively, the “Old Credit Facilities”). In March 2017, Ranpak raised $45 million of incremental First Lien (US$ Tranche) debt and used the proceeds to pay down a portion of the Second Lien (US$ Tranche), the results of which saved Ranpak 400 basis points on the applicable interest rate on $45 million of its outstanding debt. Borrowings under the US$ Tranche bore interest in an amount based on either the Adjusted Eurodollar rate (the greater of 1.00% or LIBOR) plus 3.25% or a Base Rate plus 2.75% (the higher of the Federal Funds effective rate plus ½ of 1%, prime, or the Adjusted Eurodollar rate plus 1%). Borrowings under the Euro Tranche bore interest in an amount based on the Adjusted EURIBOR rate (the greater of 1.00% or EURIBOR) plus 3.25%. Interest on LIBOR and EURIBOR rate loans were payable at the end of the applicable interest periods.

Borrowings under the revolving credit facility bore interest in an amount based on either the base rate or Adjusted Eurodollar rate plus a variable margin that is dependent on the First Lien Net Leverage Ratio. The first lien credit facilities were secured by a first priority security interest in substantially all of the Company’s assets. Principal payments on the first lien term loan facilities were due quarterly and were based on 1% of the annual outstanding balances. Additionally, per the credit agreement, Ranpak was required to make additional annual pre-payments, based on consolidated excess cash flow calculation results.

The second lien credit facility was an eight-year US$ Tranche in the amount of $135.0 million. Borrowings under the US$ Tranche bore interest in an amount based on either the Adjusted Eurodollar rate (the greater of 1.00% or LIBOR) plus 7.25% or a base rate plus 6.25%. The second lien credit agreement was secured by a second priority security interest in substantially all of Ranpak’s assets and includes default provisions and contained a covenant similar to the first lien credit facility described above.

The Old Credit Facilities were repaid in full upon the consummation of the Ranpak Business Combination and replaced with the New Credit Facilities.

Debt After the Ranpak Business Combination

In connection with the stock purchase agreement related to the Ranpak Business Combination, One Madison obtained a debt commitment letter (as amended and restated, supplemented or otherwise modified, the "debt commitment letter"), pursuant to which the Goldman Sachs Lending Partners LLC and certain affiliated investment entities thereof (collectively, the "Lenders") committed to provide senior secured credit facilities to, in part, (i) fund the Ranpak Business Combination, (ii) repay and terminate the existing indebtedness of Ranpak (the “debt refinancing”) and (iii) pay all fees, premiums, expenses and other transaction costs incurred in connection with the foregoing. The aggregate commitment of the senior secured credit facilities consists of a $289.2 million dollar-denominated first lien term facility and a €140.0 million euro-denominated first lien term facility (with the ability to reduce the dollar-denominated first lien term facility and correspondingly increase the euro-denominated first lien term facility in an amount of up to €60.0 million), a $45.0 million revolving facility (including the right to bring in additional lenders to provide commitments with respect to the revolving facility in an amount of up to $30.0 million and additional borrowing capacity available for letters of credit in an amount of up to $5.0 million), a $100.0 million first lien contingency term facility and a $100.0 million second lien contingency term facility. Upon the consummation of the Ranpak Business Combination, the New Credit Facilities became the direct obligations of certain subsidiaries of Ranpak (collectively, the "borrowers") and were secured by substantially all of Ranpak’s assets.

Each of the First Lien Term Facility, and the first lien contingency term facility accrue interest at a rate of LIBOR plus 3.75% (assuming a first lien net leverage ratio of less than 5.00:1.00). The second lien contingency term facility accrues interest at a rate of LIBOR plus 7.50%. No amounts have been drawn on under the second lien contingency. The first lien term facility and first lien contingency term facility mature on the seventh anniversary of the date of the closing of the Ranpak Business Combination, June 3, 2026. The revolving facility matures on the fifth anniversary of the date of the Closing June 3, 2024. The second lien contingency term facility matures on the eighth anniversary of the date of the Closing, June 3, 2027 but was not available for us to borrow against at March 31, 2020.

The revolving facility includes borrowing capacity available for letters of credit of up to $5 million. Any issuance of letters of credit will reduce the amount available under the revolving facility.

In addition, the debt financing provides the borrowers with the option to increase commitments under the debt financing in an aggregate amount not to exceed the greater of $95 million and 100% of trailing-twelve months consolidated EBITDA, plus any voluntary prepayments of the debt financing (and, in the case of the revolving facility, to the extent such voluntary prepayments are accompanied by permanent commitment reductions under the revolving facility), plus unlimited amounts subject to the relevant net leverage ratio tests and certain other conditions.

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The obligations of the borrowers under the debt financing and certain of their respective obligations under hedging arrangements and cash management arrangements are unconditionally guaranteed by the direct parent of each borrower and each existing and subsequently acquired or organized direct or indirect wholly-owned US or Dutch restricted subsidiary (collectively, the “guarantors”), in each case, other than certain excluded subsidiaries and subject to other customary limitations set forth in the definitive documentation with respect to the debt financing. The debt financing is secured by a security interest in substantially all of the assets of the borrowers and the guarantors (and including a pledge of the equity interests of each borrower and of each guarantor and of their respective direct, wholly-owned restricted subsidiaries), in each case subject to customary exceptions.

The revolving facility requires the borrowers to maintain a maximum first lien net leverage ratio 9.10:1.00 based on the amount of the initial first lien term loans under the debt financing actually borrowed on the closing date based on providing at least a 35% cushion to consolidated EBITDA for the most recent four fiscal quarter periods ending prior to the date of the closing. This “springing” financial covenant is tested on the last day of each fiscal quarter, but only if on such date the sum of (i) the principal amount of outstanding revolving loans under the revolving facility, (ii) drawings on letters of credit under the revolving facility and (iii) the face amount of non-cash collateralized letters of credit under the revolving facility in excess of an amount to be set forth in the definitive documentation with respect to the debt financing exceeds 35% of the total revolving commitments under the revolving facility.

The senior secured credit facilities also contain a number of customary negative covenants. Such covenants, among other things, will limit or restrict the ability of each of the borrowers, their restricted subsidiaries, and where applicable, the direct parent holding companies of the borrowers, to:

• incur additional indebtedness, issue disqualified stock and make guarantees;

• incur liens on assets;

• engage in mergers or consolidations or fundamental changes;

• sell assets;

• pay dividends and distributions or repurchase capital stock;

• make investments, loans and advances, including acquisitions;

• amend organizational documents;

• enter into certain agreements that would restrict the ability to pay dividends;

• repay certain junior indebtedness;

• engage in transactions with affiliates; and

• in the case of the direct parent holding companies of the borrowers, engage in activities other than passively holding the equity interests in the borrowers.

The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and certain other conditions and (ii) a number of other traditional exceptions that grant the borrowers continued flexibility to operate and develop their businesses. The senior secured credit facilities also contain certain customary representations and warranties, affirmative covenants and events of default.

Amendment to First Lien Credit Facilities

On February 14, 2020, Ranger Packaging LLC, a Delaware limited liability company (“U.S. Borrower”), Ranpak B.V., a private limited liability company under the laws of the Netherlands (the “Dutch Borrower”; the U.S. Borrower and the Dutch Borrower, the “Borrowers”), Ranger Pledgor LLC, a Delaware limited liability company (“Holdings”), certain other subsidiaries of Holdings, certain lenders party to Amendment No. 1 (as defined below) and Goldman Sachs Lending Partners LLC (the “Administrative Agent”) entered into the Amendment No. 1 to First Lien Credit Agreement (“Amendment No. 1”) to amend the New Credit Facilities.

Among other things, the Amendment No. 1 amends the New Credit Facilities such that (x) the requirement of the Borrowers to apply a percentage of excess cash flow to mandatorily prepay term loans under the New Credit Facilities commences with the fiscal year ending December 31, 2021 (instead of the fiscal year ending December 31, 2020) and (y) the aggregate amount per fiscal year of capital stock of any parent company of the U.S. Borrower that is held by directors, officers, management, employees, independent contractors or consultants of the U.S. Borrower (or any parent company or subsidiary thereof) that the U.S. Borrower may repurchase, redeem, retire or otherwise acquire or retire for value has been increased to the greater of $10,000,000 and 10% of Consolidated Adjusted EBITDA (as defined in the New Credit Facilities) (increased from the greater

                        47

of $7,000,000 and 7% of Consolidated Adjusted EBITDA) as of the last day of the most recently ended quarter for which financial statements have been delivered.

Cash Flows

The following table sets forth Ranpak’s summary cash flow information for the periods indicated: 

	Successor			Predecessor
	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
(in millions)
Net cash provided by operating activities	$	11.6		$	13.6
Net cash used in investing activities	(10.5		)	(6.6		)
Net cash used in financing activities	(0.4		)	(1.1		)
Effect of exchange rate changes on cash	(0.2		)	(0.2		)
Net increase in cash and cash equivalents	0.5			5.7
Cash and cash equivalents, beginning of period	19.7			17.5
Cash and cash equivalents, end of period	$	20.2		$	23.2

Cash Flows Provided by Operating Activities

Net cash (used in) provided by operating activities was $11.6 million in the Successor Period due to changes in working capital driven by a decrease in accounts receivable and cash earnings of the business and $13.6 million in the Predecessor Period due to increases in working capital utilization to support sales growth in the quarter.

Cash Flows Used in Investing Activities

Net cash used in investing activities was $10.5 million in the Successor Period, due to capitalized cost relating to the acquisition of parts and assembly of protective packaging systems placed at end-user facilities. Net cash used in investing activities was $6.6 million in the Predecessor Period resulting from capitalized cost relating to the acquisition of parts and assembly of protective packaging systems placed at end-user facilities.

Cash Flows Provided by Financing Activities

Net cash used in financing activities was $0.4 million in the Successor Period and reflects payment of debt. Net cash used in financing activities was $1.1 million in the Predecessor Period, primarily related to the payment of debt.

Contractual Obligations and Other Commitments

Ranpak has leased production facilities in Reno, Nevada, Kansas City, Missouri and Raleigh, North Carolina, in the United States and in Nyrany, Czech Republic, as well as several leased sales and administrative offices. The leases for the four leased production facilities expire in September 2020, July 2020, December 2024 and April 2026, respectively. Ranpak recognizes rent expense on a straight-line basis over the relevant lease period.

Ranpak has various contractual obligations and commercial commitments that are recorded as liabilities in its audited consolidated financial statements. Other items, such as purchase obligations and other executory contracts, are not recognized as liabilities, but are required to be disclosed. There have been no significant changes outside the ordinary course of business to our “Contractual Obligations” table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Form 10-K.

Off-Balance Sheet Arrangements

Ranpak did not have any off-balance sheet arrangements as of March 31, 2020.

Critical Accounting Policies

                        48

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period.  While we do not believe that the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.  We evaluate our estimates and judgments on an ongoing basis.  We base our estimates on experience and various other assumptions that we believe are reasonable under the circumstances.  All of our significant accounting policies, including certain critical accounting policies and estimates, are disclosed in our Quarterly Report on Form 10-K

Recently Issued and Adopted Accounting Pronouncements

For recently issued and adopted accounting pronouncements, see Note 2, "Basis of Presentation and Summary of Significant Accounting Policies" to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Departure of Chief Financial Officer

As of May 15, 2020, Trent Meyerhoefer will step down as our Chief Financial Officer and leave the Company to pursue other opportunities. William Drew, who currently serves as the Chief of Staff of the Company, will assume the role of Interim Chief Financial Officer while we conduct a search to find a permanent replacement.

                        49

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Changes in interest rates affect the amount of interest income we earn on cash, cash equivalents and short-term investments and the amount of interest expense we pay on borrowings under the floating rate portions of our credit facilities. A hypothetical 100 basis point increase or decrease in the applicable base interest rates under our credit facilities would have resulted in a $1.1 million impact on our cash interest expense for the three months ended March 31, 2020. We use interest rate swap agreements to manage this exposure.

In March 2020, we entered into the Second Amended January 2019 Swap, which amended the Amended January 2019 Swap to a lower rate of 2.1% and extend its maturity to June 1, 2024. Refer to Note 8, Long-Term Debt and Note 9, Derivative Instruments to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information on our debt and interest rate swap agreements. There were no other changes to our debt and interest rate swap agreements from those disclosed in the Form 10-K.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange risk related to our transactions and subsidiaries’ balances that are denominated in currencies other than the U.S. dollar, our functional currency. See “—Factors Affecting the Comparability of Ranpak’s Results of Operations - Effect of Currency Fluctuations” for more information about Ranpak’s foreign currency exchange rate exposure. We seek to naturally hedge our foreign exchange transaction exposure by matching the transaction currencies for our cash inflows and outflows and maintaining access to credit in the principal currencies in which we conduct business. Currently, we do not hedge our foreign exchange transaction or translation exposure, but may consider doing so in the future.

For the three months ended March 31, 2020, net sales denominated in currencies other than U.S. dollars amounted to $36.3 million or 57.2% of our net sales for the period. Substantially all of this amount was denominated in Euro. A 10% increase or decrease in the value of the Euro to the U.S. dollar would have caused our reported net sales for the three-month ended March 31, 2020 to increase or decrease by approximately $3.6 million.

Commodity Price Risk

While our business is significantly impacted by price fluctuations related to the purchase, production and sale of paper products, we are not directly exposed to market price fluctuations in paper purchase or sale prices as we negotiate prices with suppliers on an annual basis and negotiate prices with distributors reflecting competitive market terms. Our strategy has generally been to obtain competitive prices for our products and services and allow operating results to reflect market price movements dictated by supply and demand.

                        50

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2020. Based on this evaluation of our disclosure controls and procedures, our management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of March 31, 2020 because of material weaknesses in our internal control over financial reporting, as described under “Item 9A. Controls and Procedures—Internal Control Over Financial Reporting” in our Annual Report on Form 10-K for the year ended December 31, 2019.

Changes in Internal Control Over Financial Reporting

Other than the ongoing steps being taken to remediate the material weaknesses described under “Item 9A. Controls and Procedures—Internal Control Over Financial Reporting” in our Annual Report on Form 10-K for the year ended December 31, 2019, there were no changes during the quarter ended March 31, 2020 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting given that most of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact to their design and implementation.

                        51

PART II – OTHER INFORMATION

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. No assurance can be given that results in any forward-looking statement will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. The cautionary statements made in this Quarterly Report on Form 10-Q should be read as being applicable to all forward-looking statements whenever they appear in this Quarterly Report on Form 10-Q.  For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.  Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Information about our risk factors is contained in Item 1A of the Form 10-K. The following risk factor supplements the risk factors in the Form 10-K and should be read in conjunction with the risk factors in the Form 10-K. There are no other material changes in our risk factors from those disclosed in the Form 10-K.

The COVID-19 pandemic has impacted our business and could in the future materially and adversely affect our business.

The novel strain of the coronavirus identified in late 2019 and now affecting the global community has impacted and is expected to continue to impact our business and operations, and the full nature and extent of the impact is highly uncertain and may be beyond our control. Among other things, uncertainties relating to COVID-19 include the duration of the outbreak, the severity of the virus, and the actions, or perception of actions that may be taken, to contain or treat its impact, by governments and others, including declarations of states of emergency, business closures, manufacturing restrictions and a prolonged period of travel, commercial and/or other similar restrictions and limitations.

As many governmental measures providing for business shutdowns generally exclude critical infrastructure and the businesses that support critical infrastructure, such as packaging companies like us, all of our manufacturing facilities currently remain operational. Nevertheless, the impact of these measures over time, as well as additional measures we have adopted or may adopt in the future that are intended to protect the health and safety of our employees, is uncertain and could limit our manufacturing productivity. Likewise, in the event large numbers of our manufacturing workforce become ill with COVID-19 or otherwise, our productivity could be adversely affected. Any such reduction in our manufacturing productivity, whether resulting from governmental or our internal policies intended to contain the spread of the COVID-19 virus or from employee illness could hinder our ability to meet customer demand, which could have a material adverse effect on our financial condition and results of operation.

Similarly, as a result of the COVID-19 pandemic and measures taken in response to it, our suppliers and vendors may not have the materials, capacity, or capability to enable the manufacture of the parts we use to assemble our packaging machines or the paper we convert into packaging consumables. To date, we experienced delays in obtaining certain supplies used in the assembly of our packaging machines that we source from China. While these delays have not resulted in our inability to deliver packaging machines to any of our distributors or end users, to the extent they continue, or other of our suppliers or vendors are unable to provide us with the supplies we need according to our schedule and specifications, we may need to seek alternate suppliers or vendors, which may be more expensive, may not be available or may result in delays in shipments to us and subsequently to our distributors or end-users, each of which would affect our results of operations. Additionally, restrictions or disruptions in

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transportation logistics, such as reduced availability of sea or ground transport, port closures and increased border controls or closures, have started to result in delays and could result in higher costs, either of which could harm our profitability, make our products less competitive, or cause our distributors or end-users to seek alternative suppliers.

Furthermore, many of our end-users have been and could continue to be negatively impacted as a result of disruption in demand for their products due to the decline in global economic activity resulting from the COVID-19 pandemic. To the extent demand for the products sold by our end-users continues to decline or the duration of any decline is longer than they anticipate, our distributors’ and end-users’ demand for our packaging systems will also decline, which could negatively impact our sales and have a material adverse effect on our business, results of operations and financial condition.

The impact of the COVID-19 pandemic continues to evolve and its duration and ultimate disruption to our operations, supply chain, distributors and end-users, and the related financial impact on us, cannot be estimated at this time. Should any such disruptions continue for an extended period of time, the impact could have a more severe adverse effect on our business, results of operations and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description
2.1	Stock Purchase Agreement, dated December 12, 2018, among One Madison Corporation, Rack Holdings L.P. and Rack Holdings Inc. (incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-38348), filed with the SEC on December 13, 2018)
2.2	Amendment to Stock Purchase Agreement, dated January 24, 2019, among One Madison Corporation, Rack Holdings L.P. and Rack Holdings Inc. (incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 10-K (File No. 001-38348), filed with the SEC on March 1, 2019)
2.3	Amendment No. 2 to Stock Purchase Agreement, dated May 14, 2019, among One Madison Corporation, Rack Holdings L.P. and Rack Holdings Inc. (incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-38348), filed with the SEC on May 15, 2019)
3.1	Certificate of Incorporation of the Company (incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-38348), filed with the SEC on June 6, 2019)
3.2	Bylaws of the Company (incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-38348), filed with the SEC on June 6, 2019)

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4.1	Specimen Common Stock Certificate (incorporated by reference to the corresponding exhibit to the Company’s Registration Statement on Form S-3, as amended (File No. 333-232105), filed with the SEC on July 26, 2019
4.2	Form of Specimen Warrant Certificate (incorporated by reference to the corresponding exhibit to the Company’s Registration Statement on Form S-1, as amended (File No. 333-220956), filed with the SEC on January 5, 2018)
4.3	Warrant Agreement, dated January 17, 2018, between the Company and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-38348), filed with the SEC on January 22, 2018)
4.4	Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to the corresponding exhibit to the Company’s 2019 Annual Report on Form 10-K (File No. 001-38348), filed with the SEC on March 17, 2020)
10.1	Amendment No. 1 to the First Lien Credit Agreement, dated February 14, 2020 among Ranger Packaging LLC, Ranpak B.V., Ranger Pledgor LLC and Goldman Sachs Lending Partners LLC (incorporated by reference to Exhibit 10.1 of Ranpak’s Form 8-K (No. 0001-38348), filed with the SEC on February 19, 2020)
31.1*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32**	Certificate of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Calculation Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*
104*	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

_______________________

* Filed herewith

**Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 11, 2020

RANPAK HOLDINGS CORP.
By:	/s/ Trent M. Meyerhoefer
	Name:  Trent M. Meyerhoefer
	Title:    SVP and Chief Financial Officer

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