Subaru weighs options to curtail a potential $2.5B tariff hit
Subaru could face a $2.5 billion hit from tariffs unless it takes measures to mitigate the impact, a company spokesperson said in an email to Automotive Dive.
But the automaker is proactively working to avoid that fate by weighing strategies to reduce costs fueled by higher duties on parts and vehicles brought into the U.S., company officials said while discussing its fiscal year 2025 earnings on May 14. Subaru, like other automakers, is exploring boosting domestic production and considering its suppliers' capacity, the spokesperson said.
The automaker's only U.S. manufacturing site, located in Lafayette, Indiana, is currently at a normal operating level of around 350,000 units, the spokesperson said, adding that 'the plant does have capacity to ramp up.'
Sales in the company's key North American markets continue to show strong momentum, President and CEO Atsushi Osaki said on the earnings call. Subaru's best-selling vehicle in the U.S. is the Forester compact SUV, which sold 69,195 units year-to-date through April, a 4.2% year-over-year improvement, the automaker reported.
This bodes well for Subaru's plant in Indiana, where the automaker will start building the vehicles in the fall, Osaki said. The company invested 40 billion yen ($274 million) in the facility where it will manufacture the Forester and Forester Hybrid next spring. Subaru is ending its production run of the Legacy sedan in Indiana this spring and also is ending production of the Outback at the end of the year, according to a company spokesperson.
'The all-new Forester began sales last year in North America and this spring in Japan, and has been met with greater-than-expected reception and demand from customers,' Osaki said.
While Subaru is proceeding with its plan to build the Forester in the U.S. and remains committed to its shift to electrification, Osaki said global uncertainties have moved the company to reevaluate its investment plans.
'Although the business environment is undergoing major changes, we are committed to overcoming these challenges together as one team,' Osaki said.
The uncertainty caused by tariffs has moved Subaru to withhold its future guidance. However, Osaki said that even if the impact of U.S. tariffs continues throughout the fiscal year, it still aims for at least 100 billion yen ($685 million) in operating profits.
'We will strive to further enhance profitability by continuing to improve productivity and create new revenue opportunities,' he said.
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Second Quarter 2025 Highlights Net revenue increased 6.8% (including a $1.2 million, or 1.4%, non-cash reduction from warrants) and increased 3.8% on a constant currency basis Net loss of $7.5 million compared to net income of $5.5 million for the prior year period AEBITDA (1) of $16.5 million for the three months ended June 30, 2025 is down 15.8% and down 18.4% on a constant currency basis Packaging systems placement increased 2.7% year over year, to approximately 145.0 thousand machines as of June 30, 2025 Net revenue for the second quarter of 2025 was $92.3 million compared to $86.4 million for the second quarter of 2024, an increase of $5.9 million or 6.8% (3.8% on a constant currency basis) and includes a reduction of $1.2 million to void-fill net revenue for the provision for common stock warrants. Net revenue was positively impacted by increases in cushioning, void-fill, and other net revenue, partially offset by a decrease in wrapping. 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Expand Balance Sheet and Liquidity Ranpak completed the second quarter of 2025 with a strong liquidity position, including a cash balance of $49.2 million and no borrowings on its $50.0 million revolving credit facility, which matures in December 2029. As of June 30, 2025, the Company had $408.0 million outstanding under its USD-denominated first lien term facility, which matures in December 2031. The following table presents Ranpak's installed base of protective packaging systems by product line as of June 30, 2025 and 2024: Conference Call Information The Company will host a conference call and webcast at 8:30 a.m. (ET) on Tuesday, August 5, 2025. The conference call and earnings presentation will be webcast live at the following link: Investors who cannot access the webcast may listen to the conference call live via telephone by dialing (800) 715-9871 and use the Conference ID: 8369975. A telephonic replay of the webcast also will be available starting at 11:30 a.m. (ET) on Tuesday, August 5, 2025 and ending at 11:59 p.m. (ET) on Tuesday, August 12, 2025. To listen to the replay, please dial (800) 770-2030 and use the passcode: 8369975. Cautionary Notice Regarding Forward-Looking Statements This news release contains 'forward-looking statements' within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'). Statements that are not historical facts are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to estimates, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words 'anticipate,' 'believe,' 'continue,' 'could,' 'estimate,' 'expect,' 'forecast,' 'intend,' 'may,' 'might,' 'plan,' 'possible,' 'potential,' 'predict,' 'project,' 'should,' 'would' and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this news release include, for example, statements about our expectations around the future performance of the business, including our forward-looking guidance. The forward-looking statements contained in this news release are based on our current expectations and beliefs concerning future developments and their potential effects on us taking into account information currently available to us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks include, but are not limited to: (i) our inability to secure a sufficient supply of paper to meet our production requirements; (ii) the impact of rising prices on production inputs, including labor, energy, and freight on our results of operations; (iii) the impact of the price of kraft paper on our results of operations; (iv) our reliance on third party suppliers; (v) geopolitical conflicts and other social and political unrest or potential tariffs on the import of goods; (vi) the high degree of competition and continued consolidation in the markets in which we operate; (vii) consumer sensitivity to increases in the prices of our products, changes in consumer preferences with respect to paper products generally or customer inventory rebalancing; (viii) economic, competitive and market conditions generally, including macroeconomic uncertainty, the impact of inflation, and variability in energy, freight, labor and other input costs; (ix) the loss of certain customers; (x) our failure to develop new products that meet our sales or margin expectations or the failure of those products to achieve market acceptance; (xi) our ability to achieve our environmental, social and governance ('ESG') goals and maintain the sustainable nature of our product portfolio and fulfill our obligations under evolving ESG standards; (xii) our ability to fulfill our obligations under new disclosure regimes relating to ESG matters, such as the European Sustainability Disclosure Standards recently adopted by the European Union ('EU') under the EU's Corporate Sustainability Reporting Directive ('CSRD'); (xiii) our future operating results fluctuating, failing to match performance or to meet expectations; (xiv) our ability to fulfill our public company obligations; and (xv) other risks and uncertainties indicated from time to time in filings made with the SEC. 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Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net product revenue $ 77.8 $ 72.8 $ 155.4 $ 145.3 Machine lease revenue 14.5 13.6 28.1 26.4 Net revenue 92.3 86.4 183.5 171.7 Cost of product sales 56.0 48.5 110.8 94.2 Cost of leased machines 7.4 6.2 12.9 13.5 Gross profit 28.9 31.7 59.8 64.0 Selling, general and administrative expenses 28.8 27.3 57.7 55.2 Depreciation and amortization expense 8.8 8.3 17.8 16.7 Other operating expense, net 1.0 1.3 2.0 2.1 Loss from operations (9.7 ) (5.2 ) (17.7 ) (10.0 ) Interest expense 8.3 5.3 17.0 11.5 Foreign currency (gain) loss (2.6 ) 0.1 (5.2 ) (1.3 ) Other non-operating income, net (5.9 ) (17.9 ) (5.9 ) (17.9 ) (Loss) income before income tax (benefit) expense (9.5 ) 7.3 (23.6 ) (2.3 ) Income tax (benefit) expense (2.0 ) 1.8 (5.2 ) 0.3 Net (loss) income $ (7.5 ) 5.5 $ (18.4 ) $ (2.6 ) Basic and diluted (loss) income per share $ (0.09 ) $ 0.07 $ (0.22 ) $ (0.03 ) Other comprehensive income (loss), before tax Foreign currency translation adjustments $ (4.6 ) $ (0.1 ) $ (7.2 ) $ (2.2 ) Interest rate swap adjustments — (0.8 ) — (3.4 ) Cross currency swap adjustments (0.6 ) — (1.2 ) — Total other comprehensive loss, before tax (5.2 ) (0.9 ) (8.4 ) (5.6 ) Benefit for income taxes related to other comprehensive loss (4.6 ) (0.1 ) (7.0 ) — Total other comprehensive loss, net of tax (0.6 ) (0.8 ) (1.4 ) (5.6 ) Comprehensive (loss) income, net of tax $ (8.1 ) $ 4.7 $ (19.8 ) $ (8.2 ) Expand Ranpak Holdings Corp. 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Unaudited Condensed Consolidated Statements of Cash Flows (in millions) Six Months Ended June 30, 2025 2024 Cash Flows from Operating Activities Net loss $ (18.4 ) $ (2.6 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 31.9 35.5 Amortization of deferred financing costs 0.6 1.4 Loss on disposal of property, plant, and equipment 0.2 0.6 Gain on sale of patents — (5.4 ) Deferred income taxes (1.8 ) 3.7 Amortization of initial value of interest rate swap — (1.2 ) Foreign currency gain (5.2 ) (1.3 ) Stock-based compensation expense 4.1 2.8 Provision for common stock warrants 2.0 — Amortization of cloud-based software implementation costs 1.9 1.8 Unrealized (gain) loss on strategic investments (5.8 ) 3.5 Changes in operating assets and liabilities: Accounts receivable 1.2 (5.6 ) Inventories (15.0 ) (8.8 ) Income tax receivable (4.0 ) (6.6 ) Prepaid expenses and other current assets (4.6 ) (2.6 ) Accounts payable 5.2 9.5 Accrued liabilities and other 2.6 3.4 Change in other assets and liabilities 0.2 (3.3 ) Net cash (used in) provided by operating activities (4.9 ) 24.8 Cash Flows from Investing Activities Purchases of converter equipment (15.2 ) (15.3 ) Purchases of other property, plant, and equipment (2.1 ) (4.4 ) Proceeds from sale of patents — 5.4 Cash paid for strategic investments (2.5 ) (4.8 ) Net cash used in investing activities (19.8 ) (19.1 ) Cash Flows from Financing Activities Principal payments on term loans (2.1 ) (0.8 ) Proceeds from hedging instruments 0.3 — Proceeds from equipment financing — 0.7 Payments on equipment financing (0.4 ) (0.5 ) Payments on finance lease liabilities (1.5 ) (0.6 ) Tax payments for withholdings on stock-based awards distributed (1.2 ) (0.4 ) Net cash used in financing activities (4.9 ) (1.6 ) Effect of Exchange Rate Changes on Cash and Cash Equivalents 2.7 (1.0 ) Net (Decrease) Increase in Cash and Cash Equivalents (26.9 ) 3.1 Cash and Cash Equivalents, beginning of period 76.1 62.0 Cash and Cash Equivalents, end of period $ 49.2 $ 65.1 Expand Non-GAAP Measures Earnings Before Interest, Taxes, Depreciation and Amortization ('EBITDA') and Adjusted EBITDA ('AEBITDA') Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. We also present Earnings Before Interest, Taxes, Depreciation and Amortization ('EBITDA') and adjusted EBITDA ('AEBITDA'), which are non-GAAP financial measures, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA and AEBITDA can provide a useful measure for period-to-period comparisons of our primary business operations. We believe that EBITDA and AEBITDA provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. 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. AEBITDA 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; foreign currency (gain) loss; amortization of cloud-based software implementation costs; and, in certain periods, other income and expense items. We reconcile this data to our U.S. GAAP data for the same periods presented. Constant Currency We operate globally, and a substantial portion of our net revenue and operations is denominated in foreign currencies, primarily the Euro. We calculate the year over-year impact of foreign currency movements using prior period foreign currency rates applied to current year results. These 'constant currency' change amounts are non-GAAP measures and are not in accordance with, or an alternative to, measures prepared in accordance with U.S. GAAP. In addition, constant currency change measures are not based on any established set of accounting rules or principles. In calculating the Constant Currency (Non-GAAP) % Change, the current year is translated at the average exchange rate for the comparable prior year period, when comparing the current year to the prior year. We believe that our Constant Currency (Non-GAAP) % Change presentation provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. Cautionary Notice Regarding Non-GAAP Measures Non-GAAP measures, such as EBITDA, AEBITDA, and constant currency change, have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. In particular, non-GAAP financial measures should not be viewed as substitutes for, or superior to, net income (loss) prepared in accordance with U.S. 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 AEBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements; EBITDA and AEBITDA do not reflect changes in, or cash requirements for, our working capital needs; EBITDA and AEBITDA do not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to us; AEBITDA does not consider the potentially dilutive impact of stock-based compensation, and in certain periods, other income and expense items, such as restructuring and integration costs; constant currency change measures exclude the foreign currency exchange rate impact on our foreign operations; and other companies, including companies in our industry, may calculate EBITDA, AEBITDA, and constant currency change differently, which reduces their usefulness as comparative measures. (1) Reconciliations of EBITDA and AEBITDA for each period presented are to net (loss) income, the nearest GAAP equivalent. (2) Adjustments are related to non-cash unusual or infrequent costs such as: effects of non-cash foreign currency remeasurement or adjustment; impairment of returned machines; costs associated with the evaluation of acquisitions; costs associated with executive severance; costs associated with restructuring actions such as plant rationalization or realignment, reorganization, and reductions in force; costs associated with the implementation of the global ERP system; and other items deemed by management to be unusual, infrequent, or non-recurring. (3) Represents amortization of capitalized costs primarily related to the implementation of the global ERP system, which are included in SG&A. (4) Third-party professional services and consulting fees related to post-implementation system remediation. (5) In the second quarter of 2025, Other adjustments includes non-recurring excess above market procurement costs and other insignificant items. In the second quarter of 2024, Other adjustments represents primarily non-recurring costs incurred from the outsourcing of paper conversion services and other insignificant items. (6) The Constant Currency (Non-GAAP) % Change excludes the impact of foreign currency translation effects when comparing to the prior year. In calculating the Constant Currency (Non-GAAP) % Change, the current year results are translated at the average exchange rate for the prior year period, which in this case was 1 Euro to 1.0768 USD. Refer to further discussion in 'Non-GAAP Measures.' Expand Six Months Ended June 30, Constant Currency (Non-GAAP) % Change (6) 2025 2024 $ Change % Change Depreciation and amortization expense – COS 14.1 18.8 (4.7 ) (25.0 ) Depreciation and amortization expense – D&A 17.8 16.7 1.1 6.6 Interest expense 17.0 11.5 5.5 47.8 Income tax (benefit) expense (5.2 ) 0.3 (5.5 ) NM EBITDA (1) 25.3 44.7 (19.4 ) (43.4 ) (44.3 ) Adjustments (2): Foreign currency gain (5.2 ) (1.3 ) (3.9 ) NM Non-cash impairment losses 0.2 0.6 (0.4 ) (66.7 ) M&A, restructuring, severance 6.5 2.4 4.1 170.8 Stock-based compensation expense 4.1 2.8 1.3 46.4 Amortization of cloud-based software implementation costs (3) 1.9 1.8 0.1 5.6 Cloud-based software implementation costs 1.4 1.2 0.2 16.7 SOX remediation costs (4) 0.9 3.2 (2.3 ) (71.9 ) Gain on sale of patents — (5.4 ) 5.4 (100.0 ) Patent litigation settlement — (16.1 ) 16.1 (100.0 ) Unrealized (gain) loss on strategic investments (5.8 ) 3.5 (9.3 ) (265.7 ) Other adjustments (5) 4.5 1.4 3.1 221.4 AEBITDA (1) $ 33.8 $ 38.8 $ (5.0 ) (12.9 ) (13.4 ) (see subsequent footnotes) Expand (1) Reconciliations of EBITDA and AEBITDA for each period presented are to net loss, the nearest GAAP equivalent. (2) Adjustments are related to non-cash unusual or infrequent costs such as: effects of non-cash foreign currency remeasurement or adjustment; impairment of returned machines; costs associated with the evaluation of acquisitions; costs associated with executive severance; costs associated with restructuring actions such as plant rationalization or realignment, reorganization, and reductions in force; costs associated with the implementation of the global ERP system; and other items deemed by management to be unusual, infrequent, or non-recurring. (3) Represents amortization of capitalized costs primarily related to the implementation of the global ERP system, which are included in SG&A. (4) Third-party professional services and consulting fees related to post-implementation system remediation. (5) In the six months ended June 30, 2025, Other adjustments includes non-recurring warehouse and transitory costs incurred related to conversion services, non-recurring excess above market procurement costs, and other insignificant items. In the six months ended June 30, 2024, Other adjustments represents primarily non-recurring costs incurred from the outsourcing of paper conversion services, legal expenses and fees related to the Company's patent litigation which was settled in the second quarter of 2024, and other insignificant items. (6) The Constant Currency (Non-GAAP) % Change excludes the impact of foreign currency translation effects when comparing to the prior year. In calculating the Constant Currency (Non-GAAP) % Change, the current year results are translated at the average exchange rate for the prior year period, which in this case was 1 Euro to 1.0814 USD. Refer to further discussion in 'Non-GAAP Measures.' Expand
