랜팩 홀딩스(PACK) 2026년 3분기 실적 발표 콘퍼런스 콜: 자동화와 마진이 성장을 견인하다

핵심 요약

• 3분기 순매출은 자동화 장비 매출이 고정환율 기준 23.5% 성장한 데 힘입어 보고 기준 2.3%, 고정환율 기준 3.4% 증가했습니다.
• 조정 EBITDA는 110만 달러 증가한 2,250만 달러를 기록했습니다. 고정환율 기준으로는 6.1% 증가했으며, 워런트 영향을 제외하면 7.7% 증가했습니다.
• 매출총이익률은 전년 동기 대비 110bp, 전분기 대비 280bp 개선되었으며, 주식보상비용(RSU)을 제외한 고정환율 기준 판매관리비는 10.5% 감소했습니다.
• 경영진은 2026년 자동화 매출이 2025년 대비 50% 성장한 약 6,000만 달러에 달할 것이라는 전망을 유지했습니다. 해당 사업은 3분기에 조정 EBITDA 흑자를 기록했으며 4분기에도 흑자를 이어갈 것으로 예상됩니다.
• 분기 말 현금은 2분기 대비 1,000만 달러 이상 증가하여 5,340만 달러를 기록했습니다. 회전한도 대출 차입금은 없었으며 순레버리지는 4.3배로 하락했습니다.
• 경영진은 에너지 비용, 고금리, 북미 외 지역의 수요 둔화가 주요 불확실성으로 남아 있음에도 불구하고, 2027년 랜팩(Ranpak) 성장의 대부분을 자동화 및 콜드체인이 견인할 것으로 전망하고 있습니다.

주요 재무 데이터

사업 및 운영 실적

자동화는 랜팩의 주요 성장 동력으로 유지되었습니다. 워런트를 제외한 북미 자동화 매출은 47% 이상 증가했으며, 유럽 및 아시아·태평양(APAC) 자동화 매출은 고정환율 기준 18.1% 성장했습니다. 경영진은 대형 기업 고객과의 계약 이행 및 신규 고객 확보가 이러한 성장을 견인했다고 설명했습니다.

북미 매출은 6.9% 증가했으며, 워런트를 제외하면 7.9% 증가했습니다. 유통 채널 기저효과가 정상화됨에 따라 보호용 종이 시스템(PPS)도 긍정적으로 기여했습니다. 특히 완충재는 Guardian 24 도입 및 현장 발포 폼(foam-in-place) 솔루션으로부터의 고객 전환에 힘입어 매우 우수한 실적을 거두었습니다.

유럽 및 아시아·태평양 매출은 고정환율 기준 0.5% 증가했습니다. 자동화 성장과 가격 인상 효과는 PPS 물량의 4.9% 감소로 인해 일부 상쇄되었습니다. 유럽 유통업체들은 할증료 적용을 앞두고 일부 주문이 2분기로 앞당겨진 후 재고를 감축했습니다. 아시아·태평양 지역 수요 역시 리드 타임 단축과 이커머스 매출 감소의 영향을 받았습니다.

운영 이니셔티브가 수익성을 뒷받침했습니다. 감가상각비를 제외한 북미 PPS 이익률은 전년 동기 대비 290bp 이상 개선되었습니다. 경영진은 더 나은 제품 믹스, 린(Lean) 및 식스시그마 프로그램, 조달 절감, 불량률 감소, 장비 생산 속도 향상을 이유로 들었습니다. 경영진은 효율성 프로그램이 '3회 초' 단계에 있다고 표현하며 추가적인 개선 가능성을 시사했습니다.

랜팩은 또한 엘리먼트 로직(Element Logic)과의 글로벌 전략적 파트너십을 통해 자동화 생태계를 확장하고 있습니다. 양사는 랜팩의 맞춤형 포장, 상자 성형, 봉합, 컴퓨터 비전 및 종이 보호 기술을 광범위한 물류창고 자동화 시스템에 통합할 계획입니다.

경영진 가이던스

경영진은 2026년 자동화 매출을 2025년 대비 50% 성장한 약 6,000만 달러로 지속 전망하고 있습니다. 랜팩은 자동화 사업이 연간 기준 조정 EBITDA 손익분기점에 도달하고 2027년에는 긍정적인 기여를 할 것으로 기대하고 있습니다.

회사는 3분기에서 4분기로 넘어가면서 전형적인 계절적 증가를 예상하며 이전 연간 가이던스를 달성하는 궤도를 유지하고 있다고 밝혔습니다. 환율이 현재 수준을 유지한다면 경영진은 환율 변동이 4분기 보고 실적에 약 2%의 역풍을 작용할 것으로 추정합니다.

2027년과 관련해 경영진은 자동화 부문이 가파른 성장을 기록하고 연간 내내 수익성을 유지할 것으로 기대하고 있습니다. 추가 콜드체인 생산 능력은 2027년 초 가동을 시작할 예정이며, 2분기부터 의미 있는 매출 기여가 예상됩니다.

랜팩은 또한 4분기 현금 창출이 계절성과 운전자본 회수의 혜택을 받을 것으로 예상하고 있습니다. 향후 24개월 동안 순레버리지를 2.5배에서 3.0배 사이로 축소하겠다는 목표를 유지하고 있습니다.

리스크 및 관전 포인트

경영진은 배럴당 100달러를 넘는 유가, 사상 최고 수준의 디젤 비용, 침체된 소비자 심리, 고금리, 지정학적 갈등을 꼽으며 거시경제 환경의 변동성이 크다고 설명했습니다. 이러한 요인들이 고객 지출과 운영 비용에 압박을 가하고 있습니다.

유럽의 에너지 인플레이션은 특히 지속적인 우려 사항입니다. 네덜란드 천연가스 가격이 메가와트시당 90유로를 넘어서며 종이 원가가 상승했습니다. 랜팩은 매출총이익을 방어하기 위해 임시 할증료를 적용하고 있으나, 경영진은 에너지 가격이 높게 유지되는 동안 유럽 이익률이 일부 압박을 받을 것으로 예상합니다.

3분기 중 북미 외 지역의 수요가 약화되었습니다. 기존 유럽 고객들은 신중한 태도를 유지했으며, 아시아·태평양 지역의 부진도 지속되었습니다. 그럼에도 불구하고 경영진은 유통업체들이 과도한 재고를 소진함에 따라 4분기 유럽 실적이 개선될 것으로 예상합니다.

북미의 종이 시장 수급이 타이트해지고 있습니다. 회사는 생산자 가격 인상분을 반영할 계획이지만, 최근의 이익률 개선세를 유지하기 위해서는 실행력이 중요할 것입니다.

애널리스트 Q&A 하이라이트

경영진은 북미 고객들이 여전히 견조한 성수기를 준비하고 있다고 밝혔습니다. 유럽에서는 유통업체 재고 감축에도 불구하고 최종 소비자 판매(sell-through)가 비교적 견조하게 유지되었으며, 아시아·태평양 주문 시점은 생산 및 종이 조달의 현지화로 인해 리드 타임이 단축된 영향을 받았습니다.

이익률 지속 가능성에 대한 질문에 경영진은 유리한 제품 믹스가 3분기 북미 실적 개선에 약 100~150bp 기여했다고 추정했습니다. 나머지 개선분은 운영 효율화와 일회성 비용 감소에서 기인했습니다. 자동화 이익률 또한 장비 원가 절감, 생산 시간 단축, 고정비 흡수율 개선을 통해 향상될 것으로 기대됩니다.

랜팩은 월마트 및 아마존과의 관계가 빈번한 논의와 견고한 프로젝트 파이프라인을 바탕으로 활발하게 유지되고 있다고 밝혔습니다. 회사는 마진이 낮은 소모품 사업 비중을 줄이는 한편 고부가가치 자동화 및 반자동화 솔루션으로 자원을 집중하고 있습니다.

2027년에 대해 경영진은 PPS, 자동화, 콜드체인 등 3대 핵심 사업 영역을 제시했습니다. 자동화와 콜드체인이 성장의 대부분을 이끌 것으로 예상되며, 지속적인 효율성 개선을 통해 이익률, 현금 창출 및 디레버리징을 뒷받침할 계획입니다.

실적발표 콘퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Hello, everyone. Thank you for joining us, and welcome to Ranpak Holdings' Third Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the call over to Sara Horvath, Chief Legal and HR Officer. Please go ahead.

Sara Horvath

Thank you, and good morning, everyone. Before we begin, I'd like to remind you that we will discuss forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those forward-looking statements as a result of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K and our other filings with the SEC. Some of the statements and responses to your questions in this conference call may include forward-looking statements that are subject to future events and uncertainties that could cause our actual results to differ materially from these statements. Ranpak assumes no obligation and does not intend to update any such forward-looking statements.

You should not place undue reliance on these forward-looking statements, all of which speak to the company only as of today. The earnings release we issued this morning and the presentation for today's call are posted on the Investor Relations section of our website. A copy of the release has been included in a Form 8-K that we furnished to the SEC before this call. We will also make a replay of this conference call available via webcast on the company website.

For financial information that is presented on a non-GAAP basis, we have included reconciliations to the comparable GAAP information. Please refer to the table and slide presentation accompanying today's earnings release. Lastly, we'll be filing our 10-Q with the SEC for the period ending September 30, 2026. The 10-Q will be available through the SEC or on the Investor Relations section of our website.

With me today, I have Omar Asali, our Chairman and CEO, and Bill Drew, our CFO. Omar will summarize our third quarter results and market conditions, and Bill will provide additional detail on the financial results before we open up the call for questions. With that, I'll turn the call over to Omar.

Omar Asali

Thank you, Sara. Good morning, everyone, and thank you for joining us today. We are pleased to continue to grow top line and adjusted EBITDA in the third quarter and on a year-to-date basis while operating in a volatile macro environment. Our automation product line delivered another quarter of strong growth with revenue increasing 26.9% year-over-year on a constant currency basis and excluding the impact of Florence. We continue to build strong momentum in automation equipment sales in both North America and Europe and are pleased it is becoming the growth engine we expected.

We continue to expect to achieve $60 million in net revenue in this area for 2026, which would be 50% growth versus 2025. The pipeline is strong. And based on what we are seeing, we expect strong growth to continue next year. Our automation product line is serving as a differentiator for us in our discussions with customers and as a diversified revenue stream that is less correlated to the short-term macro sentiment relative to the PPS business. As anticipated, we experienced improved performance in the distribution channel in North America in the third quarter as the challenging first half comparison normalized and our new product initiatives in cushioning, void fill and wrapping are gaining traction.

Cushioning, in particular, in North America had a really strong quarter as our Guardian 24 is experiencing strong adoption, and we are having success going against foam-in-place. Channel performance drove North America volumes up 1.8%, while Europe and APAC were softer after a strong Q2, leading overall volumes to be lower by 2.5%. Europe, in particular, was an outperformer in Q2, but gave some of that back this quarter as it looks like the channel worked through some prebuy relative to the surcharge and lowered inventory levels to reflect lower lead times in EMEA and in APAC as our localization goals are being achieved. Now, more on to our results. Consolidated net revenue increased 3.4% on a constant currency basis for the quarter or up 3.8%, excluding the impact of warrants, driven by 23.5% growth in automation equipment sales on a constant currency basis. Currency was a headwind in the quarter, which detracted 1.1 percentage points on a reported basis in the quarter, bringing reported top line growth to 2.3% for the quarter and 8.9% on a year-to-date basis. Adjusted EBITDA increased $1.1 million to $22.5 million on a reported basis and was up 6.1% in constant currency terms.

Excluding the impact of warrants, adjusted EBITDA increased 7.7% on a constant currency basis and roughly in line with growth in gross profit on a constant currency basis. On a year-to-date basis, adjusted EBITDA increased $5.3 million to $60.5 million on a reported basis and was up 6% in constant currency terms.

Excluding the impact of warrants, adjusted EBITDA increased 8.8% on a constant currency basis. Now, moving to the market environment and how Ranpak is positioned. The macro backdrop for the third quarter took a step back as volatility in the energy markets and rates increased markedly. Oil prices climbed back above $100 a barrel as the conflict in the Middle East reescalated, refinery shortages are driving diesel costs to record highs, consumer confidence is at multi-decade lows and the Fed raised rates in September with expectations of more hikes on the way.

Against that backdrop, I would say demand has held up reasonably well, although Q3 saw some softness outside of North America. Customers are cautious given the pressure higher energy costs are putting on both their input costs and consumer spending, but most folks we talk to are expecting a peak season similar to last year, and we are still seeing strong demand for automation solutions. In North America, the paper market continues to tighten as producers try to push increases, which we are passing on to protect our margin profile.

In Europe, Dutch nat gas is now above EUR 90 per megawatt hour and driving paper pricing higher. But there, we have implemented a surcharge, which we adjust as needed given the volatility in energy to protect our gross profit. As we said last quarter, we believe the surcharge is temporary, and we will remove it as energy costs normalize. Conditions evolve rapidly, but overall, we believe we are managing the environment very well at Ranpak through our pricing actions and the momentum we are seeing in automation. With energy costs climbing again and rates moving higher, our customers are scrutinizing every dollar of packaging spend, which we believe plays to our value proposition of lowering their total cost of packaging. Internally, we hold ourselves to the same standard.

And this quarter, 110 bps gross margin improvement and 10.5% reduction in constant currency SG&A, excluding the RSUs expense, show that discipline is paying off. We have enhanced our operational talent and capabilities over the past year and are finding opportunities to enhance our profile through the implementation of operational and continuous improvement projects to drive our KPIs.

The team is invigorated by the early progress we are seeing and excited about further improvements we are pursuing. Procurement, in particular, is an area where we see upside as we can utilize our increased scale and global reach to find efficiencies that reduce our material cost and time to build our equipment. Overall, I believe we are on the path to a much more efficient platform in 2027. Beyond the near term, our automation and cold chain product lines are where we are concentrating our investment, and we believe they will be the foundation of our growth in the years ahead. While the macro backdrop is somewhat uncertain, we believe Ranpak is well positioned heading into peak season and 2027. With that, here's Bill with more information on the quarter.

William Drew

Thank you, Omar. In the deck, you'll see a summary of some of our key performance indicators.

We'll also be filing our 10-Q, which provides further information on Ranpak's operating results. Overall, net revenue for the company in the third quarter increased 3.4% year-over-year on a constant currency basis or an increase of 3.8%, excluding the impact of warrants, driven by strong momentum in automation and volume growth in the distribution channel in North America.

Our North America revenues increased 6.9% in the quarter or up 7.9%, excluding the impact of warrants, driven by more than 47% growth in automation, excluding warrants, while PPS also contributed positively to the top line as the channel comparisons normalized and returned to growth as expected with strong performance in cushioning. Traction with automation in North America also continues to build as we land new logos in the region, so we remain excited about the outlook there. In Europe and APAC, net revenue increased 0.5% on a constant currency basis, driven by 18.1% growth in automation on a constant currency basis as well as pricing actions, partially offset by 4.9% volume decline in PPS as EMEA channel customers work down inventory and APAC adjusted shorter lead times and lower e-commerce sales.

Gross profit increased 7.3% on a constant currency basis in the quarter and would have increased 8.2%, excluding the $1.2 million noncash provision for warrants. Our margin initiatives are delivering, and we are pleased to report 110 bps improvement in gross margin versus Q3 of last year and 280 bps improvement sequentially from Q2. In North America PPS, where margins have been most pressured, we made continued progress through our efficiency gains and improved mix, enhancing our margin more than 290 bps, excluding depreciation versus the prior year. In EMEA, there was 90 bps of pressure ex depreciation due to rising COGS in PPS and greater contribution from automation. Given how much energy prices have increased, we are most focused on protecting gross profit dollars there through the surcharge in the near term. So we do expect some margin pressure in the region at these levels. Overall, though, we have a number of actions in place, which we believe are making us more efficient and improving our profile, and we expect to make further progress into 2027.

SG&A, excluding RSU expense, was down 10.5% on a constant currency basis versus the prior year, reflecting the cost actions we have taken across the business and fewer onetime expenses. Consistent with what we shared previously, we continue to prioritize cost discipline and margin expansion. We're focused on keeping spend lean and leveraging our fixed overhead as we grow. As Omar mentioned, adjusted EBITDA increased 6.1% year-over-year on a constant currency basis or up 7.7%, excluding the impact of warrants as greater sales and gross profit flowed through with lower SG&A. Q3 was positive from an adjusted EBITDA perspective in our automation product line, and we expect Q4 will be as well as we are scaling towards overall profitability and $60 million in revenue this year. The constant currency calculation is based on a rate of 1.1688, which was last year's average rate for the quarter. As mentioned last quarter, beginning in Q3 of last year, there was considerable movement in the euro. So this quarter, we had roughly a 1% headwind on our reported results.

And for the fourth quarter, if rates stay where they are, it would be a roughly 2% headwind. But please note that for the remainder of the year. On a year-to-date basis, we have achieved net revenue growth of 8.9% or 6.6% on a constant currency basis, inclusive of a $4.6 million provision for warrants. Adjusted EBITDA increased $5.3 million or 9.6% to $60.5 million and was up 6% on a constant currency basis. Excluding the impact of warrants, adjusted EBITDA increased 8.8% on a constant currency basis year-to-date. Moving to the balance sheet and liquidity.

We completed Q3 2026 with a strong liquidity position, improving our cash balance in the quarter by more than $10 million from Q2 2026 and finishing with a cash balance of $53.4 million and no drawings on our revolving credit facility. This brings our reported net leverage down 0.4 turns from the end of Q1 to 4.3x on an LTM basis. We do expect cash to continue to improve in the fourth quarter due to seasonality and our ability to free up some working capital. Our goal remains to achieve net leverage of between 2.5x and 3.0x, which we believe we can do over the next 24 months. Our CapEx for the quarter was $10.3 million, which is up $2.5 million from the prior year. We remain disciplined on spend and have reduced converter spend versus prior year while investing in further production capacity to drive growth in key products in upcoming years in areas like cold chain and to serve growth areas related to our enterprise customers. Our fleet optimization initiatives are driving the improvements in our converter spend. Our machine population was lower year-over-year, but increased from Q2 as we're deploying new converters, but also focused on getting back converters we believe are underutilized so we can put them at more productive locations. With that, I'll turn it to Omar.

Omar Asali

Thank you, Bill. Before I close, I want to touch on a few of our key initiatives and add some color on the rest of the year and into 2027. This quarter and throughout this year, we made real progress on our priorities; scaling automation towards profitability, executing on cost out and efficiencies to improve our margin profile, reducing our exposure to lower-margin business and positioning ourselves to capitalize on the need for sustainable cold chain solutions. Our strategy has been consistent, assemble the most complete end-of-line automation offering in the industry and surround it with partners who play critical roles in how goods move through the warehouse. We believe the more places Ranpak is present in the warehouse, the more value we can create.

Our customers run more efficiently, and we earn deeper, longer-lasting relationships with some of the most sophisticated operators in the world, which is showing up in our automation results this year. In automation, we remain on track to hit roughly $60 million in revenue this year, which was my largest goal coming into 2026. Automation has real momentum in both North America and Europe, and I believe it will be a real growth driver for Ranpak going forward. As Bill mentioned, we have line of sight to automation breaking even on an adjusted EBITDA basis, which we expect this year and positive contribution in 2027.

We also continue to add partners to our ecosystem, including our recent global strategic partnership announcement with Element Logic, which broadens what we can offer our enterprise customers. This partnership formalizes and builds on existing collaboration between the 2 companies, combining Element Logic's expertise in warehouse automation, software and system integration with Ranpak's specialist capabilities in rightsizing, box forming, closing, computer vision and paper-based product protection.

Element Logic acts as both a system integrator and trusted automation partner designing, implementing and supporting end-to-end warehouse solutions that integrate Ranpak packaging automation technologies into our customers' operations. As a result of this partnership, customers gain a more integrated outbound fulfillment flow. Element Logic can design Ranpak's packaging automation into the process downstream of picking and around packing stations rather than treating packaging as a stand-alone add-on.

Together, the companies can connect warehouse automation with specialist packaging expertise to improve cost efficiency, scalability and sustainability while supporting customers as they comply with PPWR regulations. In North America, we have been tuning the PPS portfolio to improve the margin profile. And given the warrant relationship, we are being mindful of where and how we participate in the consumables area with our large enterprise customers. As we signaled last quarter, we are now doing less of the lower-margin business where we have been providing warrants, bringing it to a level where we are comfortable with, and you can see the benefits in our improved mix and margins this quarter.

With our largest customers, we are positioning Ranpak where we see the largest and most valuable opportunities and dedicating our resources to providing these value-added solutions that can grow over the next number of years. We are also adding distribution partners in North America as our enhanced portfolio now includes differentiated automation and cold chain solutions as well as best-in-class paper products is making Ranpak a partner more distributors want to work with.

From a top line perspective, we believe there will be a traditional step-up from Q3 to Q4 due to seasonality and continue to expect to meet our prior guidance for the year. Looking to 2027, the additional cold chain capacity we discussed last quarter is on track to come online in early 2027, positioning us to capitalize on the growing need for sustainable cold chain solutions and believe our ClimaLiner Plus will be a new market standard. I said it last time, but I will reiterate, sustainable cold chain is one of the great opportunities out there right now. And like automation, it gives us another scalable revenue stream. I believe these 2 areas will be top line drivers for us in 2027.

Overall, we anticipate having 3 key areas of focus at Ranpak: PPS, automation and cold chain. I'm pleased with how we are executing on our key initiatives and the path we are on. Despite the challenging macro backdrop, the overall micro backdrop is okay. We remain focused on growth, margin enhancement and deleveraging.

And I believe everything we are doing right now moves us in that direction.

We grew our cash balance by more than $10 million this quarter, have no drawings on our revolver and remain committed to reaching net leverage of 2.5 to 3 turns over the next 24 months. I want to thank our team for their hard work and commitment through a demanding year, especially as we head into peak season. With that, we'd like to open the line for questions. Operator?

Operator

[Operator Instructions]

Your first question is from the line of Greg Palm with Craig-Hallum.

질의응답

Greg Palm

Curious, just in light of everything going on, I mean, behavior of customers, have you seen any difference, whether that's around our trade downs? And just to be clear on the weakness in EMEA region from -- is any of that related to surcharges? Was there a sort of maybe a pull forward in Q2 ahead of that? And then I guess, it's more of a multipart question, but I would probably argue that the environment has gotten maybe a little or a lot more volatile like in the last month. So kind of what are you seeing real time quarter-to-date in October?

Omar Asali

Yes. Greg, it's Omar. Maybe I'll start, and I'll have Bill chime in. So let's take it geographically. In North America, we continue to see and expect a pretty strong peak season. Despite the volatility, obviously, we're living through that volatility from a macro standpoint with freight and diesel pricing. But it looks like the expectations for the holiday season are still very decent and very robust.

And that's the behavior that we're seeing from our customers. Industrial activity, we're doing better, but I think that's due to our new product innovation, in particular, the Guardian 24 that I mentioned in the call, which is a faster converter, providing a smaller footprint and a better solution out there, and frankly, compares very favorably against foam. So that's what we're seeing on the PPS side. In Europe, I would say with the surcharge, it looks like we had some of our channel partners pull through or pull forward some of the product into Q2. So that had some impact. in Q3. What we're seeing in Europe, Greg, is we're seeing that we're winning at new accounts.

We're seeing some decent trial and close activity, but just the macro environment. We're seeing a bunch of existing accounts, by the way, that remain our partners and customers just demand a bit less product, and we think that is largely driven by the war in the Middle East. Obviously, Ukraine is not helping. And clearly, energy pricing is impacting the environment. So that's what we're seeing in Europe.

As of now, we're expecting a decent Q4, but frankly, expecting similar behavior, if you will, with new accounts maybe adding and existing accounts being a little bit cautious in Europe. In Asia Pacific, we've seen some weakness, and that weakness continues. But when you put it all together, we're expecting, given what we're seeing as of now and Q4 and our expectations that actually peak season is going to be pretty good. In automation, business continues to perform extremely well. Obviously, right now, as you know, at this moment in the calendar, our book is done, and we are just working on executing and hitting milestones to gather revenue and our visibility into '27 for automation continues to be decent.

William Drew

Yes. And I guess I would just add to that, and Omar covered a lot. But as far as just some additional commentary, I think from what we were hearing from the channel partners in Europe was that the sell-through in Q3 remained strong. So they did have some additional inventory that they were working through, but the sell-through to the end users remained pretty solid. So we are expecting Europe to be better in Q4. And then just related to Asia, we have been making a big effort to localize our production there, and that includes local paper sourcing, which will be complete by the end of this year.

So there has been some movement in timing, right, in terms of lower lead times there, resulting in distributors resetting their order patterns. But we are excited about what that will do from a margin perspective for us going into next year and then also just from a competitive standpoint. So some puts and takes in the EMEA and APAC region.

Greg Palm

Got it. Okay. And then just like the margin performance was pretty impressive given kind of everything going on, I mean, both revenue and just input cost-wise.

And so I don't know if you can just kind of help us figure out how much is left in kind of that journey? I mean, in terms of the quarter, was it -- how much was mix related versus some of these efficiencies that you've targeted? And just looking ahead to next year, again, in light of this kind of input cost environment that continues to worsen, kind of how you feel about gross margin in '27?

Omar Asali

Greg, let me just start with high-level comments, then Bill will provide the detail. One, our operating leadership, which many of it -- many of this leadership has joined in the last 18 months, is doing a phenomenal job with our physical footprint, with our lines, our speed, scrap rates, frankly, procurement, which is a big focus of ours. So it's a series of projects I've mentioned in the past, we have instituted Lean and Six Sigma.

We have pretty much an exercise around CI and continuous improvement that is occurring in the company. So it's been a lot of different areas of improvement. From my belief, despite the challenging environment, I think we are probably in the third inning of this journey. I think there's quite a bit more efficiencies that our team is looking at that we're excited about. So we feel really good about improving what we're doing and doing that at much better -- sort of much better spend and much better margin profile.

As Bill mentioned, APAC, in particular, we think there's tremendous room there as we become more efficient. But frankly, we're seeing that in North America. and in Europe as well. So that's an area that we think will add quite a bit of value in '27. To your question about mix, that has helped, obviously, this past quarter a little bit. Whenever we do well with our channel partners, which in North America, we did in Q3, that always helps the margin profile. But Bill?

William Drew

Yes. So I guess, I mean, it varies by region, Greg, in terms of how much is left and kind of the direction. So in North America, I think we've made really good improvements throughout the year and getting better each quarter sequentially, and we do expect that to continue to improve in Q4. In Q3, I would say the benefit from the mix was probably about 1 point to 1.5 points in North America, and then the rest comes from just operating more efficiently and fewer onetime costs. So I think we'll continue to make good progress there.

The operations team is doing really well, and we'll continue to make sure that even with a tighter paper pricing environment, we'll continue to pass on those costs to protect that margin improvement. And in Europe, last year, we had really strong margins in the second half. And in the first quarter, we also had really strong margins, and we're doing everything to protect those. With surcharge, though, we are making sure that we're protecting the gross profit dollars in the second half here rather than just focus on the margin, just given how much the energy costs have increased in the region.

So you would expect some headwinds in Q4 in the European region. And then automation, I think overall, you continue to see continued progress there. In Europe, we continue to take cost out of the machines, get more efficient in terms of how much time it takes us to build the products. And then in North America, as volume starts to ramp up in North America and we get more traction there, you'll continue to see better fixed cost absorption. So overall, we do expect automation to continue to improve the margin profile in Q4 and next year as well.

Operator

Your next question is from the line of Ghansham Panjabi with Baird.

Unknown Analyst

This is Will Kottz on for Ghansham. I think maybe my first question is just around like some of the larger partnerships, Walmart, Amazon. How have those progressed versus your initial expectations? And then on a go-forward basis, how should we think about sort of the rollout of the rest of that given all the steps you've taken with it, obviously?

Omar Asali

Will, I think we feel great about those relationships. Our dialogue with both enterprises is very close, very frequent. We have better and better visibility in some of the future plans and some of the areas where we believe we can add value. One of the key initiatives that we've done, and you've seen it in this quarter, we want to make sure that we're dedicating our resources to the highest impact with these accounts. So we are being very mindful that we are working with them, let's call it, more and more in non-commoditized areas, maybe less in just some of the very basic consumables if there isn't any sort of our solution or any semi-automated solution or automated solution.

And that, we think, just, number one, improves our margin profile. It makes the relationship deeper and more stable. It makes us more value-add and more solution oriented. So that's the stuff that we're doing with them. Our expectation is that in '27, both of these relationships will continue to provide very, very meaningful growth. Part of that growth is coming from what I'm going to call a little bit more project orientation when we're working with them on new introductions and new ideas where we can add value.

But the funnel with us and both of these enterprises that you mentioned is extremely busy. It's extremely robust. We're dedicating a lot of resources. And so far, we feel very good about how those relationships are trending, and we expect that what we've outlined from a spend standpoint from them over the next multiple years will materialize and that they will be using us at that scale and scope.

Unknown Analyst

Okay. Very helpful. And then I guess my last question, just on 2027, like the swing factors. And obviously, you're not going to give concrete guidance, but just like the major puts and takes, right? Automation turning EBITDA positive, the cold chain capacity, just all that stuff in general, can you kind of give us a high-level view of that?

Omar Asali

Sure. So think of the business going forward as 3 key business blocks, the traditional PPS business, where we've innovated, it's very important. Obviously, that's a business where we have a 50-year history. And geographically and in light of wars and geopolitical and macro environments, there's different trends and we're navigating. And as you can tell from this call, we are not just navigating by passing price to our customers.

We're spending a lot in our efficiency so that we can provide more and more value add. And we feel pretty good overall with how we're navigating. And I think we're starting to exhibit much better commercial and operational muscle there. Automation, I think, is going to continue to drive outsized growth and returns. We're very excited that we are expecting a profitable year in automation, the whole year in 2027. Our pipeline looks good. Our conversations are good. I know I highlighted the partnership with Element Logic, but we also have other partnerships that we're doing. So we feel great about that business.

Cold chain, we will be ramping up early in the year. So as we speak, we're building the lines, we're finalizing, expanding our capacity. We think that's going to be a meaningful contributor in 2027, probably starting in the second quarter, and as the year progresses. And we think the opportunity there is huge. And just to let you know, I mean, this is a funnel and a pipeline that we have that's active, that's been tested in many cases, our product has been approved.

So it's a matter of doing the operational scale-up in order to fulfill that. So these are the key pieces driving top line with automation and cold chain driving the bulk of the growth. We're working on the margin improvement. That's another very key building block for us, and we continue to dedicate a lot of hours and effort around operational and continuous improvement. And the goal is you put that together other than driving growth and margin, it should improve our cash profile. It should improve our cash generation and help continue delever our cap structure, which is important for us. So we think the key pieces are there. What we don't know is the macro picture and sort of what happens from a macro picture. But I think the micro at our level, our confidence as a company and our execution is honestly increasing every day.

Operator

[Operator Instructions]

Your next question is from the line of Kieran McCabe with Cantor Fitzgerald.

Kieran McCabe

This is Kieran McCabe on for Troy Jensen. I apologize if my question has been addressed. I joined the call a little late. But I was wondering on the macro environment in EMEA and Europe and Asia, if it doesn't turn around going into '27 or kind of remains as is. Is there any kind of value proposition that Ranpak can kind of express to customers instead of kind of wait and see for the macro to turn? Is there sort of -- I know the last quarter, you mentioned that packaging was -- pricing and economics were competitive with resin given kind of the inflation environment. Do you kind of see that instead of customers waiting for the macro environment, they may realize that there's some advantage to adopting Ranpak regardless of the macro environment?

Omar Asali

Yes, for sure. I think -- and a lot of that comes from the innovation we've been working on in the PPS business as well as coupling with automation, right, which is really a differentiator for us. So I think in this environment, even if things remain choppy, we'll be able to work with customers to provide them with unique and differentiated solutions. Our new products, such as like the FillPak Mini and our new Guardian solutions are getting really good adoption. So that's helping us win accounts.

We're also doing things like a PadPak multi-station, right, which you may have seen on our website, which is a unique offering that enables us to serve some high-volume customers with some of our hybrid solutions, if you will. So we are having really good, I think, deep conversations with customers and able to go out and win business, not just focus on price. In other areas like the Asia Pacific market, the localization efforts that I mentioned earlier, the procurement and operations team has done a really good job of getting us 90% of the way to having local paper sourcing by year-end there, which will reduce our cost profile and enable us to share that with customers to go out and win business. So places like Australia, Japan, we feel good about being able to go out there and win new business starting next year.

Kieran McCabe

And my other question was on the strong growth in automation. Is that kind of how -- what's the kind of the mix of -- is it really your large customers that you have like the Walmarts, Amazons, the larger customers? -- really adopting and driving their programs? Or is there also a substantial portion of that coming from new customers coming online? Can you kind of maybe give a little color as where the drivers of the growth there in terms of that mix?

Omar Asali

I think it's both. I mean we continue to do very well with our large customers.

They're opening more facilities. We're part of their design. We're part of what they're building in next-generation sort of warehouses. So that is a very important driver, and this is why some of our key relationships there are important. But honestly, we continue to win with a number of new accounts. So the growth has been driven by both large enterprises, existing customers as we continue to roll out with them, but we're winning a lot with new accounts. I would say in the U.S. large enterprises tend to be a bigger factor.

And in Europe, you tend to see a lot of new customers buying a few lines here and there and that trend continues. So it's the nature of the economies, I think, of the 2 regions. The U.S. tends to be a bit chunky with bigger guys. Europe is quite spread out. But both are very, very key drivers of growth for us.

Operator

We have reached the end of the Q&A. I will now turn the call back to Bill Drew, Chief Financial Officer, for closing remarks.

William Drew

Thank you, Fern, and thank you all for joining us today.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.