Pactiv Evergreen Inc. (“Pactiv Evergreen” or the “Company”) today
reported results for the first quarter of 2023. Michael King,
President and Chief Executive Officer of Pactiv Evergreen, said,
“The Company delivered solid performance in the face of a
challenging macroeconomic environment. As expected, the Company’s
results were impacted by inflation-driven headwinds on consumer
spending, seasonal trends and the costs associated with a scheduled
cold mill outage. However, the Company maintained its disciplined
pricing strategy and continued to execute against its operational
targets to surpass the guidance for the quarter. The outperformance
was driven by a combination of favorable mix, lower SG&A and
the extension of key business within the Food Merchandising segment
that was previously expected to occur in the second quarter.
Overall, the Company’s performance in the quarter is a testament to
the breadth and resilience of Pactiv Evergreen’s product offering
and its dedicated employees.”
Mr. King continued, “The Company has made
meaningful progress on the Beverage Merchandising Restructuring
plan that was announced in March with the Canton mill expected to
cease production by June. The Company also has refined the
estimated costs to complete the planned actions. Within its core
converting operations, the Company continued to execute on its
strategic priorities to improve service levels and boost
productivity and efficiency, and we remain confident in our ability
to grow the business and de-lever the balance sheet based on Pactiv
Evergreen’s position as the market-leading North American food and
beverage packaging company.”
Jon Baksht, Chief Financial Officer of Pactiv
Evergreen, added, “Despite the near term challenges caused by
elevated inflation levels, the Company continues to proactively
address its capital structure and interest rate exposure. The
Company repaid and repurchased $110 million of our U.S. term loans
Tranche B-2 during the first quarter, bringing the cumulative debt
reduction to $228 million since December 31, 2021. Not only does
this reduce the Company’s leverage profile, it also reduces its
floating rate debt to further mitigate against future interest rate
increases. As of March 31, 2023, total debt was $4,022 million and
Net Debt1 was $3,595 million, both lower than prior year and prior
quarter levels.”
1 Adjusted EBITDA, Adjusted EPS and Net Debt are
non-GAAP measures. Refer to their definitions in the discussion on
non-GAAP financial measures and the accompanying reconciliations
below.
Beverage Merchandising Restructuring
Update
On March 6, 2023, the Company announced the
Beverage Merchandising Restructuring, a plan to take significant
restructuring actions related to its Beverage Merchandising
operations. The Company expects to close its Canton, North Carolina
mill and its converting facility in Olmsted Falls, Ohio with
operations at both facilities expected to end during the second
quarter of 2023 and production from the Olmsted Falls facility
being reallocated to other sites. In addition, effective April 1,
2023, the Company reorganized its management structure by combining
the Beverage Merchandising and Food Merchandising businesses. The
Company also continues to explore strategic alternatives for its
Pine Bluff, Arkansas mill and Waynesville, North Carolina facility.
The Company has not set a timetable in relation to this
process.
As a result of the closures and change in
management structure, the Company incurred $123 million of non-cash
charges during the first quarter of 2023 and currently expects to
incur total non-cash charges in the range of $320 million to $330
million, most of which will occur during 2023. These non-cash
charges are related to the acceleration of depreciation of
property, plant and equipment and other non-cash charges. The
Company also incurred $64 million of cash-based charges during the
first quarter of 2023 related to severance and associated benefits
and exit, disposal and other transition costs and currently expects
to incur total cash-based charges in the range of $130 million to
$160 million, mostly during 2023.
All the above estimates are provisional and
include significant management judgments and assumptions that could
change materially as the Company executes its plan. Actual results
may differ from these estimates, and the execution of the plan
could result in additional restructuring charges or impairments not
reflected above.
“As we continue to execute on the Beverage
Merchandising Restructuring, we remain committed to doing what’s
right, treating everyone with respect and delivering on all of our
commitments to our people, customers, shareholders and the
communities where we operate,” said Mr. King.
First Quarter 2023 Results vs. First
Quarter 2022 Results
Net revenues in the first quarter of 2023 were
$1,431 million compared to $1,495 million in the first quarter of
2022. The decrease was due to lower sales volume and the impact
from dispositions, notably the disposition of Beverage
Merchandising Asia on August 2, 2022. Lower sales volume was
largely due to our focus on value over volume in the Foodservice
and Food Merchandising segments and the market softening amid
inflationary pressures in the Beverage Merchandising and Food
Merchandising segments. These decreases were partially offset by
favorable pricing, due to pricing actions in the Food Merchandising
and Beverage Merchandising segments and the contractual
pass-through of higher material costs across all segments.
Net loss was $133 million, or $0.76 per diluted
share, in the first quarter of 2023 compared to $43 million of net
income, or $0.24 per diluted share, in the first quarter of 2022.
The decrease was mostly due to $187 million of charges, or $1.05
per diluted share, associated with the Beverage Merchandising
Restructuring and a $27 million, or $0.15 per diluted share,
decrease due to the gain on the sale of Naturepak Beverage
Packaging Co. Ltd (“Naturepak Beverage”) in the prior year period.
These decreases were partially offset by a $55 million, or $0.31
per diluted share, decrease in tax expense, mainly attributable to
decreased profitability.
Adjusted EBITDA1 was $189 million and Adjusted
EPS1 was $0.13 in the first quarter of 2023 compared to $182
million and $0.16, respectively, in the first quarter of 2022. The
increase in Adjusted EBITDA1 reflects favorable pricing, net of
material costs passed through, and lower transportation costs,
partially offset by higher manufacturing costs and lower sales
volume. Higher costs included $15 million related to a scheduled
cold mill outage. The decrease in Adjusted EPS1 was partly due to
an increase in interest expense, which was driven by higher
interest rates on our variable rate term loans.
Segment Results
Foodservice
|
|
For the Three Months Ended March 31, |
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
Total segment net revenues |
|
$ |
654 |
|
|
$ |
697 |
|
|
$ |
(43 |
) |
|
|
(6 |
)% |
|
|
(1 |
)% |
|
|
(5 |
)% |
Segment Adjusted EBITDA |
|
$ |
113 |
|
|
$ |
116 |
|
|
$ |
(3 |
) |
|
|
(3 |
)% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
17 |
% |
|
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net revenues was primarily due
to lower sales volume due to a continued focus on value over
volume.
The decrease in Adjusted EBITDA was due to
higher manufacturing costs and lower sales volume, mostly offset by
lower material costs, net of costs passed through, and lower
transportation costs.
Food Merchandising
|
|
For the Three Months Ended March 31, |
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
|
FX |
|
Total segment net revenues |
|
$ |
440 |
|
|
$ |
404 |
|
|
$ |
36 |
|
|
|
9 |
% |
|
|
15 |
% |
|
|
(7 |
)% |
|
|
1 |
% |
Segment Adjusted EBITDA |
|
$ |
93 |
|
|
$ |
60 |
|
|
$ |
33 |
|
|
|
55 |
% |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
21 |
% |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in net revenues was driven by
favorable pricing, due to pricing actions taken to offset higher
input costs including pricing benefit from the aforementioned
extension of key business, and the contractual pass-through of
higher material costs, partially offset by lower sales volume,
primarily due to a focus on value over volume and the market
softening amid inflationary pressures.
The increase in Adjusted EBITDA was due to
favorable pricing, net of material costs passed through, partially
offset by higher manufacturing costs and lower sales volume.
Beverage Merchandising
|
|
For the Three Months Ended March 31, |
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
|
Dispositions |
|
Total segment net revenues |
|
$ |
370 |
|
|
$ |
403 |
|
|
$ |
(33 |
) |
|
|
(8 |
)% |
|
|
7 |
% |
|
|
(6 |
)% |
|
|
(9 |
)% |
Segment Adjusted EBITDA |
|
$ |
1 |
|
|
$ |
24 |
|
|
$ |
(23 |
) |
|
|
(96 |
)% |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
— |
% |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net revenues was due to the
impact from the disposition of Beverage Merchandising Asia in
August 2022 and lower sales volume primarily due to the market
softening amid inflationary pressures. These decreases were
partially offset by favorable pricing, due to pricing actions taken
to offset higher input costs and the contractual pass-through of
higher material costs.
The decrease in Adjusted EBITDA was due to
higher manufacturing costs and the impact from the disposition of
Beverage Merchandising Asia, partially offset by favorable pricing,
net of material costs passed through. Higher costs included $15
million related to a scheduled cold mill outage.
First Quarter 2023 Results vs. Fourth Quarter 2022
Results
Net revenues in the first quarter of 2023 were
$1,431 million compared to $1,476 million in the fourth quarter of
2022. The decrease was driven by lower sales volumes, primarily due
to the market softening amid inflationary pressures in the Beverage
Merchandising and Food Merchandising segments. Pricing was
flat.
Net loss was $133 million, or $0.76 per diluted
share, in the first quarter of 2023 compared to $27 million of net
income, or $0.15 per diluted share, in the fourth quarter of 2022.
The decrease was mostly due to $187 million of charges, or $1.05
per diluted share, associated with the Beverage Merchandising
Restructuring. The decrease was partially offset by an $18 million,
or $0.10 per diluted share, decline in selling, general and
administrative expenses, driven by lower employee-related
costs.
Adjusted EBITDA1 was $189 million and Adjusted
EPS1 was $0.13 in the first quarter of 2023 compared to $167
million and $0.17, respectively, in the fourth quarter of 2022. The
increase in Adjusted EBITDA1 was due to lower material costs, net
of costs passed through, pricing actions in the Food Merchandising
segment and lower employee-related costs, partially offset by
higher manufacturing costs. The decrease in Adjusted EPS1 was
largely due to discrete tax items in the prior quarter.
Segment Results
Foodservice
|
|
For the Three Months Ended |
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
|
|
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
Total segment net revenues |
|
$ |
654 |
|
|
$ |
673 |
|
|
$ |
(19 |
) |
|
|
(3 |
)% |
|
|
(2 |
)% |
|
|
(1 |
)% |
Segment Adjusted EBITDA |
|
$ |
113 |
|
|
$ |
90 |
|
|
$ |
23 |
|
|
|
26 |
% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
17 |
% |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net revenues was principally due
to unfavorable pricing, driven by the contractual pass-through of
lower material costs.
The increase in Adjusted EBITDA was due to lower
material costs, net of costs passed through, partially offset by
higher manufacturing costs.
Food Merchandising
|
|
For the Three Months Ended |
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
|
|
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
Total segment net revenues |
|
$ |
440 |
|
|
$ |
447 |
|
|
$ |
(7 |
) |
|
|
(2 |
)% |
|
|
1 |
% |
|
|
(3 |
)% |
Segment Adjusted EBITDA |
|
$ |
93 |
|
|
$ |
83 |
|
|
$ |
10 |
|
|
|
12 |
% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
21 |
% |
|
|
19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net revenues was mostly due to
lower sales volume, primarily due to a focus on value over volume
and the market softening amid inflationary pressures, as well as
the contractual pass-through of lower material costs. This was
partially offset by pricing actions taken to offset higher input
costs including pricing benefit from the aforementioned extension
of key business.
The increase in Adjusted EBITDA was largely due
to favorable pricing, net of material costs passed through,
partially offset by higher manufacturing costs.
Beverage Merchandising
|
|
For the Three Months Ended |
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
|
|
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
Total segment net revenues |
|
$ |
370 |
|
|
$ |
385 |
|
|
$ |
(15 |
) |
|
|
(4 |
)% |
|
|
— |
% |
|
|
(4 |
)% |
Segment Adjusted EBITDA |
|
$ |
1 |
|
|
$ |
21 |
|
|
$ |
(20 |
) |
|
|
(95 |
)% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
— |
% |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net revenues was due to lower
sales volume, mostly due to the market softening amid inflationary
pressures.
The decrease in Adjusted EBITDA reflects higher
manufacturing costs, partially offset by lower material costs, net
of costs passed through.
Balance Sheet and Cash Flow
Highlights
The Company continues to focus on strengthening
its balance sheet. Since December 31, 2022, the Company reduced its
total outstanding debt, mostly due to $110 million of early
repayments and repurchases, and Net Debt1 also declined. Free Cash
Flow2 was positive during the first quarter of 2023, inclusive of
cash payments made under our 2022 annual incentive plan. The
Company’s Board of Directors declared a first quarter 2023 dividend
on May 5, 2023 of $0.10 per share of common stock, payable on June
15, 2023 to shareholders of record as of May 31, 2023.
(In
millions) |
|
As of March 31,2023 |
|
|
(In
millions) |
|
For the Three Months EndedMarch 31,
2023 |
|
Total outstanding debt |
|
$ |
4,022 |
|
|
Net cash flow provided by operating activities |
|
$ |
88 |
|
Cash and cash equivalents |
|
|
(427 |
) |
|
Capital expenditures |
|
|
(63 |
) |
Net Debt1 |
|
$ |
3,595 |
|
|
Free Cash Flow2 |
|
$ |
25 |
|
Outlook
“The Company has increased its full year 2023
Adjusted EBITDA1 guidance to a range of $775 million to $800
million, underscoring Pactiv Evergreen’s ability to drive
profitable growth in the face of the uncertain market conditions
across the industry. We are encouraged by the positive momentum
from the first quarter and expect the Company’s results to benefit
from a seasonal uplift into the second half. This is balanced
against the current macroeconomic backdrop, which we expect to
remain challenging through the remainder of this year,” said Mr.
King.
The Company has not reconciled the non-GAAP
measure Adjusted EBITDA to the GAAP measure net (loss) income on a
forward-looking basis in this release because the Company does not
provide guidance for certain of the reconciling items on a
consistent basis, including but not limited to items relating to
restructuring, asset impairment and other related charges,
depreciation and amortization expense, net interest expense and
income taxes, which would be required to include a reconciliation
of Adjusted EBITDA to GAAP net (loss) income, as the Company is
unable to quantify these amounts without unreasonable efforts.
Conference Call and Webcast Presentation
The Company will host a conference call and
webcast presentation to discuss these results on May 9, 2023
at 8:30 a.m. U.S. Eastern Time. Investors interested in
participating in the live call may dial (877) 300-9306 from the
U.S. or (412) 542-4176 internationally and use access code 6157979.
Participants may also access the live webcast and supplemental
presentation on the Pactiv Evergreen Investor Relations website at
https://investors.pactivevergreen.com/financial-information/sec-filings under
“News & Events.” The Company may from time to time use this
Investor Relations website as a means of disclosing material
non-public information and for complying with its disclosure
obligations under Regulation FD.
About Pactiv Evergreen Inc.
Pactiv Evergreen Inc. (NASDAQ: PTVE) is a leading manufacturer and
distributor of fresh foodservice and food merchandising products
and fresh beverage cartons in North America. With a team of
approximately 15,500 employees, the Company produces a broad range
of on-trend and feature-rich products that protect, package and
display food and beverages for today’s consumers. Its products,
many of which are made with recycled, recyclable or renewable
materials, are sold to a diversified mix of customers, including
restaurants, foodservice distributors, retailers, food and beverage
producers, packers and processors. Learn more at
www.pactivevergreen.com.
2 Free Cash Flow is a non-GAAP measure. Refer to
its definition in the discussion on non-GAAP financial measures
below.
Note to Investors Regarding
Forward-Looking Statements
This press release contains forward-looking
statements. All statements contained in this press release other
than statements of historical fact are forward-looking statements,
including statements regarding our guidance as to our future
financial and operational results; our expectations regarding the
duration and severity of ongoing macroeconomic challenges; our
ability to improve service levels and boost productivity and
efficiency; our ability to grow our business and de-lever our
balance sheet; and our plans regarding the restructuring of our
Beverage Merchandising operations, including as they relate to the
impacted facilities, planned restructuring activities, expected
timelines and amount and type of cash and non-cash charges that we
expect to incur and the timing thereof. In some cases, you can
identify these statements by forward-looking words such as “may,”
“might,” “will,” “should,” “expects,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential,” “likely” or
“continue,” the negative of these terms and other comparable
terminology. These statements are only predictions based on our
expectations and projections about future events as of the date of
this press release and are subject to a number of risks,
uncertainties and assumptions that may prove incorrect, any of
which could cause actual results to differ materially from those
expressed or implied by such statements, including, among others,
those described under the heading “Risk Factors” in our Annual
Report on Form 10-K for the year ended December 31, 2022 filed with
the Securities and Exchange Commission, or SEC, and our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2023 to be
filed with the SEC. New risks emerge from time to time, and it is
not possible for our management to predict all risks, nor can
management assess the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statement the Company makes. Investors are
cautioned not to place undue reliance on any such forward-looking
statements, which speak only as of the date they are made. Except
as otherwise required by law, the Company undertakes no obligation
to update any forward-looking statement, whether as a result of new
information, future events or otherwise.
Use of Non-GAAP Financial Measures
The Company uses the following financial
measures that are not calculated in accordance with generally
accepted accounting principles in the United States (“GAAP”):
Adjusted EBITDA, Adjusted EPS, Free Cash Flow and Net Debt.
The Company defines Adjusted EBITDA as net
(loss) income calculated in accordance with GAAP plus the sum of
income tax expense (benefit), net interest expense, depreciation
and amortization and further adjusted to exclude certain items,
including but not limited to restructuring, asset impairment and
other related charges, gains on the sale of businesses and
noncurrent assets, non-cash pension income or expense, operational
process engineering-related consultancy costs, business acquisition
and integration costs and purchase accounting adjustments,
unrealized gains or losses on derivatives, foreign exchange losses
on cash and gains or losses on certain legal settlements.
The Company defines Adjusted EPS as diluted
(loss) earnings per share (“EPS”) calculated in accordance with
GAAP adjusted for the after-tax effect of certain items, including
but not limited to restructuring, asset impairment and other
related charges, gains on the sale of businesses and noncurrent
assets, non-cash pension income or expense, operational process
engineering-related consultancy costs, business acquisition and
integration costs and purchase accounting adjustments, unrealized
gains or losses on derivatives, foreign exchange losses on cash and
gains or losses on certain legal settlements.
The Company defines Free Cash Flow as net cash
provided by operating activities less capital expenditures.
The Company defines Net Debt as the sum of
current and long-term debt, less cash and cash equivalents.
The Company has provided herein a reconciliation
of (i) net (loss) income to Adjusted EBITDA, (ii) diluted (loss)
EPS to Adjusted EPS, (iii) net cash provided by operating
activities to Free Cash Flow and (iv) total debt to Net Debt, in
each case representing the most directly comparable GAAP financial
measures.
The Company presents Adjusted EBITDA to assist
in comparing performance from period to period and as a measure of
operational performance. It is a key measure used by its management
team to generate future operating plans, make strategic decisions
and incentivize and reward its employees. In addition, its
management uses the Adjusted EBITDA of each reportable segment to
evaluate its respective operating performance. Accordingly, the
Company believes that Adjusted EBITDA provides useful information
to investors and others in understanding and evaluating the
Company’s operating results in the same manner as its management
and board of directors. Like Adjusted EBITDA, management believes
Adjusted EPS is useful to investors, analysts and others to
facilitate operating performance comparisons on a period-to-period
basis because it excludes variations primarily caused by changes in
the items noted above.
The Company presents Free Cash Flow to assist in
comparing liquidity from period to period and to provide a more
comprehensive view of the Company’s core operations and ability to
generate cash flow, and also, as with Adjusted EBITDA, to generate
future operating plans, make strategic decisions and incentivize
and reward its employees. The Company believes that this measure is
useful to investors in evaluating cash available to service and
repay debt, make other investments and pay dividends. The Company
presents Net Debt as a supplemental measure to review the liquidity
of its operations and measure the Company’s credit position and
progress toward leverage targets. The Company also believes that
investors find this measure useful in evaluating its debt
levels.
Non-GAAP information should be considered as
supplemental in nature and is not meant to be considered in
isolation or as a substitute for the related financial information
prepared in accordance with GAAP. In addition, our non-GAAP metrics
may not be the same as or comparable to similar non-GAAP financial
measures presented by other companies. Because of these and other
limitations, you should consider them alongside other financial
performance measures, including our net income and other GAAP
results. In addition, in evaluating Adjusted EBITDA, Adjusted EPS
and other metrics derived from them, you should be aware that in
the future the Company will incur expenses such as those that are
the subject of adjustments in deriving Adjusted EBITDA and Adjusted
EPS and you should not infer from our presentation of Adjusted
EBITDA and Adjusted EPS that our future results will not be
affected by these expenses or any unusual or non-recurring
items.
Contact:Curt
Worthington847.482.2040InvestorRelations@pactivevergreen.com
Pactiv Evergreen Inc. |
Condensed Consolidated Statements of (Loss)
Income |
(in millions, except per share amounts) |
(unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Net revenues |
|
$ |
1,431 |
|
|
$ |
1,476 |
|
|
$ |
1,495 |
|
Cost of sales |
|
|
(1,316 |
) |
|
|
(1,251 |
) |
|
|
(1,263 |
) |
Gross
profit |
|
|
115 |
|
|
|
225 |
|
|
|
232 |
|
Selling, general and
administrative expenses |
|
|
(130 |
) |
|
|
(148 |
) |
|
|
(142 |
) |
Restructuring, asset impairment
and other related charges |
|
|
(73 |
) |
|
|
— |
|
|
|
— |
|
Other income, net |
|
|
— |
|
|
|
2 |
|
|
|
28 |
|
Operating (loss)
income |
|
|
(88 |
) |
|
|
79 |
|
|
|
118 |
|
Non-operating (expense) income,
net |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
10 |
|
Interest expense, net |
|
|
(63 |
) |
|
|
(60 |
) |
|
|
(49 |
) |
(Loss) income before
tax |
|
|
(152 |
) |
|
|
16 |
|
|
|
79 |
|
Income tax benefit (expense) |
|
|
19 |
|
|
|
11 |
|
|
|
(36 |
) |
Net (loss)
income |
|
|
(133 |
) |
|
|
27 |
|
|
|
43 |
|
Income attributable to
non-controlling interests |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
Net (loss) income
attributable to Pactiv Evergreen Inc. common
shareholders |
|
$ |
(134 |
) |
|
$ |
26 |
|
|
$ |
43 |
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share
attributable to Pactiv Evergreen Inc. common shareholders |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.76 |
) |
|
$ |
0.15 |
|
|
$ |
0.24 |
|
Diluted |
|
$ |
(0.76 |
) |
|
$ |
0.15 |
|
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding - basic |
|
|
178.4 |
|
|
|
178.2 |
|
|
|
177.6 |
|
Weighted-average shares
outstanding - diluted |
|
|
178.4 |
|
|
|
179.0 |
|
|
|
178.0 |
|
Pactiv Evergreen Inc. |
Condensed Consolidated Balance Sheets |
(in millions) |
(unaudited) |
|
|
|
As of March 31,2023 |
|
|
As of December 31,2022 |
|
|
As of March 31,2022 |
|
Assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
427 |
|
|
$ |
531 |
|
|
$ |
283 |
|
Accounts receivable, net |
|
|
484 |
|
|
|
448 |
|
|
|
502 |
|
Related party receivables |
|
|
66 |
|
|
|
46 |
|
|
|
41 |
|
Inventories |
|
|
983 |
|
|
|
1,062 |
|
|
|
968 |
|
Other current assets |
|
|
109 |
|
|
|
126 |
|
|
|
113 |
|
Assets held for sale |
|
|
— |
|
|
|
6 |
|
|
|
134 |
|
Total current
assets |
|
|
2,069 |
|
|
|
2,219 |
|
|
|
2,041 |
|
Property, plant and equipment, net |
|
|
1,675 |
|
|
|
1,773 |
|
|
|
1,771 |
|
Operating lease right-of-use assets, net |
|
|
255 |
|
|
|
262 |
|
|
|
272 |
|
Goodwill |
|
|
1,815 |
|
|
|
1,815 |
|
|
|
1,812 |
|
Intangible assets, net |
|
|
1,049 |
|
|
|
1,064 |
|
|
|
1,112 |
|
Other noncurrent assets |
|
|
172 |
|
|
|
173 |
|
|
|
154 |
|
Total
assets |
|
$ |
7,035 |
|
|
$ |
7,306 |
|
|
$ |
7,162 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
379 |
|
|
$ |
388 |
|
|
$ |
433 |
|
Related party payables |
|
|
17 |
|
|
|
6 |
|
|
|
11 |
|
Current portion of long-term debt |
|
|
18 |
|
|
|
31 |
|
|
|
30 |
|
Current portion of operating lease liabilities |
|
|
64 |
|
|
|
65 |
|
|
|
62 |
|
Income taxes payable |
|
|
8 |
|
|
|
6 |
|
|
|
5 |
|
Accrued and other current liabilities |
|
|
430 |
|
|
|
415 |
|
|
|
373 |
|
Liabilities held for sale |
|
|
— |
|
|
|
3 |
|
|
|
27 |
|
Total current
liabilities |
|
|
916 |
|
|
|
914 |
|
|
|
941 |
|
Long-term debt |
|
|
4,004 |
|
|
|
4,105 |
|
|
|
4,213 |
|
Long-term operating lease liabilities |
|
|
205 |
|
|
|
209 |
|
|
|
222 |
|
Deferred income taxes |
|
|
278 |
|
|
|
319 |
|
|
|
231 |
|
Long-term employee benefit obligations |
|
|
59 |
|
|
|
60 |
|
|
|
194 |
|
Other noncurrent liabilities |
|
|
163 |
|
|
|
146 |
|
|
|
144 |
|
Total
liabilities |
|
$ |
5,625 |
|
|
$ |
5,753 |
|
|
$ |
5,945 |
|
Total equity attributable
to Pactiv Evergreen Inc. common shareholders |
|
|
1,406 |
|
|
|
1,548 |
|
|
|
1,213 |
|
Non-controlling interests |
|
|
4 |
|
|
|
5 |
|
|
|
4 |
|
Total
equity |
|
$ |
1,410 |
|
|
$ |
1,553 |
|
|
$ |
1,217 |
|
Total liabilities and
equity |
|
$ |
7,035 |
|
|
$ |
7,306 |
|
|
$ |
7,162 |
|
Pactiv Evergreen Inc. |
Condensed Consolidated Statements of Cash
Flows |
(in millions) |
(unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
Operating
Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(133 |
) |
|
$ |
27 |
|
|
$ |
176 |
|
|
$ |
74 |
|
|
$ |
43 |
|
Adjustments to reconcile net
(loss) income to operating cash flows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
174 |
|
|
|
84 |
|
|
|
85 |
|
|
|
86 |
|
|
|
84 |
|
Deferred income taxes |
|
|
(39 |
) |
|
|
(14 |
) |
|
|
50 |
|
|
|
27 |
|
|
|
18 |
|
Unrealized loss (gain) on derivatives |
|
|
2 |
|
|
|
— |
|
|
|
10 |
|
|
|
(1 |
) |
|
|
(5 |
) |
Restructuring related non-cash and asset impairment charges (net of
reversals) |
|
|
32 |
|
|
|
— |
|
|
|
56 |
|
|
|
— |
|
|
|
— |
|
Gain on sale of businesses and noncurrent assets |
|
|
— |
|
|
|
— |
|
|
|
(239 |
) |
|
|
— |
|
|
|
(27 |
) |
Non-cash portion of employee benefit obligations |
|
|
1 |
|
|
|
3 |
|
|
|
(44 |
) |
|
|
3 |
|
|
|
(10 |
) |
Non-cash portion of operating lease expense |
|
|
21 |
|
|
|
20 |
|
|
|
21 |
|
|
|
22 |
|
|
|
19 |
|
Other non-cash items, net |
|
|
6 |
|
|
|
8 |
|
|
|
11 |
|
|
|
16 |
|
|
|
7 |
|
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
(53 |
) |
|
|
79 |
|
|
|
4 |
|
|
|
(43 |
) |
|
|
(11 |
) |
Inventories |
|
|
61 |
|
|
|
58 |
|
|
|
(35 |
) |
|
|
(154 |
) |
|
|
(115 |
) |
Accounts payable |
|
|
11 |
|
|
|
(45 |
) |
|
|
(66 |
) |
|
|
61 |
|
|
|
66 |
|
Operating lease payments |
|
|
(21 |
) |
|
|
(20 |
) |
|
|
(21 |
) |
|
|
(21 |
) |
|
|
(19 |
) |
Accrued and other current liabilities |
|
|
10 |
|
|
|
(21 |
) |
|
|
67 |
|
|
|
(1 |
) |
|
|
59 |
|
Other assets and liabilities |
|
|
16 |
|
|
|
(6 |
) |
|
|
— |
|
|
|
(23 |
) |
|
|
11 |
|
Net cash provided by
operating activities |
|
|
88 |
|
|
|
173 |
|
|
|
75 |
|
|
|
46 |
|
|
|
120 |
|
Investing
Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment |
|
|
(63 |
) |
|
|
(89 |
) |
|
|
(55 |
) |
|
|
(64 |
) |
|
|
(50 |
) |
Disposal of businesses and joint venture equity interests, net of
cash disposed |
|
|
1 |
|
|
|
(6 |
) |
|
|
317 |
|
|
|
— |
|
|
|
47 |
|
Other investing activities |
|
|
2 |
|
|
|
1 |
|
|
|
3 |
|
|
|
— |
|
|
|
(2 |
) |
Net cash (used in)
provided by investing activities |
|
|
(60 |
) |
|
|
(94 |
) |
|
|
265 |
|
|
|
(64 |
) |
|
|
(5 |
) |
Financing
Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt repayments |
|
|
(112 |
) |
|
|
(95 |
) |
|
|
(6 |
) |
|
|
(5 |
) |
|
|
(6 |
) |
Dividends paid to common shareholders |
|
|
(18 |
) |
|
|
(17 |
) |
|
|
(18 |
) |
|
|
(18 |
) |
|
|
(18 |
) |
Other financing activities |
|
|
(5 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
|
|
(3 |
) |
Net cash used in
financing activities |
|
|
(135 |
) |
|
|
(114 |
) |
|
|
(26 |
) |
|
|
(26 |
) |
|
|
(27 |
) |
Effect of exchange rate changes
on cash and cash equivalents |
|
|
1 |
|
|
|
2 |
|
|
|
(3 |
) |
|
|
(3 |
) |
|
|
— |
|
(Decrease) increase in cash and
cash equivalents |
|
|
(106 |
) |
|
|
(33 |
) |
|
|
311 |
|
|
|
(47 |
) |
|
|
88 |
|
Cash and cash equivalents, including amounts classified as held for
sale, as of beginning of the period(1) |
|
|
533 |
|
|
|
566 |
|
|
|
255 |
|
|
|
302 |
|
|
|
214 |
|
Cash and cash equivalents as of end of the
period(1) |
|
$ |
427 |
|
|
$ |
533 |
|
|
$ |
566 |
|
|
$ |
255 |
|
|
$ |
302 |
|
(1) Includes $2 million, $7 million, $9 million, $19 million and
$17 million of cash and cash equivalents classified as current
assets held for sale as of December 31, 2022, September 30, 2022,
June 30, 2022, March 31, 2022 and December 31, 2021,
respectively.
Pactiv Evergreen Inc. |
Reconciliation of Reportable Segment Net Revenues to Total
Net Revenues |
(in millions) |
(unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Reportable segment net
revenues |
|
|
|
|
|
|
|
|
|
Foodservice |
|
$ |
654 |
|
|
$ |
673 |
|
|
$ |
697 |
|
Food Merchandising |
|
|
440 |
|
|
|
447 |
|
|
|
404 |
|
Beverage Merchandising |
|
|
370 |
|
|
|
385 |
|
|
|
403 |
|
Other |
|
|
2 |
|
|
|
6 |
|
|
|
22 |
|
Intersegment revenues |
|
|
(35 |
) |
|
|
(35 |
) |
|
|
(31 |
) |
Total net
revenues |
|
$ |
1,431 |
|
|
$ |
1,476 |
|
|
$ |
1,495 |
|
Pactiv Evergreen Inc. |
Reconciliation of Reportable Segment Adjusted EBITDA to
Adjusted EBITDA |
(in millions) |
(unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Reportable segment
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
Foodservice |
|
$ |
113 |
|
|
$ |
90 |
|
|
$ |
116 |
|
Food Merchandising |
|
|
93 |
|
|
|
83 |
|
|
|
60 |
|
Beverage Merchandising |
|
|
1 |
|
|
|
21 |
|
|
|
24 |
|
Other |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
Unallocated |
|
|
(18 |
) |
|
|
(26 |
) |
|
|
(18 |
) |
Adjusted EBITDA
(Non-GAAP) |
|
$ |
189 |
|
|
$ |
167 |
|
|
$ |
182 |
|
Pactiv Evergreen Inc. |
Reconciliations of Net (Loss) Income to Adjusted EBITDA and
Diluted EPS to Adjusted EPS |
(in millions, except per share amounts) |
(unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
|
Net loss to Adjusted EBITDA |
|
|
Diluted EPS to Adjusted EPS |
|
|
Net income to Adjusted EBITDA |
|
|
Diluted EPS to Adjusted EPS |
|
|
Net income to Adjusted EBITDA |
|
|
Diluted EPS to Adjusted EPS |
|
Net (loss) income / Diluted EPS (Reported GAAP
Measure) |
|
$ |
(133 |
) |
|
$ |
(0.76 |
) |
|
$ |
27 |
|
|
$ |
0.15 |
|
|
$ |
43 |
|
|
$ |
0.24 |
|
Income tax (benefit) expense |
|
|
(19 |
) |
|
|
|
|
|
(11 |
) |
|
|
|
|
|
36 |
|
|
|
|
Interest expense, net |
|
|
63 |
|
|
|
|
|
|
60 |
|
|
|
|
|
|
49 |
|
|
|
|
Depreciation and amortization
(excluding restructuring-related charges) |
|
|
84 |
|
|
|
|
|
|
84 |
|
|
|
|
|
|
84 |
|
|
|
|
Beverage Merchandising
Restructuring charges(1) |
|
|
187 |
|
|
|
0.87 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other restructuring and asset
impairment charges (reversals)(2) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Gain on sale of businesses and
noncurrent assets(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(27 |
) |
|
|
(0.07 |
) |
Non-cash pension expense
(income)(4) |
|
|
1 |
|
|
|
— |
|
|
|
3 |
|
|
|
0.01 |
|
|
|
(10 |
) |
|
|
(0.03 |
) |
Operational process
engineering-related consultancy costs(5) |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
0.01 |
|
|
|
3 |
|
|
|
0.01 |
|
Business integration
costs(6) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
0.01 |
|
Unrealized losses (gains) on
commodity derivatives |
|
|
2 |
|
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
|
|
(0.02 |
) |
Foreign exchange losses on
cash |
|
|
4 |
|
|
|
0.01 |
|
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
0.01 |
|
Costs associated with legacy
facility(7) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
0.01 |
|
Other |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted EBITDA /
Adjusted EPS(8) (Non-GAAP
Measure) |
|
$ |
189 |
|
|
$ |
0.13 |
|
|
$ |
167 |
|
|
$ |
0.17 |
|
|
$ |
182 |
|
|
$ |
0.16 |
|
(1) Reflects charges related to
the Beverage Merchandising Restructuring, including $90 million of
accelerated depreciation expense.(2) Reflects
restructuring and asset impairment charges (net of reversals)
associated with our remaining closures
businesses.(3) Reflects the gain from the sale of
our equity interests in Naturepak
Beverage.(4) Reflects the non-cash pension expense
(income) related to our employee benefit plans, including the
pension settlement gain of $10 million recognized during the three
months ended March 31, 2022.(5) Reflects the
costs incurred to evaluate and improve the efficiencies of our
manufacturing and distribution
operations.(6) Reflects integration costs related
to Fabri-Kal.(7) Reflects costs related to a
closed facility that was sold prior to our acquisition of the
entity.(8) Income tax (benefit) expense, interest
expense, net and depreciation and amortization (excluding
restructuring-related charges) are not adjustments from diluted EPS
to calculate Adjusted EPS. Adjustments were tax effected using the
applicable effective income tax rate for each period.
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