Pactiv Evergreen Inc. (“Pactiv Evergreen” or the “Company”) today
reported results for the second quarter of 2022. Michael King,
President and Chief Executive Officer of Pactiv Evergreen, said,
“Building on our positive momentum from the past two quarters, I am
pleased to share that we had a strong second quarter with
significant increases in both net revenues and net income. Net
income from continuing operations was $74 million for the second
quarter of 2022 compared to $8 million in the prior year period.
Adjusted EBITDA1 from continuing operations of $249 million for the
second quarter of 2022 was up 92% compared to $130 million in the
prior year period. Although the second half of the year will likely
present more challenges than the first, we remain confident in our
plans. Accordingly, we are updating and raising our 2022 Adjusted
EBITDA1 guidance from $705 million to a range of $750 million to
$770 million to reflect our strong year-to-date performance.2 We
are encouraged by the progress we have made in our logistics,
cubing and general operations across our plants as well as the
improvement in our labor levels but remain cautious due to the
continued inflationary pressures in the market as well as the
uncertainty around the global energy market and its impact on raw
materials, logistics and other costs. Despite this uncertainty, we
are confident in our ability to manage these higher costs and
execute on our strategy. I want to congratulate all of our team
members on a strong first half of the year and thank them for their
flexibility and dedication. Lastly, during this quarter, I welcomed
Jon Baksht to the organization as our Chief Financial Officer. I am
confident that he will be a tremendous leader for Pactiv Evergreen
as we strive to deliver on our purpose of Packaging a Better Future
while creating long-term value for all our stakeholders.”
Jon Baksht, Chief Financial Officer of Pactiv
Evergreen, said, “I am excited to be here as Pactiv Evergreen’s new
CFO and to share our strong results from the quarter. During the
second quarter, Pactiv Evergreen achieved 21% revenue growth over
the prior year. This was driven by a 23% improvement in price/mix
in the quarter due to contractual cost pass-through price increases
and pricing actions. This was partially offset by a 10% decline in
volumes versus the prior year, primarily due to strong prior year
volumes due to post-COVID re-openings, labor and related impacts
and the previously announced exit from our coated groundwood
business. Excluding the shutdown of the coated groundwood business,
volume was down 8% for the quarter. We also continue to make
progress on improving our mill operations and managing our
inventory levels to better service our customers. While we continue
to make positive internal progress, the current external
environment remains volatile with uncertainty due to the risks from
continued inflationary pressures as well as recession fears.
Although our business should be fairly resilient to these factors,
we believe it is prudent to remain cautious.”
Positioning the Company for Future
Growth
Pactiv Evergreen continues to focus on executing
strategic priorities to better position the Company for future
growth. On January 4, 2022, we entered into a definitive agreement
with SIG Schweizerische Industrie-Gesellschaft GmbH to sell our
carton packaging and filling machinery businesses in China, Korea
and Taiwan. The transaction closed on August 2, 2022, and we
received preliminary proceeds of $336 million, which are subject to
adjustments for cash, indebtedness and working capital as of the
date of completion and exclude taxes. We expect to recognize a gain
on sale in the third quarter of 2022.
____________________1 Adjusted EBITDA is a
non-GAAP measure. Refer to its definition in the discussion on
non-GAAP financial measures and the accompanying reconciliation
below.
2 The Company is unable to provide a
reconciliation of forward-looking Adjusted EBITDA from continuing
operations without unreasonable effort because of the uncertainty
and potential variability in amount and timing of gains or losses
on the sale of businesses and noncurrent assets, non-cash pension
income or expense, unrealized gains or losses on derivatives and
foreign exchange gains or losses on cash, which are reconciling
items between GAAP net income (loss) from continuing operations and
Adjusted EBITDA from continuing operations and could significantly
impact GAAP results.
Second Quarter 2022 Results
Net revenues in the second quarter of 2022 were
$1,640 million compared to $1,352 million in the prior year period.
The increase was primarily due to favorable pricing, due to the
contractual pass-through of higher material costs and pricing
actions across all of our segments. In addition, the Foodservice
segment’s acquisition of Fabri-Kal on October 1, 2021 contributed
$121 million of incremental sales for the three months ended June
30, 2022 as compared to the three months ended June 30, 2021. These
increases were partially offset by lower sales volume, primarily
due to strong prior year period sales volume as businesses and
restaurants re-opened post-COVID-19 lockdowns in our Foodservice
segment, labor and related impacts in our Food Merchandising
segment and our strategic exit from the coated groundwood business
in our Beverage Merchandising segment in December 2021.
Net income from continuing operations was $74
million in the second quarter of 2022 compared to $8 million in the
second quarter of 2021. The increase was primarily due to $158
million of higher gross profit, largely driven by favorable
pricing, net of higher material and manufacturing costs, as well as
the contribution from the acquisition of Fabri-Kal. The increase
due to higher gross profit was partially offset by a $40 million
increase in tax expense, primarily attributable to improved
profitability, a $33 million increase in selling, general and
administrative expenses, primarily driven by higher
employee-related costs and higher costs related to the acquisition
of Fabri-Kal, and a $27 million change in non-operating
expense/income, primarily due to lower gross pension plan assets
and liabilities.
Adjusted EBITDA1 was $249 million in the second
quarter of 2022 compared to $130 million in the second quarter of
2021. The increase reflects favorable pricing, net of raw material
costs passed through, and the impact from the acquisition of
Fabri-Kal, partially offset by higher manufacturing and
employee-rated costs and lower sales volume.
Segment Results (compared to the second
quarter of 2021)
Foodservice
|
For the Three Months Ended June 30, |
|
|
Components of Change in Net Revenues |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
|
Acquisitions |
|
Total segment net revenues |
$ |
791 |
|
|
$ |
571 |
|
|
$ |
220 |
|
39 |
% |
|
27 |
% |
|
(9 |
)% |
|
21 |
% |
Segment Adjusted EBITDA |
$ |
165 |
|
|
$ |
62 |
|
|
$ |
103 |
|
166 |
% |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
21 |
% |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in net revenues was primarily due
to favorable pricing, due to the contractual pass-through of higher
material costs and pricing actions taken to offset higher input
costs. In addition, the acquisition of Fabri-Kal on October 1, 2021
contributed $121 million of incremental sales for the three months
ended June 30, 2022 as compared to the three months ended June 30,
2021. These increases were partially offset by lower sales volume
as the prior year period had strong sales volume as businesses and
restaurants re-opened post-COVID-19 lockdowns.
The increase in Adjusted EBITDA was primarily
due to favorable pricing, net of material costs passed through, and
the impact from the acquisition of Fabri-Kal, partially offset by
higher manufacturing costs, lower sales volume and higher
employee-related costs.
Food Merchandising
|
For the Three Months Ended June 30, |
|
|
Components of Change in Net Revenues |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
Total segment net revenues |
$ |
444 |
|
|
$ |
388 |
|
|
$ |
56 |
|
14 |
% |
|
20 |
% |
|
(6 |
)% |
Segment Adjusted EBITDA |
$ |
78 |
|
|
$ |
59 |
|
|
$ |
19 |
|
32 |
% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
18 |
% |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in net revenues was primarily due
to favorable pricing, due to pricing actions taken to offset higher
input costs and the contractual pass-through of higher material
costs, partially offset by lower sales volume, primarily due to
labor and related impacts.
The increase in Adjusted EBITDA was primarily
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 June 30, |
|
|
Components of Change in Net Revenues |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
|
FX |
|
Total segment net revenues |
$ |
420 |
|
|
$ |
387 |
|
|
$ |
33 |
|
9 |
% |
|
19 |
% |
|
(9 |
)% |
|
(1 |
)% |
Segment Adjusted EBITDA |
$ |
29 |
|
|
$ |
15 |
|
|
$ |
14 |
|
93 |
% |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
7 |
% |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in net revenues was primarily due
to favorable pricing, due to pricing actions taken to offset higher
input costs and the contractual pass-through of higher material
costs, and favorable product mix. These increases were partially
offset by lower sales volume, primarily due to our strategic exit
from the coated groundwood business in December 2021.
The increase in Adjusted EBITDA was primarily
due to favorable pricing, net of material costs passed through,
partially offset by higher manufacturing costs, including $11
million due to a scheduled annual pulp mill outage, higher
employee-related costs and lower sales volume.
Year to Date Financial Results (Six
Months Ended June 30, 2022):
- Net Revenues of
$3,135 million for the six months ended June 30, 2022 compared to
$2,516 million in the prior year period.
- Net Income from
continuing operations of $117 million for the six months ended June
30, 2022 compared to a net loss of $3 million in the prior year
period.
- Adjusted EBITDA1
from continuing operations of $431 million for the six months ended
June 30, 2022 compared to $207 million in the prior year
period.
Net revenues for the six months ended June 30,
2022 were $3,135 million compared to $2,516 million in the six
months ended June 30, 2021. The increase was primarily due to
favorable pricing, due to the contractual pass-through of higher
material costs and pricing actions across all of our segments. In
addition, the Foodservice segment’s acquisition of Fabri-Kal on
October 1, 2021 contributed $223 million of incremental sales for
the six months ended June 30, 2022 as compared to the six months
ended June 30, 2021. These increases were partially offset by lower
sales volume, primarily due to strong sales volume in the prior
year period as businesses and restaurants re-opened post-COVID-19
lockdowns in our Foodservice segment, labor and related impacts in
our Food Merchandising segment and our strategic exit from the
coated groundwood business in our Beverage Merchandising segment in
December 2021.
Net income from continuing operations for the
six months ended June 30, 2022 was $117 million compared to a net
loss of $3 million in the six months ended June 30, 2021. The
change was primarily driven by $282 million of higher gross profit,
primarily driven by favorable pricing, partially offset by higher
material and manufacturing costs, lower sales volume and higher
logistics costs. Higher gross profit was also driven by the
contribution from the Fabri-Kal acquisition, plus the benefit
related to prior year period costs of $50 million from Winter Storm
Uri. The increase due to higher gross profit was partially offset
by a $94 million increase in tax expense, primarily attributable to
improved profitability, a $49 million increase in selling, general
and administrative expenses, primarily driven by higher
employee-related costs and higher costs related to the acquisition
of Fabri-Kal, and a $40 million decrease in non-operating income,
primarily due to lower gross pension plan assets and
liabilities.
Adjusted EBITDA1 for the six months ended June
30, 2022 was $431 million compared to $207 million in the six
months ended June 30, 2021. The increase reflects favorable
pricing, net of material costs passed through, and the impact from
the acquisition of Fabri-Kal, partially offset by higher
manufacturing costs, lower sales volume and higher employee-related
and logistics costs. The increase in Adjusted EBITDA also includes
the benefit related to prior year period costs of $50 million from
Winter Storm Uri.
Balance Sheet and Cash Flow
Highlights
- Cash and cash equivalents were $246 million as of June 30,
2022, with a further $9 million of cash and cash equivalents
classified within current assets held for sale.
- Total outstanding debt was $4,264 million at June 30,
2022.
- For the quarter ended June 30, 2022, capital expenditures
totaled $64 million.
- The Company paid dividends to shareholders of $0.20 per share
during the six months ended June 30, 2022. The Company’s Board of
Directors declared a second quarter 2022 dividend on August 1, 2022
of $0.10 per share of common stock, payable on September 15, 2022
to shareholders of record as of August 31, 2022.
Outlook
We are updating and raising our 2022 Adjusted
EBITDA1 guidance from $705 million to a range of $750 million to
$770 million to reflect our strong year-to-date performance2. We
are encouraged by the progress we have made in our mill operations
as well as the improvement in our labor levels but remain cautious
due to the continued inflationary pressures in the market as well
as the uncertainty around the global energy market and its impact
on raw materials, logistics and other costs. Despite this
uncertainty, we are confident in our ability to manage these higher
costs and execute on our strategy.
Conference Call and Webcast
Presentation
The Company will host a conference call and
webcast presentation to discuss these results on August 4, 2022 at
8:00 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 10169042. 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 our 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 16,500 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.
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 results and our expectations regarding the duration and
severity of ongoing macroeconomic challenges. 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, 2021 filed with
the Securities and Exchange Commission, or SEC, and our Quarterly
Reports on Form 10-Q for the quarter ended March 31, 2022 filed
with the SEC and the quarter ended June 30, 2022 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 non-GAAP financial measure
“Adjusted EBITDA” in evaluating our past results and future
prospects. The Company defines Adjusted EBITDA as net income (loss)
from continuing operations 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, executive transition charges and gains or
losses on certain legal settlements. The Company has provided below
a reconciliation of Adjusted EBITDA from continuing operations to
net income (loss) from continuing operations, the most directly
comparable GAAP financial measure.
The Company presents Adjusted EBITDA because it
is a key measure used by our management team to evaluate its
operating performance, generate future operating plans, make
strategic decisions and incentivize and reward its employees. In
addition, our chief operating decision maker uses the Adjusted
EBITDA of each reportable segment to evaluate its respective
operating performance. Accordingly, the Company believes that
presenting this metric provides useful information to investors and
others in understanding and evaluating our operating results in the
same manner as our management team and Board of Directors. The
Company also believes that Adjusted EBITDA and similar measures are
widely used by investors, securities analysts, rating agencies and
other parties in evaluating companies as measures of financial
performance and debt service capabilities.
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 Adjusted EBITDA
metric 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 Adjusted EBITDA
alongside other financial performance measures, including our net
income (loss) and other GAAP results. In addition, in evaluating
Adjusted EBITDA, 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 you should not infer
from our presentation of Adjusted EBITDA that our future results
will not be affected by these expenses or any unusual or
non-recurring items.
Contact:Dhaval
Patel732.501.9657dhaval.patel@pactivevergreen.com
Pactiv Evergreen
Inc.Condensed Consolidated Statements of Income
(Loss)(in millions, except per share
amounts)(unaudited)
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net revenues |
$ |
1,640 |
|
|
$ |
1,352 |
|
|
$ |
3,135 |
|
|
$ |
2,516 |
|
Cost of sales |
|
(1,332 |
) |
|
|
(1,202 |
) |
|
|
(2,595 |
) |
|
|
(2,258 |
) |
Gross
profit |
|
308 |
|
|
|
150 |
|
|
|
540 |
|
|
|
258 |
|
Selling, general and
administrative expenses |
|
(148 |
) |
|
|
(115 |
) |
|
|
(290 |
) |
|
|
(241 |
) |
Restructuring, asset impairment
and other related charges |
|
(1 |
) |
|
|
(10 |
) |
|
|
(1 |
) |
|
|
(8 |
) |
Other income, net |
|
12 |
|
|
|
5 |
|
|
|
40 |
|
|
|
11 |
|
Operating income from
continuing operations |
|
171 |
|
|
|
30 |
|
|
|
289 |
|
|
|
20 |
|
Non-operating (expense) income,
net |
|
(2 |
) |
|
|
25 |
|
|
|
8 |
|
|
|
48 |
|
Interest expense, net |
|
(50 |
) |
|
|
(42 |
) |
|
|
(99 |
) |
|
|
(84 |
) |
Income (loss) from
continuing operations before tax |
|
119 |
|
|
|
13 |
|
|
|
198 |
|
|
|
(16 |
) |
Income tax (expense) benefit |
|
(45 |
) |
|
|
(5 |
) |
|
|
(81 |
) |
|
|
13 |
|
Income (loss) from
continuing operations |
|
74 |
|
|
|
8 |
|
|
|
117 |
|
|
|
(3 |
) |
Loss from discontinued
operations, net of income taxes |
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(4 |
) |
Net income
(loss) |
|
74 |
|
|
|
7 |
|
|
|
117 |
|
|
|
(7 |
) |
Income attributable to
non-controlling interests |
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
Net income (loss)
attributable to Pactiv Evergreen Inc. common
shareholders |
$ |
73 |
|
|
$ |
7 |
|
|
$ |
116 |
|
|
$ |
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
attributable to Pactiv Evergreen Inc. common
shareholders |
|
|
|
|
|
|
|
|
|
|
|
From continuing operations |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.41 |
|
|
$ |
0.05 |
|
|
$ |
0.65 |
|
|
$ |
(0.02 |
) |
Diluted |
$ |
0.40 |
|
|
$ |
0.05 |
|
|
$ |
0.65 |
|
|
$ |
(0.02 |
) |
From discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
— |
|
|
$ |
(0.01 |
) |
|
$ |
— |
|
|
$ |
(0.02 |
) |
Diluted |
$ |
— |
|
|
$ |
(0.01 |
) |
|
$ |
— |
|
|
$ |
(0.02 |
) |
Total |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.41 |
|
|
$ |
0.04 |
|
|
$ |
0.65 |
|
|
$ |
(0.04 |
) |
Diluted |
$ |
0.40 |
|
|
$ |
0.04 |
|
|
$ |
0.65 |
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding - basic |
|
177.7 |
|
|
|
177.4 |
|
|
|
177.7 |
|
|
|
177.3 |
|
Weighted-average shares
outstanding - diluted |
|
178.3 |
|
|
|
177.7 |
|
|
|
178.2 |
|
|
|
177.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pactiv Evergreen
Inc.Condensed Consolidated Balance
Sheets(in
millions)(unaudited)
|
|
|
|
|
As of June 30, 2022 |
|
As of March 31, 2022 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
246 |
|
$ |
283 |
Accounts receivable, net |
|
527 |
|
|
502 |
Related party receivables |
|
50 |
|
|
41 |
Inventories |
|
1,103 |
|
|
968 |
Other current assets |
|
137 |
|
|
113 |
Assets held for sale |
|
131 |
|
|
134 |
Total current
assets |
|
2,194 |
|
|
2,041 |
Property, plant and equipment, net |
|
1,759 |
|
|
1,771 |
Operating lease right-of-use assets, net |
|
271 |
|
|
272 |
Goodwill |
|
1,814 |
|
|
1,812 |
Intangible assets, net |
|
1,096 |
|
|
1,112 |
Deferred income taxes |
|
7 |
|
|
7 |
Other noncurrent assets |
|
144 |
|
|
147 |
Total
assets |
$ |
7,285 |
|
$ |
7,162 |
Liabilities |
|
|
|
Accounts payable |
$ |
493 |
|
$ |
433 |
Related party payables |
|
9 |
|
|
11 |
Current portion of long-term debt |
|
30 |
|
|
30 |
Current portion of operating lease liabilities |
|
63 |
|
|
62 |
Income taxes payable |
|
6 |
|
|
5 |
Accrued and other current liabilities |
|
372 |
|
|
373 |
Liabilities held for sale |
|
24 |
|
|
27 |
Total current
liabilities |
|
997 |
|
|
941 |
Long-term debt |
|
4,207 |
|
|
4,213 |
Long-term operating lease liabilities |
|
219 |
|
|
222 |
Deferred income taxes |
|
257 |
|
|
231 |
Long-term employee benefit obligations |
|
196 |
|
|
194 |
Other noncurrent liabilities |
|
140 |
|
|
144 |
Total
liabilities |
$ |
6,016 |
|
$ |
5,945 |
Total equity attributable
to Pactiv Evergreen Inc. common shareholders |
|
1,264 |
|
|
1,213 |
Non-controlling interests |
|
5 |
|
|
4 |
Total
equity |
$ |
1,269 |
|
$ |
1,217 |
Total liabilities and
equity |
$ |
7,285 |
|
$ |
7,162 |
|
|
|
|
|
|
|
|
|
|
|
|
Pactiv Evergreen
Inc.Condensed Consolidated Statements of Cash
Flows(in
millions)(unaudited)
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
For the Three Months Ended March 31, |
|
|
For the Three Months Ended June 30, |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
Cash provided by
operating activities |
|
|
|
|
|
|
|
|
Net income |
$ |
74 |
|
|
$ |
43 |
|
|
$ |
7 |
|
Adjustments to reconcile net
income to operating cash flows: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
86 |
|
|
|
84 |
|
|
|
77 |
|
Deferred income taxes |
|
27 |
|
|
|
18 |
|
|
|
(3 |
) |
Unrealized (gain) loss on derivatives |
|
(1 |
) |
|
|
(5 |
) |
|
|
3 |
|
Other asset impairment charges |
|
— |
|
|
|
— |
|
|
|
2 |
|
Gain on sale of businesses and noncurrent assets |
|
— |
|
|
|
(27 |
) |
|
|
— |
|
Non-cash portion of employee benefit obligations |
|
3 |
|
|
|
(10 |
) |
|
|
(24 |
) |
Non-cash portion of operating lease expense |
|
22 |
|
|
|
19 |
|
|
|
19 |
|
Amortization of OID and DIC |
|
1 |
|
|
|
1 |
|
|
|
2 |
|
Equity based compensation |
|
6 |
|
|
|
4 |
|
|
|
2 |
|
Other non-cash items, net |
|
9 |
|
|
|
2 |
|
|
|
5 |
|
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
(43 |
) |
|
|
(11 |
) |
|
|
(33 |
) |
Inventories |
|
(154 |
) |
|
|
(115 |
) |
|
|
7 |
|
Other current assets |
|
(21 |
) |
|
|
9 |
|
|
|
2 |
|
Accounts payable |
|
61 |
|
|
|
66 |
|
|
|
44 |
|
Operating lease payments |
|
(21 |
) |
|
|
(19 |
) |
|
|
(20 |
) |
Income taxes payable/receivable |
|
1 |
|
|
|
(1 |
) |
|
|
23 |
|
Accrued and other current liabilities |
|
(1 |
) |
|
|
59 |
|
|
|
1 |
|
Employee benefit obligation contributions |
|
(2 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
Other assets and liabilities |
|
(1 |
) |
|
|
4 |
|
|
|
1 |
|
Net cash provided by
operating activities |
|
46 |
|
|
|
120 |
|
|
|
113 |
|
Cash used in investing
activities |
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment |
|
(64 |
) |
|
|
(50 |
) |
|
|
(71 |
) |
Acquisition of business, net of cash acquired |
|
— |
|
|
|
(2 |
) |
|
|
— |
|
Disposal of businesses and joint venture equity interests, net of
cash disposed |
|
— |
|
|
|
47 |
|
|
|
— |
|
Net cash used in
investing activities |
|
(64 |
) |
|
|
(5 |
) |
|
|
(71 |
) |
Cash used in financing
activities |
|
|
|
|
|
|
|
|
Long-term debt repayments |
|
(5 |
) |
|
|
(6 |
) |
|
|
(3 |
) |
Dividends paid to common shareholders |
|
(18 |
) |
|
|
(18 |
) |
|
|
(17 |
) |
Other financing activities |
|
(3 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
Net cash used in
financing activities |
|
(26 |
) |
|
|
(27 |
) |
|
|
(21 |
) |
Effect of exchange rate changes
on cash and cash equivalents |
|
(3 |
) |
|
|
— |
|
|
|
1 |
|
(Decrease) increase in cash and cash equivalents |
|
(47 |
) |
|
|
88 |
|
|
|
22 |
|
Cash and cash equivalents, including amounts classified as held for
sale, as of beginning of the period(1) |
|
302 |
|
|
|
214 |
|
|
|
328 |
|
Cash and cash equivalents
as of end of the period(1) |
$ |
255 |
|
|
$ |
302 |
|
|
$ |
350 |
|
(1) Includes $9 million, $19 million and $17
million of cash and cash equivalents classified as current assets
held for sale as of 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 June 30, |
|
|
For the Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Reportable segment net
revenues |
|
|
|
|
|
|
|
|
|
|
|
Foodservice |
$ |
791 |
|
|
$ |
571 |
|
|
$ |
1,488 |
|
|
$ |
1,025 |
|
Food Merchandising |
|
444 |
|
|
|
388 |
|
|
|
848 |
|
|
|
730 |
|
Beverage Merchandising |
|
420 |
|
|
|
387 |
|
|
|
823 |
|
|
|
744 |
|
Other |
|
27 |
|
|
|
24 |
|
|
|
49 |
|
|
|
53 |
|
Intersegment revenues |
|
(42 |
) |
|
|
(18 |
) |
|
|
(73 |
) |
|
|
(36 |
) |
Total net
revenues |
$ |
1,640 |
|
|
$ |
1,352 |
|
|
$ |
3,135 |
|
|
$ |
2,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pactiv Evergreen
Inc.Reconciliation of Reportable Segment Adjusted
EBITDA to Adjusted EBITDA from Continuing
Operations(in
millions)(unaudited)
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Reportable segment
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
Foodservice |
$ |
165 |
|
|
$ |
62 |
|
|
$ |
281 |
|
|
$ |
123 |
|
Food Merchandising |
|
78 |
|
|
|
59 |
|
|
|
138 |
|
|
|
114 |
|
Beverage Merchandising |
|
29 |
|
|
|
15 |
|
|
|
53 |
|
|
|
(17 |
) |
Other |
|
2 |
|
|
|
2 |
|
|
|
2 |
|
|
|
3 |
|
Unallocated |
|
(25 |
) |
|
|
(8 |
) |
|
|
(43 |
) |
|
|
(16 |
) |
Adjusted EBITDA from
continuing operations (Non-GAAP) |
$ |
249 |
|
|
$ |
130 |
|
|
$ |
431 |
|
|
$ |
207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pactiv Evergreen
Inc.Reconciliation of Net Income (Loss) from
Continuing Operations to Adjusted EBITDA from Continuing
Operations(in
millions)(unaudited)
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net income (loss) from continuing operations
(GAAP) |
$ |
74 |
|
|
$ |
8 |
|
|
$ |
117 |
|
|
$ |
(3 |
) |
Income tax expense (benefit) |
|
45 |
|
|
|
5 |
|
|
|
81 |
|
|
|
(13 |
) |
Interest expense, net |
|
50 |
|
|
|
42 |
|
|
|
99 |
|
|
|
84 |
|
Depreciation and
amortization |
|
86 |
|
|
|
77 |
|
|
|
170 |
|
|
|
150 |
|
Restructuring, asset impairment
and other related charges(1) |
|
1 |
|
|
|
10 |
|
|
|
1 |
|
|
|
8 |
|
Gain on sale of businesses and
noncurrent assets(2) |
|
— |
|
|
|
— |
|
|
|
(27 |
) |
|
|
— |
|
Non-cash pension expense
(income)(3) |
|
2 |
|
|
|
(25 |
) |
|
|
(8 |
) |
|
|
(48 |
) |
Operational process
engineering-related consultancy costs(4) |
|
1 |
|
|
|
7 |
|
|
|
4 |
|
|
|
10 |
|
Business acquisition and
integration costs and purchase accounting adjustments(5) |
|
2 |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
Unrealized (gains) losses on
derivatives(6) |
|
(1 |
) |
|
|
3 |
|
|
|
(6 |
) |
|
|
4 |
|
Foreign exchange losses on
cash(7) |
|
— |
|
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
Executive transition
charges(8) |
|
2 |
|
|
|
— |
|
|
|
2 |
|
|
|
10 |
|
Gain on legal settlement(9) |
|
(15 |
) |
|
|
— |
|
|
|
(15 |
) |
|
|
— |
|
Costs associated with legacy sold
facility(10) |
|
3 |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
Other |
|
(1 |
) |
|
|
2 |
|
|
|
(1 |
) |
|
|
4 |
|
Adjusted EBITDA from
continuing operations (Non-GAAP) |
$ |
249 |
|
|
$ |
130 |
|
|
$ |
431 |
|
|
$ |
207 |
|
(1) |
Reflects restructuring, asset impairment and other related charges
(net of reversals) primarily associated with our closure of
Beverage Merchandising’s coated groundwood operations. |
(2) |
Reflects the gain from the sale
of businesses and noncurrent assets, primarily related to the sale
of our equity interests in Naturepak Beverage Packaging Co.
Ltd. |
(3) |
Reflects the non-cash pension
expense (income) related to our employee benefit plans, including
the pension settlement gain of $10 million recognized during the
six months ended June 30, 2022. |
(4) |
Reflects the costs incurred to
evaluate and improve the efficiencies of our manufacturing and
distribution operations. |
(5) |
Reflects integration costs
related to the acquisition of Fabri-Kal. |
(6) |
Reflects the mark-to-market
movements in our commodity derivatives. |
(7) |
Reflects foreign exchange losses
on cash, primarily on U.S. dollar amounts held in non-U.S. dollar
functional currency entities. |
(8) |
Reflects charges relating to key
executive retirement and separation agreements in the first half of
2021 and in the second quarter of 2022. |
(9) |
Reflects the gain, net of costs,
arising from the settlement of a historical legal action. |
(10) |
Reflects costs related to a
closed facility, sold prior to our acquisition of the entity. |
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