Pactiv Evergreen Inc. (“Pactiv Evergreen” or the “Company”) today
reported results for the third quarter of 2022. Michael King,
President and Chief Executive Officer of Pactiv Evergreen, said,
“Following strong volumes and pricing during the second quarter of
2022, the Company reported an expected sequential decline in net
revenues as the timing of certain resin pass throughs weighed on
our overall price/mix growth while sales volume softened. Net
income from continuing operations increased compared to Q2
primarily due to the gain recognized from the sale of Beverage
Merchandising Asia. However, Adjusted EBITDA1 decreased as
expected, impacted by the timing of certain resin pass throughs as
customer spending moderated and material cost inflationary
pressures continued.
The Company is encouraged by the continued
progress made in its logistics, cubing and general operations
across the business which led to another strong financial quarter.
The strategic inventory build earlier this year supported solid
improvement in customer service levels. The Company has also
stabilized its labor levels which is expected to improve its
productivity over coming quarters. While operational improvements
continue, the Company remains cautious due to the continued
inflationary pressures in the market as well as their potential
impact on end market volume demand. Despite these pressures, the
Company is cautiously optimistic that its strong year to date
performance will continue into the fourth quarter and is raising
its full year Adjusted EBITDA1 guidance to a range of $760 million
to $780 million.”2
Jon Baksht, Chief Financial Officer of Pactiv
Evergreen, added, “The Company has taken meaningful strides in
deleveraging the balance sheet over the past year by both improving
its operations across the enterprise and managing its cash and
outstanding debt levels. This has resulted in a reduction of Net
Debt3 to $3.7 billion, and the Company’s Net Leverage Ratio3 has
improved to 4.5x from 7.6x in Q4 2021.”
____________________________1 Adjusted EBITDA is
a non-GAAP measure. All references to Adjusted EBITDA are
references to Adjusted EBITDA from continuing operations. 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 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 from continuing
operations and Adjusted EBITDA and could significantly impact GAAP
results.
3 Net Debt and Net Leverage Ratio are non-GAAP measures. Refer
to their definitions in the discussion on non-GAAP financial
measures and the accompanying reconciliations below.
Positioning the Company for Future
Growth
Pactiv Evergreen continues to execute on
strategic priorities to deleverage and focus on core competencies,
thus better positioning the Company for future growth:
- On September 20, 2022, with Pactiv
Evergreen Pension Plan (“PEPP”) assets, the Company purchased
non-participating group annuity contracts from two affiliate
insurance companies and transferred $656 million of pension plan
gross liabilities. As a result of this and the July 2021 and
February 2022 transactions, in aggregate, the Company has reduced
gross PEPP liabilities by $2,900 million.
- In September 2022, the Company
committed to a plan to fully divest its remaining closures
businesses and expects the process to be completed within the next
twelve months.
- On August 2, 2022, the Company
closed the sale of its carton packaging and filling machinery
businesses in China, Korea and Taiwan (“Beverage Merchandising
Asia”) to SIG Schweizerische Industrie-Gesellschaft GmbH and
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. The Company recognized a
preliminary gain on sale of $239 million in the third quarter of
2022.
Third Quarter 2022
Results vs. Second Quarter 2022 Results
Net revenues in the third quarter of 2022 were
$1,609 million compared to $1,640 million in the second quarter of
2022. The decrease was primarily due to lower sales volumes,
primarily due to the market softening amid inflationary pressures
and seasonal trends in the Foodservice and Food Merchandising
segments. The decrease was partially offset by favorable pricing,
due to the contractual pass-through of higher material costs and
pricing actions, most notably in the Food Merchandising and
Beverage Merchandising segments.
Net income from continuing operations was $175
million in the third quarter of 2022 compared to $74 million in the
second quarter of 2022. The increase was primarily due to the
$239 million gain on the sale of Beverage Merchandising Asia and a
$46 million increase in non-operating income due to a pension
settlement gain. These increases were partially offset by $76
million of lower gross profit, largely driven by higher material
and manufacturing costs and lower sales volume, a $56 million asset
impairment charge related to the strategic decision to exit the
remaining closures businesses and a $34 million increase in tax
expense, primarily attributable to the gain on the sale of Beverage
Merchandising Asia.
Adjusted EBITDA1 was $187 million in the third
quarter of 2022 compared to $249 million in the second quarter of
2022. The decrease was due to higher material costs, net of
material costs passed through, lower sales volume and higher
manufacturing costs.
Segment Results
Foodservice
|
|
For the Three Months Ended |
|
|
|
|
|
|
|
|
|
September 30, |
|
|
June 30, |
|
|
|
|
|
|
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2022 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
Total segment net
revenues |
|
$ |
756 |
|
|
$ |
791 |
|
|
$ |
(35 |
) |
|
|
(4 |
)% |
|
|
— |
% |
|
|
(4 |
)% |
Segment Adjusted EBITDA |
|
$ |
113 |
|
|
$ |
165 |
|
|
$ |
(52 |
) |
|
|
(32 |
)% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
15 |
% |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net revenues was primarily due
to lower sales volume due to the market softening amid inflationary
pressures, as well as seasonal trends.
The decrease in Adjusted EBITDA was primarily
due to higher material and manufacturing costs and lower sales
volume.
Food Merchandising
|
|
For the Three Months Ended |
|
|
|
|
|
|
|
|
|
September 30, |
|
|
June 30, |
|
|
|
|
|
|
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2022 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
Total segment net
revenues |
|
$ |
455 |
|
|
$ |
444 |
|
|
$ |
11 |
|
|
|
2 |
% |
|
|
6 |
% |
|
|
(4 |
)% |
Segment Adjusted EBITDA |
|
$ |
70 |
|
|
$ |
78 |
|
|
$ |
(8 |
) |
|
|
(10 |
)% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
15 |
% |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The increase in net revenues was primarily due
to favorable pricing, arising from the contractual pass-through of
higher material costs and pricing actions taken to offset higher
input costs, partially offset by lower sales volume due to the
market softening amid inflationary pressures, as well as seasonal
trends.
The decrease in Adjusted EBITDA was primarily
due to lower sales volume and higher manufacturing costs, partially
offset by favorable pricing, net of material costs passed
through.
Beverage Merchandising
|
|
For the Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
June 30, |
|
|
|
|
|
|
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2022 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
|
Dispositions |
|
Total segment net
revenues |
|
$ |
422 |
|
|
$ |
420 |
|
|
$ |
2 |
|
|
|
— |
% |
|
|
1 |
% |
|
|
5 |
% |
|
|
(6 |
)% |
Segment Adjusted EBITDA |
|
$ |
26 |
|
|
$ |
29 |
|
|
$ |
(3 |
) |
|
|
(10 |
)% |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
6 |
% |
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues were flat. Higher liquid packaging
board volumes from sales to the former Beverage Merchandising Asia
operations replaced lower beverage carton sales arising from the
disposition of the business.
The decrease in Adjusted EBITDA was primarily
due to higher material costs, net of material costs passed through,
partially offset by lower manufacturing costs.
Third Quarter 2022 Results vs. Third
Quarter 2021 Results
Net revenues in the third quarter of 2022 were
$1,609 million compared to $1,394 million in the third quarter of
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 its segments. In addition, the Foodservice
segment’s acquisition of Fabri-Kal on October 1, 2021 contributed
$114 million of incremental sales for the third quarter of 2022 as
compared to the third quarter of 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 the Foodservice segment, the
market softening amid inflationary pressures in the Food
Merchandising segment and its strategic exit from the coated
groundwood business in the Beverage Merchandising segment in
December 2021, and the impact from the disposition of Beverage
Merchandising Asia.
Net income from continuing operations was $175
million in the third quarter of 2022 compared to $2 million in the
third quarter of 2021. The increase was primarily due to the $239
million gain on the sale of Beverage Merchandising Asia. In
addition, the increase was due to $129 million of higher gross
profit, largely driven by favorable pricing, net of higher material
and manufacturing costs, and the contribution from the acquisition
of Fabri-Kal. These increases were partially offset by a $92
million increase in tax expense, primarily attributable to the gain
on the sale of Beverage Merchandising Asia and improved
profitability, a $56 million asset impairment charge related to the
strategic decision to exit the remaining closures businesses and a
$41 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.
Adjusted EBITDA1 was $187 million in the third
quarter of 2022 compared to $119 million in the third quarter of
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 and
employee-related costs and lower sales volume.
Segment Results
Foodservice
|
|
For the Three Months Ended September 30, |
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
|
Acquisitions |
|
Total segment net
revenues |
|
$ |
756 |
|
|
$ |
594 |
|
|
$ |
162 |
|
|
|
27 |
% |
|
|
16 |
% |
|
|
(8 |
)% |
|
|
19 |
% |
Segment Adjusted EBITDA |
|
$ |
113 |
|
|
$ |
64 |
|
|
$ |
49 |
|
|
|
77 |
% |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
15 |
% |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in net revenues was primarily due
to the acquisition of Fabri-Kal on October 1, 2021, which
contributed $114 million of incremental sales for the third quarter
of 2022 as compared to the third quarter of 2021, and favorable
pricing, due to the contractual pass-through of higher material
costs and pricing actions taken to offset higher input costs. These
increases were partially offset by lower sales volume due to strong
sales volume in the prior year period 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 September 30, |
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
Total segment net
revenues |
|
$ |
455 |
|
|
$ |
391 |
|
|
$ |
64 |
|
|
|
16 |
% |
|
|
20 |
% |
|
|
(4 |
)% |
Segment Adjusted EBITDA |
|
$ |
70 |
|
|
$ |
49 |
|
|
$ |
21 |
|
|
|
43 |
% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
15 |
% |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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 the
market softening amid inflationary pressures.
The increase in Adjusted EBITDA was primarily
due to favorable pricing, net of material costs passed through,
partially offset by higher manufacturing and employee-related costs
and lower sales volume.
Beverage Merchandising
|
|
For the Three Months Ended September 30, |
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2022 |
|
|
2021 |
|
|
Change |
|
|
% Change |
|
|
Price/Mix |
|
|
Volume |
|
|
Dispositions |
|
Total segment net
revenues |
|
$ |
422 |
|
|
$ |
403 |
|
|
$ |
19 |
|
|
|
5 |
% |
|
|
16 |
% |
|
|
(5 |
)% |
|
|
(6 |
)% |
Segment Adjusted EBITDA |
|
$ |
26 |
|
|
$ |
16 |
|
|
$ |
10 |
|
|
|
63 |
% |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
6 |
% |
|
|
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. The increase was partially offset by the impact from the
disposition of Beverage Merchandising Asia and lower sales volume,
primarily due to the strategic exit from the coated groundwood
business in December 2021. Excluding the shutdown of the coated
groundwood business, sales volume increased 3% versus the prior
year.
The increase in Adjusted EBITDA was primarily
due to favorable pricing, net of material costs passed through, and
the prior year period incurring $7 million of costs from Tropical
Storm Fred. These items were partially offset by higher
manufacturing costs, including $8 million due to a scheduled cold
mill outage, and higher employee-related costs.
Balance Sheet and Cash Flow
Highlights
The Company continues to focus on strengthening
its balance sheet, and its Net Leverage Ratio3 has improved since
the prior quarter end, largely due to the cash proceeds received
from the sale of Beverage Merchandising Asia as well as continued
improvement in its trailing twelve month Adjusted EBITDA.1 The
Company’s Free Cash Flow4 has also improved compared to the second
quarter of 2022, primarily due to the completion of the strategic
inventory build. The Company paid dividends to shareholders of
$0.30 per share during the nine months ended September 30,
2022. The Company’s Board of Directors declared a third quarter
2022 dividend on November 3, 2022 of $0.10 per share of common
stock, payable on December 15, 2022 to shareholders of record as of
November 30, 2022.
(In millions, except
for Net Leverage Ratio) |
|
As of September 30, 2022 |
|
|
(In
millions) |
|
For the Three Months Ended September 30, 2022 |
|
Cash and cash equivalents |
|
$ |
559 |
|
|
Net cash flow provided by operating activities |
|
$ |
75 |
|
Total outstanding debt |
|
|
4,233 |
|
|
Capital expenditures |
|
|
(55 |
) |
Net Debt3 |
|
$ |
3,674 |
|
|
Free Cash Flow4 |
|
$ |
20 |
|
|
|
|
|
|
|
|
|
|
LTM Adjusted EBITDA1 |
|
$ |
823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Leverage Ratio3 |
|
|
4.5 |
|
|
|
|
|
|
Outlook
“While external challenges related to
inflationary pressures, energy price volatility, volume pressure
and possible recession fears exist, the Company’s operations
continue to improve. The Company now expects its 2022 Adjusted
EBITDA1 to range between $760 million and $780 million, a modest
improvement against the previously communicated guidance range of
$750 million to $770 million, as the business is expected to
continue its strong performance into year end,”2 said Mr. King.
Conference Call and Webcast Presentation
The Company will host a conference call and
webcast presentation to discuss these results on November 8,
2022 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
10171979. 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 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 quarters ended March 31, 2022 and June
30, 2022 filed with the SEC and for the quarter ended September 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.
____________________________4 Free Cash Flow is a non-GAAP
measure. Refer to its definition in the discussion on non-GAAP
financial measures and the accompanying reconciliation below.
Use of Non-GAAP Financial Measures
The Company sometimes uses the following
financial measures that are not calculated in accordance with
generally accepted accounting principles in the United States
(“GAAP”): Adjusted EBITDA, Free Cash Flow, Net Debt and Net
Leverage Ratio. The Company defines Adjusted EBITDA as net income
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 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
defines the Net Leverage Ratio as Net Debt divided by Adjusted
EBITDA for the last 12 months (“LTM Adjusted EBITDA”).
The Company has provided herein a reconciliation
of (i) Adjusted EBITDA to net income from continuing operations,
(ii) Free Cash Flow to net cash provided by operating activities,
(iii) Net Debt to total debt and (iv) the Net Leverage Ratio to
total debt and net income from continuing operations (by virtue of
the reconciliation to Adjusted EBITDA referred to in clause (i)),
in each case representing the most directly comparable GAAP
financial measures.
The Company presents Adjusted EBITDA to assist
it in comparing performance from period to period and as a measure
of operational performance. It is also 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. The Company also believes that using
Adjusted EBITDA facilitates 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 it in comparing liquidity from period to
period and to obtain 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 and
Net Leverage Ratio as supplemental measures 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 these measures 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 and other
metrics derived from it, including Net Leverage Ratio, 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(in millions, except per share
amounts)(unaudited)
|
|
For the Three Months Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
Net revenues |
|
$ |
1,609 |
|
|
$ |
1,640 |
|
|
$ |
1,394 |
|
Cost of sales |
|
|
(1,377 |
) |
|
|
(1,332 |
) |
|
|
(1,291 |
) |
Gross
profit |
|
|
232 |
|
|
|
308 |
|
|
|
103 |
|
Selling, general and
administrative expenses |
|
|
(145 |
) |
|
|
(148 |
) |
|
|
(104 |
) |
Restructuring, asset impairment
and other related charges |
|
|
(57 |
) |
|
|
(1 |
) |
|
|
— |
|
Other income, net |
|
|
239 |
|
|
|
12 |
|
|
|
7 |
|
Operating income from
continuing operations |
|
|
269 |
|
|
|
171 |
|
|
|
6 |
|
Non-operating income (expense),
net |
|
|
44 |
|
|
|
(2 |
) |
|
|
40 |
|
Interest expense, net |
|
|
(59 |
) |
|
|
(50 |
) |
|
|
(57 |
) |
Income (loss) from
continuing operations before tax |
|
|
254 |
|
|
|
119 |
|
|
|
(11 |
) |
Income tax (expense) benefit |
|
|
(79 |
) |
|
|
(45 |
) |
|
|
13 |
|
Income from continuing
operations |
|
|
175 |
|
|
|
74 |
|
|
|
2 |
|
Income (loss) from discontinued
operations, net of income taxes |
|
|
1 |
|
|
|
— |
|
|
|
(2 |
) |
Net income |
|
|
176 |
|
|
|
74 |
|
|
|
— |
|
Income attributable to
non-controlling interests |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
Net income attributable
to Pactiv Evergreen Inc. common shareholders |
|
$ |
176 |
|
|
$ |
73 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
attributable to Pactiv Evergreen Inc. common
shareholders |
|
|
|
|
|
|
|
|
|
From continuing operations |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.98 |
|
|
$ |
0.41 |
|
|
$ |
0.01 |
|
Diluted |
|
$ |
0.98 |
|
|
$ |
0.40 |
|
|
$ |
0.01 |
|
From discontinued operations |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.01 |
|
|
$ |
— |
|
|
$ |
(0.01 |
) |
Diluted |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.01 |
) |
Total |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.99 |
|
|
$ |
0.41 |
|
|
$ |
— |
|
Diluted |
|
$ |
0.98 |
|
|
$ |
0.40 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding - basic |
|
|
177.9 |
|
|
|
177.7 |
|
|
|
177.5 |
|
Weighted-average shares
outstanding - diluted |
|
|
178.7 |
|
|
|
178.3 |
|
|
|
177.8 |
|
Pactiv Evergreen
Inc.Condensed Consolidated Balance
Sheets(in
millions)(unaudited)
|
|
As of September 30, 2022 |
|
|
As of June 30, 2022 |
|
|
As ofSeptember 30, 2021 |
|
Assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
559 |
|
|
$ |
246 |
|
|
$ |
627 |
|
Accounts receivable, net |
|
|
523 |
|
|
|
527 |
|
|
|
473 |
|
Related party receivables |
|
|
46 |
|
|
|
50 |
|
|
|
47 |
|
Inventories |
|
|
1,123 |
|
|
|
1,103 |
|
|
|
801 |
|
Other current assets |
|
|
117 |
|
|
|
137 |
|
|
|
120 |
|
Assets held for sale |
|
|
— |
|
|
|
131 |
|
|
|
— |
|
Total current
assets |
|
|
2,368 |
|
|
|
2,194 |
|
|
|
2,068 |
|
Property, plant and equipment, net |
|
|
1,735 |
|
|
|
1,759 |
|
|
|
1,693 |
|
Operating lease right-of-use assets, net |
|
|
275 |
|
|
|
271 |
|
|
|
254 |
|
Goodwill |
|
|
1,815 |
|
|
|
1,814 |
|
|
|
1,760 |
|
Intangible assets, net |
|
|
1,079 |
|
|
|
1,096 |
|
|
|
1,052 |
|
Deferred income taxes |
|
|
6 |
|
|
|
7 |
|
|
|
10 |
|
Other noncurrent assets |
|
|
147 |
|
|
|
144 |
|
|
|
170 |
|
Total
assets |
|
$ |
7,425 |
|
|
$ |
7,285 |
|
|
$ |
7,007 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
411 |
|
|
$ |
493 |
|
|
$ |
390 |
|
Related party payables |
|
|
10 |
|
|
|
9 |
|
|
|
10 |
|
Current portion of long-term debt |
|
|
31 |
|
|
|
30 |
|
|
|
27 |
|
Current portion of operating lease liabilities |
|
|
64 |
|
|
|
63 |
|
|
|
58 |
|
Income taxes payable |
|
|
5 |
|
|
|
6 |
|
|
|
10 |
|
Accrued and other current liabilities |
|
|
437 |
|
|
|
372 |
|
|
|
354 |
|
Liabilities held for sale |
|
|
24 |
|
|
|
24 |
|
|
|
— |
|
Total current
liabilities |
|
|
982 |
|
|
|
997 |
|
|
|
849 |
|
Long-term debt |
|
|
4,202 |
|
|
|
4,207 |
|
|
|
4,220 |
|
Long-term operating lease liabilities |
|
|
222 |
|
|
|
219 |
|
|
|
213 |
|
Deferred income taxes |
|
|
318 |
|
|
|
257 |
|
|
|
217 |
|
Long-term employee benefit obligations |
|
|
97 |
|
|
|
196 |
|
|
|
152 |
|
Other noncurrent liabilities |
|
|
137 |
|
|
|
140 |
|
|
|
142 |
|
Total
liabilities |
|
$ |
5,958 |
|
|
$ |
6,016 |
|
|
$ |
5,793 |
|
Total equity attributable
to Pactiv Evergreen Inc. common shareholders |
|
|
1,462 |
|
|
|
1,264 |
|
|
|
1,210 |
|
Non-controlling interests |
|
|
5 |
|
|
|
5 |
|
|
|
4 |
|
Total
equity |
|
$ |
1,467 |
|
|
$ |
1,269 |
|
|
$ |
1,214 |
|
Total liabilities and
equity |
|
$ |
7,425 |
|
|
$ |
7,285 |
|
|
$ |
7,007 |
|
Pactiv Evergreen
Inc.Condensed Consolidated Statements of Cash
Flows(in
millions)(unaudited)
|
|
For the Three Months Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
Operating
Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
176 |
|
|
$ |
74 |
|
|
$ |
43 |
|
|
$ |
32 |
|
|
$ |
— |
|
Adjustments to reconcile net
income to operating cash flows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
85 |
|
|
|
86 |
|
|
|
84 |
|
|
|
91 |
|
|
|
103 |
|
Deferred income taxes |
|
|
50 |
|
|
|
27 |
|
|
|
18 |
|
|
|
21 |
|
|
|
(18 |
) |
Unrealized loss (gain) on derivatives |
|
|
10 |
|
|
|
(1 |
) |
|
|
(5 |
) |
|
|
2 |
|
|
|
1 |
|
Asset impairment charges |
|
|
56 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Gain on sale of businesses and noncurrent assets |
|
|
(239 |
) |
|
|
— |
|
|
|
(27 |
) |
|
|
— |
|
|
|
— |
|
Non-cash portion of employee benefit obligations |
|
|
(44 |
) |
|
|
3 |
|
|
|
(10 |
) |
|
|
(12 |
) |
|
|
(38 |
) |
Non-cash portion of operating lease expense |
|
|
21 |
|
|
|
22 |
|
|
|
19 |
|
|
|
20 |
|
|
|
18 |
|
Amortization of OID and DIC |
|
|
2 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Equity based compensation |
|
|
6 |
|
|
|
6 |
|
|
|
4 |
|
|
|
2 |
|
|
|
3 |
|
Other non-cash items, net |
|
|
3 |
|
|
|
9 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
(4 |
) |
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
4 |
|
|
|
(43 |
) |
|
|
(11 |
) |
|
|
21 |
|
|
|
(14 |
) |
Inventories |
|
|
(35 |
) |
|
|
(154 |
) |
|
|
(115 |
) |
|
|
12 |
|
|
|
8 |
|
Other current assets |
|
|
7 |
|
|
|
(21 |
) |
|
|
9 |
|
|
|
(4 |
) |
|
|
3 |
|
Accounts payable |
|
|
(66 |
) |
|
|
61 |
|
|
|
66 |
|
|
|
(37 |
) |
|
|
2 |
|
Operating lease payments |
|
|
(21 |
) |
|
|
(21 |
) |
|
|
(19 |
) |
|
|
(18 |
) |
|
|
(18 |
) |
Income taxes payable/receivable |
|
|
(1 |
) |
|
|
1 |
|
|
|
(1 |
) |
|
|
(8 |
) |
|
|
1 |
|
Accrued and other current liabilities |
|
|
67 |
|
|
|
(1 |
) |
|
|
59 |
|
|
|
(47 |
) |
|
|
20 |
|
Employee benefit obligation contributions |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
Other assets and liabilities |
|
|
(5 |
) |
|
|
(1 |
) |
|
|
4 |
|
|
|
(1 |
) |
|
|
— |
|
Net cash provided by
operating activities |
|
|
75 |
|
|
|
46 |
|
|
|
120 |
|
|
|
71 |
|
|
|
68 |
|
Investing
Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment |
|
|
(55 |
) |
|
|
(64 |
) |
|
|
(50 |
) |
|
|
(83 |
) |
|
|
(68 |
) |
Disposal of businesses and joint venture equity interests, net of
cash disposed |
|
|
317 |
|
|
|
— |
|
|
|
47 |
|
|
|
— |
|
|
|
— |
|
Other investing activities |
|
|
3 |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(374 |
) |
|
|
4 |
|
Net cash provided by
(used in) investing activities |
|
|
265 |
|
|
|
(64 |
) |
|
|
(5 |
) |
|
|
(457 |
) |
|
|
(64 |
) |
Financing
Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt proceeds |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,510 |
|
Long-term debt repayments |
|
|
(6 |
) |
|
|
(5 |
) |
|
|
(6 |
) |
|
|
(5 |
) |
|
|
(1,210 |
) |
Long-term debt issuance costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
(5 |
) |
Dividends paid to common shareholders |
|
|
(18 |
) |
|
|
(18 |
) |
|
|
(18 |
) |
|
|
(18 |
) |
|
|
(18 |
) |
Other financing activities |
|
|
(2 |
) |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
Net cash (used in)
provided by financing activities |
|
|
(26 |
) |
|
|
(26 |
) |
|
|
(27 |
) |
|
|
(26 |
) |
|
|
275 |
|
Effect of exchange rate changes
on cash and cash equivalents |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(2 |
) |
Increase (decrease) in cash and
cash equivalents |
|
|
311 |
|
|
|
(47 |
) |
|
|
88 |
|
|
|
(413 |
) |
|
|
277 |
|
Cash and cash equivalents, including amounts classified as held for
sale, as of beginning of the period(1) |
|
|
255 |
|
|
|
302 |
|
|
|
214 |
|
|
|
627 |
|
|
|
350 |
|
Cash and cash equivalents as of end of the
period(1) |
|
$ |
566 |
|
|
$ |
255 |
|
|
$ |
302 |
|
|
$ |
214 |
|
|
$ |
627 |
|
(1) Includes $7 million, $9 million, $19 million and $17 million
of cash and cash equivalents classified as current assets held for
sale as of 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 |
|
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
Reportable segment net
revenues |
|
|
|
|
|
|
|
|
|
Foodservice |
|
$ |
756 |
|
|
$ |
791 |
|
|
$ |
594 |
|
Food Merchandising |
|
|
455 |
|
|
|
444 |
|
|
|
391 |
|
Beverage Merchandising |
|
|
422 |
|
|
|
420 |
|
|
|
403 |
|
Other |
|
|
26 |
|
|
|
27 |
|
|
|
28 |
|
Intersegment revenues |
|
|
(50 |
) |
|
|
(42 |
) |
|
|
(22 |
) |
Total net
revenues |
|
$ |
1,609 |
|
|
$ |
1,640 |
|
|
$ |
1,394 |
|
Pactiv Evergreen
Inc.Reconciliation of Reportable Segment Adjusted
EBITDA to Adjusted EBITDA(in
millions)(unaudited)
|
|
For the Three Months Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
Reportable segment
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
Foodservice |
|
$ |
113 |
|
|
$ |
165 |
|
|
$ |
64 |
|
Food Merchandising |
|
|
70 |
|
|
|
78 |
|
|
|
49 |
|
Beverage Merchandising |
|
|
26 |
|
|
|
29 |
|
|
|
16 |
|
Other |
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
Unallocated |
|
|
(23 |
) |
|
|
(25 |
) |
|
|
(13 |
) |
Adjusted EBITDA
(Non-GAAP) |
|
$ |
187 |
|
|
$ |
249 |
|
|
$ |
119 |
|
Pactiv Evergreen
Inc.Reconciliation of Net Income from Continuing
Operations to Adjusted EBITDA(in
millions)(unaudited)
|
|
For the Twelve Months Ended |
|
|
For the Three Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
Net income from
continuing operations (GAAP) |
|
$ |
326 |
|
|
$ |
175 |
|
|
$ |
74 |
|
|
$ |
2 |
|
Income tax expense (benefit) |
|
|
182 |
|
|
|
79 |
|
|
|
45 |
|
|
|
(13 |
) |
Interest expense, net |
|
|
208 |
|
|
|
59 |
|
|
|
50 |
|
|
|
57 |
|
Depreciation and
amortization |
|
|
346 |
|
|
|
85 |
|
|
|
86 |
|
|
|
103 |
|
Restructuring, asset impairment
and other related charges(1) |
|
|
59 |
|
|
|
57 |
|
|
|
1 |
|
|
|
— |
|
Gain on sale of businesses and
noncurrent assets(2) |
|
|
(266 |
) |
|
|
(239 |
) |
|
|
— |
|
|
|
— |
|
Non-cash pension income(3) |
|
|
(65 |
) |
|
|
(44 |
) |
|
|
2 |
|
|
|
(40 |
) |
Operational process
engineering-related consultancy costs(4) |
|
|
12 |
|
|
|
3 |
|
|
|
1 |
|
|
|
6 |
|
Business acquisition and
integration costs and purchase accounting adjustments(5) |
|
|
19 |
|
|
|
— |
|
|
|
2 |
|
|
|
2 |
|
Unrealized losses (gains) on
derivatives |
|
|
6 |
|
|
|
10 |
|
|
|
(1 |
) |
|
|
1 |
|
Foreign exchange losses on
cash |
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Executive transition
charges(6) |
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
Gain on legal settlement(7) |
|
|
(15 |
) |
|
|
— |
|
|
|
(15 |
) |
|
|
— |
|
Costs associated with legacy
facility(8) |
|
|
6 |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
Other |
|
|
— |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
1 |
|
Adjusted EBITDA
(Non-GAAP) |
|
$ |
823 |
|
|
$ |
187 |
|
|
$ |
249 |
|
|
$ |
119 |
|
(1) Reflects restructuring, asset
impairment and other related charges primarily associated with the
decision to exit our remaining closures businesses and 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 Beverage Merchandising
Asia and the sale of our equity interests in Naturepak Beverage
Packaging Co. Ltd.(3) Reflects the non-cash pension
(income) expense related to our employee benefit plans, including
the pension settlement gains of $47 million, $10 million and $22
million recognized during the third quarter of 2022, the first
quarter of 2022 and the third quarter of 2021,
respectively.(4) Reflects the costs incurred to
evaluate and improve the efficiencies of our manufacturing and
distribution operations.(5) Reflects amounts related to
the acquisition of Fabri-Kal.(6) Reflects charges
relating to a key executive separation agreement in the second
quarter of 2022.(7) Reflects the gain, net of costs,
arising from the settlement of a historical legal action.(8)
Reflects costs related to a closed facility, sold prior to
our acquisition of the entity.
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