Pactiv Evergreen Inc. (“Pactiv Evergreen” or the “Company”) today
reported results for the second quarter of 2023. Michael King,
President and Chief Executive Officer of Pactiv Evergreen, said,
“The Company delivered strong results that reflect the inherent
resilience of our business as well as decisive actions to maintain
cost discipline. Overall volumes continue to be impacted by
inflationary headwinds on consumer spending; however, the Company
has successfully positioned its portfolio to emphasize value over
volume and deliver on behalf of its customers. Further, the
Company’s focus on operational excellence and waste elimination
continue to yield improvements in controllable costs. The Company
also successfully ceased operations at its Canton mill on May 24,
ahead of previous guidance, which is a testament to the integrity,
hard work and diligent planning of the entire Pactiv Evergreen
organization. The Company remains well-positioned to capitalize on
the positive long-term fundamentals in the industry, and we are
confident that the actions we have taken this year will not only
strengthen that position but enhance our ability to deliver
attractive returns and enhance shareholder value in the future.”
Jon Baksht, Chief Financial Officer of Pactiv
Evergreen, added, “We are committed to aggressively reducing our
net leverage and driving free cash flow growth. During the second
quarter, we repaid $180 million of our U.S. term loans Tranche B-2,
bringing our year to date debt reduction to $296 million and
further reducing our floating rate interest exposure to 24% of our
total debt outstanding, compared to 53% at this time last year. The
Company was able to accomplish this despite incurring a substantial
portion of the expected Beverage Merchandising cash restructuring
costs during the quarter. The Company also continues to optimize
its working capital levels and remains on track to deliver on its
free cash flow guidance for 2023.
____________________1 Adjusted EBITDA and
Adjusted EPS 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 legacy Beverage Merchandising
operations. During the second quarter of 2023, the Company ceased
operations at its Canton, North Carolina mill and its converting
facility in Olmsted Falls, Ohio and production from the Olmsted
Falls facility was 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 restructuring, the Company
incurred $187 million of non-cash charges during the second quarter
of 2023 (year-to-date: $310 million) and currently expects to incur
total non-cash charges in the range of $325 million to $330
million. 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 $29 million of cash-based
charges during the second quarter of 2023 (year-to-date: $93
million) 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.
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.
“With the ceasing of operations at the Canton
mill and at Olmsted Falls, I want to sincerely thank all of the
impacted employees for their dedication throughout the process. 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.
Change in Segments
In the second quarter of 2023, in conjunction
with the Beverage Merchandising Restructuring, the Company
implemented a new operating and reporting structure resulting in
the combination of our legacy Food Merchandising and Beverage
Merchandising segments, creating our Food and Beverage
Merchandising segment. The Company also reorganized the management
of certain product lines from our Foodservice segment to our Food
and Beverage Merchandising segment. As of the end of the second
quarter of 2023, management analyzes the results of the business
through its Foodservice and Food and Beverage Merchandising
segments. All prior periods have been recast to reflect the current
reportable segment structure and the change in the management of
certain product lines.
Second Quarter 2023 Results vs. Second
Quarter 2022 Results
Net revenues in the second quarter of 2023 were
$1,426 million compared to $1,640 million in the second quarter of
2022. The decrease was largely due to lower sales volume, the
disposition of Beverage Merchandising Asia on August 2, 2022, and
the closure of our Canton, North Carolina mill operations during
the second quarter of 2023. Lower sales volume was mainly due to a
focus on value over volume and the market softening amid
inflationary pressures.
Net loss was $139 million, or $0.78 per diluted
share, in the second quarter of 2023 compared to $74 million of net
income, or $0.40 per diluted share, in the second quarter of 2022.
The decrease was mostly due to lower gross profit and
restructuring, asset impairment and other related charges, both of
which were driven by a total of $216 million of charges associated
with the Beverage Merchandising Restructuring. These decreases were
partially offset by a $53 million decrease in tax expense, mainly
attributable to the aforementioned restructuring.
Adjusted EBITDA1 was $217 million and Adjusted
EPS1 was $0.20 in the second quarter of 2023 compared to $249
million and $0.38, respectively, in the second quarter of 2022. The
decrease in Adjusted EBITDA1 was primarily attributable to lower
sales volume and higher manufacturing costs as well as the impact
from the disposition of Beverage Merchandising Asia and the closure
of our Canton, North Carolina mill operations, partially offset by
lower transportation costs. In addition to the aforementioned
items, 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 June 30, |
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2023 |
|
2022 |
|
Change |
|
% Change |
|
Price/Mix |
|
Volume |
Total segment net revenues |
|
$ |
656 |
|
|
$ |
749 |
|
|
$ |
(93 |
) |
|
|
(12 |
)% |
|
|
(6 |
)% |
|
|
(6 |
)% |
Segment Adjusted EBITDA |
|
$ |
128 |
|
|
$ |
161 |
|
|
$ |
(33 |
) |
|
|
(20 |
)% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
20 |
% |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net revenues was primarily due
to lower sales volume and unfavorable pricing largely due to a
continued focus on value over volume and the contractual
pass-through of lower material costs.
The decrease in Adjusted EBITDA was due to
unfavorable pricing, net of costs passed through, lower sales
volume and higher manufacturing costs, partially offset by lower
transportation costs.
Food and Beverage Merchandising
|
|
For the Three Months Ended June 30, |
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2023 |
|
2022 |
|
Change |
|
% Change |
|
Price/Mix |
|
Volume |
|
Dispositions / Mill Closure |
|
FX |
Total segment net revenues |
|
$ |
805 |
|
|
$ |
906 |
|
|
$ |
(101 |
) |
|
|
(11 |
)% |
|
|
4 |
% |
|
|
(7 |
)% |
|
|
(9 |
)% |
|
|
1 |
% |
Segment Adjusted EBITDA |
|
$ |
109 |
|
|
$ |
111 |
|
|
$ |
(2 |
) |
|
|
(2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
14 |
% |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net revenues was driven by lower
sales volume, the disposition of Beverage Merchandising Asia and
the closure of our Canton, North Carolina mill operations. Sales
volume was lower mainly due to a focus on value over volume and the
market softening amid inflationary pressures. These decreases were
partially offset by favorable pricing, driven by pricing actions
taken to offset higher input costs.
The decrease in Adjusted EBITDA was due to
higher manufacturing costs, lower sales volume, the closure of our
Canton, North Carolina mill operations and the disposition of
Beverage Merchandising Asia, partially offset by favorable pricing,
net of material costs passed through, and lower transportation and
employee-related costs.
Second Quarter 2023 Results vs. First
Quarter 2023 Results
Net revenues in the second quarter of 2023 were
$1,426 million compared to $1,431 million in the first quarter of
2023. Higher sales volume due to seasonal trends was offset by the
closure of the Canton, North Carolina mill operations during the
second quarter of 2023 and unfavorable pricing, driven by the
contractual pass-through of lower material costs.
Net loss was $139 million, or $0.78 per diluted
share, in the second quarter of 2023 compared to $133 million, or
$0.76 per diluted share, in the first quarter of 2023. The larger
net loss was mostly due to $29 million of higher charges associated
with the Beverage Merchandising Restructuring, partially offset by
higher sales volume and lower transportation costs.
Adjusted EBITDA1 was $217 million and Adjusted
EPS1 was $0.20 in the second quarter of 2023 compared to $189
million and $0.13, respectively, in the first quarter of 2023. The
increases in Adjusted EBITDA1 and Adjusted EPS1 were both primarily
due to lower manufacturing costs, higher sales volume and lower
transportation costs, partially offset by unfavorable pricing, net
of costs passed through, and the closure of the Canton, North
Carolina mill operations.
Segment Results
Foodservice
|
|
For the Three Months Ended |
|
|
|
|
|
|
|
|
|
June 30, |
|
March 31, |
|
|
|
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
2023 |
|
2023 |
|
Change |
|
% Change |
|
Price/Mix |
|
Volume |
Total segment net revenues |
|
$ |
656 |
|
|
$ |
614 |
|
|
$ |
42 |
|
|
|
7 |
% |
|
|
(3 |
)% |
|
|
10 |
% |
Segment Adjusted EBITDA |
|
$ |
128 |
|
|
$ |
106 |
|
|
$ |
22 |
|
|
|
21 |
% |
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
20 |
% |
|
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The increase in net revenues was due to higher
sales volume due to seasonal trends, partially offset by
unfavorable pricing predominantly due to the contractual
pass-through of lower material costs.
The increase in Adjusted EBITDA was due to
higher sales volume and lower manufacturing costs, partially offset
by unfavorable pricing, net of costs passed through, and higher
employee-related costs.
Food and Beverage Merchandising
|
|
For the Three Months Ended |
|
|
Components of Change in Net Revenues |
|
(In millions, except
for %) |
|
June 30, 2023 |
|
March 31,2023 |
|
Change |
|
% Change |
|
Price/Mix |
|
Volume |
|
Mill Closure |
Total segment net revenues |
|
$ |
805 |
|
|
$ |
850 |
|
|
$ |
(45 |
) |
|
|
(5 |
)% |
|
|
(2 |
)% |
|
|
2 |
% |
|
|
(5 |
)% |
Segment Adjusted EBITDA |
|
$ |
109 |
|
|
$ |
101 |
|
|
$ |
8 |
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
margin |
|
|
14 |
% |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in net revenues was mainly due to
the closure of the Canton, North Carolina mill operations. Higher
sales volume due to seasonal trends was offset by unfavorable
pricing.
The increase in Adjusted EBITDA was largely due
to lower manufacturing costs and higher sales volume, partially
offset by unfavorable pricing, net of material costs passed
through, and the closure of the Canton, North Carolina mill
operations.
Balance Sheet and Cash Flow
Highlights
The Company continues to deliver on its
commitment to strengthen its balance sheet. Since December 31,
2022, the Company reduced its total outstanding debt, mostly due to
$290 million of early repayments, and Net Debt2 also declined. Free
Cash Flow2 was positive during the second quarter of 2023,
inclusive of cash payments related to the Beverage Merchandising
Restructuring. The Company’s Board of Directors declared a second
quarter 2023 dividend on August 1, 2023 of $0.10 per share of
common stock, payable on September 15, 2023 to shareholders of
record as of August 31, 2023.
(In
millions) |
|
As of June 30, 2023 |
|
|
(In
millions) |
|
For the Three Months Ended June 30,
2023 |
|
Total outstanding debt |
|
$ |
3,840 |
|
|
Net cash flow provided by operating activities |
|
$ |
127 |
|
Cash and cash equivalents |
|
|
(302 |
) |
|
Capital expenditures |
|
|
(53 |
) |
Net Debt2 |
|
$ |
3,538 |
|
|
Free Cash Flow2 |
|
$ |
74 |
|
Outlook
“The Company expects to be at the high end of
the existing range for full year 2023 Adjusted EBITDA1 guidance of
$775 million to $800 million. The Company also maintained its
guidance for full year 2023 Free Cash Flow2, which includes the
cash costs related to the Beverage Merchandising Restructuring. We
remain cautious about the macroeconomic backdrop; however, we are
encouraged by our current momentum and the year over year
comparisons in the second half of 2023,” 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 August 3, 2023 at
8:30 a.m. U.S. Eastern Time. Investors interested in participating
in the live call may register for the call here. 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. 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 Net Debt and Free Cash
Flow are non-GAAP measures. Refer to their definitions 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 ability to deliver
attractive returns and enhance shareholder value in the future; and
the expected timelines and amount and type of cash and non-cash
charges that we expect to incur in connection with the Beverage
Merchandising Restructuring 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 quarters ended March 31, 2023 and June
30, 2023 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 and Chief Operating Decision Maker, who is the President
and Chief Executive Officer, use 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 |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2023 |
|
2023 |
|
2022 |
Net revenues |
|
$ |
1,426 |
|
|
$ |
1,431 |
|
|
$ |
1,640 |
|
Cost of
sales |
|
|
(1,342 |
) |
|
|
(1,316 |
) |
|
|
(1,332 |
) |
Gross profit |
|
|
84 |
|
|
|
115 |
|
|
|
308 |
|
Selling,
general and administrative expenses |
|
|
(136 |
) |
|
|
(130 |
) |
|
|
(148 |
) |
Restructuring, asset impairment and other related charges |
|
|
(32 |
) |
|
|
(73 |
) |
|
|
(1 |
) |
Other
income, net |
|
|
4 |
|
|
|
— |
|
|
|
12 |
|
Operating (loss) income |
|
|
(80 |
) |
|
|
(88 |
) |
|
|
171 |
|
Non-operating expense, net |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
Interest
expense, net |
|
|
(64 |
) |
|
|
(63 |
) |
|
|
(50 |
) |
(Loss) income before tax |
|
|
(147 |
) |
|
|
(152 |
) |
|
|
119 |
|
Income
tax benefit (expense) |
|
|
8 |
|
|
|
19 |
|
|
|
(45 |
) |
Net (loss) income |
|
|
(139 |
) |
|
|
(133 |
) |
|
|
74 |
|
Income
attributable to non-controlling interests |
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
Net (loss) income attributable to Pactiv Evergreen Inc.
common shareholders |
|
$ |
(139 |
) |
|
$ |
(134 |
) |
|
$ |
73 |
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share attributable to Pactiv Evergreen
Inc. common shareholders |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.78 |
) |
|
$ |
(0.76 |
) |
|
$ |
0.41 |
|
Diluted |
|
$ |
(0.78 |
) |
|
$ |
(0.76 |
) |
|
$ |
0.40 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding - basic |
|
|
178.5 |
|
|
|
178.4 |
|
|
|
177.7 |
|
Weighted-average shares outstanding - diluted |
|
|
178.5 |
|
|
|
178.4 |
|
|
|
178.3 |
|
Pactiv Evergreen Inc.Condensed
Consolidated Balance Sheets(in
millions)(unaudited) |
|
|
|
As of June 30,2023 |
|
As of March 31, 2023 |
|
As of June 30,2022 |
Assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
302 |
|
|
$ |
427 |
|
|
$ |
246 |
|
Accounts receivable, net |
|
|
468 |
|
|
|
484 |
|
|
|
527 |
|
Related party receivables |
|
|
38 |
|
|
|
66 |
|
|
|
50 |
|
Inventories |
|
|
927 |
|
|
|
983 |
|
|
|
1,103 |
|
Other current assets |
|
|
114 |
|
|
|
109 |
|
|
|
137 |
|
Assets held for sale |
|
|
— |
|
|
|
— |
|
|
|
131 |
|
Total current assets |
|
|
1,849 |
|
|
|
2,069 |
|
|
|
2,194 |
|
Property, plant and equipment, net |
|
|
1,488 |
|
|
|
1,675 |
|
|
|
1,759 |
|
Operating lease right-of-use assets, net |
|
|
268 |
|
|
|
255 |
|
|
|
271 |
|
Goodwill |
|
|
1,815 |
|
|
|
1,815 |
|
|
|
1,814 |
|
Intangible assets, net |
|
|
1,034 |
|
|
|
1,049 |
|
|
|
1,096 |
|
Other noncurrent assets |
|
|
176 |
|
|
|
172 |
|
|
|
151 |
|
Total assets |
|
$ |
6,630 |
|
|
$ |
7,035 |
|
|
$ |
7,285 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
352 |
|
|
$ |
379 |
|
|
$ |
493 |
|
Related party payables |
|
|
8 |
|
|
|
17 |
|
|
|
9 |
|
Current portion of long-term debt |
|
|
18 |
|
|
|
18 |
|
|
|
30 |
|
Current portion of operating lease liabilities |
|
|
62 |
|
|
|
64 |
|
|
|
63 |
|
Income taxes payable |
|
|
3 |
|
|
|
8 |
|
|
|
6 |
|
Accrued and other current liabilities |
|
|
402 |
|
|
|
430 |
|
|
|
372 |
|
Liabilities held for sale |
|
|
— |
|
|
|
— |
|
|
|
24 |
|
Total current liabilities |
|
|
845 |
|
|
|
916 |
|
|
|
997 |
|
Long-term debt |
|
|
3,822 |
|
|
|
4,004 |
|
|
|
4,207 |
|
Long-term operating lease liabilities |
|
|
220 |
|
|
|
205 |
|
|
|
219 |
|
Deferred income taxes |
|
|
255 |
|
|
|
278 |
|
|
|
257 |
|
Long-term employee benefit obligations |
|
|
59 |
|
|
|
59 |
|
|
|
196 |
|
Other noncurrent liabilities |
|
|
144 |
|
|
|
163 |
|
|
|
140 |
|
Total liabilities |
|
$ |
5,345 |
|
|
$ |
5,625 |
|
|
$ |
6,016 |
|
Total equity attributable to Pactiv Evergreen Inc. common
shareholders |
|
|
1,282 |
|
|
|
1,406 |
|
|
|
1,264 |
|
Non-controlling interests |
|
|
3 |
|
|
|
4 |
|
|
|
5 |
|
Total equity |
|
$ |
1,285 |
|
|
$ |
1,410 |
|
|
$ |
1,269 |
|
Total liabilities and equity |
|
$ |
6,630 |
|
|
$ |
7,035 |
|
|
$ |
7,285 |
|
Pactiv Evergreen Inc.Condensed
Consolidated Statements of Cash Flows(in
millions)(unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
2023 |
|
2023 |
|
2022 |
|
2022 |
|
2022 |
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(139 |
) |
|
$ |
(133 |
) |
|
$ |
27 |
|
|
$ |
176 |
|
|
$ |
74 |
|
Adjustments to reconcile net (loss) income to operating cash
flows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
259 |
|
|
|
174 |
|
|
|
84 |
|
|
|
85 |
|
|
|
86 |
|
Deferred income taxes |
|
|
(28 |
) |
|
|
(39 |
) |
|
|
(14 |
) |
|
|
50 |
|
|
|
27 |
|
Unrealized (gains) losses on derivatives |
|
|
(1 |
) |
|
|
2 |
|
|
|
— |
|
|
|
10 |
|
|
|
(1 |
) |
Restructuring related non-cash and asset impairment charges (net of
reversals) |
|
|
9 |
|
|
|
32 |
|
|
|
— |
|
|
|
56 |
|
|
|
— |
|
(Loss) gain on sale of businesses and noncurrent assets |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
(239 |
) |
|
|
— |
|
Non-cash portion of employee benefit obligations |
|
|
3 |
|
|
|
1 |
|
|
|
3 |
|
|
|
(44 |
) |
|
|
3 |
|
Non-cash portion of operating lease expense |
|
|
19 |
|
|
|
21 |
|
|
|
20 |
|
|
|
21 |
|
|
|
22 |
|
Other non-cash items, net |
|
|
10 |
|
|
|
6 |
|
|
|
8 |
|
|
|
11 |
|
|
|
16 |
|
Change in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
46 |
|
|
|
(53 |
) |
|
|
79 |
|
|
|
4 |
|
|
|
(43 |
) |
Inventories |
|
|
47 |
|
|
|
61 |
|
|
|
58 |
|
|
|
(35 |
) |
|
|
(154 |
) |
Accounts payable |
|
|
(38 |
) |
|
|
11 |
|
|
|
(45 |
) |
|
|
(66 |
) |
|
|
61 |
|
Operating lease payments |
|
|
(20 |
) |
|
|
(21 |
) |
|
|
(20 |
) |
|
|
(21 |
) |
|
|
(21 |
) |
Accrued and other current liabilities |
|
|
(28 |
) |
|
|
10 |
|
|
|
(21 |
) |
|
|
67 |
|
|
|
(1 |
) |
Other assets and liabilities |
|
|
(13 |
) |
|
|
16 |
|
|
|
(6 |
) |
|
|
— |
|
|
|
(23 |
) |
Net cash provided by operating activities |
|
|
127 |
|
|
|
88 |
|
|
|
173 |
|
|
|
75 |
|
|
|
46 |
|
Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment |
|
|
(53 |
) |
|
|
(63 |
) |
|
|
(89 |
) |
|
|
(55 |
) |
|
|
(64 |
) |
Disposal of businesses and joint venture equity interests, net of
cash disposed |
|
|
— |
|
|
|
1 |
|
|
|
(6 |
) |
|
|
317 |
|
|
|
— |
|
Other investing activities |
|
|
(1 |
) |
|
|
2 |
|
|
|
1 |
|
|
|
3 |
|
|
|
— |
|
Net cash (used in) provided by investing
activities |
|
|
(54 |
) |
|
|
(60 |
) |
|
|
(94 |
) |
|
|
265 |
|
|
|
(64 |
) |
Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt repayments |
|
|
(182 |
) |
|
|
(112 |
) |
|
|
(95 |
) |
|
|
(6 |
) |
|
|
(5 |
) |
Dividends paid to common shareholders |
|
|
(18 |
) |
|
|
(18 |
) |
|
|
(17 |
) |
|
|
(18 |
) |
|
|
(18 |
) |
Other financing activities |
|
|
(2 |
) |
|
|
(5 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
Net cash used in financing activities |
|
|
(202 |
) |
|
|
(135 |
) |
|
|
(114 |
) |
|
|
(26 |
) |
|
|
(26 |
) |
Effect
of exchange rate changes on cash and cash equivalents |
|
|
4 |
|
|
|
1 |
|
|
|
2 |
|
|
|
(3 |
) |
|
|
(3 |
) |
(Decrease) increase in cash and cash equivalents |
|
|
(125 |
) |
|
|
(106 |
) |
|
|
(33 |
) |
|
|
311 |
|
|
|
(47 |
) |
Cash and cash equivalents, including amounts classified as held for
sale, as of beginning of the period(1) |
|
|
427 |
|
|
|
533 |
|
|
|
566 |
|
|
|
255 |
|
|
|
302 |
|
Cash and cash equivalents as of end of the
period(1) |
|
$ |
302 |
|
|
$ |
427 |
|
|
$ |
533 |
|
|
$ |
566 |
|
|
$ |
255 |
|
(1) Includes $2 million, $7 million, $9 million and $19 million
of cash and cash equivalents classified as current assets held for
sale as of December 31, 2022, September 30, 2022, June 30, 2022 and
March 31, 2022, respectively.
Pactiv Evergreen Inc.Reconciliation of
Reportable Segment Net Revenues to Total Net
Revenues(in
millions)(unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
Reportable segment net revenues |
|
|
|
|
|
|
|
|
|
Foodservice |
|
$ |
656 |
|
|
$ |
614 |
|
|
$ |
749 |
|
Food and Beverage Merchandising |
|
|
805 |
|
|
|
850 |
|
|
|
906 |
|
Other |
|
|
— |
|
|
|
2 |
|
|
|
27 |
|
Intersegment revenues |
|
|
(35 |
) |
|
|
(35 |
) |
|
|
(42 |
) |
Total net revenues |
|
$ |
1,426 |
|
|
$ |
1,431 |
|
|
$ |
1,640 |
|
Pactiv Evergreen Inc.Reconciliation of
Reportable Segment Adjusted EBITDA to Adjusted
EBITDA(in
millions)(unaudited) |
|
|
|
For the Three Months Ended |
|
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
Reportable segment Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
Foodservice |
|
$ |
128 |
|
|
$ |
106 |
|
|
$ |
161 |
|
Food and Beverage Merchandising |
|
|
109 |
|
|
|
101 |
|
|
|
111 |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
Unallocated |
|
|
(20 |
) |
|
|
(18 |
) |
|
|
(25 |
) |
Adjusted EBITDA (Non-GAAP) |
|
$ |
217 |
|
|
$ |
189 |
|
|
$ |
249 |
|
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 |
|
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
|
Net loss to Adjusted EBITDA |
|
Diluted EPS to Adjusted EPS |
|
Net loss 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) |
|
$ |
(139 |
) |
|
$ |
(0.78 |
) |
|
$ |
(133 |
) |
|
$ |
(0.76 |
) |
|
$ |
74 |
|
|
$ |
0.40 |
|
Income
tax (benefit) expense |
|
|
(8 |
) |
|
|
|
|
|
(19 |
) |
|
|
|
|
|
45 |
|
|
|
|
Interest
expense, net |
|
|
64 |
|
|
|
|
|
|
63 |
|
|
|
|
|
|
50 |
|
|
|
|
Depreciation and amortization (excluding restructuring-related
charges) |
|
|
82 |
|
|
|
|
|
|
84 |
|
|
|
|
|
|
86 |
|
|
|
|
Beverage
Merchandising Restructuring charges(1) |
|
|
216 |
|
|
|
0.98 |
|
|
|
187 |
|
|
|
0.87 |
|
|
|
— |
|
|
|
— |
|
Other
restructuring and asset impairment charges (reversals) |
|
|
1 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Loss on
sale of businesses and noncurrent assets |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Non-cash
pension expense(2) |
|
|
3 |
|
|
|
0.01 |
|
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
0.01 |
|
Operational process engineering-related consultancy costs(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Business
integration costs(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
0.01 |
|
Unrealized (gains) losses on commodity derivatives |
|
|
(1 |
) |
|
|
— |
|
|
|
2 |
|
|
|
0.01 |
|
|
|
(1 |
) |
|
|
— |
|
Foreign
exchange (gains) losses on cash |
|
|
(2 |
) |
|
|
(0.01 |
) |
|
|
4 |
|
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
Executive transition charges(5) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
0.01 |
|
Losses
(gains) on legal settlements(6) |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
(15 |
) |
|
|
(0.06 |
) |
Costs
associated with legacy facility(7) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
0.01 |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
Adjusted EBITDA / Adjusted EPS(8)
(Non-GAAP Measure) |
|
$ |
217 |
|
|
$ |
0.20 |
|
|
$ |
189 |
|
|
$ |
0.13 |
|
|
$ |
249 |
|
|
$ |
0.38 |
|
(1) |
Reflects charges related to the Beverage Merchandising
Restructuring, including $177 million and $90 million of
accelerated depreciation expense for the three months ended June
30, 2023 and March 31, 2023, respectively. |
(2) |
Reflects the non-cash pension expense related to our employee
benefit plans. |
(3) |
Reflects the costs incurred to evaluate and improve the
efficiencies of our manufacturing and distribution operations. |
(4) |
Reflects integration costs related to Fabri-Kal. |
(5) |
Reflects charges relating to key executive retirement and
separation agreements. |
(6) |
Reflects losses (gains), net of costs, arising from the settlement
of certain historical legal actions. |
(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. For the three months ended June
30, 2023, March 31, 2023 and June 30, 2022, the tax effect of the
adjustments were income of $0.24 per diluted share, income of $0.20
per diluted share and a loss of $0.01 per diluted share,
respectively. |
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