- Delivers solid sequential and year-over-year financial results across all segments and raises 2022 Adjusted EBITDA guidance
- Strengthens financial position with receipt of Asia business sale proceeds and pension settlement
- Improves operational performance
Third Quarter 2022 Financial Highlights:
- Net Revenues of $1,609 million for the third quarter of 2022 were down 2% compared to $1,640 million in the second quarter of 2022 with 3% attributed to volume decline, partially offset by 2% growth due to price/mix. Net revenues were up 15% compared to $1,394 million in the third quarter of 2021 with attributions of 17% growth due to price/mix and 8% growth due to acquisitions, partially offset by 8% volume decline and 2% decline due to dispositions.
- Net Income from continuing operations was $175 million for the third quarter of 2022 compared to $74 million in the second quarter of 2022 and $2 million in the third quarter of 2021.
- Adjusted EBITDA1 of $187 million for the third quarter of 2022 decreased 25% compared to $249 million in the second quarter of 2022 and increased 57% compared to $119 million in the third quarter of 2021.
LAKE FOREST, Ill., Nov. 07, 2022 -- 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.”
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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.
Source: Pactiv Evergreen
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