• Pactiv Evergreen Reports Fourth Quarter 2020 Financial Results

    ソース: Nasdaq GlobeNewswire / 24 2 2021 16:01:00   America/New_York

    LAKE FOREST, Ill., Feb. 24, 2021 (GLOBE NEWSWIRE) -- Pactiv Evergreen Inc. (“Pactiv Evergreen” or the “Company”), today reported results for the fourth quarter 2020 ended December 31, 2020.

    John McGrath, Chief Executive Officer of Pactiv Evergreen, “I am pleased that our fourth quarter 2020 operating performance ended near the prior year and where we were expecting despite ongoing headwinds from the impacts of COVID-19.”

    McGrath continued, “With the introduction and distribution of COVID-19 vaccines in the U.S. and other of our key markets, we believe that an economic recovery is on the horizon and that we are the packaging company best positioned to benefit from such a recovery. For this reason, we continue to focus on executing our strategic initiatives while working closely with our customers to prepare for a significant increase in consumer demand during the expected economic recovery. I am very proud of and thankful for our team members for all of the work they are doing to support our customers during these unprecedented times.”

    Fourth Quarter 2020 Financial Highlights:

    • Net Revenues of $1,175 million for the fourth quarter of 2020 compared to $1,303 million in the prior year period
    • Net Income from continuing operations of $18 million for the fourth quarter of 2020 compared to a net loss of $140 million in the prior year period. Net income (loss) from continuing operations included certain significant and/or unusual items that are not necessarily representative of underlying operational performance as discussed in more detail below
    • Adjusted EBITDA¹ from continuing operations of $170 million for the fourth quarter of 2020 compared to $173 million in the prior year period

    Fourth Quarter 2020 Results

    Net revenues in the fourth quarter of 2020 were $1,175 million compared to $1,303 million in the prior year period. The decrease in net revenues was primarily driven by lower volume largely due to the unfavorable impact from the COVID-19 pandemic, as well as lower pricing mainly due to lower raw material costs passed through to customers.

    Net Income from continuing operations was $18 million in the fourth quarter of 2020 compared to a net loss of $140 million in the fourth quarter of 2019. The change was primarily driven by higher significant and/or unusual items including an $85 million change in income taxes primarily attributable to changes in the Company’s valuation allowance associated with deferred interest deductions in the prior year period, lower interest expense of $25 million driven by lower average debt outstanding in the current year quarter, $24 million of favorable non-cash pension income, lower foreign exchange losses on cash of $24 million, favorable change of $9 million related to unrealized gains on our commodity derivatives and lower operational process engineering-related consultancy spend of $8 million, partially offset by higher restructuring and impairment charges of $9 million. Additionally, underlying operational performance was impacted by lower volume primarily driven by the impact of COVID-19, lower pricing and higher manufacturing costs, partially offset by favorable raw material costs, net of lower costs passed through to customers and lower corporate costs.

    Adjusted EBITDA¹ was $170 million in the fourth quarter of 2020 compared to $173 million in the fourth quarter of 2019. The slight decline was primarily due to lower volume driven by the COVID-19 pandemic, lower pricing and higher manufacturing costs, partially offset by favorable raw material costs, net of lower costs passed through to customers and lower corporate costs.

    Key Segment Results (compared to the fourth quarter of 2019)

    Foodservice

    • Net revenues decreased $70 million, or 13%
    • Adjusted EBITDA decreased $3 million, or 4%

    The decrease in net revenues was primarily driven by lower sales volume due to market contraction from the impact of the COVID-19 pandemic, as well as lower pricing primarily due to lower raw material costs passed through to customers.

    The decrease in Adjusted EBITDA was primarily driven by lower sales volume due to the impact of the COVID-19 pandemic and higher manufacturing costs, partially offset by lower raw material costs.

    Food Merchandising

    • Net revenues decreased $1 million
    • Adjusted EBITDA increased $4 million, or 6%

    The decrease in net revenues was primarily driven by higher volume, partially offset by an unfavorable product mix and lower costs passed through to customers.

    The increase in Adjusted EBITDA was primarily driven by favorable material costs, net of lower costs passed through to customers, partially offset by an unfavorable product mix.

    Beverage Merchandising

    • Net revenues decreased $55 million, or 13%
    • Adjusted EBITDA decreased $18 million, or 33%

    The decrease in net revenues was primarily due to lower sales volume and lower pricing due to the impact of the COVID-19 pandemic.

    The decrease in Adjusted EBITDA was primarily driven by lower pricing and lower sales volume due to the impact of the COVID-19 pandemic, as well as increased manufacturing costs. These items were partially offset by lower raw material costs, as wood supply markets have returned to historical normalized levels from prior year weather-related increases.

    Financial Results for the Year Ended December 31, 2020

    • Net Revenues of $4,689 million for the year ended December 31, 2020 compared to $5,191 million in the prior year period
    • Net Loss from continuing operations of $10 million for the year ended December 31, 2020 compared to a net loss of $240 million in the prior year period. Net loss from continuing operations included certain significant and/or unusual items that are not necessarily representative of underlying operational performance as discussed in more detail below
    • Adjusted EBITDA¹ of $615 million for the year ended December 31, 2020 compared to $691 million in the prior year period

    Net revenues for the year ended December 31, 2020 were $4,689 million compared to $5,191 million in the prior year period. The decrease was primarily due to lower sales volume across Foodservice and Beverage Merchandising, largely due to the unfavorable impact from the COVID-19 pandemic, as well as lower pricing, mainly due to lower raw material costs passed through to customers and an unfavorable impact from foreign currency.

    Net loss from continuing operations favorably changed by $230 million to $10 million for the year ended December 31, 2020 compared to a net loss of $240 million in the prior year period. The change was primarily driven by higher significant and/or unusual items including a $196 million change in income taxes driven by a favorable impact from the CARES Act and a favorable change in the Company’s valuation allowance, $77 million of favorable non-cash pension income, lower interest expense of $62 million driven by lower average debt outstanding in the current year partially offset by higher debt extinguishment costs, lower restructuring and impairment charges of $28 million, and lower operational process engineering-related consultancy spend of $14 million, partially offset by higher strategic review and transaction-related costs of $40 million, higher related party management fees of $39 million and higher foreign exchange losses on cash of $7 million. Additionally, underlying operational performance was impacted by lower sales volume due to the impact of the COVID-19 pandemic, higher manufacturing costs and lower pricing, partially offset by favorable material costs, net of lower costs passed through to customers and lower corporate costs.

    Adjusted EBITDA¹ was $615 million for the year ended December 31, 2020 compared to $691 million in the prior year period. The decrease was primarily due to lower sales volume due to the impact of the COVID-19 pandemic, higher manufacturing costs and lower pricing. These items were partially offset by favorable material costs, net of lower costs passed through to customers and lower corporate costs.

    Balance Sheet and Cash Flow Highlights

    • Cash and cash equivalents was $458 million as of December 31, 2020
    • Total outstanding debt was $4,004 million at December 31, 2020
    • For the year to date year ended December 31, 2020, capital expenditures related to the Company’s Strategic Investment Program (“SIP”) totaled $110 million
    • In October 2020, the Company contributed $121 million to its largest pension plan, the Pactiv Evergreen Pension Plan (“PEPP”). The net pension liability of the PEPP decreased from $654 million as of December 31, 2019 to $439 million as of December 31, 2020
    • The Company declared a quarterly dividend of $0.10 per share of common stock on February 4, 2021, which was paid on February 24, 2021 to stockholders of record at the close of business on February 14, 2021
    • The Company repaid the remaining $59 million of aggregate principal of its 5.125% notes on February 16, 2021

    Outlook

    The Company expects ongoing impacts from the COVID-19 pandemic including continued softened demand in its Foodservice and Beverage Merchandising segments, as well as continued elevated operating costs to maintain and improve service to customers. Winter Storm Uri damaged buildings and equipment in, interfered with the operations of, and sharply increased the energy costs for, Pactiv Evergreen’s facilities in the Southern half of the U.S. Pactiv Evergreen had to suspend its operations in eight of its facilities in Arkansas and Texas last week. While Pactiv Evergreen is beginning to recover from the winter storm, the financial impact of this event is still being assessed. Additionally the timing of the Pine Bluff mill outage and the aforementioned inclement weather conditions being experienced in Texas and Arkansas will most likely result in significant added costs during the first quarter of 2021.

    The Company expects a strong second half of 2021 as the vaccine roll-out is forecasted to reach critical mass leading to revenue recovery in the Foodservice and Beverage Merchandising segments, commodity cost increases recovered through price and hedge coverage, benefits from the SIP and other strategic initiatives and steady mill operational improvements.

    Conference Call and Webcast Presentation

    The Company will host a conference call and webcast presentation to discuss these results on February 25, 2021 at 8:00 a.m. U.S. Eastern Time. Investors interested in participating in the live call may dial 877-407-0789 from the U.S. and 201-689-8562 internationally, and enter confirmation code 13716230. Participants may also access the live webcast and supplemental presentation on the Pactiv Evergreen Investor Relations website at https://www.pactivevergreen.com under “Events.”

    About Pactiv Evergreen Inc. (NASDAQ: PTVE)

    Pactiv Evergreen Inc. is a manufacturer and distributor of fresh foodservice and food merchandising products and fresh beverage cartons in North America and certain international markets. It supplies its products to a broad and diversified mix of companies, including full service and quick service restaurants, foodservice distributors, supermarkets, grocery and healthy eating retailers, other food stores, food and beverage producers, food packers and food processors.

    Note to Investors Regarding Forward Looking Statements

    This press release contains statements reflecting our views about the Company’s future performance that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including the Company’s fiscal year 2021 guidance. 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” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about the Company, may include projections of the Company’s future financial performance, its anticipated growth strategies and anticipated trends in its business. These statements are only predictions based on the Company’s current expectations and projections about future events. There are important factors that could cause the Company’s actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the risk factors set forth in the Company’s most recent filing, its final prospectus, filed with the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4).

    For additional information on these and other factors that could cause the Company’s actual results to materially differ from those set forth herein, please see the Company’s filings with the Securities and Exchange Commission, including its final prospectus filed with the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4). Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

    Contact

    Investors
    ICR
    Ashley DeSimone
    Ashley.DeSimone@icrinc.com
    646.677.1827


    Pactiv Evergreen Inc.
    Consolidated Statements of Income (Loss)
    (in millions, except per share amounts)

      For the Three Months
    Ended December 31,    		 For the Year Ended
    December 31,
      2020 2019 2020 2019
    Net revenues $1,175  $1,303  $4,689  $5,191 
    Cost of sales (987) (1,095) (3,969) (4,344)
    Gross profit 188  208  720  847 
    Selling, general and administrative expenses (112) (125) (470) (466)
    Goodwill impairment charges —  —  (6) (16)
    Restructuring, asset impairment and other related charges (10) (1) (28) (46)
    Other income (expense), net 15  (22) (33) (29)
    Operating income from continuing operations 81  60  183  290 
    Non-operating income (expense), net 16  (11) 66  (13)
    Interest expense, net (96) (121) (371) (433)
    Income (loss) from continuing operations before tax 1  (72) (122) (156)
    Income tax benefit (expense) 17  (68) 112  (84)
    Net income (loss) from continuing operations 18  (140) (10) (240)
    Income (loss) from discontinued operations, net of income taxes 219  60  (15) 330 
    Net income (loss) 237  (80) (25) 90 
    Net (income) loss attributable to non-controlling interests (1) 2  (2) 1 
    Net income (loss) attributable to Pactiv Evergreen Inc. common stockholders $236  $(78) $(27) $91 
             
    Earnings (loss) per share attributable to Pactiv Evergreen Inc. common stockholders        
    From continuing operations – basic & diluted $0.10  $(1.03) $(0.08) $(1.78)
    From discontinued operations – basic & diluted  1.23   0.45   (0.10)  2.46 
    Total – basic & diluted $1.33  $(0.58) $(0.18) $0.68 
                     
    Weighted-average shares outstanding – basic  176.8   134.4   146.2   134.4 
    Weighted-average shares outstanding – diluted  176.9   134.4   146.2   134.4 


    Pactiv Evergreen Inc.
    Consolidated Balance Sheets
    (in millions)

      As of December 31,
    2020     		 As of December 31,
    2019
    Assets    
    Cash and cash equivalents $458  $1,155 
    Accounts receivable, net 375  445 
    Related party receivables 55  — 
    Inventories 784  753 
    Other current assets 175  119 
    Assets held for sale or distribution 26  1,232 
    Total current assets 1,873  3,704 
    Property, plant and equipment, net 1,685  1,703 
    Operating lease right-of-use assets, net 260  191 
    Goodwill 1,760  1,766 
    Intangible assets, net 1,092  1,147 
    Deferred income taxes 7  21 
    Related party receivables —  339 
    Other noncurrent assets 166  161 
    Noncurrent assets held for sale or distribution —  7,143 
    Total assets $6,843  $16,175 
         
    Liabilities    
    Accounts payable $313  $316 
    Related party payables 10  30 
    Current portion of long-term debt 15  3,587 
    Current portion of operating lease liabilities 57  47 
    Income taxes payable 10  14 
    Accrued and other current liabilities 322  418 
    Liabilities held for sale or distribution 12  485 
    Total current liabilities 739  4,897 
    Long-term debt 3,965  7,043 
    Long-term operating lease liabilities 217  157 
    Deferred income taxes 193  150 
    Long-term employee benefit obligations 519  730 
    Other noncurrent liabilities 136  124 
    Noncurrent liabilities held for sale or distribution —  992 
    Total liabilities $5,769  $14,093 
    Total equity attributable to Pactiv Evergreen Inc. common stockholders 1,071  2,079 
    Non-controlling interests 3  3 
    Total equity $1,074  $2,082 
    Total liabilities and equity $6,843  $16,175 


    Pactiv Evergreen Inc.
    Consolidated Statements of Cash Flows
    (in millions)

      For the Year Ended December 31,
      2020
    		 2019
    Cash provided by (used in) operating activities    
    Net (loss) income $(25
    		) $90 
    Adjustments to reconcile net (loss) income to operating cash flows:    
    Depreciation and amortization 467  643 
    Deferred income taxes 18  98 
    Unrealized gains (losses) on derivatives (10) (13)
    Goodwill impairment charges 6  25 
    Other asset impairment charges 18  106 
    (Gain) loss on disposal of businesses and other assets (10) 42 
    Non-cash portion of employee benefit obligations (59) 27 
    Non-cash portion of operating lease expense 96  108 
    Amortization of OID and DIC 17
    		  20 
    Loss on extinguishment of debt 68  1 
    Other non-cash items, net 21  (3)
    Change in assets and liabilities:    
    Accounts receivable, net 33  19 
    Inventories (64) 19 
    Other current assets (2) 29 
    Accounts payable 32  (118)
    Operating lease payments (93) (106)
    Income taxes payable (58) (53)
    Accrued and other current liabilities (80) (37)
    Other assets and liabilities 6  4 
    Employee benefit obligations (128) (5)
    Net cash provided by operating activities 253  896 
    Cash provided by (used in) investing activities    
    Acquisition of property, plant and equipment and intangible assets (410) (629)
    Proceeds from sale of property, plant and equipment 48  23 
    Disposal of businesses, net of cash disposed 8  597 
    Proceeds from related party loan repayment —  5 
    Net cash used in investing activities (354
    		) (4)
    Cash provided by (used in) financing activities    
    Long-term debt proceeds 7,861  — 
    Long-term debt repayments (8,944) (381)
    Financing transaction costs on long-term debt (49) — 
    Premium on redemption of long-term debt 569  — 
    Net proceeds from issue of share capital (34) — 
    Cash held by RPC & GPC at the time of distribution (110) — 
    Other financing activities (4) (3)
    Net cash used in financing activities (711
    		) (384)
    Effect of exchange rate changes on cash, cash equivalents and restricted cash (14) — 
    (Decrease) increase in cash, cash equivalents and restricted cash (826
    		) 508 
    Cash, cash equivalents and restricted cash as of beginning of the period1 1,294  786 
    Cash, cash equivalents and restricted cash as of end of the period1 $468  $1,294 

    1 – includes $10 million, $139 million and $127 million of cash and cash equivalents and restricted cash classified as current assets held for sale or distribution as of December 31, 2020, December 31, 2019, and December 31, 2018, respectively.


    Pactiv Evergreen Inc.
    Segment Results
    (in millions)

      Foodservice Food
    Merchandising    		 Beverage
    Merchandising
    Reportable segment net revenues            
    Three months ended December 31, 2020 $460  $350  $363 
    Three months ended December 31, 2019  530   351   418 
    Adjusted EBITDA          
    Three months ended December 31, 2020 $71  $66  $36 
    Three months ended December 31, 2019  74   62   54 


      Foodservice Food
    Merchandising    		 Beverage
    Merchandising
    Reportable segment net revenues      
    Year ended December 31, 2020 $1,811  $1,396  $1,469 
    Year ended December 31, 2019  2,160   1,388   1,606 
    Adjusted EBITDA      
    Year ended December 31, 2020 $241  $252  $148 
    Year ended December 31, 2019  336   223   196 


    Use of Non-GAAP Financial Measures

    The Company uses the non-GAAP financial measure “Adjusted EBITDA” in evaluating its past results and future prospects. 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 of a significant or unusual nature, including but not limited to foreign exchange gains or losses on cash, goodwill impairment charges, related party management fees, unrealized gains or losses on derivatives, gains or losses on the sale of businesses and non-current assets, restructuring, asset impairment and other related charges, operational process engineering-related consultancy costs, non-cash pension income or expense and strategic review and transaction-related costs.

    The Company presents Adjusted EBITDA because it is a key measure used by its management team to evaluate its operating performance, generate future operating plans and make strategic decisions. In addition, the Company’s chief operating decision maker uses Adjusted EBITDA of each reportable segment to evaluate the operating performance of such segments. Accordingly, the Company believes presenting this metric provides useful information to investors and others in understanding and evaluating its operating results in the same manner as the management team and board of directors.

    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, the Company’s non-GAAP financial measure may not be the same as or comparable to similar non-GAAP financial measures presented by other companies.

    Please see the reconciliation of the Company’s Non-GAAP measure used in this release to the most directly comparable GAAP measure, beginning on the following page.


    Pactiv Evergreen Inc.
    Reconciliation of Net Income (Loss) from Continuing Operations to Adjusted EBITDA from Continuing Operations
    (in millions)

      For the Three Months
    Ended December 31,    		 For the Year Ended
    December 31,
      2020 2019 2020 2019
             
       
    Net income (loss) from continuing operations (GAAP) $18  $(140) $(10) $(240)
    Income tax (benefit) expense (17) 68  (112) 84 
    Interest expense, net 96  121  371  433 
    Depreciation and amortization 76  75  289  273 
    Goodwill impairment charges(1) —  —  6  16 
    Restructuring, asset impairment and other related charges(2) 10  1  28  46 
    (Gain) loss on sale of businesses and noncurrent assets(3) (2) (2) (1) 22 
    Non-cash pension (income) expense(4) (16) 8  (71) 6 
    Operational process engineering-related consultancy costs(5) 1  9  13  27 
    Related party management fee(6) —  2  49  10 
    Strategic review and transaction-related costs(7) 8  5  47  7 
    Foreign exchange losses on cash(8) 1  25  15  8 
    Unrealized (gains) losses on derivatives(9) (7) 2  (10) (4)
    Other 2  (1) 1  3 
    Adjusted EBITDA from continuing operations (Non-GAAP) $170  $173  $615  $691 

    (1) Reflects goodwill impairment charges in respect of the Company’s remaining closures operations.
    (2) Reflects asset impairment, restructuring and other related charges primarily associated with the remaining closures businesses that are not reported within discontinued operations as well as corporate restructuring actions following our IPO.
    (3) Reflects the (gain) loss from the sale of businesses and noncurrent assets, primarily in our Other segment during 2019.
    (4) Reflects the non-cash pension (income) expense related to the PEPP.
    (5) Reflects the costs incurred to evaluate and improve the efficiencies of the Company’s manufacturing and distribution operations.
    (6) Reflects the related party management fee charged by the Rank Group Limited to us and the fee to terminate this arrangement upon our IPO. Following the Company’s IPO, they are no longer charged the related party management fee.
    (7) Reflects costs incurred for strategic reviews of the Company’s businesses, as well as costs related to the Company’s IPO that cannot be offset against the proceeds of the IPO.
    (8) Reflects foreign exchange losses on cash, primarily on U.S. dollar amounts held in non-U.S. dollar functional currency entities.
    (9) Reflects the mark-to-market movements in the Company’s commodity derivatives.

    __________________________________

     

    ¹ Adjusted EBITDA is a non-GAAP measure. Refer to the discussion on non-GAAP financial measures and reconciliation included in this press release.


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