UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification Number) |
(Address of principal executive offices) (Zip Code)
Telephone: (
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes
The registrant had
Table of Contents
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PART I. |
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Item 1. |
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2 |
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2 |
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3 |
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4 |
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5 |
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6 |
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8 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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26 |
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Item 3. |
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32 |
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Item 4. |
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33 |
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PART II. |
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34 |
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Item 1. |
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34 |
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Item 1A. |
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34 |
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Item 2. |
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34 |
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Item 3. |
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34 |
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Item 4. |
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34 |
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Item 5. |
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34 |
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Item 6. |
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35 |
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36 |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Pactiv Evergreen Inc.
Condensed Consolidated Statements of (Loss) Income
(In millions, except per share amounts)
(Unaudited)
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For the Three Months Ended March 31, |
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2021 |
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2020 |
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Net revenues |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Restructuring, asset impairment and other related charges |
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Other income, net |
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Operating (loss) income from continuing operations |
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Non-operating income, net |
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Interest expense, net |
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(Loss) income from continuing operations before tax |
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Income tax benefit |
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(Loss) income from continuing operations |
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(Loss) income from discontinued operations, net of income taxes |
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Net (loss) income |
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Income attributable to non-controlling interests |
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— |
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Net (loss) income attributable to Pactiv Evergreen Inc. common shareholders |
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$ |
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$ |
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(Loss) earnings per share attributable to Pactiv Evergreen Inc. common shareholders |
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From continuing operations |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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From discontinued operations |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Total |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
2
Pactiv Evergreen Inc.
Condensed Consolidated Statements of Comprehensive Loss
(In millions)
(Unaudited)
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For the Three Months Ended March 31, |
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2021 |
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2020 |
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Net (loss) income |
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$ |
( |
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$ |
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Other comprehensive loss, net of income taxes: |
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Currency translation adjustments |
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Other comprehensive loss |
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Comprehensive loss |
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Comprehensive income attributable to non-controlling interests |
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— |
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Comprehensive loss attributable to Pactiv Evergreen Inc. common shareholders |
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$ |
( |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
3
Pactiv Evergreen Inc.
Condensed Consolidated Balance Sheets
(In millions, except share amounts)
(Unaudited)
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As of March 31, 2021 |
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As of December 31, 2020 |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowances for doubtful accounts of $ |
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Related party receivables |
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Inventories |
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Other current assets |
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Assets held for sale |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets, net |
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Goodwill |
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Intangible assets, net |
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Deferred income taxes |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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Liabilities |
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Accounts payable |
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$ |
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$ |
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Related party payables |
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Current portion of long-term debt |
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Current portion of operating lease liabilities |
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Income taxes payable |
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Accrued and other current liabilities |
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Liabilities held for sale |
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Total current liabilities |
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Long-term debt |
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Long-term operating lease liabilities |
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Deferred income taxes |
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Long-term employee benefit obligations |
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Other noncurrent liabilities |
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Total liabilities |
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$ |
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$ |
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Commitments and contingencies (Note 13) |
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Equity |
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Common stock, $ |
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$ |
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$ |
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Preferred stock, $ issued or outstanding |
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Additional paid in capital |
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Accumulated other comprehensive loss |
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( |
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Retained earnings |
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Total equity attributable to Pactiv Evergreen Inc. common shareholders |
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Non-controlling interests |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
4
Pactiv Evergreen Inc.
Condensed Consolidated Statements of Equity
(In millions, except per share amounts)
(Unaudited)
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Common Stock |
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Shares |
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Amount |
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Additional Paid In Capital |
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Accumulated Other Comprehensive Loss |
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Retained Earnings |
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Non- controlling Interests |
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Total Equity |
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For the Three Months Ended March 31, 2020 |
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Balance as of December 31, 2019 |
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$ |
— |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of income taxes |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Distribution of Reynolds Consumer Products Inc.(1) |
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— |
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— |
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( |
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( |
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— |
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( |
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Dividends paid to non-controlling interests |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance as of March 31, 2020 |
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$ |
— |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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For the Three Months Ended March 31, 2021 |
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Balance as of December 31, 2020 |
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$ |
— |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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Net (loss) income |
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— |
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— |
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— |
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— |
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( |
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( |
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Other comprehensive loss, net of income taxes |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Dividends paid to common shareholders ($ |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Equity based compensation |
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— |
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— |
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— |
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— |
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— |
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Balance as of March 31, 2021 |
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$ |
— |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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(1) |
Refer to Note 1, Nature of Operations and Basis of Presentation, and Note 2, Discontinued Operations, for additional details. |
See accompanying notes to the condensed consolidated financial statements.
5
Pactiv Evergreen Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
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For the Three Months Ended March 31, |
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2021 |
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2020 |
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Cash provided by (used in) operating activities |
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Net (loss) income |
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$ |
( |
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$ |
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Adjustments to reconcile net (loss) income to operating cash flows: |
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Depreciation and amortization |
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Deferred income taxes |
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( |
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( |
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Unrealized loss on derivatives |
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Other asset impairment charges |
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( |
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Non-cash portion of employee benefit obligations |
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( |
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( |
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Non-cash portion of operating lease expense |
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Amortization of OID and DIC |
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Loss on extinguishment of debt |
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Other non-cash items, net |
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( |
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Change in assets and liabilities: |
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Accounts receivable, net |
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( |
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( |
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Inventories |
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( |
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( |
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Other current assets |
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( |
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( |
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Accounts payable |
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Operating lease payments |
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( |
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( |
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Income taxes payable/receivable |
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( |
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Accrued and other current liabilities |
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( |
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Employee benefit obligation contributions |
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— |
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( |
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Other assets and liabilities |
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( |
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Net cash provided by (used in) operating activities |
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( |
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Cash used in investing activities |
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Acquisition of property, plant and equipment and intangible assets |
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( |
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( |
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Disposal of businesses, net of cash disposed |
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( |
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— |
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Net cash used in investing activities |
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( |
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( |
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Cash (used in) provided by financing activities |
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Long-term debt proceeds |
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— |
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Long-term debt repayments |
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( |
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( |
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Deferred financing transaction costs on long-term debt |
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— |
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( |
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Premium on redemption of long-term debt |
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( |
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— |
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Dividends paid to common shareholders |
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( |
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— |
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Cash held by Reynolds Consumer Products at the time of distribution |
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— |
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( |
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Other financing activities |
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— |
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( |
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Net cash (used in) provided by financing activities |
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( |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash |
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( |
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( |
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(Decrease) increase in cash, cash equivalents and restricted cash |
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( |
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Cash, cash equivalents and restricted cash as of beginning of the period |
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Cash, cash equivalents and restricted cash as of end of the period |
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$ |
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$ |
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Cash, cash equivalents and restricted cash are comprised of: |
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Cash and cash equivalents |
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$ |
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$ |
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Cash and cash equivalents classified as assets held for sale or distribution |
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— |
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Restricted cash included within other current assets |
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— |
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Cash, cash equivalents and restricted cash as of end of the period |
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$ |
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$ |
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Cash paid (received): |
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Interest |
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$ |
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$ |
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Income taxes (refunded) paid |
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( |
) |
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See accompanying notes to the condensed consolidated financial statements.
6
Significant non-cash investing and financing activities
During the three months ended March 31, 2020, we repurchased and canceled
During the three months ended March 31, 2021 and 2020, we recognized operating lease right-of-use assets and lease liabilities of $
See accompanying notes to the condensed consolidated financial statements.
7
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Note 1. Nature of Operations and Basis of Presentation
The accompanying condensed consolidated financial statements comprise the accounts of Pactiv Evergreen Inc. (“PTVE”) and its subsidiaries (“we”, “us”, “our” or the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods and should be read in conjunction with the consolidated financial statements and the related notes thereto included in our latest Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 25, 2021. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021. All significant intercompany transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Although our current estimates contemplate current conditions and how we expect them to change in the future, as appropriate, it is reasonably possible that actual conditions could differ from what was anticipated in those estimates, which could materially affect our results of operations and balance sheet. Among other effects, such changes could result in future impairments of goodwill, intangibles and long-lived assets, and adjustments to reserves for employee benefits and income taxes. The estimated recoverable amounts associated with asset impairments recognized in all periods presented represents a Level 3 measurement in the fair value hierarchy, which includes inputs that are not based on observable market data.
The worldwide COVID-19 pandemic has had, and will continue to have, a significant impact on our results of operations, and it may also have additional far-reaching impacts on many aspects of our operations including the impact on customer behaviors, business and manufacturing operations, our employees and the market in general. The extent to which the COVID-19 pandemic impacts our business, financial condition, results of operations, cash flows and liquidity may differ from management’s current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, actions taken to contain the virus and how quickly and to what extent normal economic and operating conditions can resume.
On February 4, 2020, we distributed our interest in the operations that represented our former Reynolds Consumer Products ("RCP") business to our shareholder, PFL. The distribution was effected in a tax-free manner. The distribution occurred prior to and in preparation for the IPO of shares of common stock of RCPI ("RCPI IPO"), which was completed on February 4, 2020. To effect the distribution of RCP, we bought back
On September 16, 2020, we distributed our interest in the operations that represented our former Graham Packaging Company ("GPC") business to our shareholder, PFL. The distribution was effected in a tax-free manner. The distribution occurred prior to and in preparation for our initial public offering (“IPO”), which was completed on September 21, 2020. To effect the distribution of GPC, we bought back
Unless otherwise indicated, information in these notes to the condensed consolidated financial statements relates to our continuing operations. Certain of our operations have been presented as discontinued. We present businesses that represent components as discontinued operations when the components either meet the criteria as held for sale, or are sold or distributed, and their expected or actual disposal represents a strategic shift that has, or will have, a major effect on our operations and financial results. As discussed in Note 2, Discontinued Operations, the assets, liabilities, results of operations and supplemental cash flow information of all of our former RCP segment, distributed in February 2020, and all of our former GPC segment, distributed in September 2020, are presented as discontinued operations for all periods presented. Sales from our continuing operations to our discontinued operations previously eliminated in consolidation have been recast as external revenues and are included in net revenues within operating income from continuing operations. Refer to Note 16, Related Party Transactions, for additional details.
8
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Recently Adopted Accounting Guidance
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) Disclosure - Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. This ASU requires sponsors of defined benefit pension or other post-retirement plans to provide additional disclosures, including a narrative description of reasons for any significant gains or losses impacting the benefit obligation for the period. It also eliminates certain previous disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2020 and must be applied on a retrospective basis to all years presented. The requirements of this guidance have an impact on our annual disclosures but have no impact on the measurement and recognition of amounts in our condensed consolidated financial statements.
Accounting Guidance Issued but Not Yet Adopted as of March 31, 2021
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This ASU provides temporary optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. This ASU is effective upon issuance and generally can be applied through the end of calendar year 2022. We are currently evaluating the impact and whether we plan to adopt the optional expedients and exceptions provided under this new standard.
We reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our condensed consolidated financial statements.
Note 2. Discontinued Operations
Our discontinued operations for the three months ended March 31, 2020 was primarily comprised of our former RCP and GPC businesses.
Income from discontinued operations, which includes the results of GPC through September 16, 2020 and the results of RCP through February 4, 2020, were as follows:
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For the Three Months Ended March 31, 2020 |
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Net revenues |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Restructuring, asset impairment and other related charges |
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Interest expense, net(1) |
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Other expense, net |
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— |
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Income before income taxes from discontinued operations |
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Income tax expense |
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