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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

 

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: 001-39528

 

PACTIV EVERGREEN INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

98-1538656

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

 

1900 W. Field Court

Lake Forest, Illinois 60045

(Address of principal executive offices) (Zip Code)

Telephone: (847) 482-2000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock, $0.001 par value

 

PTVE

 

The Nasdaq Stock Market LLC

 

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. Yes No

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). Yes No

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.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

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 No

The registrant had 177,803,062 shares of common stock, $0.001 par value per share, outstanding as of November 2, 2022.

 

 


 

Table of Contents

 

 

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

Item 1.

 

Financial Statements (Unaudited)

 

3

 

 

Condensed Consolidated Statements of Income (Loss)

 

3

 

 

Condensed Consolidated Statements of Comprehensive Income

 

4

 

 

Condensed Consolidated Balance Sheets

 

5

 

 

Condensed Consolidated Statements of Equity

 

6

 

 

Condensed Consolidated Statements of Cash Flows

 

7

 

 

Notes to the Condensed Consolidated Financial Statements

 

9

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

27

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

38

Item 4.

 

Controls and Procedures

 

38

PART II.

 

OTHER INFORMATION

 

39

Item 1.

 

Legal Proceedings

 

39

Item 1A.

 

Risk Factors

 

39

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

39

Item 3.

 

Defaults Upon Senior Securities

 

39

Item 4.

 

Mine Safety Disclosures

 

39

Item 5.

 

Other Information

 

39

Item 6.

 

Exhibits

 

40

 

 

Signatures

 

41

 

 

 

 

 

 

 


 

FORWARD-LOOKING STATEMENTS

This report contains certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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 us, may include projections of our future financial performance, our anticipated growth strategies, anticipated trends in our business and anticipated growth in the markets served by our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our 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 those factors discussed under the caption entitled “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2021. You should specifically consider these numerous risks. These risks include, among others, those related to:

fluctuations, including increases, in raw material, energy and freight costs;
labor shortages and increased labor costs;
the current macroeconomic environment with high levels of inflation, high interest rates and global supply chain challenges;
our ability to meet demand for our products;
the uncertain economic, operational and financial impacts of the coronavirus pandemic;
failure to maintain satisfactory relationships with our major customers;
our dependence on suppliers of raw materials and any interruption to our supply of raw materials;
the impact of natural disasters, public health crises and catastrophic events outside of our control;
our ability to realize the benefits of our capital investment, acquisitions, restructuring and other cost savings programs;
our safety performance;
uncertain global economic conditions;
competition in the markets in which we operate;
changes in consumer lifestyle, eating habits, nutritional preferences and health-related, environmental and sustainability concerns;
the impact of our significant debt on our financial condition and ability to operate our business;
changes in market interest rates, or a phase-out or replacement of LIBOR as an interest rate benchmark;
compliance with, and liabilities related to, applicable laws and regulations;
the ownership of a majority of the voting power of our common stock by our parent company Packaging Finance Limited, which we refer to as PFL, an entity owned by Mr. Graeme Hart; and
our ability to establish independent financial, administrative and other support functions.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations.

2


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Pactiv Evergreen Inc.

Condensed Consolidated Statements of Income (Loss)

(In millions, except per share amounts)

(Unaudited)

 

 

 

For the Three Months Ended
September 30,

 

 

For the Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net revenues

 

$

1,609

 

 

$

1,394

 

 

$

4,744

 

 

$

3,910

 

Cost of sales

 

 

(1,377

)

 

 

(1,291

)

 

 

(3,972

)

 

 

(3,549

)

Gross profit

 

 

232

 

 

 

103

 

 

 

772

 

 

 

361

 

Selling, general and administrative expenses

 

 

(145

)

 

 

(104

)

 

 

(435

)

 

 

(345

)

Restructuring, asset impairment and other related charges

 

 

(57

)

 

 

 

 

 

(58

)

 

 

(8

)

Other income, net

 

 

239

 

 

 

7

 

 

 

279

 

 

 

18

 

Operating income from continuing operations

 

 

269

 

 

 

6

 

 

 

558

 

 

 

26

 

Non-operating income, net

 

 

44

 

 

 

40

 

 

 

52

 

 

 

88

 

Interest expense, net

 

 

(59

)

 

 

(57

)

 

 

(158

)

 

 

(141

)

Income (loss) from continuing operations before tax

 

 

254

 

 

 

(11

)

 

 

452

 

 

 

(27

)

Income tax (expense) benefit

 

 

(79

)

 

 

13

 

 

 

(160

)

 

 

26

 

Income (loss) from continuing operations

 

 

175

 

 

 

2

 

 

 

292

 

 

 

(1

)

Income (loss) from discontinued operations, net of income taxes

 

 

1

 

 

 

(2

)

 

 

1

 

 

 

(6

)

Net income (loss)

 

 

176

 

 

 

 

 

 

293

 

 

 

(7

)

Income attributable to non-controlling interests

 

 

 

 

 

 

 

 

(1

)

 

 

(1

)

Net income (loss) attributable to Pactiv Evergreen Inc. common shareholders

 

$

176

 

 

$

 

 

$

292

 

 

$

(8

)

Earnings (loss) per share attributable to Pactiv Evergreen Inc.
   common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.98

 

 

$

0.01

 

 

$

1.63

 

 

$

(0.01

)

Diluted

 

$

0.98

 

 

$

0.01

 

 

$

1.63

 

 

$

(0.01

)

From discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.01

 

 

$

(0.01

)

 

$

0.01

 

 

$

(0.03

)

Diluted

 

$

 

 

$

(0.01

)

 

$

 

 

$

(0.03

)

Total

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.99

 

 

$

 

 

$

1.64

 

 

$

(0.04

)

Diluted

 

$

0.98

 

 

$

 

 

$

1.63

 

 

$

(0.04

)

See accompanying notes to the condensed consolidated financial statements.

3


 

Pactiv Evergreen Inc.

Condensed Consolidated Statements of Comprehensive Income

(In millions)

(Unaudited)

 

 

 

For the Three Months Ended
September 30,

 

 

For the Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income (loss)

 

$

176

 

 

$

 

 

$

293

 

 

$

(7

)

Other comprehensive income (loss), net of income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation adjustments

 

 

(6

)

 

 

(7

)

 

 

(12

)

 

 

(20

)

Defined benefit plans

 

 

41

 

 

 

211

 

 

 

(62

)

 

 

211

 

Other comprehensive income (loss)

 

 

35

 

 

 

204

 

 

 

(74

)

 

 

191

 

Comprehensive income

 

 

211

 

 

 

204

 

 

 

219

 

 

 

184

 

Comprehensive income attributable to non-controlling interests

 

 

 

 

 

 

 

 

(1

)

 

 

(1

)

Comprehensive income attributable to Pactiv Evergreen Inc. common shareholders

 

$

211

 

 

$

204

 

 

$

218

 

 

$

183

 

 

See accompanying notes to the condensed consolidated financial statements.

4


 

Pactiv Evergreen Inc.

Condensed Consolidated Balance Sheets

(In millions, except share amounts)

(Unaudited)

 

 

 

As of September 30,
2022

 

 

As of December 31,
2021

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

559

 

 

$

197

 

Accounts receivable, net of allowances for doubtful accounts of $3 and $3

 

 

523

 

 

 

474

 

Related party receivables

 

 

46

 

 

 

48

 

Inventories

 

 

1,123

 

 

 

854

 

Other current assets

 

 

117

 

 

 

127

 

Assets held for sale

 

 

 

 

 

162

 

Total current assets

 

 

2,368

 

 

 

1,862

 

Property, plant and equipment, net

 

 

1,735

 

 

 

1,786

 

Operating lease right-of-use assets, net

 

 

275

 

 

 

278

 

Goodwill

 

 

1,815

 

 

 

1,812

 

Intangible assets, net

 

 

1,079

 

 

 

1,127

 

Deferred income taxes

 

 

6

 

 

 

7

 

Other noncurrent assets

 

 

147

 

 

 

149

 

Total assets

 

$

7,425

 

 

$

7,021

 

Liabilities

 

 

 

 

 

 

Accounts payable

 

$

411

 

 

$

364

 

Related party payables

 

 

10

 

 

 

10

 

Current portion of long-term debt

 

 

31

 

 

 

30

 

Current portion of operating lease liabilities

 

 

64

 

 

 

61

 

Income taxes payable

 

 

5

 

 

 

8

 

Accrued and other current liabilities

 

 

437

 

 

 

315

 

Liabilities held for sale

 

 

24

 

 

 

31

 

Total current liabilities

 

 

982

 

 

 

819

 

Long-term debt

 

 

4,202

 

 

 

4,220

 

Long-term operating lease liabilities

 

 

222

 

 

 

229

 

Deferred income taxes

 

 

318

 

 

 

246

 

Long-term employee benefit obligations

 

 

97

 

 

 

79

 

Other noncurrent liabilities

 

 

137

 

 

 

140

 

Total liabilities

 

$

5,958

 

 

$

5,733

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Common stock, $0.001 par value; 2,000,000,000 shares authorized; 177,800,391 and 177,250,974 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

$

 

 

$

 

Preferred stock, $0.001 par value; 200,000,000 shares authorized; no shares
issued or outstanding

 

 

 

 

 

 

Additional paid in capital

 

 

639

 

 

 

625

 

Accumulated other comprehensive loss

 

 

(173

)

 

 

(99

)

Retained earnings

 

 

996

 

 

 

758

 

Total equity attributable to Pactiv Evergreen Inc. common shareholders

 

 

1,462

 

 

 

1,284

 

Non-controlling interests

 

 

5

 

 

 

4

 

Total equity

 

 

1,467

 

 

 

1,288

 

Total liabilities and equity

 

$

7,425

 

 

$

7,021

 

See accompanying notes to the condensed consolidated financial statements.

5


 

Pactiv Evergreen Inc.

Condensed Consolidated Statements of Equity

(In millions, except per share amounts)

(Unaudited)

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid In
Capital

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Retained
Earnings

 

 

Non-
Controlling
Interests

 

 

Total
Equity

 

For the Three Months Ended
September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2021

 

 

177.2

 

 

$

 

 

$

620

 

 

$

(362

)

 

$

763

 

 

$

4

 

 

$

1,025

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, net of income taxes

 

 

 

 

 

 

 

 

 

 

 

204

 

 

 

 

 

 

 

 

 

204

 

Equity based compensation

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Vesting of restricted stock units, net of tax withholdings

 

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared - common shareholders ($0.10 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Balance as of September 30, 2021

 

 

177.3

 

 

$

 

 

$

623

 

 

$

(158

)

 

$

745

 

 

$

4

 

 

$

1,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2022

 

 

177.7

 

 

$

 

 

$

634