SEC Filing | Pactiv Evergreen Inc.

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10-Q

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 March 31, 2023


☐	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 178,277,047 shares of common stock, $0.001 par value per share, outstanding as of May 2, 2023.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of (Loss) Income	3
	Condensed Consolidated Statements of Comprehensive Loss	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	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION	33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
	Signatures	36

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, 2022. You should specifically consider these numerous risks. These risks include, among others, those related to:

•

fluctuations in raw material, energy and freight costs;

•

labor shortages and increased labor costs;

•

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 global macroeconomic environment, including higher rates of inflation;

•

the restructuring of the operations of our Beverage Merchandising segment;

•

the impact of natural disasters, public health crises and catastrophic events outside of our control;

•

our ability to successfully complete acquisitions, divestitures, investments and other similar transactions that we pursue from time to time;

•

our ability to realize the benefits of our capital investment, acquisitions, restructuring and other cost savings programs;

•

our safety performance;

•

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;

•

compliance with, and liabilities related to, applicable laws and regulations; and

•

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 beneficially owned by Mr. Graeme Hart.

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.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Pactiv Evergreen Inc.

Condensed Consolidated Statements of (Loss) Income

(In millions, except per share amounts)

(Unaudited)


	For the Three Months Ended March 31,
	2023			2022
Net revenues	$	1,431		$	1,495
Cost of sales		(1,316	)		(1,263	)
Gross profit		115			232
Selling, general and administrative expenses		(130	)		(142	)
Restructuring, asset impairment and other related charges		(73	)		—
Other income, net		—			28
Operating (loss) income		(88	)		118
Non-operating (expense) income, net		(1	)		10
Interest expense, net		(63	)		(49	)
(Loss) income before tax		(152	)		79
Income tax benefit (expense)		19			(36	)
Net (loss) income		(133	)		43
Income attributable to non-controlling interests		(1	)		—
Net (loss) income attributable to Pactiv Evergreen Inc. common shareholders	$	(134	)	$	43
(Loss) earnings per share attributable to Pactiv Evergreen Inc. common shareholders
Basic	$	(0.76	)	$	0.24
Diluted	$	(0.76	)	$	0.24

See accompanying notes to the condensed consolidated financial statements.

Pactiv Evergreen Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In millions)

(Unaudited)


	For the Three Months Ended March 31,
	2023			2022
Net (loss) income	$	(133	)	$	43
Other comprehensive income (loss), net of income taxes:
Currency translation adjustments		14			4
Defined benefit plans		(1	)		(103	)
Interest rate derivatives		(6	)		—
Other comprehensive income (loss)		7			(99	)
Comprehensive loss		(126	)		(56	)
Comprehensive income attributable to non-controlling interests		(1	)		—
Comprehensive loss attributable to Pactiv Evergreen Inc. common shareholders	$	(127	)	$	(56	)

See accompanying notes to the condensed consolidated financial statements.

Pactiv Evergreen Inc.

Condensed Consolidated Balance Sheets

(In millions, except share amounts)

(Unaudited)


	As of March 31, 2023			As of December 31, 2022
Assets
Cash and cash equivalents	$	427		$	531
Accounts receivable, net of allowances of $3 and $3		484			448
Related party receivables		66			46
Inventories		983			1,062
Other current assets		109			126
Assets held for sale		—			6
Total current assets		2,069			2,219
Property, plant and equipment, net		1,675			1,773
Operating lease right-of-use assets, net		255			262
Goodwill		1,815			1,815
Intangible assets, net		1,049			1,064
Other noncurrent assets		172			173
Total assets	$	7,035		$	7,306
Liabilities
Accounts payable	$	379		$	388
Related party payables		17			6
Current portion of long-term debt		18			31
Current portion of operating lease liabilities		64			65
Income taxes payable		8			6
Accrued and other current liabilities		430			415
Liabilities held for sale		—			3
Total current liabilities		916			914
Long-term debt		4,004			4,105
Long-term operating lease liabilities		205			209
Deferred income taxes		278			319
Long-term employee benefit obligations		59			60
Other noncurrent liabilities		163			146
Total liabilities	$	5,625		$	5,753
Commitments and contingencies (Note 12)
Equity
Common stock, $0.001 par value; 2,000,000,000 shares authorized; 178,276,952 and 177,926,081 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	$	—		$	—
Preferred stock, $0.001 par value; 200,000,000 shares authorized; no shares issued or outstanding		—			—
Additional paid in capital		650			647
Accumulated other comprehensive loss		(95	)		(102	)
Retained earnings		851			1,003
Total equity attributable to Pactiv Evergreen Inc. common shareholders		1,406			1,548
Non-controlling interests		4			5
Total equity		1,410			1,553
Total liabilities and equity	$	7,035		$	7,306

See accompanying notes to the condensed consolidated financial statements.

Pactiv Evergreen Inc.

Condensed Consolidated Statements of Equity

(In millions, except per share amounts)

(Unaudited)


								Accumulated
					Additional			Other						Non-
	Common Stock				Paid in			Comprehensive			Retained			Controlling			Total
	Shares		Amount		Capital			Loss			Earnings			Interests			Equity
For the Three Months Ended March 31, 2022
Balance as of December 31, 2021		177.3	$	—	$	625		$	(99	)	$	758		$	4		$	1,288
Net income		—		—		—			—			43			—			43
Other comprehensive loss, net of income taxes		—		—		—			(99	)		—			—			(99	)
Equity based compensation		—		—		4			—			—			—			4
Vesting of restricted stock units, net of tax withholdings		0.4		—		(1	)		—			—			—			(1	)
Dividends declared - common shareholders ($0.10 per share)		—		—		—			—			(18	)		—			(18	)
Balance as of March 31, 2022		177.7	$	—	$	628		$	(198	)	$	783		$	4		$	1,217

For the Three Months Ended March 31, 2023
Balance as of December 31, 2022		177.9	$	—	$	647		$	(102	)	$	1,003		$	5		$	1,553
Net (loss) income		—		—		—			—			(134	)		1			(133	)
Other comprehensive income, net of income taxes		—		—		—			7			—			—			7
Equity based compensation		—		—		5			—			—			—			5
Vesting of restricted stock units, net of tax withholdings		0.4		—		(2	)		—			—			—			(2	)
Dividends declared - common shareholders ($0.10 per share)		—		—		—			—			(18	)		—			(18	)
Dividends declared - non-controlling shareholders		—		—		—			—			—			(1	)		(1	)
Disposal of subsidiary		—		—		—			—			—			(1	)		(1	)
Balance as of March 31, 2023		178.3	$	—	$	650		$	(95	)	$	851		$	4		$	1,410

See accompanying notes to the condensed consolidated financial statements.

Pactiv Evergreen Inc.

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	For the Three Months Ended March 31,
	2023			2022
Operating Activities:
Net (loss) income	$	(133	)	$	43
Adjustments to reconcile net (loss) income to operating cash flows:
Depreciation and amortization		174			84
Deferred income taxes		(39	)		18
Unrealized losses (gains) on derivatives		2			(5	)
Restructuring related non-cash charges (net of reversals)		32			—
Gain on sale of businesses and noncurrent assets		—			(27	)
Non-cash portion of employee benefit obligations		1			(10	)
Non-cash portion of operating lease expense		21			19
Other non-cash items, net		6			7
Change in assets and liabilities:
Accounts receivable, net		(53	)		(11	)
Inventories		61			(115	)
Accounts payable		11			66
Operating lease payments		(21	)		(19	)
Accrued and other current liabilities		10			59
Other assets and liabilities		16			11
Net cash provided by operating activities		88			120
Investing Activities:
Acquisition of property, plant and equipment		(63	)		(50	)
Disposal of businesses and joint venture equity interests, net of cash disposed		1			47
Other investing activities		2			(2	)
Net cash used in investing activities		(60	)		(5	)
Financing Activities:
Long-term debt repayments		(112	)		(6	)
Dividends paid to common shareholders		(18	)		(18	)
Other financing activities		(5	)