PTVE - Earnings call transcript Q1 2021

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Pactiv Evergreen First Quarter 2021 Earnings Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Dhaval Patel, Senior Vice President of IR and Strategy. ahead. go Please

Dhaval Patel

today, and and interest operator, first everyone. you Ragen, the Thank XXXX Executive King, Thank and Financial Officer; Pactiv good Officer. Evergreen your Michael call on me in call. Operating our have and for Michael earnings Chief Officer you, Chief With morning, we Chief welcome quarter to

heard company's Before in today at www.pactivevergreen.com website company's Investor we begin, Relations this remarks reviewing please with Management's visit access tandem the supplemental the presentation. Events should presentation. be section of the earnings and

results Before everyone are we not detailed uncertainties materially our statements could the should of performance, you impact begin subject numerous that differ also condition. statements. we may to We filings actual SEC our discussion results future future more recent formal remarks, you statements operating forward-looking I that cause include could put to for refer would undue to like expect. are and These a today of of therefore, remind to all not and what reliance financial guarantees from our on that discussions and These risks risks forward-looking them. our

over today's call, we can performance. discuss or useful non-GAAP measures we financial believe it should substitute our this measures, for The considered turn in which evaluating additional of in isolation available in are will our GAAP Michael be And GAAP. presentation let information during be earnings Lastly, not comparable me a as With to results prepared with King. in reconciliation release. that, Mike? accordance to

Michael King

everyone, and welcome. Thank you, morning, Dhaval. Good

tenure, My career over collaborative. focused long-term been over driving it's well to a into a that to pleasure eye several with TI in leading the of I've as short companies facilities. taken end-to-end FRAM and mill I'm and organization the and meet rapidly Pactiv approach of an our and and that my is on like industry, earnings first being as the bit manufacturing both My it's My across might CEO Autolite well I'm and are of in the operations as started Automotive, the mechanical of a amazing culture, pedigreed most turnaround say up talented of Evergreen, Graham converting the as be the sweet Before well transformation I insight and progressed it business. of to our the hands-on this recently, environment months CEO. space Corporation. is jumping through visited X and future. and Lear operations keen automotive engineer. results viability have and I'm manage opportunities Packaging. with private of as past business the in as my Huhtamaki very with individuals I In integration. current Evergreen and that challenging development so short-term chemical to packaging our confident public now. my we employees sectors systems spot to the to give thought Pactiv helpful many background suited I of as a have call team

improving turn a on host quarter could an I Despite first the strategic initiatives. through eliminating across results solid of by deliver segments Uri, unprecedented attention remain to waste our and our impacted paper winter of was to a mills business and outage. The also Slide managed laser well as focused a your challenges, we X. as XXXX If these number in COVID-XX-pressured challenges as storm, cold presented scheduled mill

conclude full give business. your During an year We'll an financial direct -- on through we'll a XXXX attention update to questions update Slide performance. could this this and and presentation, provide I quarter will X. the provide we on answers And today. quarter our with If discuss business first takeaways go our We'll We'll key first XXXX we'll outlook. highlights.

adjusted to Merchandising, the improvement, results business Winter Our outage. and the we despite volume X% respectively, to improvement planned actually Foodservice of see negative The quarter were Storm saw activity March. of total X% steady up due continued of along year-over-year and Uri first cold and continued the negatively EBITDA underlying and the COVID-XX mill storm. with the for quarter X%, depressed and Food impact COVID-XX In was from company impacted volumes by month

to We of the for remainder expect growth the stronger continue year-over-year XXXX. volume

We not elimination our this our waste next-generation in are an review time, and We to plan to Please Beverage months. focus coming still and on notes repaid for segment has The process now the at the of early update but Merchandising to do in have program. relatively Evergreen further quarter. Pactiv operational of continued you you $XX debt down we million company provide Slide the paying of details X. has in turn the

and from offset by defined COVID-XX. cash was mill loss million QX CapEx, a materials. EBITDA. These raw to $X.XXX due through by operations declined less Now due was XXXX as down XX% flow, year-over-year for the are million and versus partially continued of million of highlights. XXXX material XXXX and $XX down as favorable Uri, from EBITDA net from as QX billion Storm passing let's from QX XXXX was share outage were driven We was recovering Free note for move lower X% $X.XX. impact $XX the Net were results the the from EBITDA depressed continuing X% COVID-XX adjusted as would to well quarter as of $XX to continuing loss Net month the up well sales was system. impact the Winter of the of revenue Adjusted raw earnings March. operations per X quarter costs cold

in Slide could Finally, and $XX to If the our you Strategic Investment benefits Program first is on quarter. delivered I million direct X. of track

beyond. in have Pactiv many EBITDA continues and As deliver that growth XXXX discussed, previously will we Evergreen have to levers benefits

should operating cost pandemic and incremental ordering, to The COVID-XX operational overall the mass vaccination also continues and as the country. decline to shift The during the across realize we secular leverage economy volume will As costs. COVID-XX help continues online takeout upside subsides, rebound plan sustainability our significant also drive investing to and in for and pillar also continue incremental delivery volume growth. growth as capacity view story We to another differentiator a will demand. the We of meet customer our more business.

our new, We offerings preferences. their a to meet customers develop shift broad to products provide to products with they of are able portfolio product sustainable customers' as to as as work well sustainable customers

will now reduction optimization cost Please also Finally, continue to initiatives Slide contribute turn X. EBITDA growth. and to to

XXX% packaging to and lead and in the from when responsibility forestry. climate another change. we One have largest the data XX% to issues. of and where gas industry, examining XX% our point we all currently it packaging the offering accelerate XXXX. focus from recycled, of sustainable towards made one we third-party sources, reductions Related up fiber recognize of which our As products emissions mitigate of recyclable our pillar, the commitment certified sustainable shows we latest or the companies the comes we and XXXX to helps we updating our ESG progress are our products planet's came with headed, that When help inspire that our report, on industry, date be comes data outlined it building broadest are to sustainability finalizing beverage our food excellence. to is we in our in procured by to greenhouse materials. protecting renewable stakeholders options reach goal and committed today we XXXX, can are us resources, we're will area, In share our to our to and XXXX, In that

quarter, XX we X.X which fiber first in has averages. Valuing During top in rates at come in number the Pactiv we've last the injury Xx launched were years. Evergreen. first our the brings new people target to XX total we been And better products overall the based. introduced items new saw below and always quarter, of than a industry all priority That

Looking rewards and our launching a better that Week actions to their program families National communities. Volunteer new by we beyond our for people, employees their celebrated

and to we company, Board policies promote with ESG in We'll details greater Please the invite in providing link are be reporting this develop Directors topics to included and working external you more future. at forward presentation. Finally, we view the XX. our to governance, more years, quarters the coming newly effective as Slide look sharing of a now that we and public on transparent to in turn

Evergreen been Another for innovation. key has focus Pactiv

functionality from into Pactiv We have as and that right tackle number with work be enhances evolving partner a continued substrates. the those allows of integration us requirements has only to consumer to of preferences in Evergreen to of of needs they further customers our challenging sustainability. capabilities. make capabilities The This and the closely invest dynamic products to a

first We focus launched with of with preferences. EarthChoice quarter as of today's have align on we XXXX to products new total the launched now XX sustainability-oriented customer a XX products in

addition, launching In focused on new tamper food evident address needs. we to customer and are safety products

only a an Pactiv now potential identified from to We and of XXXX Program we've additional Please the our to have combined but turn realize complete XX. in We in remain on million synergies Slide XXXX. developed million of of projects track number not to $X synergy Investment also EBITDA Evergreen, Strategic $XX opportunities.

payback. total We end to $XXX number by average a will on a of have the programs has total year X- of the of spent X.X-year a million that a

review operational next-generation in of coming on turn review. stages programs. programs our we Mike are it We the maturing over detailed both Pactiv for and the and across actions will waste these our provide to quarters Beverage as financial plan start now over elimination Merchandising Ragen to implement a We I business. the more information to Evergreen months

Michael Ragen

Mike. Thanks,

Moving to Slide XX.

period quarter note X%. decline versus Looking is X%. strong in important we $X.XXX COVID-XX revenue a impact primarily up XXXX billion March performance, XXXX year-on-year due last pandemic. improvement was to billion of $X.XXX financial It with year, to first at the The the a saw in was net revenue of same our the that decline

strong XXXX March decline was were same our period is million the baseline. the year pandemic, versus of Our of EBITDA COVID-XX not this so Adjusted affected year, a XX%. lift a million in $XXX prior numbers by last and $XX yet

Our and a segment the Food respectively, Uri. was Foodservice despite affected Merchandising factors. quarter, X%, Beverage by and of Winter X% Storm were our In of up segments Merchandising number effects COVID-XX and the

as defined detail due year unfavorable to flow, for Free adjusted adjusted in in the presentation. period EBITDA them discuss will cash last EBITDA. same was We lower CapEx, less the later

Slide results for segment by QX. XX Moving our to and

We're last revenues of in a saw period which Our lower and March, February. Foodservice our year was particularly volumes, versus net down favorable the raw impact partially January and X% volume. segment strong cost volumes seeing the year to due for Foodservice by to up in same on EBITDA X% in higher manufacturing net recovery costs, Adjusted continuing. costs versus pass-through, the material due lower is sales segment last period same of offset COVID-XX

segment Our net down Food mostly material favorable favorable with Merchandising manufacturing saw of down offset X% cost up Adjusted X%, mostly was slightly mix. pricing, net on volume pass-through, costs. higher net EBITDA lower of by costs, by revenues offset

due Merchandising COVID-XX. drivers Uri, of period mill cost which being: the which segment operational net same million. million COVID-XX the period last and outage, was revenues last the year, for saw $XX cold EBITDA effect the million performance, segment million; Winter $XX $XX mill cost in pandemic, business $XX which million; versus effects same XX% quarter; down this Our which key versus of a impact impacted Storm $XX the Adjusted the Beverage of year down to the cost

Slide to Moving XX.

and raw incurred we QX segments. volume, the in million $XX ensure due notably adjusted Uri and manufacturing In during million a Winter customers. business. Winter costs estimate EBITDA facilities QX our impact Arkansas material our Storm damage energy to was a most shut and had in we of impact Here, storm QX, The COVID-XX to to $XX impact and million. of QX Beverage incurring costs The was higher We mostly on and to where incurred further in will by COVID-XX impact business price of we higher Foodservice estimate that our to supply Uri Storm quickly, onetime needed concentrated our Merchandising costs our down driven higher costs $XX the and the of unrecoverable sites certainty process. damage in to see Texas, also of

XX. Moving to Slide

revenues COVID-XX and remains In made mobility and Looking Pactiv assumptions at certain of dependent to forecasts, XXXX, Merchandising upon may recovery have that our the our second half of impact a not the outlook regarding Evergreen for uncertain. we are Foodservice Beverage ultimate eventually. pandemic increased

our Merchandising to Uri, We related $XXX change within year is these million earlier neither have nor the million projection. been guidance due the of of operations time, conservative updating impact this million assumptions. whilst our million $XX to in we segment. Winter $XXX aggressive Approximately Beverage Storm At from the EBITDA to our to mill adjusted are to guidance full $XX is

Merchandising mill Turning priority. operations a the around within segment the Beverage remains

effect We invest place in resources place. takes continuing turnaround to the have the turnaround are the to to that and ensure

We Merchandising throughout expect Food strong segments and the performance to our on One the quick in Foodservice year. QX. note continue

$XX impact quarter will material results. the spikes In million from Storm impact addition recent to residual raw second Uri, of the negatively Winter

Our contractual take the we strong expect then you time. second of for the price pass-throughs see half back Thank during and half. will effect in your margin to improvement XXXX,

summary EBITDA Investment consolidated a free back adjusted closing progress of versus Strategic QX As to income/loss, King comments. I'll an included appendix of pass statements net period to and EBITDA of adjusted have Mike document, now revenue and Program. we flow reconciliation our to cash last this a for and bridges year, in same income/loss it

Michael King

the businesses. Thank performance in our for In us the and, in open ahead you, around we closing, Foodservice the forward Merchandising that, and we of opportunities our forward drives was will mill first in activity operations. to With while now Food and continued business Mike. look to our as turning continued returns Merchandising up particular, look recovery challenging, quarter also business it Operator? questions. I Beverage

Operator

question [Operator first Instructions] from Pettinari The is from Anthony Citi.

Anthony Pettinari

Mike. Welcome,

in resin the direction the on year that's just you the terms remind resin seeing, embedded to or inflation maybe inflation lags, your X unprecedented caught put just the of line X you're then in your the the Given whether that up finer And can prices point outlook. that for get quarter, they're a on for assumptions time quarters? us remainder of of

Michael Ragen

Yes.

Mike this So is Ragen.

The of of that revenue to So in somewhat our I'll and us. is prices QX the disconnect still year. see inventory between in in take What costs. spiked is we're that we lot resin early one. will see going for a our A

-- As we merchandising. you -- particularly terms see the Foodservice Food that's XXX% hedging. And hedge not but lag the and in know, will in in perfect of we

and be a margins. QX, pricing the through normal We But our in will restore up resin, we top QX. of lag on back see will will our

We are QX. resin to sort through QX costs expecting through of and flatten then subside out

Anthony Pettinari

undertaking history improve that days, X or on Okay. or is as your That's helpful. an and very it's you're could to early company And experience? opportunity it review that then, either the possible understand still think identify really commercially but operationally things given stand you Mike, and you your X that out to

Michael King

good a Yes, parallel in in mills. of reliability issues solving yes, There's both been question. host that we've

operations, fairly converting tell would I run well. Our you,

that's us. as the also the look just across focus for board. in mills. the the holistic a tying government product being So right certainly and how U.S. would you we're I now That an opportunity commercially, proliferation of with competitor the its truly around the that. work review, at say is body evaluating terms managing labor the to doing country sense pricing out uptimes and our tongue stuck largest continue we of our give And in of we're as labor, really, strategic a challenge

insulating And labor, uptime on levers at price, commercially and so looking then all right efficiency now. those ourselves are

Operator

is Ghansham next Baird. from The Panjabi question from

Ghansham Panjabi

roles. and Congrats, Dhaval, your Michael new on

Michael King

you. Thank

Ghansham Panjabi

of at guidance. just guess on up I on following construct of looking kind the question Anthony's

about EBITDA lowered You for million. $XX XXXX by

you Winter Or labor, Uri to you et the initial obviously your think of that should called But issues the price/cost million by $XX just higher, guidance? XXXX? offsets resin I not fully the as Are any relative you $XX are million we are you Storm there these freight, out mentioned, issue. from but costs consider positive end recover mill from much then cetera. to assuming and specific

Michael Ragen

Yes. Mike This is Ragen again.

Foodservice based. So the XX% Merchandising, well. the if it's carton on And segment, a revenue just is take in Beverage as Merchandising, of our -- our is of business, I the we step of in remainder of pass-through. on around a look, market it a business, number. similar lot are And And XX% side the back. In Food it's

the we've to out. that's are modeled cover recover So our bulk And prices the to cost contractual, expecting things that's or increases we that. and up of way input get the

the there we end way see Look, to if we've resin of are modeled it in input drop, But some Now upsides flattens that? year. that said out that back of costs drops, sure, and if a upside. as I is the might Anthony, is, sort it drops to then the little

Ghansham Panjabi

great. Okay,

clarify, Or spill the XXXX? flat to XXXX? into resin recover by Just if that between and you year-end, of would stays now over end would everything

Michael Ragen

by the XXXX. recover end of We'll

Ghansham Panjabi

I then year-over-year. increase And volume X% March you Perfect. it. think Got mentioned in

Just And segments? far you seeing to as what then context the so by X April what in across us like. give look board kind March of XXXX the are

Michael Ragen

Sure.

volumes I'm much isn't like and -- -- XXXX, than to in up of XXXX too total, as particularly a information. Foodservice but institutional. hopefully, were to So we March, in I going in needs for business this stated, to in April. much our Foodservice Everyone -- volumes too -- of XX% look, that -- be is to look understand rather But March. our at But

stadiums, to So really schools, things They open. they've opened a haven't certain but they're like or still fully not opened extent, offices.

want world we're at of volumes. versus and I XXXX for March, so we're we're XXXX X% or versus that's -- the when XXXX X% Foodservice X%, look we're stopped. in And in about because with in In to XXXX even numbers. on I this -- about versus XX talk up when flat up up April around But April, terms don't

versus about April, And X% on XXXX about we're X% We're up we're up. on In XXXX in So up we're and down versus we're in around up X% in XX% on -- and and And we're a in we Merchandising, seeing on up positive about X% we're looking were XXXX XXXX up, Food down in Merchandising Beverage X% about on but down X% March, XXXX. XXXX. about XXXX. XXXX, to versus March X% for there. And XXXX about little then little XXXX, March. a

So -- give so see and pulls why of you month-to-month, forwards, sort X the obviously, all and you pushbacks stuff, pull months. that's I can that --

part XX% with volumes. what solid mentioned good, seeing is openings as of Food in strong think business areas further we're Foodservice historically. the to that the the business, occur come I recovery I we're So Foodservice we're seeing institutional seeing upside Merchandising, in of the around

We obviously bit of like containers cartons, little But will growth in year, pullback things those that a that disappeared will trays, last in we people like see weren't a things. graduations almost that. things in things sorts bakery protein see -- as celebrating of like areas and

Foodservice that Foodservice this then we'll go we in pull-through see We also think that from -- return cupstock, -- see see We'll schools go a into back, the of the will see customers. we'll school Merchandising, on year. Beverage milk. lot cups paper cups more as And our

So strong, that currently continue think that We're yet, the we're to they're to going think economy like not they're we continues as and the encouraged. volumes, declaring but up. victory we open

Operator

The RBC. next question from is Arun Viswanathan from

Arun Viswanathan

Great and Mike. welcome, Dhaval and

within described in on ask update Program light $XX guess the could to you've wanted that of been So million especially was Investment the Beverage about process. IPO us just during Maybe I there, progress that Merchandising? experiencing headwinds I of your Strategic the you

Michael Ragen

Sure.

of presentation on million To to Slide the provides spent in at the $XXX and to summary. the rate. appendix as we've it program, we an million continue $XXX the spend XX, So date,

is During of from $XX we a the million positive. first benefit that, saw very which quarter,

we year, last were -- million. we at $XX for at full were year, the think I

in mill. mentioned EBITDA the great cold we means that we're in to we down those which -- $XX took So Through cost mill mills, that, million a that Bluff I accelerating QX. savings, the King us outage, the million Pine Mike on spent quarter outlined see. QX, is in in and $XX

will which of in the the rebuilt investment of in be substantially. great. a million Merchandising We which invested business we at mills. boiler. circa And $XXX that bulk However, X this the Evergreen is time, We did we spend lot will Beverage a year,

there. that around. the the see expecting -- benefits invest And from continue we'll we're So continuing to invest to to we're mills turn as

Arun Viswanathan

by as cost year. So a given and just I of the price the would on so you said pressures, follow-up, given imagine inflation resin up be you caught this end some of what

year, the the or the from and million you'd the increases get in You'd $XX back add from the then benefits. next SIP storms

to a couple look would that next more of But on So 'XX I characterization or a years? extent. that's longer to recovery XXXX of you then? obviously, guess like expect how term dependent about And the the the thinking you're fair full Foodservice is

Michael Ragen

here, So XXXX. on overcommit than would I don't just you it. walk And better my to through I but I XXXX of want sort expect would that if be thoughts

year, the from benefits The that in you that Program lot half numbers this in our and the there. from second a and just around year, expecting of costs to increased this COVID, half we're infer of see plants of recovery really I is we've costs second mean, Investment essentially coming can down as Strategic our

to plus, through our and costs point, we recover and inputs. the -- are and increased resin pass-throughs other in contract material raw recovering we'll so And your

to So our we run strong, benefits be Strategic very rate continue will Investment Program. see should the from exit and

by we'll That clarification programs will we be linger outlined Mike further we're the continue into will saying have in on that future provide end from will not King also year, -- We COVID. see recovered we the that year. And that of to calls. other next

discussed, I exceed what my is have Mike So year, next view, and personal and I XXXX. think we'll

Operator

The next Bank of George Staphos is from question from America.

George Staphos

into I and question Dhaval Mike. get can my then first mills to want and extent the welcome, volume, I to really talk. with and around that the start more Evergreen Again, we want to

that marketing a the the as at Or volume of little you're a else weakness little a that home. make because bit would is so for EarthChoice as bit you to Foodservice, resonating else And question. we most as in you is So that weakness the you finding are in store What's or present not allowing reopen? there what Is as sustainable the business means are the much How in you unrelated in just the the of that plastic quarter, there? it Mike, Food perimeter we sustainable? volumes it food that that of saw something something of the shopping -- So and Merchandising getting Mike we're or recyclability customer is your that? packaging what behind with choice? expect

Michael Ragen

Okay.

So.

Michael King

Well, let take the me EarthChoice.

Michael Ragen

Yes, please.

ahead, Mike. go You

Michael King

Yes.

So second I'll George. your answer question,

On it's It's it's It's are at we X sure, recycled not those pillars, content the recyclability, of the the -- EarthChoice, both. but we're for same the also across look the the levers. the of those as poly X X board. leveraging that out EarthChoice. But in certainly, side

George Staphos

And you across EarthChoice how now within using much whole recycled content or right platform? the are

Michael King

on back get I'll know, you Ragen? Mike Do to have to you that.

Michael Ragen

sorry. question how recycled The was much content? I'm

George Staphos

Yes.

Michael King

or number. it can It's. I don't our -- have know. don't XX%? I it get I'm Is Yes. not head. that don't -- the exact we top we XX% off of

George Staphos

That’s fine.

Michael Ragen

recycled example, itself. It we can required it for on -- can But that. cost things XXX%. and and clarity do and just do the like -- We product depends PET, the so on depends the

So we balance -- out. -- but that we'll

the answer one not it's so And board. across

George Staphos

trends I save how the much can was now Merchandising and volume use. right. can into what's you versus on driving later. did total that that? And you it But off-line. sort in content We where 'XX, Food dig of just for Or asking we are

Michael Ragen

Yes.

And there. a So pullback trays egg we've cartons, expect. we we'd -- seen, which in sell into volume have we've channels. small the lower seen some and what We've protein we consumer seen

George Staphos

Okay.

is back, Merchandising, I for the mills. we driven $XXX by business overarching and Beverage the reduction million. been to -- the is, has well which and guess guidance Turning for largely the largely been over company, Evergreen it's the whole look question if the

you biggest at is As you within able lot been than right confidence, you be sounds right number it, the like take Is of the of the to resolve more that the And reliability. the are mills initial at what to it the mills? the Evergreen? sometimes what in you driver Because based mostly most something given X else? experience. now, problems you've gives terms up those know causing of Is past what reliability investment you'll variance look curve you expectations box? now issues? it on that get to what finding And has old a grew able been if It it's head

what's So giving the you confidence there?

Michael King

take Yes, this one. I'll

not simple and it's certainly answer, a So different.

excellence you We hasn't different attention know, X place a have those Bluff get or just I to as -- the that would to I X Pine curve. mill best in and you sub-facilities one journey. if cost are X about a further should you, there break both into think on you in you tell needed their generally, our mills, stations isn't as of sub-facilities, special tell bit would Bluff in Pine journey. can we their its

of in our well. getting of that our granular production lot is one side, sub-facilities able your our those headed production, all will, seeing would whether metrics of Every bleaching. you if machines improve. direction. are attention, X the heavily paper a coming operational I all cold those Our and pulping, question, in say, just paper or we're right it's run where in been production sub-facilities, we've to a chip invest We're board out of to mill outage, side

Canton. otherwise we're head -- the and sure it's It's really all those Bluff. box So frankly, not things major don't not upstream uptime mill have in did side. outage. a be And Canton, ability lot efficient frankly. similar cold It's We of overhaul-related have, Pine a having our of the been investment issues issues. not hampering not a which been making There's and paper reliability to board hurt in that or story story in on on

operation, our long-term into flying fixing major and see items downtime production. plane that the outage, medium- lot can the we viability again, things. So cold and and paper of mill everything look boiler we're as at a doing itself having doing without not we're We're to, a of manifest we the that

all the up It's focus. in of the to is labor and upstream have consistent the machines consistent story. advantage similar -- keep and So getting we downtimes taking the

to strategic reluctant some more we there's into rooming your through function of not detail And question, George. changes the item. make go that's hope on like and might get I big so there. It's it's we until somewhat step we're answers what systemic, be that review one a lot why can

George Staphos

it's work More to very but it. Michael, No, helpful. we be done, appreciate

Operator

The next Kyle is from Deutsche Bank. from White question

Kyle White

how role. know what the relatively take in in Mike, portfolio here, your overall portfolio, the in regards to trying I just new to you Dhaval, congrats Beverage you looking I your days of business understand you it's mean, look at thoughts Evergreen. -- at segment role. a But terms specifically on at when Pactiv early view Merchandising, the Mike, that

Michael King

Yes.

of kind of it that vertically cupstock think think I boards everything else. then things and as liquid of I So and integrate, we and

coated facilities but to sheet look on like paper whether uncoated -- those SKU we rolling that groundwood have liquid to tell we it's continue we're at that areas segment businesses. have -- we're want of -- profitable lean good and you as see spaces, levers it's our to in of pricing benefits looking the over really that I side, to converting or too straighten our -- products EarthChoice. uncoated to spaces, from out the sheet what where be realize the can I it kind side. across and pretty packaging liquid able me and SKUs. mills to don't I I each to all comment that commercial any for saturation free or early we on board in synergies you the will on the which And on -- our coated way. all it's exciting But groundwood So can I of free mix And it tell at

just because X end-to-end probably how segments, what yet for about give not of I I all full buckets, a there looking you it's it, tell so is think one of exciting, you're on look. know kind I that's which didn't can the I but that. we're And you big as really

The reviewing detail. in we're other X

Kyle White

that's No, helpful.

realize of On have to synergy identified, And on you you additional kind the of when line that a $XX time these? do driving these million you have expect projects synergies? what's

Michael King

an we I'd Yes. even through on like live It's or able be indicative. review before you exact to the give to go an to that. strategic get premature

Operator

Suisse. Crédit from McGovern Sam from is question next The

Sam McGovern

impact Texas impacted any how option you that guys business storms, the there's from to and would you recoveries the bit more any insurance? anticipate regard a about it talk you or specifically from whether can With little

Michael Ragen

you do take want that? Mike, to me

Michael King

the and take the potential. end, recovery I'll me Let you about let front talk

Michael Ragen

Okay.

Michael King

unfortunate when an that planned mill to us it than cold -- cold mill we What -- outage sooner the -- the force a was eclipsed was for The week pull after hit. somewhat did take event was storm say wanted. mill the we cold the storm to the

no was, hit worst storm. us intended, a it right time at could. it So perfect It pun the

a cold during of freezing exposing taking think mill wasn't if of in the So -- sub-facilities one or as that snap weak wasn't linkages. X there pipes, you cold South, the X There those wasn't sub-facilities, impacted. already one kind a mill greatly of

far that for that the a in cost keep cost gas, gas with anything a couple that's things And to rising mill and to having purchase that so things commit you coupled would us, -- with cold of really the weak, maintained. natural storm normally the heated, energy be South particularly really exposes natural to breakages

it the already planned quickly. focus lot had we so things exacerbated that in on -- get ability planned a to, fixed to also we that but mill, hadn't it to needed of And our things a, the it work was on cold --

the down that failures, was energy body exposed host that in mill. the be -- and whether us of paid that And Pine themselves So And -- during period you a and than for a during we talk I'll of pumps. to the scope for had planned it wanted of things We let had to boilers, the Mike, time. turbine of and failed whether energy were then energy what of -- that that generators. the in we longer it There's recovery outage, work cetera. Bluff the that work be certainly side we and backup more be lot turbines et several storm recovery, pump potential for of

Michael Ragen

Yes.

not we'll sure for reviewing our but back, that get So anything expect. We're of in it. as terms of all recoverability, we're pushing options you'd we're

So we're hopeful.

is that of expect, us through And and we prices down, -- gas money obviously factored natural the the a well. energy we lot in forecast, roof, saw prices haven't as The anything energy spiked. cost We into though. Arkansas, our piece as mill, before particularly you'd shut

Sam McGovern

rising capital to the costs, roll Okay. other with flows cash the we Great. working the of in through we That's terms And about regard then impact raw just line think as to helpful. XXXX? and material should how

Michael Ragen

Yes.

we $XX -- have a in inventories seen our we saw due to QX, So costs. million increase in raw the increased material

a right working we that but end And we've is of million a the somewhat of be talked to benefits our offset saw process, QX, the increase integrated allow the our through on higher that. us So supply inventories rate, to to inventories our we're -- doing of $XX lot -- we of what we somewhat will about And in trying to capital. program to chain did down. the that through bring one year, are due managing program. But work and now been -- our IPO we

will be total an -- to number. because inventories the will at that, of higher to physical to year inventory that's rate costs. But so of the but by higher we we're see raw And million end up so -- see down, expecting $XX the $XX offset material and million, come

Operator

The from BMO. next is from Mark Wilde question

Mark Wilde

you the wondered second the resin I Ragen, Mike if impact from quantify quarter to able mismatch. are

Michael Ragen

But of expecting we're personally. have in said of and I'm QX, terms terms can what see guidance to as I see, our expecting volumes. to strong Well, we've in already, for

in quarter. by a material will costs volume offset higher the impact lot the raw that However, of be

to So I quarter would a not year. expect than higher last materially see

and that recover we'll see QX Does help? then, and through higher QX. However, we'll margins

Mark Wilde

dollars second of could Yes. millions the just maybe resin of give a -- mismatch us sort impact the hoping terms range in quarter. from in just that is I of what was of for you I

Michael Ragen

Okay.

million it's So $XX $XX around to million.

Mark Wilde

I year-over-year what then And basis Is a type now numbers give was another embedding volume point? basis? segment-by-segment to just possible of right. expectations you're second All a right some this the what it on guidance us the have Okay. question on at about half in into built had you do

Michael Ragen

you guidance. some give I'll Sure.

embedded to we're the know So is talk and expecting I easier what versus we've see in is me -- don't numbers -- to it's to whether. in XXXX Foodservice, be for because what

Mark Wilde

fine. That's That's That's fine. fine.

Michael Ragen

the over so to our little to be Foodservice was numbers of versus down place. said X% we've all X% -- in But XXXX. sort XXXX a

in said manifested 'XX. I've would to expect to in expect hasn't to where in and flat flat we pick earlier, to around April then the back Beverage and XXXX. that end be be as a Now we Food And the down itself and back would months in to Merchandising, be early March up little Merchandising, in Beverage

Mark Wilde

very $XXX Okay. than then Last helpful. for Mike, with the almost And if of management us I could. That's right. numbers many call higher million projections guidance. current provided the were when All summer on those the XXXX,

if still Now from you kind have what the months? the there's to about the doing some just guidance. you're also, that of of of X there. X the gap forward been over issues big leave to quarter, X talk a or we Can then X aside drivers what improve reduce first last And guidance kind or going

Michael Ragen

Yes.

Okay.

George Beverage and what alluded variance is think Mark, you to know, that's I as in Merchandising, think big the before. So I

we out. it's recover would we'd give COVID, back didn't you, you what assumptions themselves $XX and had million. play off the et when from quickly in about XXXX cetera, quickly made -- of easiest et Foodservice around with but cetera, versus school, So me certain outlook one back we go children first. discussed how those And we to this how let some

million that of so And the $XX about represents outlook.

we Now than had what in stronger seeing we as outlook. are I volumes earlier, the said

volume then that of last about and big million, where between the that mills around the price off will timing I'd you to split things: last call X is Merchandising. and And The and and recovery in and into -- went knows the well, itself. gave we came Beverage we $XX different guys who we call, sorry, the that. that down where manifest So essentially guidance the

of Also, and volume lower keeping sure board full. because downtime. we've not to the there paper segments. -- volume, that to keep So seen make price the in pricing, taking volumes in on we are we've pricing we're any to had particularly we And mills the terms chase some want

and around volumes pricing at had recovery. So board to so assumed, -- again, than we've sell had we what lower

in Again, milk. schools. area, a of that business, the in because in into who as big mentioned well that part school that Foodservice, And itself also in convert I we our to Merchandising, sell manifests Secondly milk. Beverage board same competitors school it's

half of the big they're pieces million. on about and that's the $XX price So and volume,

the down at just the we this not and assumed quickly The then million, as recovering another what turning which And piece fast. are recovery And million. in than they're other guidance, had half around prior the mill speed mills storm, is $XX timing, okay? So was okay? morning it brought is as obviously $XX we last not our million, what the $XX is that's then outlined

you where where walk we to are were So that should backwards from we today.

Mark Wilde

kind And of Okay. forward, Very helpful. going Mike?

Michael Ragen

about going sort we like you So forward, how mean of.

Mark Wilde

I because mean, X drop last the yes, over or months. this it's X a just huge sharpening a -- guidance, is the

Michael Ragen

Sure.

you've of increases raw So down a by year, This X seen back we'll -- price material halves. weighed be a as us of somewhat year at sort the bit catching and to look QX, I'd this of be we're up. the tale results. going QX,

what see what volumes. you -- to we're see starting is to what However, and I stronger think hope I

some to about we QX, you able QX, volumes. that is see give see we're be proof QX. QX should you'll Obviously, and So in saying the what and in pudding. should stronger that, in confidence Then

We we're trends rate. exiting will nice that would continue have positive we And some XXXX see at a exit improve of on caught up price. such mills to run expect the to in that the starting that we're

see COVID, look Investment what any next year benefits numbers, it is recovery or X. commit our at Program, looks over that the from and like, continued will but continued to to of from we'll we'll terms not see I'm next going out In play which the I Strategic themselves way year

calls, in upcoming from And see some some we of which outline should these we'll benefits other programs, that.

year of mills, So the with top front this then lead and combined structures plants haven't of our but back us, of the think, in plus around the around volume that COVID, in results to have half will improved on we again, right we've into that, that, going I got demonstrated getting XXXX. in reducing we the costs tailwinds

Operator

follow-up Staphos from George is America. of Next question a from Bank

George Staphos

try a quick lightning round I'll here. to make

need was expect have you the same time? lastly, do not lead a capital outage can two, then flying remediation Evergreen? one. you might more take or the Mike new to some spending what year a system to mill the the would cold so So you you're outlook? that plane and leadership while Mike, put, us for with this it you fix when spending? of And And Number Canton, at as remind Number to to, trying required

Michael King

the new So have XX%. recycled the question. XXX%, but answer anticipate couldn't really to not before the . is is XX% answer be question recycled We we as the have anticipating no, a go minimum the high poly for think as But in Canton, thanks, cold now $XXX over year I call, on the hope not number going sooner. is our your taking our We're content And outlook, will in million. tell have XXXX. to And well. we as it outage. place don't in mill earnings And we $XXX new a million I'll can the our you I is EarthChoice. next leadership, George. minimum on because that I content is prior piggyback leader or our Capital

Operator

The Schwartz from next question is from Scott HPS Partners.

Scott Schwartz

maturities, XXXX remaining? surrounding any you thoughts the your that Do ones have are

Michael Ragen

would that reviewing the with we look to thoughts. do No But in obviously, next at year. the that something definitive We're moment.

Operator

the call for question-and-answer like turn I'd the session. This any back remarks. concludes management to over to closing

Michael King

this very want forward about the brighter we joining year. making us you just quarters We for business look Thank much. I as progress to continue Thank is thank to Yes. and the everybody you. talking today.

Operator

concludes conference call. This today's

for have disconnect and day. pleasant participating Thank may your You a you lines.

Pactiv Evergreen (PTVE) 9 May 212021 Q1 Earnings call transcript