Pactiv Evergreen (PTVE) 7 May 222022 Q1 Earnings call transcript

Company Profile

Participants

Dhaval Patel	Head-Investor Relations & Strategy
Michael King	Chief Executive Officer
Michael Ragen	Chief Financial Officer
Ghansham Panjabi	Baird
Chris Parkinson	Mizuho
Arun Viswanathan	RBC Capital Markets
George Staphos	Bank of America
Adam Samuelson	Goldman Sachs
Bryan Burgmeier	Citi
Anojja Shah	BMO Capital Markets
Kyle White	Deutsche Bank
Ed Brucker	Barclays
Andy Scheffer	Onex Credit Partners
James Finnerty	Citigroup

Call transcript

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Operator

Good day, and welcome to the Pactiv Evergreen, Inc.

First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. turn and over Strategy. to Head Dhaval like IR of would the to conference Patel, I Please ahead. go

Dhaval Patel

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

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

materially filings any of differ risks. recent forward-looking date, update on we our guarantees expect. except what formal could Before to guidance report quarterly today's future Report we contemplated our statements statements. statements of as refer begin uncertainties information to I on performance and our risks make include reliance forward-looking to statements XX-Q including to materially discussions by put on and our remarks, should subject results we for available this those that our you XXXX. cause more any on everyone as these and us Annual differ today forward-looking results those of and also Form upcoming The our law. including forward-looking will on call numerous are remind not not are that from to required on These regarding Therefore, statement. based like actual XX-K disclaim most by forward-looking undue could and statements These statements actual would obligation recent are statements our Form from you to discussion all for we SEC We detailed

can will Lastly, discuss and believe financial call, evaluating during we measures, useful in our which we certain be performance. non-GAAP today's GAAP

directly figures and to With today's in comparable reconciliation considered call appendix call are the or Mike? most today's release GAAP that, a earnings all Michael continuing Our over not available in turn results and to only. with GAAP CEO Unless a for let should substitute non-GAAP is me in the to accordance otherwise discussed our during as for isolation measures stated, in Evergreen's, the be Pactiv prepared measures King. presentation. operations

Michael King

as end, of EBITDA to track and the debt in adjusted Thanks, remains first the quarter. XXXX low-Xs late at be last Yesterday to from the the ratio close of quarter pricing, on Dhaval. times in outage, Storm Revenues times X.X our year-over-year also Winter pricing which this start year. started to the and the while Good quarter. Evergreen converting mill net It strong everyone strong the I'm to performance quarter and from and net the demonstrate the well. report its operations of welcome. did cold the in is and scheduled year last us In from helping and that the as market Uri benefited to in adjusted general, we are deleverage Fabri-Kal higher XXXX realized profitability LTM and morning, first which by the the Pactiv end X.X the we end off at year strong after up our due we in year is improved pleased seeing benefit saw from year stated were the have momentum business we EBITDA benefit building reoccur to to released helping the results. ability the cost well more as business acquisition our not improved mill us stability as

detailed quarter. us financials turn through for our some Let to first over Ragen Mike walk me now it Mike? more to

Michael Ragen

Thanks, Mike.

X highlights. on slide Moving and QX XXXX to touching our

up billion XXX% prior QX strong prior we million by income And what was results was QX $XXX encouraged EBITDA XXXX. see up this a our $X.XXX $X.XX. was diluted following year. with adjusted on $XX million on EPS are XX% year. Net Net in We revenue

did our same as aligns now as provided free less as CapEx. the was million impact is Moving versus a versus generation billion increase million defined and scheduled same EBITDA flow an is billion and labor Winter and of of was X was $XX XXXX defining primarily the to period year. that period of define $X.XXX flow. costs year, primarily Please of related more through adjusted exit more the XXX%. the in define primarily to plus cash higher costs $XX updated increase activities by slide of definition the outage $XX negative favorable and the $XXX was net mill acquisition CapEx down versus that business. same increase benefit last The a by Uri operating provided have note in higher to EBITDA and last from offset manufacturing cash and revenue challenges new QX with it the in flow peers. discuss paper performance. Fabri-Kal of definition in net costs. an and previously period our closely partially our not Volume and activities we discussion due cash actions $X.XXX less logistics Adjusted a passed Storm accurate by material due million that we proxy XX%. it cash We million Fabri-Kal. groundwood year the less deeper QX operating material, The our cold We CapEx versus activities was for pricing coated to Free customers believe increase to Net acquisition the cash last recur pricing, XXXX how X% flow

slide adjusted to This EBITDA. QX revenue bridge X. and Slide to helps year-on-year Moving

key $XXX growth million lower of at by Looking compared Fabri-Kal revenue, to acquisition last of of revenue our from net a year, $XX disposition, the when QX were price/mix and million drivers the volume. offset of

of benefit higher For the Also favorability more Fabri-Kal added price/mix costs. million. acquisition adjusted EBITDA, $XX offset than

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

pricing up XX% up increases versus material revenues well due higher net higher for acquisition the the COGS favorable period as was offset costs. by segment of EBITDA saw to primarily the from and manufacturing Adjusted acquisition segment pricing the driven impact same to Fabri-Kal. the partially as of Fabri-Kal, from last year, by impact logistics and recover the XX%, Foodservice Our

Food customers segment volume by Merchandising to material sales saw costs. for the manufacturing partially was material favorable net costs, Our labor due X% higher versus and offset due period the by last revenues logistics shortages. volume driven sales to pricing up EBITDA XX%, pricing, higher up Adjusted primarily partially lower offset to primarily year, same favorable actions, due lower segment pricing passed primarily and to through by costs and

for The costs Adjusted pass recur, Beverage QX through key exit driven the did XXXX. costs mix, Our actions $XX business. to comments. product of pricing, XXXX higher primarily to coated storm offset and favorable negative the by $XX logistics I'll to net lower by due in now related it were costs customers winter mill manufacturing million Uri revenues million pricing, not segment and saw that our from Merchandising benefit higher groundwood King partially material, pricing further and the outage higher by offset in of drivers to million million sales Mike scheduled back due costs was up cold segment material to $XX EBITDA and partially XX%, volume $XX for passed favorable versus

Michael King

of on in Slide turn crafted continue update you along McDonald's my initiatives, social journey. parts a recycled be progress can When to cups provide make I cooking clear on in we Thanks, ESG A in to items. our and McDonald's exciting part environmental, it stores bio-based Mike. from also polypropylene the have circular closing If of used from in McDonald's oil. please cups participation materials. from These first our is sourced quarter particularly new I'll could being Georgia before equal other our What's and material to the progress highlight that with currently the recycled is XX, trialed remarks. was post-consumer comes XX launch governance brief biobased

as of to as to in our risks that of undertook addition, well an highlight scenarios analysis examined In important the an climate-related risks. test transitional and is and mention our physical opportunities we face resilience

reports the disclosures make. other invite future investors.pactivevergreen.com we work this and in will that climate-related disclosures other expect learn to the shareholders our at we found We view form more, reports and To basis ESG of section.

Now please turn to Slide XX.

we we're good XXXX, start guidance While adjusted million at are for our maintaining $XXX to time. off of EBITDA a this

of the longer all making the At a but second on an markets We and staff. half labor conditions to in are to again of by seeing our our XXXX. the start training we on the of are those challenge, are labor rate again, across challenge end remain track is on to at had we see we of of tunnel. seeing be believe we the XX% the moderate we good on business; are challenges over up working the vacancy half next the enterprise our all we see XXXX. And second believe The progress height labor no the believe track light in and drag improve are new

We our broad enterprise due also operations in across prices been the Global market. our there volatile uncertainty to general progress but continued operations the in for are on conflict energy challenges remains also seeing and Europe. have mill the in reliability significantly and

and on let markets prudent At the We Pactiv the the improve our operational like full The costs. take our to more the the year. service and Evergreen logistics commitment our enhance capabilities conflict, energy customers general we of hard focused our customers workforce the us pressures stakeholders. Operator? remain to your to we in best for for $XXX at I'd energy from questions. While and maintain all production thank of to our have million of can company also no remain impact all elevated and of to ability. direct time, is work materials that With it impact believe the so their for this our our guidance serve raw value the volatility continuing inflationary global continued

Operator

go question-and-answer is Instructions] Baird. The first will now Ghansham begin We session [Operator from with Panjabi question the Please ahead.

Ghansham Panjabi

as with trying customers Good Michael, year easy quarter? there on from why of quarter. prebuys, segment then that the segment during you to zoom adjust and ago up little everybody. bit I impact comps try in couple first Foodservice declined a to from X% variability Was first resin just out relatively understand QX as any morning, down guess, Thank I'm to the last quarter. quarters the you, a the

Michael King

question. good Yes,

-- So think we as QX is levels to inventory. also service were and we well, and I earlier as open actually goal reestablish our

I -- that we've say demand wouldn't changes. seen Our any

about So make to still. would no customers unit every we just your our question, buy answer

a had really Foodservice and QX was we decline E inventories our the slow strategy C as with to our segment So to start D around you Omicron. in reestablish specifically well items see our on as

our by deliver. up to until service and that ability was late So ability February to January own slowed our

Ghansham Panjabi

assumptions Got gas to US And in in then your blow energy resin clearly of there's for obviously, are. you. cost, both of year well that's question, my the for the raw rest the material a the terms a of them natural big second to and for spike in upside as starting is out embedded resin

at to curious Just specific embedding this point. as your what guidance is

Michael Ragen

Good Yes. Ragen It's here. Ghansham. morning, Mike

Ghansham Panjabi

morning. Good

Michael Ragen

that So And for we've of to raised majeure the our at give in as uncertainty why of curves. forecast the COGS. reasons well. just in also haven't what we continued see one assumed expecting through there is the the the this resin in -- are given guidance guidance, we're end feel of moment we're year markets to a overall events the is the around increases as you number And a the force -- resin seeing

will XX% substantially. over inflation $X was since we COGS last year's over Our year-on-year pure in our Will aggregate And COGS be around that's plan billion. billion did XX% just COGS. -- up $X.X increase changed be

of So is hundred million very couple back which it's and gone that why forecast. we're the up cautious dollars, by the about year end of a

forecast would our are but bit various a than to we're So pessimistic there per that little continue assumptions forecasts say. the also what are as out all more of to up the trail

Ghansham Panjabi

Very you. clear. Thank

Operator

is Chris ahead. Mizuho. from The go next Parkinson question Please with

Chris Parkinson

so you, Thank much. Great.

your has effort a operations hold the effort conscientious to last our You've very taken nine made And the your really feels portfolio including six to months, the over of various assets perhaps improve especially mills. throughout give on it that do quick of Can current those managers. intermediate just your assess efforts new a some and let's thoughts and Thank us you. near including update say, even longer-term how performance? you you

Michael Ragen

Yes.

operations. few Not six a things our benefit we the to all our months, at fill more have the seen of gave workforce. hourly us a agree. the So I'd completely of just able horizon say you over started to last in nine have shift to our we see mills, being of

height labor a XX% mentioned get challenges, a think near during And seats seeing Taking been we of the had I were little approaches just if to that so filled rate. over has I new big not those XX% the help. vacancy

OE long I mills warehouse that think service in how helped And is -- throughput been I and not improvement that's and to networks we've to QX reestablish and of the expect our distribution that But enterprise, inventories same time reestablishing a that. health in fitness be we're our converting our we through our strong across to We've shipping has at start as our of indicative some rates for moderate want both demand year-on-year seen able and make to The levels. to been benefiting allowed operations. anymore. time, have first -- time and our we to in a the well. the seen in us double-digit continue. same position results everything We're pull

And is so and on so the track together. part that operations our plan coming part to is that speak -- of controllable

while the just to by dynamic. talk in our going about you what mentioned also results, a And there and our operations. to we're enabled ability it some price/cost lot our That's after get of

Chris Parkinson

initial give helpful. going the just you versus contribution us the quick any Just just Can just versus color broad what the moving much. how as parts given And appreciated? Thank your year be would say original quick all plan? EBIT That's let's on And greatly update very Fabri-Kal would since the this the follow-up. assessment? deal's very you a for acquisition, be that's closed rough a

Michael King

as integration the give very find continue continued I'll -- give create We're a that get be that very to Evergreen pleased as Mike ahead to have businesses say of you let And both our business. we couple I in comments Fabri-Kal and ways new we're synergies. would Fabri-Kal in business well after ability plan then I'll Pactiv to with numbers. values the of to and historic our

So generally we're Mike the I speak I'll would say to numbers. let very pleased.

Michael Ragen

here. Yeah. Hi, Mike it's Chris,

synergies four yeah, we're the have So faster. done of we're reiterate We'd them within would a expected Mike the to just lot hoping to going and over most -- what said, years to run I three two.

the somewhere between year million million what will be would we In full the to terms this of $XX contribution $XX expect for year.

the original and of So we those to on are top we're really as looking getting after synergies well. build

Chris Parkinson

Thank always. you as

Operator

The Markets. RBC next is from question Arun Viswanathan with Capital Please go ahead.

Arun Viswanathan

the my Great. revisit I wanted guess, question. Thanks for Yeah, taking I just guidance. to

Foodservice guess uncertain the assume in possible looks through or pricing that you I I hold actually when that congrats I that are So a very are is and better it some it beat what nice we you than Merch that in on could you thinking? be guidance And But maybe do that, a there. think progress. you're conservative? Bev so is year, does understand still QX. is really as back some and still pricing work see just move resin understand prices taking it somewhat outlook? some your also like in But full-year the conservatism you about the increases for give building the

Michael King

choppiness several realistic supply if our not our would chain mentioned I you had I we oil already and say us raw we the will the materials. a That's majeures at tell history optimistic it and uncertainty is the would other it's I certainly are major could created teacher. of little the resin, that when would force say you are -- conservative. look some around in being be that better. Mike

this the or It's along… year just said perspective that similar optimistic chain mentioned guidance. projects say or feel our it's I choppy imports got capital are just And and have currently eye we inflationary all materials on. our would an QX, keep the supply whether would on for back but half something and it's this and from very certainly related I where visibility say would We've global is say I the cost we're why to the purchases it's us. maintaining both things of good timing are back-half more very machine Secondly, to we I pretty Q, we've

Arun Viswanathan

Merch, mean, possibility maybe and I guess some million-plus with range is I mills the Merch the that a work that $XX gets there On Bev in Bev you've reopening? into recovery on the completed

Michael King

I Well, missed sorry. I'm your the question front-end of

Arun Viswanathan

the EBITDA I was the that that the million-plus progress range given get within just on of saying into a per do completed lot Bev you some mills? think and $XX Merch the you've could work quarter of

Michael King

$XX think the that run don't Ragen -- sure. but million reach think Yeah. quarterly let I for within I'll a to Mike rate, speak Q is I

Michael Ragen

I that Beverage costs we be Merchandising. we think million hoping that Arun, outages within rate. a year a obviously And reasonable absolutely -- around lot there $XX quarter on would is mill But quarter-on-quarter. $XX a large Yeah. that more million swing But run -- reach than that. for that's the with in this be can or average future is

hundred following to a Ghansham forecast. I earlier COGS said, just question when that between think year, and increased talking of terms have I'd our the to year for budget full plan this to dollars or of said the what million we in couple from did on Mike our

what go and down, that. talk that. dollars hundred pricing million don't of got couple about Obviously, the will to we another we've you pricing it's in do, coming get cover but do So expect to going market to

But it have price so than we chasing up, go in going inflation -- we have. we we up, quarter good saw with the we've to after more keeps other that. this. and we the keep We results the what costs got are So that even to ticking see way doing and as get

and of all is. and interest markets, in going above lot rates with up that's things where going these may on a of the that, So, other different Over soften. demand risk

looking full get ourselves of we're QX. don't in though just to the year even we We ahead So at pragmatic want a good way. a had

Arun Viswanathan

Thanks.

Operator

question is George with from next Bank go America. Please The Staphos ahead. of

George Staphos

number, last said inflation? against up so guess, to and of FCF appreciate the Putting helps quarter-by-quarter on too. my last I terms things Foodservice on congratulations for for versus earnings One, Hi, of comps pricing short. the in go as the And quarter on which quarter. Thanks a on format you're in shipments bit for some but night what What's as your quarter. get degree the lastly, rebuild as recall. you couple question guys. all XQ? else. we the My keeping give helping trying that Thanks well much And at us being change, look guys some release McDonald's analyst. restricting I'm the not and out the be at XQ, a the need remarks I a cup changing to with is able I congratulations line to lot are one obviously then more which taking tougher good Foodservice can that's Number everybody to to not given you you some Really more And too a inventories the in you you X, the am outlook last degree, question in growth is the it's luck a as year you one? segment busy volume to day. is

Michael King

our bring from in McDonald's of done responsibility, a the going do no had between as got to the streams of leader teams we've here. we that, for to be it's Specific space to many it partnering we're to one It's many ways a standpoint customers. a on sustainable McDonald's innovation of circular really one got just our things one going. -- jump be the forward using Certainly, something look approach. with where social new an and I'll technical before that to was really collaboration we've cup

we So do are excited to it.

the future I to the approaches XX you it's market. new currently and should bigger. selling the bringing to what indicative are those We of in of cups, optimistic interesting that think us And are innovative locations sustainable that something expect in terms from expands

Michael Ragen

terms And certainly price, two our that's regard your intent questions to in of at Okay. helping restricting other and there, shipments with all. George, not

us, of back and progress levels to maintain that in customers For continuing service expect that are seeing around And it's key all levels getting regard. us those. good our the the we historical -- to

inventory we the QX backing QX, comps when Fabri-Kal effect we In we out where of have be terms X%. tougher X% terms say would them want Foodservice. year-on-year for of or that Essentially, be to the levels for up Foodservice, in will to we of the in restored

And flow so, we Foodservice. in expect of normal out inventory a would

QX growth. issues So, comps year-on-year terms we don't any of in see with expected

George Staphos

turn I'll Michael. it Thanks, over.

Operator

next with Goldman The question from go ahead. is Adam Please Samuelson Sachs.

Adam Samuelson

Food categories volumes I you've get and your we I'm then, you those rebuilding period weaker outlook guess stronger the sense store in Thank demands. had forward the end moving specific you. is And around helpful. disaggregating do Merchandising you. you've maybe parts would the the and first And Thank the or being or own of Good made versus to just maybe the as any call would Yes. around trends that particularly, question out how going everyone. around morning, lower think outlook. of some be volume stocks forward? market about impact lower and of the trying inventories a decisions conscious

Michael King

Yes.

it Food and well Merchandising our business, standpoint, some segmentation from as our our our -- a egg of business So business, includes as protein consumer is business. our business ag

to impact demand. we've that -- terms -- you can product is like several seasonality similar impact it's seen we've it's noticed the influenza what So with What you does and on of some commented does availability one-size-fits-all poultry, it on what in avian have between And which a the Foodservice an events tell inventories. not same is our I the is there's channels. we've approach But answer.

products business. it's like areas our increasing, but given in produce on believe demand or So, have softening, egg. seasonal see some seen demand we Conversely, our we seasonality we like rapidly do on agriculture

of it's target a moving So channels. the some in

is to our improve watching our we're we things half back challenges demand. service watching strong. where We're goal through something closely. win be our the that's now, us are to allow despite So to specific one-off QX, see each reestablish continue plan Food in our levels inventories we segments. things in and those what we're and is, with of terms And talked is ourselves adapting consumer again, this for channels to stable. to fairly that be business, about seem Right of But, Merch closely to

Adam Samuelson

at then framing right. That's And following seemed Chris' on I you it outlook going for growing would Fabri-Kal, because EBITDA business question have business the than into year. like acquisition. later that for All higher said organic the that Okay. think -- that the And helpful. maybe the time it volumes? to What's was earlier in is this your that's year rolling maybe was improved, of start base

I'm to starts just to in. about layer that trying think how So

Michael King

want take one? you to do Mike, that

Michael Ragen

other The line PET with the particularly are The and sells around recycled sure. much in volumes Yes, Fabri-Kal products. cups is in business the Foodservice itself -- ESG-considered growing very products. that ESG-type

there, in good we're growth volumes. of So terms those seeing

see part year, through In of latter terms year. synergies of kick to that lift the outlook half the we from in will do of we start as yes, back the Fabri-Kal the in, a the the expect

Adam Samuelson

noisy cadence a The what corporate end. Okay. of should for unallocated for question if there think about I the period anything or in XXXX? a at notably up take was pretty quick all modeling there? in And year-on-year. could the And is we And unallocated just corporate

Michael King

consistent in-quarter reasonably be with will it results. that, the expecting I'm

be will bit. a up it So little

above we're We've got like costs. spending a of and over lot on have things added more that, and And personnel then cybersecurity higher We those sorts money things. headcount.

up So to and we up. to continue it do to expect be trend

Adam Samuelson

it Okay. Thank I color. appreciate all you. pass that on. I'll

Michael King

Okay.

Operator

ahead. Please, is Citi. from Pettinari with question next The Anthony go

Bryan Burgmeier

are working just Pactiv deleveraging. with if gauge that impact producers raw some free is conversion despite to I potentially that doesn't a to impact some provide rising, headwind free This provide Burgmeier to trying year, earnings, Bryan guidance. it context in cash so and Pactiv costs material capital flow But cash Anthony. actually Hi. improved for for the citing sitting could possible understand, is other I'm around flow

Michael King

of flow So working quarter, I year. building would in that we -- that when be during we last of the cash the terms capital we'd one said headwinds be, talked free

because flow a estimated building I terms on we so, news is and payables. that, inventories. cash able some our headwind that to receivables been in And conversion, we're of million The of have circa good offset $XXX improving

rather December, probably And on to that to I'd so, $XXX probably what million will expect $XX that basis, an more increase. December like being than be see annual million is it

what mean and to offset strong cash up, -- is, based and but inventory. that I payables around off continue -- that So some will by on headwind will inventory efforts of go other come to collections

Bryan Burgmeier

on year the Foodservice for Thanks your it. in color Got obviously there. full XQ. And guidance, EBITDA was strong really

year-over-year to layer So full growth into up I'm about think that segments -- the think of the portion for you of quite well. just EBITDA to year-over-year different and for the about could as different trying segment. year. expect the just see Do segments level trying growth Merchandising each Foodservice the that to bit I'm the was Obviously, Beverage growth? a how largest

Michael King

year-on-year. will back the from the we've see doubt Yeah sure. growth Foodservice as No come then, Fabri-Kal and acquisition That's of a growth driven by natural COVID. lot

expect And $XXX terms below of hits grow big so, segment, million had terms to in seeing winter more when where year flood in the in to Uri year slightly Foodservice storm we'd then, about last we're guess last of Canton. I that some and I it it, think And Beverage like from XXX-ish. Merchandising,

some that see and round improvement And because of And then, let's other there. above it tailwinds and over groundwood the segment of improvement we'll so that those coated numbers. of Pine million call natural then, closure for $XX Bluff the are complex at

year million of to we'd last sort the speaking, roughly be going number and million So between $XXX from dollar million. XX-odd $XXX somewhere

then be would remainder the Merchandising So -- Food potentially. in and

Bryan Burgmeier

it. Thanks the Thanks. luck in quarter. Mike. Good Got

Michael King

Thank you.

Operator

is ahead. Anojja The BMO question with from go Markets. Please next Shah Capital

Anojja Shah

shake just eating demand more behavior medium-term about past lower out you and cooking been you think then, is And that might I'm home at sticky? demand, over Do everyone. the of morning a have lot do for consumers that pre-pandemic? thinking Good Hi. it was think some fact Foodservice than the two years.

Michael Ragen

of money out not cook, go I little seeing be anything. in want think having really in terms have some certainly and future. will what would get but But spend think to we're a it and get been in wanting people home sure. will I that we said people this what of there's but to restaurants, view just was than personal people happen a and think that, to tell. the had economic difficult stay environment I'm what out it's is to more that, doing I started have -- people seeing That and

Michael King

The thing home that Mike with delivery. I add would seen we've what is to the

that's So correct, which where from significant container home home of standpoint a people to seen a a consumers' we've is or to additive model in growth. delivery behavior the takeout the foodservice likes DoorDash shift are

So, yeah, but food. -- in buying they're it's they're their home,

Sorry.

Anojja Shah

makes All problem. No right sense.

Okay. And particularly then views channel. just chemicals but that? we've about in recently hearing on the or food in bit quite comments been any PFAS particularly one packaging, a -- follow-up question, you QSR have Do

Michael King

Not particularly.

faced to a something partnering we're chemicals face. challenge with the address that our all customers challenge we're is with. certainly, And that's all For our we

of Outside aware specific taking So to we're it serious. and that? of certainly It's is a that... there something

Anojja Shah

like impacts any seeing you're if then? significant just Yes, impact

Michael King

impacts this say at I time. significant wouldn't

Anojja Shah

Great. very much. you Thank

Operator

The is Kyle from White next with Bank. Deutsche question

Kyle White

for taking Thanks morning. Good Hi. question. my

levels you carrying relative have imagine this Just increased from the on Thank on well? as I -- to What's you current training the rate? the labor you're update the going where vacancy headwind at could And to you. be? sense wondering, if a your you'd do of like that's on you're us also where and

Michael Ragen

take this one Mike. Yeah. I'll

Michael King

Sure.

Michael Ragen

year into expected we're to we of are we terms actually color we behind of to be So we in as on the we versus a now levels slightly ahead. labor came terms -- in where track what our planned. of as But just where bit and

In at up you see rate the terms vacancy XX% about could -- and over had actual of to the employees. above being between absences the COVID-related Mike the and point of then absence been And past vacancy. sickness labor time vacancies before add we've any shortage King we that, over in spoken in when XX%

favorably trend And X% there. at the levels. down So to now continuing we're circa we're

terms our safely them training we the around up to to plants our and of it headwind people retain spending are to look and through get takes into system trained get In them. whatever

seeing still. of lot are a turnover We

that, driven our our mostly levels terms In plants. over aggregate XX% costs is inflation in total around labor but the by of up

million training the a are that annum. of costs – It's lot in to plant In actually with It's they're million does day-to-day year-on-year. direct day associated one Every just difficult leadership they're $XX increase the because somewhere internal is our terms teaching be stuff the probably around quantify training. itself a but to $XX around basis. of people, the would million cost on $XX it per a out that single

Kyle White

the Got year. you. number made it. you Thank decisions a of over And and past divestments strategic then

bit. portfolio pruned You a the little

mills had with talked now? and in You improved you Are the see for happy Are content the strategic that review happy segment. path Beverage current that the with Merchandising about, strategic performance you've be those two with those that the mills? return the portfolio the logical that segment of of terms you forward owner mill you the of owners you're the something where that is or maybe is threshold more of to Thanks. or in content make to it not business you anything

Michael King

Yeah.

I'll strategic prior is say I've what review Qs an in as iterative is So ongoing process. mentioned our

what continue as not. portfolio process, and – what all a of both our at of might and sense our look makes So part businesses internal to the we

our I and operations move would irresponsible continue continue not our we of In terms Merch, process. are do performance. of we to say would And improve to converting our to – be the strategic say us that, review in I to mill for Beverage deliver ability pleased forward would it certainly, are well. where with

ways portfolio. at our enhance further to and improve looking are We

– forthcoming your early say as too part latter to still And of will be the to continues. answer those decisions. we there, process but – make question would of your with decisions, line our just we it's say that So questions I very

Kyle White

you. Thank quarter. it. the strong Got Congrats on

Michael King

Thank you.

Operator

is The Please go next with ahead. question from Ed Barclays. Brucker

Ed Brucker

of I strong the quarter, again. to or machinery in the wanted the if Hi. congrats – Thanks the you're for carton business just Asia. packaging taking able proceeds get on to share and question, for use see your

I $XXX million. think it was

Just wanted to do you're see with what that. to planning

Michael King

with At planning morning. debt that. to this stage, Good pay Yeah. down be we'd

Ed Brucker

looking you deleverage, you for a list, then to how that allocation and M&A capital view just you're potential And as debt looking and guess, commentary, given wanted well. perspective how but it. reduction, just how down Got to view from debt, future shareholder pay your you I you're priority get the returns, then I view to in

Michael Ragen

Yeah. want do. do first what foremost to I deleverage. don't That's want us. We and think anything has changed there we for to

do do of a think the to for paying it's practice We that. us. we to want dividend, good continue In terms

ahead $XXX We think our $XXX investment, investing around In still past capital capital this investments. year being terms of we programs business. the pushing of somewhere with into in our talked those million in and we're million,

similar out acquisitions, of hunting. to we terms are In Fabri-Kal,

We But consider along, new that's thing there. aren't doing comes nothing that. right the if But it. like anything we'd

think I the our So priorities remain same.

Ed Brucker

Yeah.

Operator

from Please is question go Andy last Onex The Scheffer ahead. Credit Partners. with

Andy Scheffer

Thanks taking question. Hi. Good for morning. my

in the timing it back the ultimately pass Regarding or the to comments of your ability inflation and hesitancy is a year, is customer purely about issue? the half any pushback, through on concern it

Michael King

say I would the –

Michael Ragen

timing. the It's

Michael King

Yes, timing for sure.

Michael Ragen

It's a issue. timing

Andy Scheffer

Okay. a majeures. on of that how you and of them comments surrounding Can your size And the them? bit often upon how in expand the then terms little – circumstances force

Michael King

Yes.

a when the new XX seems a So be comes bit to months majeure. of force it to last normal

whether and to expose supply constituent large the continuing throughout reliability tiered – styrene weather a factories are it's a really and have significant led the better would And part or put and XX it's across with world several what's chain more supply constituent months pressure slowed of hasn't faced down. the been in breakdown, And even of aluminum so our we've of events whether it these or there or supply new it's the seems choppiness chemical parts And some equipment chain. there's last for facilities be companies, to it's just our or cracker happening all even to on concerns all the whether monomer, weakness that allocations for facilities, the chain. of event resin call I than the something just that's

Andy Scheffer

the work to Are timing you issues decline? through those seeing

Michael King

and soon ability is up interesting that things our majeure. improving albeit I regret would as The it them but yes of force there's – this better. gotten I'll ways has seeing of a address of some frankly we're supply chain severity have pop the as new continue to say I to to and these say

Andy Scheffer

you Thank

Operator

Citigroup. We have ahead. James from with one more go Please question Finnerty

James Finnerty

for been Thanks has taking if late. my this question. I already. answered I hopped on apologize

on down we the is as you side, to delever you to Just should be the what sheet? debt balance the longer leverage what goals over leverage paying look expect term? And the

Michael Ragen

I what to have would changed think want has in – in be nothing of target. we terms three to of good terms we debt really maturity. XXXX where then be. Around times we a four a And

have I We time what at answer down. is makes we'll sense terms in the give loans. the pay can term of Whatever really

James Finnerty

the you're you the you. number then given And Thank Great. you on post say year EBITDA just full you fourth reiterated guidance quarter in first when as were than confident quarter, that today for more would results? reported

Michael Ragen

it When to out we we – talked we what think a the we that aiming were in we can to number think before do. and that's confident quarter I confident absolutely number we're we we're discussed last want in now. put I there hit and that and

were and we're – So confident now. are and confident confident then we

James Finnerty

much. very you Thank Great.

Operator

like turn remarks. This for King to closing concludes the any to conference would I our Mike Q&A session. back over

Michael King

like the quarter concludes you. We to QX. to our Thank look successful forward of you to the would you. Yes you I and thank Thank guys at for joining call. say end back just next us This getting at here earnings. another

Operator

conference today's The attending you Thank now concluded. presentation. for has

now disconnect. may You

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