PTVE - Earnings call transcript Q2 2022

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Operator

Good morning, and welcome to the Pactiv Evergreen, Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded today. I would now like to turn the conference over to Dhaval Patel. Please go ahead.

Dhaval Patel

Thank you, operator, and good morning, everyone. interest XXXX Evergreen earnings your our welcome for quarter second call. you in and Pactiv to Thank With me Financial on King, Chief the call today Officer; Jon we and Bakhst, Chief Officer. Executive have Michael on Please visit www.pactivevergreen.com access company's the company's Relations earnings website and presentation. the supplemental the at Investor section Events reviewing remarks Management's with should heard be presentation. today tandem in this

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

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

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

Michael King

and morning, continue Good strong quarter pleased continues deliver XXXX improving the Yesterday business acquisition. material as after benefit as results. from we yet raw on to pricing adjusted pricing net another closed, to the the pass-throughs, released Dhaval. I'm from lag as Thanks, welcome. focus to team Pactiv the everyone, report its of had EBITDA Evergreen quarter costs, and to from while higher Revenues the that second due cost benefit results. benefited well Fabri-Kal market

across past We organization to make quarters. the progress the few over steady continue

still labor as something the previously this impacting that While the strong across COVID business the significantly our year is considerably, we gap past. in has thanks The last highlighted year not had efforts track, organization. narrowed we it's to and has it as

year's versus Finally, our levels. depressed last improving profitability is

of this improvement. a possible embrace throughout culture organization, of is continued to the and and All because drive we excellence continue

American close as also business The Asia-based time, week, this the ahead also we profitability Fabri-Kal our and also to inflation We we same of business. to strong earlier the North higher better also materials to our operations X delivered our an are balance in cube general, the take our across efficiencies, we seeing more warehouses. needed strategic In we of allows business across increase to where segments. At and all stable productivity and intend are Asian focus broader on initiatives of pricing cost, normalized on improved of automation proceeding actions And while return seeing saw enhancing sale levels. We've the plan. sheet. integration is the our sale raw us of announced

extensive to to We get know a CFO working you like take the public as expertise him Jon. financial Chief markets. prior Officer, with our with well forward Baksht, dealing with banker an as with Financial a welcome of him investment for Jon I'd new to all look as the to experience brings to moment to team. Finally, Jon, and

Let detailed review more second in me Jon us it over the to to through Jon? turn walk now financials of a our quarter.

Jon Baksht

Thanks, Mike.

Before company, I like warm company. such of to my results, short Evergreen while discussion begin a moment of continue a a business, with impressed of purpose-driven organization our recent to time strong It's I'd having an the to values and the part on Pactiv success. team build and be and the the for the to financial opportunities thank to I'm the company's with time strong In Mike exciting my the a at culture. take broader welcome at fundamentals same

haven't the you to what had I'd to of a you to those of Pactiv give me opportunity like Evergreen. drew yet, meet I For sense

company a case and the market. compelling be to by public, potentially broader As Pactiv Evergreen recently I find taken investment for the overlooked

of bears producers value we reinforcing, beverage in food categories. product a As the share in for our and one most to compelling footprint America on scale and a the largest which several provide know packaging customers, market of are call leading of with fresh nationwide North proposition and you today includes

results like we, everyone, resilient this quarter. evidenced remains chain-driven While headwinds, as experienced underlying by have the supply and inflation business our

further positions Our footprint us warehousing growth. extensive manufacturing, and distribution for

financial products into evident XX% coming materials. yield a renewable dividend Financially, our my committed from X%. around sure or dialogue. our are is enthusiasm our made currently more recycled, I committed sustainable forward look revenues a recyclable with provides future remain of I'm in with policy, we now and continuing to results. to to which our XXXX move We I'll

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

quarter. continue year revenue cash million EBITDA we up $XX income $X.XX. another versus Net and progress $XX $X.XX quarter EPS and billion, versus diluted XX% up was was our was strong XX% steady the flow of year. for prior million, negative delivered Net make prior to was quarter, with $XXX free stated, Mike the Adjusted As million.

X. Slide to Moving

in post an period Net in coated The businesses and XX%. primarily which as was performance. of prior million. as the flow $XX increase well Adjusted primarily Free $X.XXX also restaurants $XXX Uri. pass-through, and million increase due XXXX same period the offset in the adjusted was labor billion revenue increase versus groundwood. last stable that earlier million of the was acquisition, versus pricing, EBITDA includes in of $XXX was year-to-date referenced Winter was The period period and Mike prior strong Fabri-Kal from pricing year. of billion and EBITDA favorable cost our down $XX reopened as COVID-XX pass-throughs exit last to benefit Fabri-Kal. cash operations more by due driven volumes shortages in to material costs of financial lockdowns, year Storm at $X.XXX improvement acquisition EBITDA related Looking the X%, the the sales year, The to same million net improved

settlement cost $XXX costs. EBITDA. the last Slide included sales our to period of logistics a favorable and year. cash pricing, I'd in flow to less Free also by a net last groundwood planned This year, adjusted strong versus period CapEx, the to paper deeper is comps sales material same million business. of pass-through was actions price in was was of costs, year. of net largely billion last not needed calculation the shortages to cash the increase negative higher outflow approximately EBITDA employee-related million million cash due last The of X pricing $XX in due an material customers of increase that period in manufacturing discussion flow, was replenishment down $XX Fabri-Kal and was amount $X.XX of and higher XX%. positive impact net from Net to increase as following Volume versus but million our revenue million lower $X.XXX and other year, acquisition operating and line, plus mix acquisition, of Moving same of litigation challenges partially labor last tough the volume to reported pass-through we The The defined offset in primarily billion cost the provided and the increase due same QX income $XX benefited of our coated XXXX build year, to in by $XXX in Fabri-Kal. exit experienced activities performance. income primarily related an a versus onetime higher note is XX%, due XX%. million inventory quarter. versus a the volume Adjusted primarily is the $XXX negative as

a Our remainder volume do inventories basis are levels. now on the to which significant allows us at levels, more service provide for normalized year. builds not inventory the of expect customer improved We

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

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

than adjusted Fabri-Kal offset million EBITDA, benefit and some price/mix favorability from more higher and $XX costs deterioration. volume the For a acquisition

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

Foodservice segment segment $XXX from impact by higher Fabri-kal, lower last Our year, versus acquisition the the offset net was well due versus prior-year strong and sales from primarily costs. up increases the as Fabri-Kal, revenues of million up impact same acquisition the down costs, and to period sales partially pass-through Adjusted XX%, as volume. higher for pricing of volumes to net X% recover saw driven which EBITDA the COGS manufacturing by of higher the offset cost material employee-related favorable pricing, volume

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

driven saw due by product in material as scheduled actions, and pulp our our EBITDA due employee million up well outage. pricing Our as The net primarily pricing customers XXXX. volume lower coated for partially cost due revenues groundwood the Beverage sales drivers manufacturing, pricing was mix, cost pass-through Merchandising material, costs an from segment higher mill to logistic partially higher $XX by to higher offset X%, business. by favorable primarily versus exit segment $XX were key to million and offset $XX Adjusted to annual million favorable

Moving to and total ended debt. outstanding billion million in $XXX Slide cash with We $X.X XX. in QX

which sheet. sale Merchandising As will business, indicated the in week, the we of further the our release Beverage agent strengthen press have balance our in closed earlier

We expect capital $XXX estimated of of estimated proceeds adjustments taxes. million, and approximately working net

the XXXX. end end was billion billion X.X $X well debt the Our at for to around adjusted ratio with proceeds. pro forma $X.X net LTM and We EBITDA net the debt around the below of at a QX Asia QX business sale of of X.X, ended

net results. and quarter our third to report our quarter expect we X fourth when leverage We be below

for Mike Additionally, comments. balance sheet. further to further the now we are deleverage it evaluating other pass alternatives to I'll back

Michael King

our your brief and Thanks, emissions, our turn Jon. update I'll our across lot This XX. remarks. of the This ESG waste ES&G on sustainability we've a report We've a and performance progress allows the energy, improving If on in I on provide our can and closing a to attention resource effort tracking put our and year, entire new system. implemented my audit analyze, us Slide to management fields. enterprise. data operational data water our before

new environmental Evergreen, are increasing for At we the as are our goals and finalize an to emissions certified reduction Pactiv X proud forestry. forest greenhouse as Scope recently we and and to an we sustainable As Scope wood report responsible sustainable policy between forestry of to we XX% XXXX, published XXXX promoting gas committed related and promote X updated We well certifications. disclosures forestry, XXXX. use

management risk, published our as for amount members' our supply in Waste while introducing to performance our a ways resources, path to in zero all Implementation we're are on can life provide we development, are chain, support are updated stadiums to gases, much colleges Celebrate journey recreational Foodservice significant Guide greenhouse team customers' our value waste. both efforts new time of In value operators reinvest a strengthening Zero a litter By pollution, operation. also to Under pillar, sustainable the like their support cut bringing their we career to loop, our manage these a tuition programs People a future. and June, people. to core their assistance sustainable resource for and closing meaningful and of we or creating system, As venues, program spending our our value begin committed for relevant people operators that

first forward Evergreen's been be Lean latest couldn't more, learn the more Leanne celebrate boardrooms. view To I and and since experience chair, disclosures a shareholders gender our Finally, prouder in to section. in helping equality Pactiv director to Baker. to at her investors.pactivevergreen.com our to we and from leadership other in invite found female build IPO ESG reports we're Board benefiting has looking

attention to could if I XX. turn Now your Slide

As normalized on results progress more indicate, steady to making our levels. our we returning are profitability

of year, EBITDA XXXX to strong a now our be As million to adjusted we the $XXX result million range. the start in the are to $XXX expecting

free be half to remainder of the the in expect we the flow cash inventory for Additionally, positive year build year. of the first following the

see in improvements continue to We labor the markets.

and now still filling employee are training positions retention we opening -- focused on have. while We the the finishing open

As my all continue we comments across opening stated, see improvement to operations.

well still with raw as We dealing as are, volatility the linked inflationary material however, to markets. broader pressures

to portfolio fears environment. fairly cautious due now is volume resilient we around the addition, but is the believe times, prudent In in our a to the recovery current recessionary have We added in uncertainty remain of recession. it

would cost our of results anticipate our I like improve experience inflationary capabilities the expect more and quarters, time, to X that, next At in workforce for the our service we us for for With We lower questions. QX. year typically continuing EBITDA the seasonal customers. demand Evergreen pass-through, lag commitment to let and will timing peak their work. the this on take your normalized production this given hard thank focused to particularly the remain Pactiv continued and represent we quarter would Given Operator? all

Operator

will [Operator Capital question Instructions] from Markets. Our Viswanathan first with RBC come Arun

Arun Viswanathan

progress Congratulations turnaround. here on the the and

So price I the is just first on question situation. cost guess

you raw kind -- across have of last are still the So sizable price Yet inflation some implemented categories. some other pretty material as couple you some are noted, over increases and of inflation you quarters. experiencing

seen kind environment potential kind would the elasticity kind expect those, customers, of we as from you as? describe should i.e., any lap or what going response Or you away of pricing So down? what kind trading And we your of pivoting of forward? have

Michael King

Thanks, Arun.

other you relates elements. to contractually would transactionally our key well we've I material living raw made So cost you, deal non-raw tell our two progress materials, nonmaterial-related pricing recovery. our it and of of It's what as or customer our has calling then on as as know, both getting we're great as support, a costs.

And see future that. I continues of business. expect the throughout that you that this so

kind that able Our target we've you of regard. Qs continue. I'd to for get is demonstrated in that And see, support. first as the XXX% this recovery X to expect been can that of we've year that

work Each more recoveries. On things material the you're dictate raw loose those side different -- also to And try And falls things up, those of are a more to contractually those to tighten how what are will will an we while our segments seeing. index-based lags one has those going to out. the be lag. used

But I raw degree of cost lesser We doing. the continue. see to doing I to living kind materials are given strength, same materials the what a strength pricing will -- the think, on are side, the of expect

Arun Viswanathan

a then. as just And follow-up

it? it, potentially comps? do some we any comp areas a those volumes next on How And Is So softness? well? read we should is softness, you think mainly about again, you how as tough acceleration And issue? have just Or maybe that noted of comps. you year expect some was volume should but volume that easy seen

Michael King

Yes, good question. Yes.

are a And every we fiber little are we I ton we in demand products both Foodservice still here. our kind Merch some our paper terms seeing a of So can strong even business, we out. would our bit. QX The of and late very Bev into saw in is moderation we sold tell you, in products, get QX, produce. sell can board for of -- as volumes we business our in

we've demand on the labor to challenges. largely And not our with Merch constrained Food side, demand be softening. that own seem So does

to So it's most products, our for is in say segments, But I of do there. is will all tell anything half see we back you moderating that difficult if of products. moderation. not are almost if assumptions the our nondiscretionary our some

and need every the use Our people products products day. are

positioned handle in be shifts, falloff huge a shift. in in moderation segment of There periods that the expect demand. recessionary we're in that. mobility don't see past well our I to So but We some as terms will

Operator

come Samuelson next Our will Sachs. question of Goldman from Adam

Adam Samuelson

of So the and you -- What this first going year. on the and on what X% like if I we could have this just back constraints? the constraints, demand some quarter quarter you we that slowing didn't in external I'm could have your just into the continuing but volumes in constraints? would get the production those Foodservice, production environment maybe as especially -- the question think guess to sense goes back down side, alluded looked the your think have in some half been versus not second underlying about of, to if your then about what trying the a internal demand

Michael King

I the rough that decision difficult. rebuild really position demand. mean That's the Qs you think setting we X% mean made half did so weren't constrained of I Yes. the future coated at and numbers, that as groundwood But for missed that and exit volume one or was look it constraining our conscious we volume, us demand back of decisions our try an and areas. I things to real to the And inventory. we the we the well opportunity we of X% some maybe? aside that was

understanding hard all you those also The our other things levels. And answer know that an is it's thing fragile. to customer give on without remain that we inventory

not their either. rebuilt have yet inventories of customers most Our fully

if or say that, I more real but don't for have X% So be was it's good I'd a than hard guessing maybe. to I sorry X% it to say. answer I'm tried

Adam Samuelson

Okay.

second in presumably the June dimensionalize vertical, and institutional whether guess, then any product any color would of and have July casual demand line kind later Foodservice talked you And -- about by to of of any who, do visibility maybe the in way as QSR, That and through helpful. type that's there? quarter, So dining, to kind that? specific I you or be magnitude slowing, customer

Michael King

shift. some still sitting down and seeing are taking food eating, the mobility We're People restaurant, out. Yes. going to

In tad. anybody don't think trend slowing. there no QSR is is that it fact, I a seeing up kind the mobility, of there. secret we're plot missing that

trend. large that us, just the I of likely masked the higher for fact that's that, And us. customers able that's our a been been think probably service to of moderate. not there's for I at outside a given some slightly level shift inventories. that And Although think we're scale really it's by But now

that missing, getting kind were we better anything of So through we're back service.

Adam Samuelson

I clarifying ask quick And if Okay. a could just question.

So acquisitions, the total company all is that I bridge presume for contribution EBITDA Fabri-Kal.

So since it well you've base in would I X just XX% business the the seem the just that look that's was it, business business, kind it the and quarter, as confirm LTM from preceding being -- favorable the And just you've owned your would price because want acquisition of EBITDA the in months that as would September. And that did you to when margins just last in so cost moderate that. it is in like if already exceeded case. announced

Michael King

Yes.

we if then, synergies already It's business executed. business ERP pricing same of the responsibility of footprint things I have all -- And business. that is and the across Fabri-Kal, I'd that of same your tertiary understand well we We're we're yes, are we representing think the in and other integrated. on in different broader ahead been the I largely us. for the systems, synergies that strength question, the It's the expected that asset we largely say planned schedule terms impact has. performance exactly of that and have no kind is pricing the

strength. a for the I a across would thing acquisition business that through so absolutely, And But been good tick flowing generally then that's you, is and the piece us. has broader tell of and price big

Operator

next question Kieran come with Brun De Our Mizuho. will from

Kieran De Brun

there's manufacturing could you've on but availability was a easing? the labor It about you the of just more, front. progress, but little seen and spoke like little you How that and a of I touch still lot in back seems those wondering the overhang. an it costs half if what a of and bit, bit that a made higher thinking of you bit potentially some year to you've are on

Michael King

question. Kieran. Yes. Thanks, Thanks. Good Yes.

So tell labor of labor. widen. in we folks, making our I and largely, have the is that sure that in would off we're and focus that both pays made doesn't you progress labor our that force, retention retain to making And investments gap and a train lot

labor really We're focused all put trying and really doors thing that that right skilled that's of to at fixing from the QX. expect units, kind actually point largely, for focused we've jobs, right in not as talent to priority where be folks, of a want close as right a place business. walk where big the and business in our traffic, while the that day. business long-term far in QX QX our want technical It's that's So we future, headcount. for kind is getting and Hiring sure a the the the made that paced to be selective. a of QX one. the stable every our was to constrained applying path that bit factories, that folks making as a people through environment only to labor, do terms work people that problem. Merch of a as really we strides are more we're labor the that won't in for one things now a But better in we we've and Food on And we've we're which on gap And it the done foot fast largely,

Kieran De Brun

follow-up. a one on And a then just really quick

right from sale, thinking profits on impact towards and it quickly, the as the And kind think going of carton $XXX we and the it about the of that that of to the guess, the business? I way the or how Is packaging should it? second think you debt about I magnitude pay alluded million sale be about, to think half down. of rolls off business the machinery in in profits the sales should For Asia, that we

Michael King

Yes.

is been that deleveraging priority priority pretty clear our that's other our better our make lowering right and the that. be is are also some paying improve presented generally, itself. think leverage that upping uses sheet would at as now, that -- debt. or EBITDA. gearing, look balance There certainly We health our down we've I But sense the

Operator

Panjabi question Baird. from Ghansham come will Our with next

Ghansham Panjabi

you just back there just last and to weakness sharing on comments incremental noise comparability builds is your the do customers the baseline on? some year, think lot in at And are on from point. earlier last just COVID. there's that this up are seeing of pre-COVID opened then relative can What Maybe inventory share so to you there because Foodservice and going a Mike, you and of that year with what and from segment issue the variability through you're is a we things was that weakness? a and volume so Or standpoint?

Michael King

up difficult Yes. a a year It's strong feeling good did comps -- a a tell last open bit are was are But consumer of there a -- -- mixed question, say bag it that. certainly makes the you, for shift would bit to and and I a pre-XX. we of we I don't Ghansham.

a I even whole, as of the shift weren't I like a to look pretty business, of kind segment a year yes, think we're to to I'm bit a if flat. segment. pretty we're the flat, but it say basis a on I'd And confident like-for-like starting Foodservice at And representative new flat. I in last mix a There now new across pre-COVID, comps the think not Foodservice, there's of see. -- been comps broader But we're normal normal. just has we're

Ghansham Panjabi

just cash Just some trying what the And Jon, interest? question maybe flow. for can a of flow coming maybe on year. items looks cash cash CapEx, like get to as to this us position sense free Jon of out cash you on update a tax, cash the

Jon Baksht

to. Sure, happy

EBITDA take if So and then you just down. it walk our guidance

amount the normalize Taxes, rate if probably the at a somewhere in you you have looking But just $XXX annualize it estimate, take and to debt. a in and curve do the $XXX year. in just variable So Interest, of million to million it's you the you're $XXX for area fair and we're for CapEx, the know, But $XXX seeing in it. for area looking around probably million range, area. variability the have more year, that we half bit can the that. first it, as

cash somewhere the in that not focusing we're then inventory. the prepared would that's you inventory say So in any guiding working what What to year, so But really a again million not the And not that did in just area. I say that's much. on gets the I free $XXX for area. flow And necessarily is remarks, to capital builds. anticipating further

And flat capital. so reflects number that as would that take perspective, it a from I more of working

Operator

with will Deutsche next question Our Kyle White from Bank. come

Kyle White

the second raise. about I the guess Jon, that? wanted Welcome, on looking initial And should forward guidance think just outlook closely half I of than Or half driven we appreciate more guys. the relatively quarter, to kept you focus I to is raise. increase expected? on in coming your into and to purely year? working the by understand, I'm Congrats first the with the how you. trying you a then really being strong kind from better performance unchanged expectations

Jon Baksht

exactly you think about That's how it. should

Michael King

That's fair.

Kyle White

up imagine pricing lot that, price is second been the I you've of guess half, why if our vantage expect first I follow we into the that this realizing continue cost that given half little to over slowing on from a for mean, been then can't obviously shouldn't energy I a been I you. like down that have the input stable. volatile. seems it costs bit markets all relatively point at have kind of

what is EBITDA normal on as being business? seasonality? of the this the pricing Or relates the for Is year. inflation about quarter So you that a peak demand or see talked because to you function on just it it of

Michael King

Yes.

impact, will what us, dynamic. in a it for see be now So you largely won't raws QX

have what the done actually the year. in raws we're first of digesting half So

customers. the raw side date of specifically, have that lags with pass on falling, our So on back we'd the falling for to costs, polypropylene. material material material to instance you've some With that got

piece that a state. of that's current of there's not So indicative

The adjustments. through of right, inflation other is and cost to that continue you're side price will living we of

so These as some there. remain products do earlier. do we nondiscretionary I have that We are said, mentioned expect -- And continued will products. do day. people I like mentioned, to That every moderation going use we also are

I so a forecast. balanced the bringing And at we're look think just

back the we You're take economically, same the do seasonality the feel the this pricing, like that some on we've know approach. to right and pricing material. kind we've givebacks got uncertainty going around of taken But right, coming look what's we just expect of on and we volumes, year in at half

Operator

Instructions] question Anthony with next from [Operator Pettinari Our come will Citi.

Bryan Burgmeier

Anthony. Bryan for actually sitting is This Burgmeier in

If you would the been outage, $XX second in that close little out of right the million quarter beverage Do of bit front per a 'XX? to range that too half pretty the think can segment back levels. in million, XXXX maybe to EBITDA the have get back half 'XX is Or that merchandising aggressive you mill $XX now? EBITDA or

Michael King

be I that think definitely for too aggressive. 'XX, would

the have think the that we But a for away business. that. the we what I would outage quarters I do looking back you're for off year tell kind you a and there. rate that run away, in the time base future given at back a have year. I'm an of fact don't certainly, on reluctant get of we're Just being half that planned give not to for to half you line

Bryan Burgmeier

Got it. the… And Understandable. Thanks.

Michael King

yes, -- underscore would I go ahead.

Bryan Burgmeier

ahead. go no, no, No,

Michael King

aside, making the set mills. that fact we which -- terms that mills have we if our the would the I both done for we the outage are very -- of mill do was in progress. a benefit I believe mills I'd say underscore -- The would with Yes, well outage, just of have mill

stabilized there. -- we are we So stabilized

So kind the stabilize run to tell those that that's we of rates I'm confident targeting you are are why to the business.

Bryan Burgmeier

last than going to possible just tell? little Asia think Or In you of to some one bit Or significantly or or recent I'm just be size to smaller to something too sale early? too the early trying larger Pac on scope that? And it's being it maybe in then closer detail portfolio prepared those? the for moves me. any is size remarks, the mentioned maybe deleveraging are a Can you provide or considered. further

Michael King

just to It's early tell. too

Operator

Scheffer Our question Credit next Partners. come will with from Onex Andy

Andrew Scheffer

for segments, from, you each describe now run? where and X fully labor come you've you how staff levels you typically in are us of the the of business sort Can fulfillment where

Michael King

between a in Yes. levels, pro-post. of was hourly. our of in I would our And XX% gap just market of vacancy top healthy I that, kind for I would we normalized between we're X% our hourly tell peak vacant, we And of largest north pre-pandemic both both here what backwards then the space. pandemic, and call height trying vacant. of our our I exposure pretty segments. and segment-based which you, to we you that workers rate sit X% mean other XX%. Food would in And after XX% that, labor the On at wise, would give the was X today, -- you range is tell and work Merch

Andrew Scheffer

the restocking volume inventory then of volume, terms was what aid that I could into you deliver. your the of that you And in thought say heard I

purposely it sure were doing anywhere that in were it So various rather sort into And just dialing volume customers. I'm there back, of on but of inventory with put Was decline? customer much that of didn't how and optimization that deciding move just you terms any was then some also was. business we'd that that sense part or not make you

Michael King

So not our to demand products. due the we right for largely own having constrained us,

And so We not to demand the wanted so demand. extent the inventory. not we're we to did constrain inventory, we rebuilt rebuild constraining

a in healthy products, inventories the look way a right at is that. better established we So to

customer it. if not a make our to there. product, got ship, decision there, So customers products needed sitting based on was We it that were a they then did

-- and want a SKUs certain done wasn't see course levels. a inventory to to type implemented or don't the all as as rebuild inventories to normal rationalizations we we not decision over or reestablish our And try of to be It I inventory for we customers. as it all customers levels course there that for whether was in largely strategy kept making, a us customer it that improve others. strategic rationalize strategy normal customers, Secondly, was decision-making we've

Andrew Scheffer

normal, lack think as was alluding I were the that's of and in not did versus that was And had just Or what any of world demand? the of you what new products caused to what material a shifted you you have? of it maybe and inputs because terms of mismatch

Michael King

a didn't that things, one suffering up, global and that's get tell our due heavy to And you on product. We bits materials basis, There's good a constrained where to did are our We get a to pretty they availability. pop continue known commodity. all and bobs there. dynamic side, widely Yes. aluminum but modes. area on the that's products ability switch material our would aluminum constrain lift to I

Operator

Staphos will of question from America. next with Our Bank come George

George Staphos

want a And congratulations Mike, the person it. I'm sure, performance. I I the maybe just only point who apologize, on make of to clarification. missed just

you what should or have shipments you you able in and your last not were your your Or did to volume I constrain read you did would sought So rebuild rebuild that? been to to inventories? customers inventory? volume, some How still your as quarter, the was

Michael King

Yes. customers first the George, out coming supply of the quarter dates great right of have to on and of of dates couldn't you're absolutely QX, products, right. We shelf. did and our many right the demand because constrain frankly, in we

George Staphos

Okay.

the a your that be if quantify even So don't have effect there reported effect volume you have because there that would otherwise negative that put necessarily of to you was would on some you and fair? negative up results would want was strategy,

Michael King

Yes.

George Staphos

Kyle getting on piggyback could, bit on Okay. my what little was If I a question at. follow-on

have X look wasn't did sort performance, So than lower than the than is but you would sure too. guard getting biggest very of hey, half, heading your second on, the what lower, other factors the factors and as X perhaps of look rails we better there's performance that that as a going expectations? recession, were better key [indiscernible] dissimilar XQ, coming original Because to pricing were over out that What in your inflation, there we XQ? I polypropylene were probably well better lag, now from much or givebacks to we're Again, XQ. sure, you modeled. the as was back And your and XQ, in think out expectations be usually have a drove

positive have to going spreads several quarters. for you're So

be be all you What it for where seeing, EBITDA would very So headwinds run you're that what the range XQ? your be? that if of in of to together, saw comparable all we rate wouldn't XQ? factor Why would sort the

Michael King

Yes. Thanks, George.

So I would tell our you pass-throughs working. the is biggest are contractual thing

so saw It's price QX big customers support strength. area ability correctly. where get our very and raw, from And on highlighted inflationary our as we one you to and

ahead The of labor is second our is plan. recovery

to QX into before drag well potentially expect to it QX into and inventories. reestablish able were We we

getting through late being started unconstrained the we So getting some are QX. the of we benefits, to mid benefits constrained and that of demand

on So segment, of on large which Despite volume mix by we for the that a is the are groundwood front. coated a chunk and set says subcategories won story you us. segment our aside, volume. of what Many moderation favorable

And so and price that's of established QX care take in inventories better kind demand. a labor as to of mix we recovery, nutshell a and

the and savings On been are we and we -- you the that polypropylene, highlighted those has what falling, with so back passing customers. back polypropylene half, can to use

It way. versus speak. back mode the assumption, out the the strength. flattens kind to in enjoying are passing go we so other and largely polypropylene the of don't which half, in see And Now continued to that the of we starts back lag, is

George Staphos

Okay.

what of there you a XQ perhaps again, step on volume the a So I we when spreads there's put way that? you range see pass-through. lag a see? on of Is a how now right to you any narrowing sell, can big considering down from think Do though, versus even XQ

Jon Baksht

put for guidance thing of into at EBITDA the I'll Jon. to be expecting you the Yes, you're year we're you the our in. at note guidance that is take just you QX this and just just is -- EBITDA. -- that. a as I'd can The can range a looking of half only is I'll of look the remainder for jump just a back what weak for the year, for forecast if seasonally other look back

better than should be QX a So bit QX.

Operator

queue. There will back over Michael in questions for any I that, would to the are our remaining And conclude now no remarks. question-and-answer session. conference to like we closing turn with King,

Michael King

the appreciate us forward I joining look further just certainly want today. I to and everyone in thank conversation discussions for to QX.

Operator

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

You may now disconnect your lines.

Pactiv Evergreen (PTVE) 6 Aug 222022 Q2 Earnings call transcript