Earnings call transcript Q4 2022

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Operator

Good day, and welcome to Pactiv Evergreen Incorporated Fourth Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunities to ask questions. [Operator Instructions]. is event this note, being recorded. Please

now Curt Worthington, would go like Investor to to over ahead. conference the Vice Please turn Relations. I President, and Strategy

Curt Worthington

interest everyone. Operator, fourth our we earnings on you good have you, me XXXX Evergreen, morning, With call Thank for welcome and quarter your the in call. to Michael Pactiv and President Thank today, Management's Relations Please remarks website in reviewing Jon and Events the CEO, supplemental heard visit earnings should Baksht, our today CFO. presentation. www.pactivevergreen.com be tandem at this our and and presentation. access Investor section with King,

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

comparable GAAP to considered during or for otherwise presentation. directly and measures Unless a the figures release today's Our not in our continuing stated, results and with GAAP, reconciliation should today's substitute non-GAAP only. available in the all accordance earnings as are for operations isolation measures in in to call most be prepared appendix is discussed

With over President Mike? call King. the Evergreen's me that, to Michael CEO, and let turn Pactiv

Michael King

morning, start Curt Thank new Strategy him like on and and sectors, experience in by and as I'd Relations. Evergreen more team. years finance to excited everyone. welcoming Vice and to role to than of Pactiv good you, Investor his Curt industrial brings the Curt. we're XX President, the have

XXXX high the million. guidance market $XXX Yesterday, Pactiv year end solid exceeded which released full our close, after full of the quarter to results, Evergreen year and $XXX fourth of range

years Our of of of $XXX our highlights the of couple managing we us through accomplished the EBITDA over goals to the the strengths year many last full pandemic. the numerous while as presented adjusted organization obstacles onset million from

Turning to plan our of a update on strategic four. filings. as will restructuring well we as agenda merchandising details related call earnings I a some SEC part and beverage the and slide with yesterday the release of start as announced that today's

on full comments highlights. then results Jon performance QX discuss full year our some then I and detail. XXXX more provide will in year financial will

Finally, outlook, move I XXXX we'll to our their ESG some then and will and cover Q&A. update

our we six, execute continue as are are focus Evergreen. starting to intend organization to are. we an of high-level an a on of strategic focus slide areas. overview with Pactiv strengths We who how with On what know driving at We these strategic and

We beverage. on are and focused food

companies. of in which our two number we large the strong with majority one or markets, number relationships have are and of chip our customers, are We many blue

operating best is our This are our at growth. customers are where focused operations where on opportunities we profitable our and are and where we see for This scale. We America. North is

our capital decreasing are We intensity, material are margin, raw low to high operations operations. focused converting and exposure on

will discuss merchandising of details restructuring We beverage and the further we announcement. into our get as this

sure that customers. on are our sustainability, environmentally friendly desires focused are our We and products making sustainability anticipate the of

is changing. packaging constantly We are on The trend. space

innovating are latest trends. constantly the to ahead stay of We

We solutions cups with our that all sell provider. or across just their types substrates customers packaging don't containers. are a provide of applications. We and needs address solutions We complete

importantly, we generating and our generate returns. on dependable And product exposure, for focused profitable and market we returns shareholders. growth With end balanced consistent are driving

seven. slide to Moving

that times ESG. on margin business, emphasized core focus put we have a North level that our in American that we consistently We we said our several would that would of We communications. key we and themes deleverage our would high operations, many high would on streamline focus

in in each stand North what our to done progress and already We've back, can have on we in we early of of our look reshaping we portfolio XXXX in great proud America. As areas. focus made core these be

position million. our businesses, We and and We such and of expanding of acquired and food the Fabri-Kal, which brands non-core Beverage the have executed strengthening business, goods including sale of multiple proceeds realized Greenware divestitures in service as consumer Recycleware. our packaged merchandising great $XXX businesses, over integrating Asia

centralized reduced and on adjusted by paying strong leverage And increasing our our net organization, debt EBITDA. have ESG. our we are focus down We by ratio continuing both

in restructuring will step announced business. next stronger, established. a will the plan evolution we multi-year discuss is have big to This that advance effort become The Today significant yesterday what we a next. our we all to priorities designed competitive further Merchandising be more Beverage is

to previously operational merchandising meet long-term We beverage eight. strategic manufacturing would in position and here in of our and options we and changing help its our review that needs strengthen slide leadership America. North to undertake our announced food us implement to packaging a identify beverage optimize footprint, customers' segment identify to efficiencies Moving improvements,

a has several process including to segment, led in of this sale This of significant evaluation number international locations. changes the

internal our effectively include have approved strategy align our strategic has focus. strategic which our review We production further to actions further, our and board simplifying progressed more with

that expected combining and businesses. management to to fixed overhead our our we structure and and maintain reorganizing ensure our We cost. reduce continuity supply to food intensity can Additionally, ongoing capital are our merchandising our continue strategic customers. support we beverage intend take to merchandising actions and will be measures These

these proactive steps our remain in actions, is and increasing returns position that paper uncoated liquid productivity our expect the and competitive market, footprint. sustained Moreover, margin we market in our to the growth overall manufacturing profitable believe part to these optimizing by operation. will us packaging position free lowest sheet exit We ultimately of which as for

a project high footprint business XXXX, that mills. view low large was In this what of with at CapEx a will shows our had what we it and business looked our XXXX, future. the beverage business time of eight global and integrated manufacturing, Slide including IPO in high look in the merchandising like level a our like vertically margin,

integration America East in of included facilities into X and business, the business Middle Asia, IPO, Evergreen our and strategic Legacy the merchandising square the Pactiv operations the has Central manufacturing been beverage with Since The business priority. million a XX space. of feet

number of portfolio. a coated well executed the business, reshape to exited ground Middle as and Asia, paper already We've our as the East. with actions Central in We've America operations

is one by approximately almost XX%. number carton and announced converting we've business and machinery combined food and actions by the and evolution the with to of reducing profile just our restructuring business, is on our merchandising that square facilities in footage XX%, envision focused additional filling The associated

lower cost changes CapEx requirement These significant benefits cash a and with drive increased generation. will

plan steps as the The months nine. our slide key to a Moving merchandising beverage take we coming restructuring of include. to part over

close XXXX. to Canton, expect the We second our mill Carolina, North during in quarter of

quarter of the second close facility Olmsted Falls, in to XXXX, our our converting reallocate during concurrently Ohio, expect We converting to its facilities. production remaining and

and will of with and reduction remain workforce on to We a commitments, severance outplacement committed assistance right, in company's with treating approximately our result impacted and will delivering everyone XXXX employees doing plan provide agreements. consistent what's labor policy union to The and positions. the respect, all we

gratitude take locations the I to opportunity for of also their to my want our employees to here at this affected service. dedicated years express

We are our business. for converting beverage $XX equipment, approximately supports our in million strategy investing state-of-the-art which

in investment for cost We our significantly position and lower expect us will will this growth XXXX.

of business starting in and QX into combine will beverage businesses merchandising our food a We merchandising XXXX. single

$XXX result depreciation of of charges equipment. the the acceleration the to restructuring, a $XXX of related to we primarily XXXX, incur million plant and non-cash of million As in to expect range during

incur and disposal exit and $XXX cash XXXX million pay $XXX in transition and charges benefits range other during associated to of million the expect and XXXX and and to also related We costs. to severance

are we be Once these will merchandising equipped actions reliable complete, results. and believe beverage more business our and deliver to sustainable better

outlays the benefits to during primarily to non-cash begin to plan XXXX results plans, implement we out realizing into XXXX and to XXXX and incur we close as we move and our charges While expect operating cash XXXX. onetime these

beginning with CapEx, approximately of approximately benefits annualized be of reduction expected in XXXX. and an of rate full in reduction cost targeting $XX are in annualized We to realized $XX these million million run our

Arkansas to in We alternatives Bluff, this also continue strategic of for yet Carolina, review. The operate while company a completion and intend Pine exploring continue them. our in not we our has facility Waynesville, set to for timetable North mill

the high restructuring will base. reduced volatility and business, maintaining ability will sustain and while service and our shareholder our overhead plans believe operating customer to all enhance risk deliver we for core Overall, through to our required levels value capital reduce earnings the

a year on XX% on our reported highlights This to many benefit of net us. XXXX cost and the for the well great from Slide Fabri-Kal. strong was organization very Moving increase over of year We the full $X.X year pricing with productive revenues combined XXXX pass-throughs XX. full billion, and another year executed acquisition prior fronts.

declined post-COVID of the and in the into year economy volumes X%, the prior softening sales lockdowns reopening largely impact outsized end. to volumes of sales Our U.S. due the year

QX a Merchandising of year-over-year. Additionally, Asia in Beverage contributed the our further of XXXX X% volume decline in business sale

our highlights business target price Our successful levels. customer revenue restoring to the to service year-over-year efforts manage performance while

invested managed pricing We throughput inflationary return equipment to challenging production stabilized environment. and and target improved effectively a workforce, in amidst effectiveness our levels, to inventory our

operating million a interest the resilience brought year labor rates, the market of adjusted the conditions guidance full year is strong We company's $XXX which the for and inflation results of testament challenging of our ended exceeded elevated tight recent by a market market resulting in volatility. face most on EBITDA with and

XXXX. year, we ratio non-core end times X.X to $XXX times divest of of We end, businesses X.X net down reduced leverage were of to the our cash at able further aggregate the million. During for year from as proceeds

liabilities pension transferred I we an funded. billion plan $X.X that the sheet. our Legacy of Pactiv aggregate is would also pension gross note of addition, off In balance fully Evergreen

and updated report August XXXX in products remain our which revenues compared of net from XXXX. recycled, XXX% renewable is XXXX published ambitious from our We to of focused ESG come on or materials our made in we recyclable in one having XX% goals,

Pactiv everyone helped diligent these and for Evergreen thank at to achieve the efforts that us want accomplishments. I focus

and year commitment and the at of we into Looking to have our of streamline XXXX, are more continue delivering ahead value. to shareholder our we on well course us business enhance

restructuring and of during Our I the concluding to our our efficient force will remarks. areas proactive in XXXX execution management plans, that trading, productivity customers, on for and delivering our focus sustainability touch include my will commitments of

over fourth and to Jon before I my discuss on segment will remarks. quarter it to turn outlook our performance closing business fourth and highlights, drivers ESG, now quarter Jon? discussion

Jon Baksht

Mike. Thanks,

$X.X QX. versus Turning were with revenues the adjusted quarter revenue year to were slide both XX, million. starting and and Net $XXX EBITDA with versus down EBITDA adjusted fourth of quarter Net results. billion prior

impacted consumer quarter off performance with in weakness months and costs brings spending higher coming manufacturing that that expected summer seasonal typically broader combined stronger fourth a demand, further impacted slowdown Our by volumes. was the

softening at challenging in of our material year notably the that was in wages, call, with cost input as and most XXXX year. Looking our pressures business, to earnings demand a affected aspects inflationary regard the most and drivers, recent business late logistics, many noted

expect peaked, these levels because on keep are cautious the to we consumer pressure interest well remain moderation inflation could that will are seeing that absolute which rates a we elevated, XXXX. and although has on we into Generally points, continue indicate inflation

year. impact QX sector softer more in and continuing levels inflation and trend in of levels start sales than the at into this Moreover, the we elevated through food the remained the is volume saw general inflation,

in seen foreign driven from have pricing are shipping across increased and traction we most strength of the pressure seeing also the rates business, the drop pricing areas dollar. While we the in by imports,

and plateaued These have begun prices a to customers decline albeit to through are our with passed mostly modestly. lag. resin that is cases positive, some in impacts One

XXXX are late seeing soften costs costs. XXXX. and input We in in to continue declining softened Transportation

chemicals energy, Natural generally meaningful input Other gas unemployment and low, as a has seen such decline. stabilized, remains U. S. have have wood costs generally wages while stabilized.

training focus and retention levels employee at However, a skill lower remain area. key

food service in with segment. demand QSR within volumes the is moderating. In as customers consumer we have We have combined foot noted our segment, market sales recent destocking many challenge as our areas traffic reduced observed

to relative of beverage protein seen notably at board continues has in our sales dine resilience segment And the the to out merchandising see home in with and recent consumer, shift retail, in egg merchandising out by in continued strength from combined food Our uncoated the channels. and freesheet. segment dine softness

headwinds Finally, of operational residual during we Winter Storm mills for quarter XXXX. created the will fourth and be merchandising the first there during expect our Elliott beverage quarter, impact

segments, on segment. the Fourth inflationary in Continuing exit Net revenues coated down Volume due slide over market on the focus the pressures softening groundwood results. XX. value and a year-over-year XX%, X%. were beverage across quarter primarily from and all down is merchandising volume to the strategic business

was pass-through XX%, pricing mix also the and contractual actions across Revenue Beverage of segments. impacted and costs to Price businesses. higher all Asia by of disposition due primarily the was material Merchandising up closures

higher EBITDA higher costs sales net related pricing, offset passed-through. lower employee due and costs, volume Adjusted costs was by primarily of to partially manufacturing favorable down, material

costs costs incurred positive million Winter of Higher Storm flow in million was related $X of $X to related increase cash changes. to due outage. included scheduled the capital mill The and primarily cold additional working to Elliot impact

pass-throughs by business, beverage and other food XX, spend, $X.X material segments of seasonality declining on our Beverage prior sale mix slowing partially the actions. slide segments sequential price the a and Merchandising for largely in volume all quarter due from Fourth down the to across Asia versus were quarter X% revenues comparison. to Moving cost, net offset consumer merchandising quarter, sales merchandising price billion, and

a EBITDA quarter, was million levels. decline $XX Adjusted quarter XXXX million for from the $XXX third

third of of elevated volume of ongoing Merchandising Beverage seasonal due sequential Our the to business Asia declined consumer the of a as result and shifting as the expected inflation, in combination pressure a trends our trends quarter. sale

Fourth Storm by Elliot. also quarter Winter impacted was

as the earlier slight In addition, the inventory we capital levels at ensure decrease in in to as able illustrated we to manage working year, reached during efficiency, quarter target production inventory were the end. year by

cash quarter, inflows, decline capital by quarter Fourth as versus which by working accounts volume largely from $XX receivable of decline $XX a the flow and benefited offset million in are million decline $XX in third softened driven free in inventory accounts million payable. a partially

on expect annual related to to While focused incentive addition are the future, additional efficiency flow beverage near under term on operating early working to cash made we onetime methods near a gain plan, in payments restructuring. I be capital in XXXX to in XXXX cash drag the to our cash certain outlays related merchandising

and service our actions pricing to Continuing by primarily higher segment. X%, costs. of XX, pass through down taken our the net contractual on material In X%. Price higher up mix was slide input year-over-year, results segment, to food were due and costs offset revenues

volume EBITDA favorable softening higher passed due and continued material down over to a pressures. net was sales partially volume inflationary by XX%. on primarily to Volume XX%, lower pricing employee Adjusted related was through. offset the of due focus costs market and value costs and primarily was to decrease due and This down manufacturing

million, to consumer QSR lower Quarter-over-quarter, were of $XX due X% an slowing and pressures the ongoing down consumer inflationary trends or and amid particularly sales and net unfavorable volume price revenues driving seasonal XX%, overall channel. shifting of spend, in mix

our due XX%, customers volume. million, The was merchandising is slowing food EBITDA slide also partially destock. On to driving primarily or Adjusted consumer down sales lower our $XX spend of segment. to XX

of revenues mix contractual and Year-over-year higher actions to the up material Price primarily higher up taken costs. were pricing to input offset net was due XX%, X%. costs pass-throughs

This material inflationary passed-through, up costs X%, down pricing sales EBITDA amid higher to partially volume by higher XX%. and to lower Adjusted related pressures. primarily costs, manufacturing of favorable market was employee increase due net offset due was primarily was Volume softening costs.

customers by material XX% was Adjusted higher $XX volume offset favorable revenues price X% by net or volume. and pass-through mostly million, trends as lower to to of sales costs spend Quarter-over-quarter, sales pricing, of $X combined were a due X%, seasonal the million, primarily with X% down by offset or slightly mix from slowing pricing actions. a decline from other in up consumer favorable EBITDA was partially

On taken to net slide pricing the merchandising of contractual were up XX%, X%, Year-over-year, costs down mix price to and actions segment. beverage due XX, offset material higher higher pass-throughs revenues was costs. our input primarily

the Volume of Asia. in inflationary beverage was amid down the XX%, pressures from was primarily due disposition softening the and market The to decline the to strategic impact the exit from of groundwood business. XX% merchandising coated due

of favorable This by beverage of partially XX%. due primarily the was pass-through. decrease and and Adjusted was Asia from to higher impact related net pricing offset EBITDA merchandising down material employee costs disposition the manufacturing cost

board the included demand, scheduled Quarter-over-quarter, a volume or primarily Asia sale freesheet mix and cold were offset revenues operations softening mill costs the pass-throughs. and manufacturing volume to from X% and uncoated lower due in Winter a lower primarily contractual liquid sales price X%, X% to on Higher million, Elliot packaging Storm due by net $XX to cost QX, of X% impact favorable outage. due down of partially the

Adjusted or insurance Uri. manufacturing to partially sales higher Winter primarily proceeds scheduled the lower in by due to to and million million, collection favorable of Elliot Storm related EBITDA $X and $X Storm offset mill Winter pricing cold XX%, and was largely volume, outage due down costs, a

flow items. times, net net a down billion end cash, Slide highlight on times We the debt year X.X with balance X.X XXXX. at million and our from Next ratio and of we $X.X XX, of ended sheet leverage cash $XXX in of the

debentures X.XX% par. We delever XXXX, and million took of XX% our to X.XX% of balance and aggregate fourth and and $XX repurchased additional reduce our interest We due risk. of sheet in rate XXXX quarter actions during further our the principal

maturing aggregate These we transactions repaid interest current repurchased annual our a have in cash expense in by debt combined million at rates. of and XXXX. January reduce million $XX of $XXX During LIBOR XXXX, February

X.XX%, opportunity With in X.X at U.S. X.XX%. has low against our debt execute of term volatility notional become the to LIBOR of swaps to billion $X headwind and its rising interest the weighted a in rate on to value recent took a to component interest our rate of a outlays. we average rate QX our fix of Therefore, loans LIBOR from of cash current source a

XXX past interest When over million transactions. has rate expense, rate our debt we the to interest from LIBOR exposure impact annualized Presently, year. factoring every have million of XX% the change from our aforementioned to points floating to in in down total $XX reduced XX% the swaps, prior basis $XX

We will improve continue for financial mitigate and volatility. to capital allocation. focus a evaluate to our further our alternatives area Deleveraging position remains

plan with Lastly, fully Pension funding into no volatility for assets income future. is obligations foreseeable and our our plan to Pactiv Evergreen the largely derisk funded allocated Legacy are fixed material

levels year strong was Full we on that million rebuild despite calls, strategic to inventory to target $XXX cash our significant discussed flow at free investment prior inventory a

I'll for now to comments. pass further it Mike back

Michael King

Please to XX. Jon. you, turn Thank slide

environmental, Moving ESG we packaging resilient Evergreen for which better and efforts. customers, in some and and work. our a more purpose on social Pactiv to our designed and updates future efforts sustainable our shareholders, of communities Supporting a build to on our are governance our the employees, our live

February. leading highlight of of polystyrene. announced AmSty and North would collaboration first circular recycling The manufacturer that the a I like America in has item with in is to polystyrene AmSty the pioneered is we

our and sustainable our our a circular company's sustainability offer innovative, toward will progress helps packaging by packaging partnership important our future we our helping portfolio providing partnership, of polystyrene This this customers better respective purpose of solutions. expands and products, fulfill Through recycled company goals.

To at improved our we proud view our activities, which more efforts in recognized were to ESG company in Secondly, by section. ESG to ESG we our invite that see ESG disclosures build sustainable more to learn the latest are investors.activeevergreen.com our ratings you about XXXX. prominent agencies, rating a

company's Now and XXXX the economy. amidst and remain elevated the please growth. in spending a a inflation to in rates excited slide the opportunities turn on as interest macroeconomic slowdown further XX. performance cautious for for about potential remain the and broader consumer I'm pleased recent pullback during backdrop our We

resilient units, business. beverage to business while across we we remain stability our food business expect our restructure our relative with However, two

to $XXX EBITDA first expect deliver We approximately of quarter adjusted million.

merchandising seasonality softer the operations. we Elliot trailing of the the of impact Considering in see saw reflects the also includes moderated This quarter expect demand. on quarter mill we to Winter fourth volumes the Storm consumer the first it our impact and in beverage

long-term that changes With know the growth, will portfolio, the little earnings is next company in term. over a bit or short smaller In announced journey year our be bit bumpy. so to order we in the for a getting the our position

levels, adjusted we input with execution our that $XXX recent throughput, believe to of the our improvements million year margin can cost a focus of we $XXX the for and on proper productivity XXXX full solid restructuring and service deliver stabilizing, plans, million. Overall, and in in range EBITDA

we Looking to to modest year at second in first improvement our half of the the plan, the compared expect see half.

the Given goal our announced the restructuring is of and guidance plan, significance to progresses. year clarity the as further provide

mentioned excludes Beverage impact non-cash the restructuring. previously cash Merchandising of the guidance to This charges related one-time and the

reflect does restructuring. guidance our the However, benefit phased from the

was guidance To EBITDA to the bridge, we our $XXX like-for-like adjusted mill approximately adjusted XXXX, given XXXX our restructuring, and from generated partial in XXXX XXXX in basis a The of million. Canton $XX divested million contributions year EBITDA adjusted businesses further operations EBITDA. in relative

base EBITDA. pro forma $XXX of a in XXXX results This million adjusted of

guidance, bridge beginning beginning our in we adjusted year-over-year XXXX from the restructuring XXXX. food businesses relatively the from quarter we EBITDA benefit while pick to XXXX Beverage to Merchandising as expect to remain stable of So, second our some up

I XXXX to approximately Other the equipment be mentioned Beverage includes the converting capital on the maintain to spending and mills new capital expect which previously during transitionary guidance we points, million, spending year. Merchandising, $XXX

will outlook on charges, fundamentals of XXXX. are we million will hard year cash doing expect the business restructuring to in the that to charges. expect million position including a and $XXX $XXX restructuring better book of for $XXX fully between We better million, $XXX this We and us set work up

sustained differentiated, On and generating reiterate Evergreen a attractive, We returns to servicing makes XX, stakeholders. socially focus on our I'd will strong, slide executing to our for Pactiv growing customers business. what our and responsible like while strategy continue

food largely We're and our an beverage resilient. recession merchandising, service, leader and food industry in markets are

our we As growth recent decisive portfolio generate and returns. are to announcement, shape and you from taking actions our saw profitable

products We offer of substrates. and a broad array

standing base many long have blue partnerships with strategic of We which companies. customer our are chip

working the and sustainable develop products. innovate highest to constantly quality, are We

set mentioned of products we goal As come earlier, renewable from in or a from net of XXX% having revenues our recycled, recyclable made XXXX materials.

managed of strong and further and this capital yields All drive we carefully which EBITDA flow to adjusted generation, process. cash allocation deleveraging free growth through our disciplined

would In I to the vendor Evergreen like customer closing, mutual I our continued like their commitments all hard success. to and continued for also to their for Pactiv our workforce of thank commitment would and partners work. thank valued

us let for it Operator? that, With questions. up open

Operator

will begin today Instructions] Brun question the De and Mizuho. The Kieran Please comes go first We ahead. from session. answer question now with [Operator

Kieran De Brun

Hey, good morning.

Michael King

Morning.

Kieran De Brun

wondering a could just volumes. little you what I talk if bit you're relative to about seeing

little the maybe progressing quarter? in the you can color that Thank seems the maybe protein be would done mentioned think or but resilience? in pockets a first thinking maybe terms there you destocking, said, there how volumes mentioned you. bit a be then of And about to still also now more reduced during helpful? throughout seeing of key us that retail. first Any about QSR, how where you you're I give pockets quarter. bit think year to little I somewhat of other kind you're food you think of I in are traffic the any but strength? think there's Are

Michael King

Absolutely. Yes.

largely we of several food our did we a to of our channels, that couple seeing service A, is moderation we've in really destocking our of know in are customers. So, result of that a ability The our a yes, things. business. service primarily volumes seen

We distribution improved inventories. something we've that's as come chop coming and So out. seeing have in to or we that's do destocking reduce the started are. with be sustained we're opportunity going is taken on customers where here QX in has think space, their out We our the think to QX largely that don't that seeing what in prolonged. that's that especially that we or service, our And

you or traffic related? of think in relates seeing home is out home, versus outside it calories, the that a As the their And dine any are largely between terms shift sentiment their started in dine mobility it's whether is to buying how down. products booming, our we in if get and experience. food saw consumers first out So, within there consumer about economy people things out. dining in are step is about QX the good When and up, the are was and people we they're

And down to an So doing quick at their serve that now shift buy more or restaurant quick restaurant what a seeing we're is in-store from serve of more getting buying. calories home.

space trends kind the the egg us. stronger protein a that egg kind for we know little that of in and are So would be of

trend food spaces So and which our food it QX. through buying the store, beverage driven a merchandising seeing and is home, we're that's and really taking by people going to

where optimistic. full the in year see don't some we I further crash to it's as ,we're to is, we're big deterioration tell But pessimistic, far as it As you relates QX. not from at not what expect mobility

the start to QX see stabilize and strengthening that starting we that fact, that at customers, half as through we the post confidence consumer back year. distribution In our hope inventory of

view of of XXXX, where stand So our we that's today. kind

and of So strength the on intake. in-home moderation calorie kind outside home

Kieran De Brun

stickiness some the Thank of Great. of pricing through then input that maybe of pricing got pass-through we push the input falling you. like if you a follow-up. context down, the That's in and maybe just about costs, about you the think do a that pricing provisions? raw bit you've the outside environment, so through like fantastic of the a little think When quick just coming color. costs how And we about spoke general

Jon Baksht

in up some be will a Sure. say contractual There I benefits would -- eaten that lot the from by of get does those that moderation input some costs. pass-through.

on lot know don't of a XXXX. there is benefits on pricing look -- I of we and But actions that still out particularly. wouldn't to a focus So necessarily count I from quality earnings as

there pickups potential there. some So be could

Kieran De Brun

Great. you. Thank

Operator

Please from RBC question comes Capital Vishwanathan ahead. with Arun Markets. next go The

Arun Vishwanathan

and year restructuring Thanks taking the Great. for Congrats the on my question. announcement.

So just question I on guidance. first guess the is my

you're like maybe is million $XX million itself looks midpoint QX sequentially. it And about so. at down the So, $X or down

So, a or even net by driven some so, maybe you taking? about say I well? is think way result mean, those market the maybe flush Or you maybe it sounds Thanks. it? neutral for as actions year-on-year, some QX like to of just you'd Is by can mainly out could us? if Maybe you're that assumptions see the that right And recovery some growth. that

Michael King

is, we're it, million Arun, used, a Yes. not Depending Elliot. had year-over-year the the would QX, you're will Storm up winter kind tell we way $XX we baseline of had right. on from absolutely What looking impact lagging near you I at be

in the recall, to lagging year, our we more extent, production were prepared, to you we south, similar in paper late lost mill, freeze Uri in January. came in Pine Bluff, a a had out and Arkansas we with lesser that of to deep days So, of several may the our a specific

So in that's qualifier one our big terms of QX.

when divestitures, actually is the exited operations then I QX And to grow our the We and you the that, XXX year, at versus plan look QX. tell least for would and baseline full strength you but XXX. to our take we're or see also of ability that of the return a at terms in kind some taper in productivity, after off seeing moderation QX volume it through to

us. start, with as basis think think would pretty the perspective, good from year-over-year the But a way say, cost I understanding guess, whacked as points here kind up, is to managing through certainly that a [ph] We're start getting the was big but for better I the it. yes, I of two right storm So, progresses. year then and of about start those a net neutral

Arun Vishwanathan

restructuring the then And just announcement. Okay. on Thanks.

So an journey this has you for been guys. ongoing

new you dispositions any expect in Just at plan the should I when current you're beverage we wondering look folding or into plan, the merchandising or merchandising. know food

have So four there are pillars as you will you know forward beverage you'd but potentially looking of real And business look know an se, or I go there's start is a at this far looking to integrated per is, as as is far portfolio as other exit? that kind core timeline as to no there. you accomplish said going you merchandising? pieces you for I that that as what guys are that to

complete some looking or plan So those getting get are just is you mainly as through you savings it restructuring to of numbers? those pillars maybe this

Michael King

Yes, good question.

it's over been say, the And to an transparent all of So, we process. we've as possible enable been and far the as have would we've to years, things transparent going to sequential steps thus two and be tried as iterative pretty be last that. that I've have I next. our done announce

up our management whether the exits, of from at a flow we've look a big the perspective just do next you divestitures, the with to some our if So or ability, set progress made resource take generation cash step. of those some ability the

us quality step And really announcement in our big for improving earnings. so, is recent this a of

pillars we one the And so, capital, ability constraints redeploy that our execute which that had to more one business you when we've how to those you broad is enables transparent, of no on about look secret the at the constraints mentioned. of that being think is us

further divest American any strategy so, exit or tell centric. the our And would you We're I other North whether remains assets, same. we

ability manufacture Our leverage here. our continue goal to profitably to is to

that noted months. are those next see leverage are expect core merchandising capabilities remarks. restructuring plan outside of in terms my operations our operate the of as to we as segment, one to the to relates converting business kind do to the in and lot core do the Our of something where it very unlock segment, in prepared as we that team, a to in anything we of We XX synergies

should think way. do kind And of beverage of that food and We in a starting you business looking report to we're how So that's at April it. merchandising intend, it as unit.

businesses, segments this restructuring. from as to of So, two result a going three three segments really

Arun Vishwanathan

Thanks.

Operator

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

Unidentified Analyst

Hi. Yes. morning. This Good of had on is a actually George behalf conflicting morning. call this [Indiscernible] George.

net maybe income free So, for what help you and can of I taxes to and expand interest maybe to first, like expecting terms cash capital this for us flow in year, you're then working items expense get XXXX? other guess on just and

Michael King

to. Yes, Yes. sure. Happy

components So flow. free just cash to sense a of of some give of for a XXXX, bit you being

have but The So, some Cash to $XXX. the for have taxes rates, just our so is $XXX rates year. is guidance current floating exposure roughly at $XXX current LIBOR we $XXX interest can year. with rates, Cash do be last guidance line will you given to for LIBOR EBITDA CapEx. in

million. $XX called we So around

guide is The the item $XXX cash to restructuring. million $XXX for million other

Now, would we majority going of is but XXXX. that the in sitting I XXXX, and mentioned that that XXXX you tell to be

be we the -- that then, as million range closure a that expecting our And a there this will we capital as year be And capital from build. look were benefit $XX benefit should we are of otherwise. for in board, at of levels but we working we dividend working And then from levels. year bit should don't got release then, obviously pick to And of $XX approved be same capital our a little we up some at are had of Canton year working then strategic dividend be could which around -- more inventory that keep a if year we've This across around, last remainder expect million. dividend, the will we of broadly of we be inventory have the should to the the you target the $XX million. bit

Unidentified Analyst

year, where That's can then, kind maybe leverage balancing helpful at of expect of the And merchandising? Thanks. just kind with you you restructuring color. the as be discuss the end especially of to you're Great. beverage

Michael King

Sure.

be our to to the think our on of these tell I the But do expect below in that you, all years, and remains. a commitment to are all And a position of with things, we'll ratio. four pieces. net lot the we over times improve leverage I with takes, Now moving would there course getting puts

expect some So would by year. year X.X, I that the we of on modest closed end improvement the the at and

Unidentified Analyst

Great, thanks.

Operator

Ghansham ahead. question with go next The from Please Baird. comes Panjabi

Ghansham Panjabi

Good guys. Hey, morning.

Just to confirm and this to I right. make sure have

restructuring/divestment portfolio. a be pure on side, the So across still your operation have products once paper dual converting complete, plan the but is substrate you'll

First Just point. downstream assets? the sort well converting this to of modernize ultimately off, at capitalized how this to are sense assets converting the also, require as right? you And is will that trying to a get

Michael King

Yes. our portfolio If don't with a question board? we you, from change your all. to substrate intend perspective first is we intend any I at But in got substrate have understand if dual to I have do

I for. will portfolio fiber-based with And the as converting were operations yes, second the into looking converting the fiber our announcements. the carton balance was believe that's of So business. then remain we just -- intact side, what question the your as our in you not but all well absolutely leading on are

well as We are investing asset consolidate we in prepared that remarks. converting also mentioned in release we well. So our as we as base our modernizing as

Ghansham Panjabi

just to How Got volume just X% price you. And was move, end far looks comments input X% market then decline out between remaining that as you on evolve then parse at it XX% And decisions the and least this How Okay. year. does the like divestment. expect the sort your prices for starting XQ, your manage so cost. unfolds? volume? Resin separately, year do or to are the of to weakness

Jon Baksht

into mixes the terms the there. of in percentage, breakdown the different Yes, get don't really of we

look contractual resin of quality progresses, as add at our where places the value broader product that movement terms to passed-through movement, most I our we the course pricing as benefit be some of of as and overall mix. our we general resin portfolio over of from the strategy terms through price our the have of mentioned, earnings, will can of benefit a look year the although that will benefit, lot to year, pass-throughs. or In some in we price we at moderation But expecting the to a continue we're are, to

Michael King

there Yes. we the terms no as happened that the There the well that was as retail our that unrelated in nothing beverage saw. volumes were -- volume was question, to discontinuation to of weakness

non-dairy, about areas it's If serve, dairy, we think the you fresh juice spaces. and so, And

prices on shelf were that think, nothing more what the I drove It's that. than the you decline So really, saw. higher

Ghansham Panjabi

Got you. it. Thank

Operator

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

Bryan Burgmeier

actually Hi, any XXXX, about in why that the Is decline maybe Anthony. destocking volume is being there question. first Thanks customers of the similar that this of year-over-year in reason still volume get we Burgmeier are the Bryan for would magnitude for change trajectory Considering year? is XQ to as it the fair think half the into taking meaningfully?

Michael King

that destocking the started for largely Well, for us, at least customer Yes. our QX base. we believe in

And softening their safety. inventories be don't gotten base. look it, our returned And so, levels reoccurring what's some holidays. distribution we that distribution, not through drivers behind and based seen theme. the we they've with was consumer that customers a of our really the that the that service see as at from size kind We've expect a We to just enabled certainly but broader have we believe the met as specifically of us, right

a QX. So we that's That's not a sustained don't believe QX. that normal

To QX of And we're things so, decline outside XXXX not seasonality, of better for anticipating say of our reoccurring. that If differently, normal a XXXX. kind where because in year-over-year a QX be than question. answers those your should

Bryan Burgmeier

in $XX land said about a the this but kind the remaining Fabri-kal impact expecting know And restructuring you XXXX? you just question me, Thanks there reduction synergies the items. Are of up just any last bridge program cost the that of EBITDA overall, in million are Yes, benefit makes And couple sense. that much Okay. for how still of from then, year-over-year detail. a I targeting? year? thinking for you're

Jon Baksht

piece, we're I'll synergies think that. last of From we I We've QX integrated Fabri-kal rate the full call. at effectively and run as that last year. mentioned Sure, take business, of

further into going a this going year, So into and no there's standpoint. from Fabri-kal QX uplift

we point, this at fully have integrated. So been

starting relates We the synergy year. in QX. consolidating that of the course those are well. be of We're the the going as mentioned Canton it will As part the your second in of question, the uplift, QX over business to in in units we closure to phase terms

would to could to going values probably approximately order a start some that, you in you half of guidance. of rolling give run of about we half expect hit approximately just And of we're some to XXXX, into model rate in year. the going this year's that around that given synergies included the So those part of magnitude, XX back

Bryan Burgmeier

it. a turn over. lot. Got Thanks I'll it

Operator

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

Adam Samuelson

morning. Good you. thank Yes,

seem volume. kind COVID just on in volumes I performance. here, of there's XXXX, would first of volumes at striking X. I look volumes as And in that are up kind you kind appreciate views with food of levels. and share. And organically know They value Fabri-kal organically I basis, your kind of on of in the X talked love that XXXX back some are over to of it the I So question in service And in kind kind the kind layering against were get XXXX the down depressed guess an noise market about organic we'd of but the is

areas certain you maybe mix had help can just has? in fast you of think of volumes de-emphasizing kind portfolio as the of conscious kind you've But growing not shifts think about the as have the aggregate us where you kind So of lines. that of the product terms kind might been market of

Michael King

Yes.

food service and also So complexion that business, about volume our chains if distribution. of we're serve you of think the and we're quick

the that it of if we that properly, had historically, So rebound. happened, depressed and effect you COVID with what's said you saw a you at levels snap-back look X%

large On in our when the you and food typically consumer merchandising we're makes the other if between get they calories, us. their a buy business, shift the the down chain how channels watch And restaurant distribution that, a for there's of greatly side influenced.

So we're in food service.

on see and the buy starts our their inside business. get step to merchandising start you the lift the that their again, their calories So when side consumer to large down, other what see you food takes next fill a a you But pantry wouldn't home, is see decrease. in

And is mobility versus there in at house. consumer are, the choppy is higher are that service eat menu tickets to and up, thing the and It's that's lot that of we're consumers more also still consumer. shelf the get. that's customers same food And the prices costs the store prices, now and landing it's the shelf softest the step buying our pricing that the right decision that facing the driven higher. some kind out signal, is volumes, of retail, the menu expensive for really the out and you're decreased in seeing buy value but cycle they by consumer prices, lower so, higher of what cases, while there are within it's are our a And

Adam Samuelson

just Okay. to It's on merchandising. helpful. up then beverage And follow

anymore. the slide business with about kind integrated an the mill of closure integrated So mill being talks mill not having producer, Canton, of

talk alternatives but exploring strategic liquid obviously Pine carton Bluff, for that's still principal about your of board. supply You

would the alternatives, idea would is divestment operations? you that that some the come is your still a potential of operating, with idea sort, or so if of as sale converting agreement like supply And there that a kind be some mill look at and sort for there's of

Michael King

Yes.

remarks, highlight strategic as alternative operate in in critical So are are Bluff critical the Pine critical. is ability we remain to certainly prepared our both to needs the food, it one our We're the but Bluffs and avenue to we and shelter Pine converting we own and successfully, to they'll support all select. it future core mill. whatever water, the Waynesville to down, give go mill continue committed operations. operating we Sale could

those And you to think considerations there. protect Pine Anything carton it there, in going Waynesville, are said the I core So, our a side converting do we're we critical Bluff business right. degree, and to certainly certainly on

Adam Samuelson

it helpful. you. that's I'll Thank right, on. All Okay. pass

Operator

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

Ed Brucker

had getting ratings if to actual it Hey, I with gross balance just thanks ratings, any your be committed on you've the to conversations on reducing a just to leverage of goals get question. the seems specifically times, and getting like any agencies that like My behind. get me, is with for below or a done rating feel thoughts, excuse down, the taking and if bit seems my like, the there's first may four the questions given back want to I balance one higher what sheet, rating? sheet, what and to you've debt,

Jon Baksht

Sure. We don't control our ratings.

broadly ratings They balance active allocation, to an would look and flow, have do debt. we our Moody's for just S&P the dialogue them. capital I know, at gross et so you is to net entirely as say, than our and tend plans off, again, them cetera. talk First to both cash sheet, speaking, about up with debt more

the net to with a use. would cash. about we four million target, talked us debt is that look ended as the from I think perspective, $XXX So plus of quarter the that And times agencies We to number.

So I $XXX spend that we year, over think this if did of million they're you and bid QX last looking three over $XXX look for, the cash. the of some into the at million months actions of

further ratings right But what the we you there. and focusing been they control, continuing the relates the company commentary relates I look on path But think we're cash things if to just delever. spend to I the think it speak We'll our think can look and of think again, as on at it is signals. reports, keep to positive the agencies I more has delevering more their to as I I on and upgrades ratings, which as for can't to are. more actual that we,

Ed Brucker

Got then, of it. And relation kind in to that.

cash divestitures Waynesville sheet with you balance or some Pine cash If see the on or now. and do that Bluff really right generated any you free flow have the

debt with gross at coupon certain Now on term Would that debt I in of paid guess, unsecured you've you higher or reduction? And target, I those you've the, some rate, to interest least locked in target loan. off January some of the February. continue or more know

Jon Baksht

I any can't Yes. or signal obviously. we take, actions may not future may

of and I still you cash some I and as is leave growth. can focus, it's do all we think and that is excess So, have a a balance I deleveraging deleveraging with mentioned,

capital that we focus our sensible. So for our on. we're all this business some we year saying invest the about of that We on in talked where us converting to position returns future mentioned, going we well in is investments as assets

So as it'll that where goes. continue at look to we be a balance capital

Ed Brucker

Thanks. That's helpful. Great.

Operator

White Deutsche with Bank. comes next Please The from ahead. question Kyle go

Kyle White

Thanks Hey, the on of year-over-year that consumer your XXXX in outlook? us and for assumed moving you with shifting volumes good a on just basis company guardrails what able are behavior, to well volumes question. bit parts destocking. expectations Are for as inflation morning. lot as on A more taking the is for the give a

Jon Baksht

shift we're the volumes, in of food beverage businesses broadly isn't material there's guidance in the just included there. as mean, around you moving I pieces a at a speaking lot particularly No, look if not,

the to food So that from beverages, should last But take with business, volume year. be relatively line the side. on in volumes

Kyle White

you're then later expect sense. another just Is given target CapEx that or helpful. there this expecting. program this said restructuring post that the is for I XXX the it That's And that you year? right year, long-term think Yes. the step we should was business Make on down the

Jon Baksht

We're future not that. any providing guidance beyond

that is our exposure the As XXX of some merchandising by of we longer-term, converting the inclusive million on side, reducing we talked $XX the in talked mill of terms Canton. to closing the of about, operations about modernizing of beverage the assets

to capital is But capital. there which We about, deleveraging more the talked be light as are growth going one and opportunities, of for we goals. are also

to with will But less to no can maintenance continue in at continue And reducing operation. exposure guidance a we'll going opportunities we the But balanced so, further be mill on that our capital look that basis basis. where to sensible invest a to is from perspective. say I

Kyle White

Sounds good. it I'll turn over.

Operator

[Operator from Instructions] The with Suisse. Curt go question next Please ahead. comes Woodworth Credit

Curt Woodworth

good in. setting Thanks Yes, me for morning.

So, I look roughly to know you're assuming was the we was at of cost volumes just a kind pro I given a is you're guess fair in at year, it And and of food say that from EBITDA management. bridges, perspective, if that about price slight benefit? neutrality million. then, when price the looking mixed forma part EBITDA, year, this flat at or cost is positive And looking $XXX it last

that color be give any can So you would on helpful?

Michael King

Yes.

to curve. Our stay right the side pricing of on is strategy the price cost

of kind position commodity of are falling out support with we outside the pandemic like things movements that that's based customers. index ourselves considered. so, And all contracts our to costs coming that our and of And with

think price said the year. right occurred on of this you the it. to way wrong is We get about yes, it the So, plan I way to think don't side cost

Curt Woodworth

terms about it on the you optimization volume, kind want or value Do are you should front? that You the what a there about share you volumetrically reflect you little product levers a have perspective talked done going doing. composition the therefore and this you the SKU market market on discuss? and could where you or any in a have that the then forward? then, that kind portfolio think of SKU but is luck. good are over And unique of earlier, this year new introduction perspective, bit I more from you or Thanks And touched of

Michael King

Yes.

That's as to largely on product capitalize where So largely to and through our take where I on would areas push shifts, products are can looking and growth. we that the say, process to advantage capitalize service at of where in consumer ability XXXX opportunities, areas certainly we we're we look shifting. our the broader

the whether the fiber where flexible we anywhere really ability So, on seeing. the that's challenges and and from on substrate more fight side to molded protein volume to side, value use egg shifting lean can be we're or is looking our a perspective we're substrate off that in

Curt Woodworth

Okay, you. thank

Operator

King any session. our I concludes and to Mike closing would for question This over turn conference the like to remarks. answer back

Michael King

the we Thank the about and Pactiv you. We're as interest updating excited we and Thank next building we're to strategy, you. look again And appreciate continue you in forward questions. momentum our here today. for your thank to at quarter. We joining Evergreen you all execute on long-term your

Operator

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

now disconnect. may You

Pactiv Evergreen (PTVE) 7 Mar 232022 Q4 Earnings call transcript