PTVE - Earnings call 3 2023 | Pactiv Evergreen Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Pactiv Evergreen Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your first speaker today, Curt Worthington. Curt, you have the floor.

Curt Worthington

Thank you, operator, and good morning, everyone. interest XXXX Evergreen, earnings your our welcome for quarter third call. you in and Pactiv to Thank With me on King, President the call today, CEO; Jon we and Baksht, CFO. and have Michael Relations Events of our the earnings presentation. www.pactivevergreen.com visit Please supplemental our Investor and website section access at our today that begin our including will forward-looking remarks, remarks discussions presentation.Before heard should those tandem to statements, guidance be today with Management's I for regarding this want reviewing in we formal everyone XXXX. our remind include not are could those by statements These future results our of forward-looking and actual guarantees differ performance, statements. materially contemplated from forward-looking you on Therefore, put not should undue those statements. reliance These cause to actual statements what numerous could differ to uncertainties materially from that subject are results we risks also expect. and including ended Report the June XX, Form March We a XX-K for XX XX, Form December XX-Q our ended September Annual those risks. quarterly you refer for SEC all of reports year on XX, and and to more of XXXX, our our quarters on detailed discussion for the filings, XXXX, recent call law.Lastly, will date, and we forward-looking we available of financial as The forward-looking any us to call, today's can required on believe today's GAAP useful information on are we as by except to our make be update performance. based statements, obligation discuss disclaim any which certain evaluating during we and statements non-GAAP this measures, in

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

Michael King

performance the discuss X. against Curt, begin the strategic provide Q&A.Turning to toward priorities, we've you, end for then metrics. attention and an of Slide made key open progress us the Thank to our XXXX. morning, quarter our At overview for during with you everyone. line good made our Slide updates joining we'll We'll progress proud and for call, Thank of today.Turning targets our your the we've steady I'm on financial the of the X.

during Our EBITDA not dedicated XX.X%. adjusted team. without performance to the with third solid been margin quarter EBITDA possible increasing adjusted would delivered have during quarter We the our growth XX%

our In addition, $XXX we in net made free generated flow reducing further cash million and progress leverage.

teams a market navigating execute continue at level, high challenging dynamics. to Our

solid to business Our resilience deliver ability reflect returns. third and our quarter results the of sustainable company's the

free to guidance product emphasizing and result, of higher-margin continue operational focusing discuss upwards, margins progress channel cash and a on we excellence are broad As revising our which focused offerings, our range products, flow. our detail.We leverage make and on network distribution of strategy We to generate improved and continue will in our coverage Jon value-over-volume to remain improving our balance sheet. greater

production shareholder system, last best on We improvement. and these introduced the Evergreen as quarter, promotes the of recall which priorities that implementation allow we value.Next, practices also enhance focusing us to are confident that Pactiv will known PEPS, strategic continuous

increasing of of During our I'm the the year-end. that became pleased by the to that we we plants during to are brand we quarter, X reach anticipate goal third second from quarter, our X site shared of plants X ahead share target. status facilities that expect term, ] our to X number of having PEPS-certified, gold certified status to next year we plants with X.Longer [ brand before our first of achieve X silver status become our XXXX. to during And

have PEPS the second still journey, are made the the we we meaningful. progress since quarter While in early is

with improving impact about enthusiastic our key our waste customers. and organization strategic the to elimination have win throughout the and continue will this are operations We scalability.We

As we better end insight long-term We that call, needs. our provide well by into partially with their second benefit our customers growth. strong is positioned its highlighted are earnings our business succeed, markets, during aligning for when outperforming quarter partnerships customers and our

committed year. to And we our demand changes with we align to in customers. broader as been continue was team production remain key effectively restaurants with made and Evergreen, has end levels. enabling the efficiencies.Foot with positive and to progress full-service able traffic improve seeing adapt customers.Although are down align are our compared to addition, to in moderating, control balancing better Meanwhile, last markets In are to us we pleased here our Pactiv our we costs costs to demand, strategically QSRs we've momentum slightly with

However, customers outperform to with market. strategic our key allowed segment the our alignment Foodservice

as year, been have which product has disciplined value-over-volume to categories realization to our that continued the past supported benefit in also their we restaurants spending to the store. we to And calories, approach, allocated shift transition consumers within Evergreen. they've during the Over quarter. elements, grocery the lower-cost their our store, those have Outside price of from budgets Pactiv

our flow confident excellence Merchandising operational single economic the and closure Beverage Merchandising of of combination converting We Olmsted mill and Beverage has higher have quarter, our during the profile.We've our past to grow reorganization into addition, been Canton to including Last demonstrated This to our the of our and segment. our year, and market.Moving the improve related in structure resilience Falls Merchandising highlighted I of transformational these Food free cash manufacturing journey. liquid reducing our the Restructuring we X. aspect In made of progress ability the successful to remain and cycle. a considerable margin reduce profits model management competitive our overhead business and and adjusted our through remain costs in businesses The will EBITDA facility. and costs year our Slide packaging drive us actions the on the intensity position capital legacy

the with service no any our restaurants, transformational beverage packaging food journey distributors, as distribution areas product broadline or convenience are with to foundation end-market provider. positioned stores nationwide scale support our solutions offering end-market quarter, upon.Today, I This critical the matter is provide their will headwinds footprint the against that one consumers be means or behavior QSRs, us our sustainable the inflation.As built mentioned as it diversified have their these highlight that of inside consumers are previously, stores, altered product our meet environment as QSRs higher-end full-service scale uniquely current have insulates that and food processors, This to proposition adapt is reach favor broad our we exposure, menu to provide companies. restaurants. we We and our spend, have and tier prices Starting our This across payment to exposure. grocery and macroeconomic diversified sell shift to customers beverage other especially value higher another. unlike the in lower where important consumers consumer the fast partially whether This to to down caused home, needs. over channel outside food to from patterns trade to impact restaurants

serves full channel. the Our the within foodservice restaurant spectrum business

it and and store shift allow grocery this shift they grocery behavior.Turning consumer packaging drive-thru innovate food us those to at to segment with confident shift foodservice. will and industry. customer capitalize So and shifts a the perimeter product X. This And beverage We attention realize trends, in any where to dynamic working Beverage offer Slide this to customers. for diverse is as enables ever-changing develop that array ourselves is sustainable economic Merchandising competitive is environment of options migrate volumes our exposure on [ our the from the that expect within of continue the needs. secure and us quickly Food we breadth we're our even profitable other in in singular believe peace customer broadest insulate your able respond of mind trend ], products. In outlet and center or the The that store.With products pivot options foot the consumer to one our gives friendly with our advantage over quality throughout changing We aisle it from to a offers we the demand have store the end-market from to environmentally the window menu the level. can forced highest at spend us and which another, to traffic. offering consumers food convenience to the beverage opportunity to also for prices their the and and from product the to growth is of to substrates fresh Higher presence in us, to capture

us our strong of which sustainability future play a a of the ability supply customer are we of customers and We critical and are goals, build with our provider strategies.In strategic considered cover our needs. such and afforded has vital we role chains with a packaging in customers of a as chains and packaging-related to because wide the chain solutions supply many host technical their become move choice partnerships component supplier to cases, supply spectrum their such help services, their

have work customers incentive products a to Our develop strong next-generation us substrates. with and to

the have Slide of to with disruption customers solutions X. the the convenience turnkey to our sustainable for engineer and minimizes and expertise We solutions Evergreen Pactiv provider.Turning know-how a

Our us have key point gives customers. exclusive best-in-class It service all our that national us in production another we allow strategically us also meeting hub-and-spoke to deliver an are Many upstream timely packaging only to stages a packaging strategically between. to our products largest, located differentiator downstream manufacturing while broad into manner. distribution in have from efficiently centers value distribution vantage precise do footprint chain quickly Not also close we the the ensuring centers is in consumption allows offer customers, of that our of to a distribution strategically deliver to our the most a network we important products footprint, needs and our customers. located of also

our As while rely just management. just-in-time in can other lot on on delivery, packaging case companies for inventory a us of count a result, customers

back with production better customers Our needs.We which to quickly categories forecasting, customer distribution allowed to work changing us us changes adapt and and closely our demand carries inventory adjust across on to anticipate centers to enable accordingly. all levels our

purchasing categories to to basis. challenging decisions. to and are general, role higher a and recently, allocate consumers optimizing from operate teams creation.Turning spending In We the that changing continues prioritize customers, of and to remain of sustainable operations sequential manufacturing the chains. more continue benefit efficiently our encouraging also More to both from network improving our we in. participate benefit year-over-year Slide food as volumes we distribution in moderating and customer value our product critical supporting levels, evolving playing to beginning on our inflation remains competitive to caused advantage Our see channels meet supply for signs and needs variability The consumers sales while long-term impact adjust by the of further XX. elevated committed backdrop market reducing demand prices and a

leaders. to industry winning are by so continue to ourselves, have On of strategically markets, benefit respective they we seen aligned that limited their with that believe so customers, position our promotional they when which we are contributed We volumes. are We our quarter activity front, third we customers succeed. some that in

not reduce the been to lag we expect effort of volatility a net customer be Although picks lower the to large-scale to the recent commodity cost the yet, in in mechanisms. don't the And pass-through the we Evergreen.Regarding our material positive as for material results rest as XXXX. have promotional a trend pricing promotional the XXXX well We've up, cost has have impact in Pactiv contractual on extent activity made that sector price raw concentrated would environment, a overall year. for that seen the our

improving continue to we and organization. manage productivity costs by Finally, controllable across our efficiency the

Beverage to communicated and to our of leverage.Our strategically adjusted expense allocate net onset. interest cash and on on progress as the result operational schedule, a achieve And improving free our been milestones result, flow. and continues significant from to remain benefits that we've reducing we our efficiencies, pay As Merchandising are able seeing pace our operational overall to Restructuring cash EBITDA our debt, to down we a we

hard a focus at both more As which impact a all particularly flow structure, footprint of taking of facilities generation. results reminder, effort our on over in lower a capital-light would work to Jon? execute of this it's Jon I'm cash to operational the to operations, detail. help quarter that, turn third according the way.With discuss proud to us the commitment streamline and our employees, to increased Overall, support is the like of and converting this along to more I in tremendous effort our physical dedication to now an from And operating call also costs very continue to plan. and resulting

Jonathan Baksht

We Mike. start our for quarter Thanks, highlights with of Slide revenues $X.X I'll third the on quarter. reported XX. billion net

May the reflects and to This in of Canton compared operations our the the this sale million $XXX this of have quarter. decline year While a Most the out. the of and portfolio August. mill of carried Asia restructuring represents we last of decrease includes last shutdown optimization

million, actions, with Excluding was to increase $XXX was $XXX success the cost those across revenue raw year mix organization. as adjusted EBITDA which period. compared due was our value-over-volume improving discipline in decisions.Third while environment lower approximately $XX year cost mostly as ago the million our our reflects maintaining million down strategic to quarter to compared last well The material the

Our in $XX costs efforts increased flow managing to flow. free control expansion $XXX year quarter cash in points cash outflows. quarter, and margin XX.X%.As our in points million to we've million despite remain basis delivered profitability We on over to adjusted basis focused compared cash maximize ago free we restructuring-related and to XXX the last period prior EBITDA of the discussed compared quarters, XXX to the

continue have $XXX which And cash.Our goal by million. cover debt been customers in during more better Xs on with flow improved levels, make in up has performance third our our cash our pay We year-end. progress EBITDA results. that leverage Due reduction, we quarter, maintaining net net goal and to strong debt effectively the generate to to third to is We ahead us Slide the inventory X.Xx, low turn our continues our ability achieved year-over-year I'll the adjusted XX, which by our be frees to quarter and quarter.Continuing inventory in improved of reduced down during debt. to successful help normalized aligning

moderated As segment. Canton backdrop, elevated timing under as net while year Those benefited into and XX%, to levels.Starting by began costs from revenue, the the dynamics year pressure historically spreads inflation favorable and of spreads normalize our attractive Food driven contractual last our mainly Beverage mill closure a saw with of pass-throughs. the of supply-demand within volumes to to raw this Merchandising remained due a we due decline material

and our Merchandising primarily and $XXX in closure adjusted driven to this: environment We quarter, million. detail contractual from in X%, to greater the year.As the markets X% offset X%. the strategic revenue in Excluding end segment financial lower decisions to lower Food quarter to XX% business, our by performance declined by Canton lower relative I'll with the was our Price/mix results, our managing We of in mainly costs. and the continue we overall pass-throughs Merchandising. cost Asia increase third down down reflects is costs, manufacturing lower due and benefited and an Beverage overall and Beverage to EBITDA than divestiture raw outperform Volumes pricing last were as by able cover volumes delivered of the value-over-volume material we were transportation material

strategic working to to and from due quarter. billion, comparison. the was Slide quarter the down build, by inventory restructuring-related benefits outflows restructuring of flow initiatives and a are were cash year and decisions and We including seeing $X.X the mill the results cash Merchandising interest higher Canton our offset prior also our of net volume mostly mostly prior down efforts. XX for increased and a due productivity Free working impact segment. and from the capital paid.Moving X% capital operating impact improved the benefit, partially Net to sequential closure slight The expenditures value-over-volume revenues Beverage in Food decrease

due price/mix higher cost manufacturing were lower We experienced We material from was costs, and offset net contractual by unfavorable costs. partially from second the slightly quarter, to a our of benefited million the increase of also cash higher offset interest we'll the to compared Slide and million XX, costs, material operating of the to timing expenditures.Turning quarter, improved lower EBITDA partially driven second continued mainly the for which Adjusted levels, $XX segment. lower at flow by $XXX increased pass-throughs and quarter. payments mix. inventory results, optimization by results Free product pass-through capital look by

to market single continues segment against constructive backdrop. that were Our flat versus our a markets year, which end low Foodservice given were is last essentially digits. perform Volumes down challenging well

somewhat that these have same from have and been Our targeted have share, At promotions limited. have benefited of we key time, dynamic. the some customers gained customers our implemented that

quarters, we value-over-volume. to due decrease primarily contractual X%. reflects The continue successful previous profitability were was year-over-year which as in balancing material emphasize raw On down basis, to in a of As costs, mix price/mix volumes. pass-throughs and lower been we've most and

volumes X% increased or material net back-to-school products a trends pass-through.On Adjusted seasonal as to to adjusted and cold quarter-over-quarter the similar EBITDA million responding of to costs, to elevated Our factors experienced increasing $XX quarter, basis, by million Beverage cups and as reflected or their like protein was X% revenues EBITDA to due inflation and favorable and manufacturing Merchandising Food transportation quarter cost costs, net due egg. observed X%, in price/mix. $XX costs.Turning higher and with volumes budget the XX. to cost due sequentially. in pass-through and Slide down Net lower higher categories higher second increased with reallocating primarily material of similar second customers

frozen In the for a revenue weather California delayed in packaging resulted half availability XX%. fruit fruit addition, quarter. fruits fruit uses.On severe in reduced is was a that of of as basis, larger reduced This the overall down fresh harvest the year the harvest the the and portion in in third quality fresh other used first for year-over-year

of divestiture decision of X%, the volume was Asia. Canton relationships overall factors, customer our low-margin mill book reevaluated select to from down most the of was strategic to Merchandising exit due business as our those that Canton Beverage closure the we and the However, following closure Apart mill. included which

which XX%, by costs, ] sequential to XX%, in the of lower digits.Adjusted primarily pass-through X% material offset to volumes those by Canton the down outage a price/mix and was mill transportation due in contractual the X%, mix. were closure mill costs, increased by Canton XX%, was lower the the due net offset was by due partially EBITDA lower pass-throughs. quarter, was and impact low cost of factors, mainly to a manufacturing unfavorable basis, On due revenue mostly prior [ product X% shutdown, cold down EBITDA due underlying to by sales including the single from value-over-volume to down volume decisions, lower costs, Adjusted of increased Excluding down volume. partially net

margins Our Slide of basis XX. to demonstrating points restructuring.Turning increased segment for the sequentially, benefits the the XXX

make and We reducing free to our continue on flow. progress our leverage profile maximizing cash

ratio to Our driven net the quarter, adjusted XX declined EBITDA leverage months. a a in net X.Xx debt sequential last over improvement by in third reduction in the and

We to be leverage Xs and in ] XXXX. expect further our in we'll that confidence to by net our year-end make improvements ratio [ the

In in the ahead million previous our we terms cash which $XXX generated free million third and of guidance. quarter flow, is $XXX year-to-date, of

billion interest end. flow reduce our including $X the as interest million, free have in to us million interest interest expense during $XX allowed key quarter would has average rate reduce $XXX repayments the future rates, cash Based reduction with $XXX to quarter's by third entered fourth rate approximately our XXXX, of now of generation a this growth.Factoring annual X.XX% of debt million total we by debt debt of contributor flow cash during fixed quarter. the swaps a into of of Our quarter current year-to-date, on we XX%

in approach aligns as underlying customer well strategy long-term We a support market remain and priorities, and our future allocation our trends. our leader our capital confident long-standing position our growth. relationships with Regarding consumer

to preserve aggressive committed which balance will sheet in are growth, turn and the our goals to delever delivering allow to profitable liquidity. us meet We

benefit our Beverage by volatility.Importantly, Restructuring, earnings business growing further portfolio our intensity make lower and to we non-core profile our we us on As Merchandising resources to we businesses capital demonstrated core help from exiting willingness our expect have on to focus optimize reduced the progress markets.

Restructuring as we we cost more stages structure Beverage to incremental, some transformational expect be including less As journey, next rightsizing. and Merchandising continue our the the optimization and transformational

investments adaptable. incremental the our We benefits may cost model business require future more making in expect term, the that in and near this generating

Slide more capabilities returns provide our reinvest to for consider customer in us enable more As our growth. with our these updated strong We efficiently, opportunity and reduction initiatives, will while outlook. serve cost we stakeholders.Turning actions operate to enhancing base the flow XX and additional cash to our effectively believe generating us business to

quarter We year-to-date. and solid pleased are with our performance this

business continues both an Our future at across and positioned remain capitalize to we company to on growth level elevated well execute opportunities. units,

our our guidance impacted the the costs to refine $XXX Restructuring. by up range restructuring I'll we the of proceeds guidance as out excellent of we compared Merchandising is the generating higher business on the will $XXX include performance leverage interest that we to million bringing our have any from these full of XXXX decisions U.S. deliver to Beverage the increased customers' and flow strong account weigh outlook and million, sustainable estimates. elevated capital between and earlier this the quarter this expected economy and be range believe expected ability does cash near the the and tightened and purchasing remains EBITDA may fiscal $XXX headwinds, we resilience have order are not rates Adjusted the our provided primarily help the year demonstrates point company's exceed EBITDA. also in results.To Despite is patterns highlighted, this cash to by range for as million also our benefit As and to net $XXX ratio.Our reduce the spending still we spending, low our year-to-date, free term. equipment for business year. guidance now the flow the sales to us the following: demonstrate updating further year which the of million, anticipate from full end full that, remains year adjusted $XXX now property in cash for consumer inflation cash impact million our for $XXX possible third million range results for facilities uncertain million We Similarly, to which total reflects further our free $XXX of our ability

we will for XXXX.I'll back previously, it As highlighted $XXX approximately in we million turn cash of have restructuring comments. occur now closing anticipate costs to Mike

Michael King

the we We've immense we take in In to in to our across pride strategy our manufacturing portfolio, hold to and and are Thanks, invest Pactiv when Jon. chain we committed our our supply ESG all communities. in Evergreen do what our sustainability accountable product materials areas we in ourselves our products delivering of firsthand sustainable operations.You operations. increasing to is without and of business scale that can't Innovation envision sustainable the at happen key goal innovative sustainable know, innovative, our products. continue

excited ESG Also, as areas focus governance planet, people a to report well first comprehensive Scope the and the stories emissions announced This recycling allows our offer future. even certified-circular of our collaboration our of will quarter, provide we to metrics. internationally made teams packaging on of a products expanding are X gas ExxonMobil eager packaging.We Exxtend, several reporting ESG for energy partnership greenhouse are ExxonMobil's based results of options, our innovative sustainability report assurance This packaging ESG fulfill our better packaging a customers detailed polypropylene their updates on to with release recognized upcoming announce report, our with The of the standards. across technology. customers ] more materiality GRI our to assessment third-party also our and product, share portfolio circular as across our the initiatives new consumption.Our purpose will to enterprise report advanced [ the and us offer X first and of work include

have sustainability in we our progress our are early While in and of progress journey, to we date made initiatives. are other ESG we proud the

we their committed years hard leveraging open remain the to I execution We highlight delivering of the with prepared established concludes thank and team's With long-term our dedication our that, the stockholders.That it sustainable over let's Lastly, each want remarks. them for up of again to continued and questions. our foundation work. solid Operator? objective for value of ongoing have

Operator

first from Ghansham question with Panjabi comes [Operator Baird. Instructions] Our

Ghansham Panjabi

us can off, specific I and Is parameters fourth upgraded savings? guess, first a that? end Maybe better to about give that exactly upside? the on you you bit driving think driving outlook just some quarter, kind What's markets it as of than the what's for we thought? progress little XQ were the as restructuring

Michael King

[Technical Difficulty]

Ghansham Panjabi

related And could just Okay. then maybe quantify. just to that, you

So sort year-over-year third XXXX? cost the was from increase are able you of of quarter, the much EBITDA point, during how And flow-through million $XX that effect savings? any at to in this share into

Michael King

Difficulty] [Technical

Operator

George Staphos with from comes question Bank America. of next Our

George Staphos

I hearing, example, questions, is this we from least coming issue, were everyone at phone having if else but Ghansham's over don't was but know I'm management not at where all. for the line, through

can hear I question would be If you my this. guess, first me,

adjusted year-to-date a in has for Pactiv the this think network, possible, done diversified leveraging what you ASP last up already or this inflation. in had of job wonderful for distribution terms us, versus has You've and you moved quantify always if your the segments, year Could value-over-volume. year, your manufacturing quarter versus pushing what say, quarter last year's

COGS go try the us had, there or volume way?Second Is how coming that I to how doing through? So if a question map Is you're figure there is to the a that progress the for out $XX million like? to way between Slide in value how raw slide we look your productivity and cost we index, your in -- -- way of performance. quarter, if out break to manufacturing year-on-year out split appendix, XX and the the at in the

Jonathan Baksht

okay? Jon. George. can Sure, And This me you to hear just check, is

George Staphos

guys Cashen line. you through And My you was on on hear not the ] hearing can phone funny. it's I now. but the coming webcast, you're associate [

it to was just I one, wanted but only just if know don't I case. in the So mention

Jonathan Baksht

check we can we that No, do while call. Okay. the into

was Ghansham think able I to hear us.

So let me start.

me it all, and topic. and I hitting your let try questions, so think unpack asked if you of me I'm lot let a know

sales into for you're think I market, one, in these first we the So reasons. seeing get to the how on pricing getting We don't is price, that. average what our are obvious calls

more tell where which looking as at you And profitable. on approach, a on which margins better we getting of are there's basis, I at are really blended focused an what spread. value-over-volume we're is certainly assessing customers the And would I and products, think element categories that. we're really

better in come focusing our as supporting spreads customers that -- think margins our building our for that us.And overall focus across are we that we those you're We on on seeing I and efforts margins as through drive really on profitability focus the business. really

in so some are And there's more cases, opening -- normalization on big have as I takes. but pricing we obviously -- picture, in the margins And more within overall remarks, puts and seen this our highlighted market. that, improving. But in the

George Staphos

per thinking not So again, performance. on could that average your doubt spread margin. you unit clearly, just on margin progress index has revenue along maybe And again, that. you're there. the per by unit yes, either, somehow, or on sorry, maybe was product pound of also per or But helpful if going will I'm the you're somehow Jon, line, that keep with but no I there because you're congratulations getting what doing ahead. a the be way how up moved was your

Jonathan Baksht

Yes. And is our what our going coming pricing seeing to would in price. down. again, price been the you're average -- to bit reiterate just exactly commodity too break sales out we're a environment not I But that say has

we've been But price. And got so a there's know. in you again, corresponding pass-throughs, bring as down

that of some seeing get we're more So normalized.

George Staphos

raws, can of terms million process, COGS, that be on And that parse $XX great. PEPS, you the if would productivity, of in

Jonathan Baksht

Yes.

the is sequential -- of on -- focused one? So slides -- that I on right you out, looking Is the our and if -- looking think at there bridge break you're the the presentation, at the year-over-year. referenced kind and you you're that if investor a

George Staphos

COGS XQ in XQ year-over-year the particular? It's versus and

Jonathan Baksht

Yes.

seeing there pricing. vast going majority the COGS of to So is raw that be on the material you're

resins go as a have the So we lot down. year-over-year, of come

logistics. big also improvements and that that. percentage manufacturing a that's of in But embedded in So is

to of kind which a we the would pass-throughs then more then manufacturing, And say the is disaggregate of of bit. raw raw have I is So from more overall restructuring. that probably and that than savings is than materials if half logistics were XX% and [ kind materials remainder just and for. ] you a bit

Operator

Arun from comes Viswanathan. question next Our

Arun Viswanathan

George have first to I we Great. had Hopefully, on that that continue everyone. hear issue the same question.

the of results. I I here. congrats outlook So wanted yes, into kind on I to guess, the just dive great guess,

improvement mainly year-on-year other you're EBITDA other But range? mean year. some a lower mid-single-digit of for kind about actions you're we volume QX, kind of continue out, targeted to growth? So that of Or as to And EBITDA posting should the restructuring Is kind is due X% issues. single-digit within to of is that there that you in maybe I post seasonality sequentially this kind because of see you obviously are that low some to growth? growth Pactiv look and upside of taking? your and from guiding some

Jonathan Baksht

Yes.

fair that's So characterizations. from I are -- an quite annualized all basis, those think

the benefits those we're think QX. starting of I to see the in restructuring,

be you a further expect to going of this we've the in to to into the that come the business. are built basis our on from savings, run to bit We as dynamics And other the rate. saw QX then of some operational terms consistent a more in efficiencies QX we get normalized QX that just

those to QX. expect We continue into

material have As prices I leading come mentioned was down. the to factors George, in some of one

some mix seeing just getting to customer well. fourth And really we're basis, our and that and a pass-through back are quarter a mix business in more focused from that value-over-volume, as then see of better the you'll the so that come And really on to place, we and through.

Arun Viswanathan

a did Okay. follow-up, guidance And your flow you just of free cash as million-plus. $XXX increase then

a in because turns dovetail growth? you items? flow year? free mean, look leverage the would expect kind maybe lower flow you as growth of of that I would Or working do discrete EBITDA below into of cash next capital out to kind the So cash could you other or X of XXXX, maybe similar exceed free expect EBITDA any be growth

Michael King

controllable -- our tell is focused cash committed I talking What and we're this on keenly free [ point. would ] deeply at and really you we're thinking we're to reducing not leverage. about manageable, net So XXXX our

So I think that's right.

I is certainly a in we free year prepared think cash wouldn't for as get Xs this remarks, said I getting But top a priority for us. into at next point. our the

Operator

question next Our Citi. comes of Anthony from Pettinari

Anthony Pettinari

Does I with up $XXX for unchanged? is I million I $XXX than cash to million like, from capital $XX expected? were million working think, guess, is that still costs to And of Or that the, looking Just million guide, less $XXX 'XX ticked million from $XX source $XXX I then cash? $XXX think, revised to the maybe has to think, that $XXX million cash to million range the mean million. costs restructuring, previously

Jonathan Baksht

guidance. on so that So the the is to confirm first just revised one, yes,

the guide not bottom So our And cash up we XXXX range, took impact. the -- what did for of end was million. $XX we but change

restructuring, that And so to the way effectively, be that's I that's guidance incremental overall for the with item. the provided would think that a about and cash -- we But to haven't Canton closure going Mike 'XX related XXXX, as think to highlighted.

to can as confirm, does just So change Anthony? cost guide our not there. you okay, relates 'XX the to me, cash hear And it

Anthony Pettinari

I on And That's Yes, helpful. of in source then capital of hear cash? the can terms you. working

Jonathan Baksht

Yes.

we in our a of that's this right. in investor change year, cash in capital, our outlook So XX. Slide have terms working on deck for bridge The

$XXX So Yes. press remains that range earnings million $XXX the million of same. to In the release.

Anthony Pettinari

would I as look you it. Got as or sort guess volumes value you Food Merchandising and related the like in well, when to of of positively? like made in the foodservice, maybe -- decisions you of over then of it. just kind you Got kind would or at anything can is Beverage a and And feel their when there worse then run maybe volume there was And October course? same in expect Or better comps, XQ the about expect question, inflect demand? that kind

Michael King

Yes.

promising. there's if a at that things think of look you look specifically, lot I foodservice

look see of we seasonality mix as QX things if both our you normal to like that So kind We're seasonality, things noted sequentially. we're at and a From into we pre to are -- starting specifically getting previously. year-over-year looking moderating. 'XX feel back

I we to think, guessing X to think, comes And that real. consumer right trend, people point? more. just will so we're in to pricing, change a we when down I I do because think flows, that menu people start inflection fresh center the high QX when to feels a And I their ] to the can does it seeing calories their little behaviors watching get and more.On we're to better. metric Food our tell be assessing QX get away, tell that [ foodservice but the quarters The -- that us largely say, to Beverage Merchandising things, seasonality -- gains now, you, at quarter the are measure would and those hate is looking [ both but the buy-down losses, continue discretionarily. use it all That starting trend, is are moderate. the I a ] traffic stores less all that to calories spending call of expensive very perimeter it are and lot

of some lead So we healthy until discretionary as yet start the Merchandising. we're items core and obviously, discretionary focused some would more or focused consumers are alternatives and baked get [indiscernible] are more -- there not Food that basics People to on, more us the on some believe that are on goods less priority. more of and the -- and baked food spending, see to Beverage the that the proteins

we're think -- for see, wait positive looking I are and So but probably we'll things us.

Operator

question Goldman comes Adam Sachs. The from next Samuelson of

Adam Samuelson

substrate? or of to kind some where volumes could more a or emphasizing that is category -- So maybe solutions a to maybe the conversely, or there seeing there's a if of extent on thing you on the portion others. or vice has than of you're shift opposite color that any more the portfolio any margin that your by the clean particular there sustainable the greater questioning conversely product by distinction you're wondering seeing or is And in implications? you emphasis of higher Are notable provide kind -- of versa value-over-volume, continuing distinction

Michael King

we drive Yes. growth one with customer can we're producer, our that we customer we overall value I a of any volume -- of really a and just not partners we're see That's taking as product kind a there's the just -- us. versus base. a extract product prevalent partner. we where type but and would for that category view it that It's that to what relates -- and as not sure where it's segment, others an more kind packaging of or chain not value-over-volumes say supply our is provide making working seeing partners to

you seeing are seeing about are their strategies. our customers your that offerings, question, when our sustainable We to think -- continue to evolve we

it I would spaces. us, winning a for driver in those and say it's it's is -- value focus We of are a us. for

So don't undervalue to want comment. I that

ability strategy. So is -- margins we're doing and our separate there a is value-over-volume from our there better but profile product an to of that, better growth advantage take and -- there value

Adam Samuelson

the where and Can we into closely to be year levels capital more settle Okay. continuing out trends? And then do next XXXX. capital one cash of just deleveraging think That's about of incremental turns working source Jon, flow maybe are they will EBITDA of think for helpful. we cash flow Or as then an the kind cash? think kind about -- your you will now the they where that track working

Jonathan Baksht

a it's Yes, great question.

going clearly, into targeting which that. next asking standpoint, on to that we into we're the So for by into per while -- a would and get thanks free flow to flow next that intend imply leverage cash certainly to do. year, we're not se, going cash providing year From Xs by guidance be next some year, we free generating

built the that more to and year. some were at I for driver more I level going our are really year of just We've -- And that year, our free be EBITDA think inventory closely don't year levels. into the I inventory our LTM into would we're normalized reduction drivers basis, working cash key next shown, cash cash drive that we're we really ability or the trajectory our we're dynamics on, even this that during we with year is inventory, incremental this incremental next that probably free million as our at some that as last to inventory where that really to moving down more be to -- say into extrapolating $XXX the the we was What from flow getting environment. quarter. service million getting margin to going next flow lot that evidenced drove going it customers.Frankly, levels inventory is into that hold to with up look to anticipate this quarter, There help we've look I that if that going you we're year-to-date. the repeating margin think business. really work next of into components on year by efficient Certainly, some gotten inventory As on, an a we're $XXX point you that even growth or next ability not think the trajectory those inventory

Operator

call I'm over showing remarks. for to back I at questions like the turn Mike to this would time. further King no now closing

Michael King

Stacy. you, Thank

socially differentiated strong As we Pactiv a Evergreen close was business. responsible and today,

We we are are resilient. and an industry and Merchandising, Food leader in are our confident that recession markets and foodservice largely Beverage

to many us has sustainable our generating leadership a our experienced the team portfolio long-standing to best-in-class demonstrated on blue-chip partnerships our of customer are have transform to broad put deliver the and base, focused position are in and companies. substrates, strategic our we willingness offer of returns We array products which with and commitments.We

from come XXX% of made from We recyclable -- our constantly We products. sustainable materials. to goal are revenues working develop set net innovate highest of having in and or quality XXXX recycled the products a renewable

through We capital we drive continue generation, you are to and carefully EBITDA further quarter. to flow next We process. forward look updating you managing disciplined for deleveraging again your allocation which cash time. Thank adjusted growth to strong and deliver free

Operator

This concludes presentation. today's

You may now disconnect.

Pactiv Evergreen (PTVE) 2 Nov 232023 Q3 Earnings call transcript