Pactiv Evergreen Reports Third Quarter 2020 Financial Results
Pactiv Evergreen reported its Q3 2020 results, noting net revenues of $1,195 million, a decrease from $1,306 million YOY, largely due to COVID-19 impacts. The net loss from continuing operations rose to $143 million from $35 million a year earlier, partly due to a $105 million tax valuation allowance. Adjusted EBITDA was $173 million, slightly down from $177 million in Q3 2019. The company anticipates continued challenges due to the pandemic but remains focused on strategic investments for growth. Full-year revenue guidance is between $4,710 million and $4,755 million.
- Successful IPO raised approximately $546 million.
- Net cash of $1,756 million as of September 30, 2020.
- Strategic investment program on track for capital expenditures.
- Net loss from continuing operations increased to $143 million.
- Adjusted EBITDA decreased slightly to $173 million.
- Ongoing impacts from the COVID-19 pandemic expected to soften demand.
Completes September IPO and October Debt Refinancing
Strategic Investment Program Continues to Support Growth and Productivity
LAKE FOREST, Ill., Nov. 11, 2020 (GLOBE NEWSWIRE) -- Pactiv Evergreen Inc. (“Pactiv Evergreen” or the “Company”), today reported results for the third quarter 2020 ended September 30, 2020.
John McGrath, Chief Executive Officer of Pactiv Evergreen, “Our third quarter reflects hard work from all of our team members especially as they worked through the challenges brought on by the pandemic. I want to thank them all for their dedication and focus providing industry-leading solutions to our customers. We are pleased that our third quarter 2020 Adjusted EBITDA performed near to the year ago period, recovering well from the lows of the second quarter of 2020.”
McGrath continued, “Whilst challenges around COVID-19 remain, we go into the last quarter of the year with financial flexibility and a stronger balance sheet, and we continue to drive improvement across our business through our strategic investment program. As we move forward, we will continue to grow by focusing on markets and products that we believe will thrive throughout and post the COVID-19 pandemic.”
Third Quarter 2020 Financial Highlights:
- Net Revenues of
$1,195 million for the third quarter of 2020 compared to$1,306 million in the prior year period - Net Loss from Continuing Operations of
$143 million for the third quarter of 2020 compared to a net loss of$35 million in the prior year period. Net Loss from Continuing Operations included certain significant and/or unusual items that are not necessarily representative of underlying operational performance as discussed in more detail below. In particular, the Company recorded a$105 million non-cash tax valuation allowance - Adjusted EBITDA of
$173 million for the third quarter of 2020 compared to$177 million in the prior year period1
Third Quarter 2020 Results
Net revenues in the third quarter of 2020 were
Net Loss from Continuing Operations increased
Adjusted EBITDA was
Key Segment Results (compared to the third quarter of 2019)
Foodservice
- Net revenues decreased
$73 million , or13% - Adjusted EBITDA decreased
$8 million , or9%
The decrease in net revenues was primarily driven by lower sales volume due to market contraction from the impact of the COVID-19 pandemic, as well as lower pricing primarily due to lower raw material costs passed through to customers.
The decline in Adjusted EBITDA was primarily driven by lower sales volume due to the impact of the COVID-19 pandemic and higher manufacturing costs, partially offset by lower raw material costs and lower logistics costs due to lower sales volume and favorable freight rates.
Food Merchandising
- Net revenues increased
$3 million , or1% - Adjusted EBITDA increased
$16 million , or29%
The increase in net revenues was primarily driven by favorable pricing, partially offset by lower costs passed through to customers, an unfavorable foreign currency impact and lower volume.
The increase in Adjusted EBITDA was primarily driven by favorable material costs, net of lower costs passed through to customers, partially offset by lower sales volume.
Beverage Merchandising
- Net revenues decreased
$40 million , or10% - Adjusted EBITDA decreased
$21 million , or47%
The decrease in net revenues was primarily due to lower sales volume and lower pricing due to the impact of the COVID-19 pandemic.
The decrease in Adjusted EBITDA was primarily driven by lower pricing and lower sales volume due to the impact of the COVID-19 pandemic, as well as increased manufacturing costs due to planned mill outages in the current year quarter. These items were partially offset by lower raw material costs, driven by wood supply as markets have returned to historical normalized levels from prior year weather-related increases and lower employee-related expenses.
Year to Date Financial Results (nine-months ended September 30, 2020)
- Net Revenues of
$3,514 million for the nine months ended September 30, 2020 compared to$3,888 million in the prior year period - Net Loss from Continuing Operations of
$28 million for the nine months ended September 30, 2020 compared to a net loss of$100 million in the prior year period. Net Loss from Continuing Operations included certain significant and/or unusual items that are not necessarily representative of underlying operational performance as discussed in more detail below - Adjusted EBITDA of
$445 million for the nine months ended September 30, 2020 compared to$518 million in the prior year period
Net revenues for the nine months ended September 30, 2020 were
Net Loss from Continuing Operations decreased
Adjusted EBITDA was
Balance Sheet and Cash Flow Highlights
- Cash and cash equivalents was
$1,756 million as of September 30, 2020 - Total outstanding debt was
$5,198 million at September 30, 2020. Total Net Debt2 was$3,442 million at September 30, 2020. - For the year to date period ended September 30, 2020, capital expenditures related to our strategic investment program totaled
$76 million . - Net working capital totaled
$872 million at September 30, 2020 compared to$882 million at December 31, 2019. The decrease was primarily due to lower accounts receivable and lower inventories due to lower sales, partially offset by lower accounts payable due to lower purchases and timing of payments.
Successful Initial Public Offering and Debt Refinancing
Preceding the quarter end, on September 17, 2020, the Company priced its initial public offering (“IPO”) in which it issued 41,026,000 shares of common stock. Subsequent to the IPO, there were 175,434,000 shares of common stock outstanding. The IPO price was
On October 20, 2020, 1,723,710 shares of the optional shares pursuant to the IPO underwriting agreement were issued at
Outlook
The Company expects ongoing impacts from the COVID-19 pandemic including continued softened demand in its Foodservice and Beverage Merchandising segments, as well as continued elevated operating costs to maintain and improve service to customers. The Company’s Strategic Investment Program is on track related to both capital expenditures and benefits realized.
With this in mind, the Company expects the following financial results for the full year 2020:
- Full year revenue between
$4,710 million and$4,755 million , driven by all three segments; - Adjusted EBITDA between
$615 million and$630 million , reflecting lower Beverage Merchandising EBITDA, offset by improved performance from other segments; and - Capital expenditures between
$240 million and$280 million .
Conference Call and Webcast Presentation
The Company will host a conference call and webcast presentation to discuss these results November 12, 2020 at 8:00 a.m. Eastern Time. Investors interested in participating in the live call can dial 877-407-0789 from the U.S. and 201-689-8562 internationally, and entering confirmation code 13711848. Participants may also access the live webcast and supplemental presentation on the Pactiv Evergreen Investor Relations website at https://www.pactivevergreen.com under “Events.”
About Pactiv Evergreen Inc. (NASDAQ: PTVE)
Pactiv Evergreen Inc. is a manufacturer and distributor of fresh foodservice and food merchandising products and fresh beverage cartons in North America and certain international markets. It supplies its products to a broad and diversified mix of companies, including full service restaurants and quick service restaurants, foodservice distributors, supermarkets, grocery and healthy eating retailers, other food stores, food and beverage producers, food packers and food processors.
Note to Investors Regarding Forward Looking Statements
This press release contains statements reflecting our views about our future performance that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including our fiscal year 2020 guidance. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the risk factors set forth in our most recent our final prospectus filed with the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4).
For additional information on these and other factors that could cause our actual results to materially differ from those set forth herein, please see our filings with the Securities and Exchange Commission, including our final prospectus filed with the Securities and Exchange Commission on September 18, 2020 pursuant to Rule 424(b)(4). Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
Contact
Investors
ICR
Ashley DeSimone
Ashley.DeSimone@icrinc.com
646.677.1827
Condensed Consolidated Statements of Income (Loss)
(in millions, except per share amounts)
(unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net revenues | $ | 1,195 | $ | 1,306 | $ | 3,514 | $ | 3,888 | |||||||
| Cost of sales | (1,011 | ) | (1,100 | ) | (2,982 | ) | (3,249 | ) | |||||||
| Gross profit | 184 | 206 | 532 | 639 | |||||||||||
| Selling, general and administrative expenses | (116 | ) | (104 | ) | (358 | ) | (341 | ) | |||||||
| Goodwill impairment charges | (6 | ) | (16 | ) | (6 | ) | (16 | ) | |||||||
| Restructuring, asset impairment and other related charges | (14 | ) | (39 | ) | (18 | ) | (45 | ) | |||||||
| Other (expense) income, net | (79 | ) | 2 | (48 | ) | (7 | ) | ||||||||
| Operating (loss) income from continuing operations | (31 | ) | 49 | 102 | 230 | ||||||||||
| Non-operating income (expense), net | 17 | — | 50 | (2 | ) | ||||||||||
| Interest expense, net | (87 | ) | (84 | ) | (275 | ) | (312 | ) | |||||||
| (Loss) from continuing operations before tax | (101 | ) | (35 | ) | (123 | ) | (84 | ) | |||||||
| Income tax (expense) benefit | (42 | ) | — | 95 |
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FAQ
What were Pactiv Evergreen's Q3 2020 net revenues?
Pactiv Evergreen reported net revenues of $1,195 million for Q3 2020.
How did COVID-19 affect Pactiv Evergreen's financial performance?
COVID-19 led to lower sales volume and pricing, contributing to increased net loss and decreased net revenues.
What are the revenue expectations for Pactiv Evergreen in 2020?
Pactiv Evergreen anticipates full-year revenue between $4,710 million and $4,755 million.
What was the adjusted EBITDA for Pactiv Evergreen in Q3 2020?
The adjusted EBITDA for Q3 2020 was $173 million.
What is the current debt position of Pactiv Evergreen?
Total outstanding debt was $5,198 million as of September 30, 2020.
Pactiv Evergreen Inc.
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Packaging & Containers
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LAKE FOREST
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