UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________to __________
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification Number) |
(Address of principal executive offices) (Zip Code)
Telephone: (
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
☑ |
Non-accelerated filer |
☐ |
Smaller reporting company |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes
The registrant had
Table of Contents
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PART I. |
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Item 1. |
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3 |
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3 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
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4 |
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6 |
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7 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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27 |
Item 3. |
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38 |
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Item 4. |
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38 |
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PART II. |
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39 |
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Item 1. |
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39 |
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Item 1A. |
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39 |
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Item 2. |
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39 |
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Item 3. |
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39 |
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Item 4. |
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39 |
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Item 5. |
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39 |
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Item 6. |
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40 |
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41 |
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FORWARD-LOOKING STATEMENTS
This report contains certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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, anticipated trends in our business and anticipated growth in the markets served by 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 those factors discussed under the caption entitled “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2022. You should specifically consider these numerous risks. These risks include, among others, those related to:
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations.
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Pactiv Evergreen Inc.
Condensed Consolidated Statements of Income (Loss)
(In millions, except per share amounts)
(Unaudited)
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For the Three Months Ended |
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For the Nine Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Net revenues |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Restructuring, asset impairment and other related charges |
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( |
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( |
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( |
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Other (expense) income, net |
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( |
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Operating income (loss) from continuing operations |
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Non-operating (expense) income, net |
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Interest expense, net |
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( |
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( |
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Income (loss) from continuing operations before tax |
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Income tax (expense) benefit |
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( |
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( |
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( |
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Income (loss) from continuing operations |
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( |
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Income from discontinued operations, net of income taxes |
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Net income (loss) |
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Income attributable to non-controlling interests |
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— |
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( |
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( |
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Net income (loss) attributable to Pactiv Evergreen Inc. common shareholders |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Earnings (loss) per share attributable to Pactiv Evergreen Inc. |
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From continuing operations |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
( |
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$ |
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From discontinued operations |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
— |
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$ |
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$ |
— |
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Total |
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Basic |
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$ |
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$ |
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$ |
( |
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$ |
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Diluted |
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$ |
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$ |
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$ |
( |
) |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
3
Pactiv Evergreen Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)
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For the Three Months Ended |
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For the Nine Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Net income (loss) |
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$ |
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$ |
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$ |
( |
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$ |
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Other comprehensive (loss) income, net of income taxes: |
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Currency translation adjustments |
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( |
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( |
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( |
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Defined benefit plans |
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( |
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( |
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( |
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Interest rate derivatives |
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— |
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— |
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Other comprehensive (loss) income |
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( |
) |
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( |
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Comprehensive income (loss) |
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( |
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Comprehensive income attributable to non-controlling interests |
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( |
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— |
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( |
) |
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( |
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Comprehensive income (loss) attributable to Pactiv Evergreen Inc. common shareholders |
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$ |
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$ |
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$ |
( |
) |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
4
Pactiv Evergreen Inc.
Condensed Consolidated Balance Sheets
(In millions, except share amounts)
(Unaudited)
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As of September 30, 2023 |
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As of December 31, 2022 |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowances of $ |
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Related party receivables |
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Inventories |
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Other current assets |
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Assets held for sale |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets, net |
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Goodwill |
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Intangible assets, net |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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Liabilities |
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Accounts payable |
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$ |
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$ |
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Related party payables |
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Current portion of long-term debt |
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Current portion of operating lease liabilities |
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Income taxes payable |
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Accrued and other current liabilities |
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Liabilities held for sale |
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— |
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Total current liabilities |
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Long-term debt |
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Long-term operating lease liabilities |
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Deferred income taxes |
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Long-term employee benefit obligations |
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Other noncurrent liabilities |
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Total liabilities |
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$ |
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$ |
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Equity |
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Common stock, $ |
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$ |
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$ |
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Preferred stock, $ |
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Additional paid in capital |
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Accumulated other comprehensive loss |
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( |
) |
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( |
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Retained earnings |
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Total equity attributable to Pactiv Evergreen Inc. common shareholders |
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Non-controlling interests |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
5
Pactiv Evergreen Inc.
Condensed Consolidated Statements of Equity
(In millions, except per share amounts)
(Unaudited)
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Accumulated |
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Additional |
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Other |
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Non- |
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Common Stock |
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Paid in |
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Comprehensive |
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Retained |
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Controlling |
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Total |
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Shares |
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Amount |
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Capital |
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Loss |
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Earnings |
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Interests |
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Equity |
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For the Three Months Ended September 30, 2022 |
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Balance as of June 30, 2022 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income, net of income taxes |
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— |
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— |
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— |
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— |
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— |
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Equity based compensation |
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— |
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— |
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— |
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— |
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— |
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Vesting of restricted stock units, net of tax withholdings |
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— |
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( |
) |
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— |
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— |
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— |
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( |
) |
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Dividends declared - common shareholders ($ |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance as of September 30, 2022 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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For the Three Months Ended September 30, 2023 |
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Balance as of June 30, 2023 |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of income taxes |
|
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Equity based compensation |
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— |
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— |
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— |
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— |
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— |
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Vesting of restricted stock units, net of tax withholdings |
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— |
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— |
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— |
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— |
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— |
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— |
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|
Dividends declared - common shareholders ($ |
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— |
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— |
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|
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— |
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— |
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( |
) |
|
|
— |
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|
( |
) |
Balance as of September 30, 2023 |
|
|
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|
$ |
— |
|
|
$ |
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$ |
( |
) |
|
$ |
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$ |
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$ |
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|||||
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|||||||
For the Nine Months Ended September 30, 2022 |
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|||||||
Balance as of December 31, 2021 |
|
|
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|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
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|
$ |
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|||||
Net income |
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— |
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— |
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— |
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— |
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|||
Other comprehensive loss, net of income taxes |
|
|
— |
|
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|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
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|
( |
) |
Equity based compensation |
|
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— |
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— |
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— |
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— |
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— |
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||
Vesting of restricted stock units, net of tax withholdings |
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— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
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|
( |
) |
|
Dividends declared - common shareholders ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance as of September 30, 2022 |
|
|
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
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|||||||
For the Nine Months Ended September 30, 2023 |
|
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|||||||
Balance as of December 31, 2022 |
|
|
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Net (loss) income |
|
|
— |
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— |
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— |
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— |
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( |
) |
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( |
) |
|
Other comprehensive income, net of income taxes |
|
|
— |
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— |
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— |
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— |
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|
— |
|
|
|
|
||
Equity based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Vesting of restricted stock units, net of tax withholdings |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Dividends declared - common shareholders ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Dividends declared - non-controlling shareholders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Disposal of subsidiary |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance as of September 30, 2023 |
|
|
|
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
See accompanying notes to the condensed consolidated financial statements.
6
Pactiv Evergreen Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
|
|
For the Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
Adjustments to reconcile net (loss) income to operating cash flows: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
|
|
Unrealized losses on derivatives |
|
|
— |
|
|
|
|
|
Asset impairment and restructuring related non-cash charges (net of reversals) |
|
|
|
|
|
|
||
Loss (gain) on sale of businesses and noncurrent assets |
|
|
|
|
|
( |
) |
|
Non-cash portion of employee benefit obligations |
|
|
|
|
|
( |
) |
|
Non-cash portion of operating lease expense |
|
|
|
|
|
|
||
Equity based compensation |
|
|
|
|
|
|
||
Other non-cash items, net |
|
|
|
|
|
|
||
Change in assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
( |
) |
|
|
|
|
Operating lease payments |
|
|
( |
) |
|
|
( |
) |
Accrued and other current liabilities |
|
|
|
|
|
|
||
Other assets and liabilities |
|
|
|
|
|
( |
) |
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
Investing Activities: |
|
|
|
|
|
|
||
Acquisition of property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Disposal of businesses and joint venture equity interests, net of cash disposed |
|
|
|
|
|
|
||
Other investing activities |
|
|
|
|
|
|
||
Net cash (used in) provided by investing activities |
|
|
( |
) |
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
||
Long-term debt repayments |
|
|
( |
) |
|
|
( |
) |
Dividends paid to common shareholders |
|
|
( |
) |
|
|
( |
) |
Other financing activities |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
|
|
|
( |
) |
|
(Decrease) increase in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents and restricted cash, including amounts classified as held for sale, |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash as of end of the period |
|
$ |
|
|
$ |
|
||
Cash, cash equivalents and restricted cash are comprised of: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash classified as other noncurrent assets |
|
|
|
|
|
|
||
Cash and cash equivalents classified as assets held for sale |
|
|
— |
|
|
|
|
|
Cash, cash equivalents and restricted cash as of end of the period |
|
$ |
|
|
$ |
|
||
Cash paid: |
|
|
|
|
|
|
||
Interest |
|
$ |
|
|
$ |
|
||
Income taxes paid, net |
|
|
|
|
|
|
||
Significant non-cash investing and financing activities
During the nine months ended September 30, 2023 and 2022, we recognized operating lease right-of-use assets and lease liabilities of $
See accompanying notes to the condensed consolidated financial statements.
7
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Note 1. Nature of Operations and Basis of Presentation
The accompanying condensed consolidated financial statements comprise the accounts of Pactiv Evergreen Inc. (“PTVE”) and its subsidiaries (“we”, “us”, “our” or the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods and should be read in conjunction with the consolidated financial statements and the related notes thereto included in our latest Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 7, 2023. Operating results for interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. All intercompany transactions and balances have been eliminated in consolidation.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Although our current estimates contemplate current conditions and how we expect them to change in the future, as appropriate, it is reasonably possible that actual conditions could differ from what was anticipated in those estimates, which could materially affect our results of operations, balance sheet and cash flows. Among other effects, such changes could result in future impairments of goodwill, intangibles and long-lived assets, and adjustments to reserves for employee benefits and income taxes. The estimated recoverable amounts associated with asset impairments represent Level 3 measurements in the fair value hierarchy, which include inputs that are not based on observable market data.
Revision to Restricted Cash
During the nine months ended September 30, 2023, we revised the presentation of restricted cash balances on our condensed consolidated statements of cash flows to include $
Recent Accounting Pronouncements
We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our condensed consolidated financial statements.
Note 2. Dispositions
Beverage Merchandising Asia
On January 4, 2022, we entered into a definitive agreement with SIG Schweizerische Industrie-Gesellschaft GmbH to sell our carton packaging and filling machinery businesses in China, Korea and Taiwan (“Beverage Merchandising Asia”) included in the Food and Beverage Merchandising segment. The transaction closed on August 2, 2022, and we received proceeds of $
Closures Businesses
During the third quarter of 2022, we committed to a plan to sell our remaining closures businesses included in the Other operating segment. As a result, we classified the related assets and liabilities of these businesses as held for sale and recognized an impairment charge of $
8
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
amount. We recognized a partial reversal of the initial impairment charge of $
Naturepak Beverage
On March 29, 2022, we completed the sale of our equity interests in Naturepak Beverage Packaging Co. Ltd. (“Naturepak Beverage”), our
Other
During the third quarter of 2023, we committed to a plan to sell certain properties within our Foodservice and Food and Beverage Merchandising segments. As a result, we classified the related assets as held for sale on the condensed consolidated balance sheet as of September 30, 2023. We expect to recognize an immaterial gain upon the sale of these properties.
Note 3. Restructuring, Asset Impairment and Other Related Charges
On
The Beverage Merchandising Restructuring resulted in a workforce reduction of approximately
As a result of the Beverage Merchandising Restructuring, we incurred charges during the three and nine months ended September 30, 2023, and we estimate we will incur further charges in future periods, as follows:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
|
Total Expected Charges(1)(2) |
|
|||
Non-cash: |
|
|
|
|
|
|
|
|
|
|||
Accelerated property, plant and equipment depreciation |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other non-cash charges(3) |
|
|
|
|
|
|
|
|
||||
Total non-cash charges |
|
|
|
|
|
|
|
|
||||
Cash: |
|
|
|
|
|
|
|
|
|
|||
Severance, termination and related costs |
|
|
|
|
|
|
|
|
|
|||
Exit, disposal and other transition costs(4) |
|
|
|
|
|
|
|
|
||||
Total cash charges |
|
|
|
|
|
|
|
|
||||
Total Beverage Merchandising Restructuring charges |
|
$ |
|
|
$ |
|
|
$ |
|
|||
9
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
The Beverage Merchandising Restructuring charges and other restructuring and asset impairment charges (net of reversals) were classified on our condensed consolidated statements of income (loss) as follows by segment:
|
|
Food and Beverage Merchandising |
|
|
Other |
|
|
Total |
|
|||
For the Three Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Cost of sales |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Selling, general and administrative expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restructuring, asset impairment and other related charges |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
For the Nine Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Cost of sales |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Selling, general and administrative expenses |
|
|
|
|
|
— |
|
|
|
|
||
Restructuring, asset impairment and other related charges |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
For the Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|||
Restructuring, asset impairment and other related charges |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
For the Nine Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|||
Restructuring, asset impairment and other related charges |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
During the three months ended September 30, 2022, we recorded a of $
During the three and nine months ended September 30, 2022, we recorded employee termination costs and other restructuring charges of $
10
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
The following table summarizes the changes to our restructuring liability related to the Beverage Merchandising Restructuring during the nine months ended September 30, 2023:
|
|
December 31, 2022 |
|
|
Charges to Earnings |
|
|
Cash Paid |
|
|
September 30, 2023 |
|
||||
Severance, termination and related costs |
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Exit, disposal and other transition costs |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||
Total(1) |
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Note 4. Inventories
The components of inventories consisted of the following:
|
|
As of |
|
|
As of |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in progress |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Spare parts |
|
|
|
|
|
|
||
Inventories |
|
$ |
|
|
$ |
|
||
Note 5. Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following:
|
|
As of |
|
|
As of |
|
||
Land and land improvements |
|
$ |
|
|
$ |
|
||
Buildings and building improvements |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Property, plant and equipment, at cost |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property, plant and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense related to property, plant and equipment was recognized in the following components in the condensed consolidated statements of income (loss):
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Cost of sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total depreciation expense(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
11
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Note 6. Goodwill and Intangible Assets
Goodwill by reportable segment was as follows:
|
|
Foodservice |
|
|
Food and Beverage |
|
|
Total |
|
|||
As of December 31, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reclassified due to segment composition change |
|
|
( |
) |
|
|
|
|
|
— |
|
|
As of September 30, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
In the second quarter of 2023, in conjunction with the Beverage Merchandising Restructuring, we implemented a new operating and reporting structure resulting in the combination of our legacy Food Merchandising and Beverage Merchandising segments, creating our Food and Beverage Merchandising segment. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details. We also reorganized the management of certain product lines from our Foodservice segment to our Food and Beverage Merchandising segment. Refer to Note 18, Segment Information, for additional details. The change in the management of certain product lines resulted in a $
Intangible assets, net consisted of the following:
|
|
As of September 30, 2023 |
|
|
As of December 31, 2022 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
||||||
Finite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer relationships |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Trademarks |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Other |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
||
Total finite-lived intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Indefinite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trademarks |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
Other |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Total indefinite-lived intangible assets |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
Total intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Amortization expense for intangible assets of $
Note 7. Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following:
|
|
As of |
|
|
As of |
|
||
Rebates and credits |
|
$ |
|
|
$ |
|
||
Personnel costs |
|
|
|
|
|
|
||
Restructuring costs(1) |
|
|
|
|
|
— |
|
|
Interest |
|
|
|
|
|
|
||
Other(2) |
|
|
|
|
|
|
||
Accrued and other current liabilities |
|
$ |
|
|
$ |
|
||
12
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Note 8. Debt
Debt consisted of the following:
|
|
As of |
|
|
As of |
|
||
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Credit Agreement |
|
$ |
|
|
$ |
|
||
Notes: |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Pactiv Debentures: |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
||
Total principal amount of borrowings |
|
|
|
|
|
|
||
Deferred debt issuance costs (“DIC”) |
|
|
( |
) |
|
|
( |
) |
Original issue discounts, net of premiums (“OID”) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Less: current portion |
|
|
( |
) |
|
|
( |
) |
Long-term debt |
|
$ |
|
|
$ |
|
||
We were in compliance with all debt covenants during the nine months ended September 30, 2023 and the year ended December 31, 2022.
Credit Agreement
PTVE and certain of its U.S. subsidiaries are parties to a senior secured credit agreement dated August 5, 2016 as amended (the “Credit Agreement”). As of September 30, 2023,
|
|
Maturity Date |
|
Value Drawn or Utilized |
|
|
Applicable Interest Rate |
|
||
Term Tranches |
|
|
|
|
|
|
|
|
||
U.S. term loans Tranche B-2 |
|
|
$ |
|
|
SOFR (floor of |
|
|||
U.S. term loans Tranche B-3 |
|
|
$ |
|
|
SOFR (floor of |
|
|||
Revolving Tranche(1) |
|
|
|
|
|
|
|
|
||
U.S. Revolving Loans |
|
|
$ |
|
|
|
— |
|
||
We repaid a total of $
On April 17, 2023, we amended the Credit Agreement, replacing the LIBOR-based reference rate with a Secured Overnight Financing Rate (“SOFR”) based reference rate, effective for interest payments for the period commencing April 28, 2023. Other than the foregoing, the material terms of the Credit Agreement remain unchanged, and our election to use certain practical expedients under Accounting Standards Codification Topic 848: Reference Rate Reform resulted in no material impacts on our condensed consolidated financial statements.
On July 26, 2023, we further amended the Credit Agreement to extend the maturity date on our $
13
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
The weighted average contractual interest rates related to our U.S. term loans Tranche B-2 and B-3 for the nine months ended September 30, 2023 and 2022 were
PTVE and certain of its U.S. subsidiaries have guaranteed on a senior basis the obligations under the Credit Agreement to the extent permitted by law. The borrowers and the guarantors have granted security over substantially all of their assets to support the obligations under the Credit Agreement. This security is expected to be shared on a first priority basis with the holders of the Notes.
Indebtedness under the Credit Agreement may be voluntarily repaid, in whole or in part, and must be mandatorily repaid in certain circumstances. We are required to make quarterly amortization payments of
The Credit Agreement contains customary covenants which restrict us from certain activities including, among others, incurring debt, creating liens over assets, selling assets and making restricted payments, in each case except as permitted under the Credit Agreement.
Notes
As of September 30, 2023, our outstanding notes were as follows:
|
|
Maturity Date |
|
Interest Payment Dates |
|
|
|||
|
|
The effective interest rates of our debt obligations under the Notes are not materially different from the contractual interest rates.
PTVE and certain of its U.S. subsidiaries have guaranteed on a senior basis the obligations under the Notes (as defined below) to the extent permitted by law. The issuers and the guarantors have granted security over substantially all of their assets to support the obligations under the Notes. This security is expected to be shared on a first priority basis with the creditors under the Credit Agreement.
The respective indentures governing the
Under the respective indentures governing the Notes, we can, at our option, elect to redeem the Notes under terms and conditions specified in the indentures. Under the respective indentures governing the Notes, in certain circumstances which would constitute a change in control, the holders of the Notes have the right to require us to repurchase the Notes at a premium.
Pactiv Debentures
As of September 30, 2023, our outstanding debentures (together, the “Pactiv Debentures”) were as follows:
|
|
Maturity Date |
|
Interest Payment Dates |
|
|
|||
|
|
The effective interest rates of our debt obligations under the Pactiv Debentures are not materially different from the contractual interest rates.
14
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
The Pactiv Debentures are not guaranteed and are unsecured.
The indentures governing the Pactiv Debentures contain a negative pledge clause limiting the ability of certain of our entities, subject to certain exceptions, to (i) incur or guarantee debt that is secured by liens on “principal manufacturing properties” (as such term is defined in the indentures governing the Pactiv Debentures) or on the capital stock or debt of certain subsidiaries that own or lease any such principal manufacturing property and (ii) sell and then take an immediate lease back of such principal manufacturing property.
The
Other borrowings
Other borrowings represented finance lease obligations of $
Scheduled maturities
Below is a schedule of required future repayments on our debt outstanding as of September 30, 2023:
|
|
|
|
|
2023 |
|
$ |
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
Thereafter |
|
|
|
|
Total principal amount of borrowings |
|
$ |
|
|
Fair value of our long-term debt
The fair value of our long-term debt as of September 30, 2023 and December 31, 2022 is a Level 2 fair value measurement.
|
|
As of September 30, 2023 |
|
|
As of December 31, 2022 |
|
||||||||||
|
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
||||
Credit Agreement |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Pactiv Debentures: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Interest expense, net
Interest expense, net consisted of the following:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Credit Agreement |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pactiv Debentures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of DIC and OID |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized derivative gains |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Net foreign currency exchange losses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Other |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Interest expense, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 9. Financial Instruments
We had the following derivative instruments recorded at fair value in our condensed consolidated balance sheets:
|
|
As of September 30, 2023 |
|
|
As of December 31, 2022 |
|
||||||||||
|
|
Asset |
|
|
Liability |
|
|
Asset |
|
|
Liability |
|
||||
Commodity swap contracts |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
Interest rate derivatives |
|
|
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
Total fair value |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Classification: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current assets |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
Other noncurrent assets |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Accrued and other current liabilities |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other noncurrent liabilities |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total fair value |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Our derivatives are comprised of commodity and interest rate swaps. All derivatives represent Level 2 financial assets and liabilities. Our derivatives are valued using an income approach based on the observable market index prices less the contract rate multiplied by the notional amount or based on pricing models that rely on market observable inputs such as commodity prices and interest rates. Our calculation of the fair value of these financial instruments takes into consideration the risk of non-performance, including counterparty credit risk. The majority of our derivative contracts do not have a legal right of set-off. We manage the credit risk in connection with our derivatives by limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties.
During the fourth quarter of 2022, we entered into derivative financial instruments with several large financial institutions which swapped the LIBO rate for a weighted average fixed rate of
During the three months ended September 30, 2023, we recognized an unrealized gain of $
16
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
During the three and nine months ended September 30, 2023, we recognized realized gains of $
The following table provides the detail of outstanding commodity derivative contracts as of September 30, 2023:
Type |
|
Unit of Measure |
|
Contracted |
|
|
Contracted |
|
Contracted Date of Maturity |
|
Natural gas swaps |
|
Million BTU |
|
|
|
|
$ |
|
Nov 2023 - Dec 2025 |
|
Note 10. Employee Benefits
Net periodic benefit (expense) income for our defined benefit pension plans and other post-employment benefit plans consisted of the following:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Service cost |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
Interest cost |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Expected return on plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of actuarial gains |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Ongoing net periodic benefit cost |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income due to settlements(1) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total net periodic benefit (expense) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Net periodic benefit (expense) income for defined benefit pension plans and other post-employment benefit plans was recognized as follows:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Cost of sales |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
Non-operating (expense) income, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Total net periodic benefit (expense) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Contributions to the Pension Plan for Pactiv Evergreen (“PPPE”) during the year ending December 31, 2023 are expected to be less than $
Pension Partial Settlement Transactions
On September 20, 2022 and February 24, 2022, using PPPE assets, we purchased non-participating group annuity contracts from insurance companies and transferred $
17
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Note 11. Other (Expense) Income, Net
Other (expense) income, net consisted of the following:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Gain (loss) on sale of businesses and noncurrent assets |
|
$ |
— |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Gain on legal settlement(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Other |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Other (expense) income, net |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Note 12. Commitments and Contingencies
We are from time to time party to litigation, legal proceedings and tax examinations arising from our operations. Most of these matters involve allegations of damages against us relating to employment matters, personal injury and commercial or contractual disputes. We are also involved in various administrative and other proceedings relating to environmental matters that arise in the normal course of business, and we may become involved in similar matters in the future. We record estimates for claims and proceedings that constitute a present obligation when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of such obligation can be made. While it is not possible to predict the outcome of any of these matters, based on our assessment of the facts and circumstances, we do not believe any of these matters, individually or in the aggregate, will have a material adverse effect on our balance sheet, results of operations or cash flows. However, actual outcomes may differ from those expected and could have a material effect on our balance sheet, results of operations or cash flows in a future period. Except for amounts provided, there were no legal proceedings pending other than those for which we have determined that the possibility of a material outflow is remote.
Indemnities
As part of the agreements for the sale of various businesses, we have provided certain warranties and indemnities to the respective purchasers as set out in the respective sale agreements. These warranties and indemnities are subject to various terms and conditions affecting the duration and total amount of the indemnities. Any claims pursuant to these warranties and indemnities, if successful, could have a material effect on our balance sheet, results of operations or cash flows.
18
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Note 13. Accumulated Other Comprehensive Loss
The following table summarizes the changes in our balances of each component of AOCL:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Currency translation adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Currency translation adjustments |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other comprehensive (loss) income |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance as of end of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Defined benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net actuarial gain (loss) arising during year(1) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
Deferred tax (expense) benefit on net actuarial gain (loss) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
Loss (gain) reclassified from AOCL: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reclassification upon sale of businesses(2) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Amortization of experience gains |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Defined benefit plan settlement gain |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Deferred tax expense on reclassification |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Other comprehensive (loss) income |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance as of end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest rate derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of beginning of period |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
|
Net derivative gain |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Deferred tax expense on net derivative gain |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Gain reclassified from AOCL |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Deferred tax expense on reclassification |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Other comprehensive income |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Balance as of end of period |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
AOCL |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive (loss) income |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Balance as of end of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Note 14. Income Taxes
The effective tax rates for the three and nine months ended September 30, 2023 and 2022 represent our estimate of the annual effective tax rates expected to be applicable for the respective full fiscal years, adjusted for any discrete events which are recorded in the period that they occur.
During the three months ended September 30, 2023, we recognized a tax expense of $
19
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
During the three months ended September 30, 2022, we recognized a tax expense of $
We are under audit by the Internal Revenue Service (“IRS”) and other taxing authorities. The IRS is currently auditing our U.S. income tax returns for 2016-2017. As of September 30, 2023, we have not received any proposed adjustments from taxing authorities that would be material. Although the ultimate timing is uncertain, it is reasonably possible that a reduction of up to $
Note 15. Related Party Transactions
As of September 30, 2023, approximately
Transactions with our related parties are detailed below. All of our related parties are commonly controlled by Mr. Graeme Hart, our controlling shareholder, except for our joint ventures.
|
|
Income (expense) for the |
|
|
Income (expense) for the |
|
|
|
|
|
|
||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
Balance Outstanding as of |
|
|||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
September 30, |
|
|
December 31, |
|
||||||
Joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Included in other current assets |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||||
Sale of goods and services(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
||||||
Other common controlled entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sale of goods and services(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transition services agreements and rental income(2) |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Charges(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Purchase of goods(2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
||
Charges(3) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
||
We also lease a portion of two facilities to RCPI and are party to an information technology services agreement with RCPI. We do not trade with Graham Packaging Company Inc. (“GPCI”) on an ongoing basis. We also are party to a transition services agreement with GPCI.
Note 16. Equity Based Compensation
We established the Pactiv Evergreen Inc. Equity Incentive Plan for purposes of granting stock or other equity based compensation awards to our employees (including our senior management), directors, consultants and advisors.
20
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Equity based compensation costs were $
Restricted Stock Units
During the nine months ended September 30, 2023, we granted restricted stock units (“RSUs”) to certain members of management and certain members of our Board of Directors. These RSUs require future service to be provided and vest in annual installments over a period ranging from to
(In thousands, except per share amounts) |
|
Number of |
|
|
Weighted |
|
||
Non-vested, at January 1 |
|
|
|
|
$ |
|
||
Granted(1) |
|
|
|
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
Vested |
|
|
( |
) |
|
|
|
|
Non-vested, at September 30 |
|
|
|
|
$ |
|
||
Unrecognized compensation cost related to unvested RSUs as of September 30, 2023 was $
Performance Share Units
During the nine months ended September 30, 2023, we granted performance share units (“PSUs”) to certain members of management which vest on the third anniversary of the grant date. Based on the achievement of a company performance target during a performance period set by our Compensation Committee of our Board of Directors, upon vesting, the PSUs are exchanged for a number of shares of common stock equal to the number of PSUs multiplied by a factor between
(In thousands, except per share amounts) |
|
Number of |
|
|
Weighted |
|
||
Non-vested, at January 1 |
|
|
|
|
$ |
|
||
Granted(1) |
|
|
|
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
Non-vested, at September 30 |
|
|
|
|
$ |
|
||
Unrecognized compensation cost related to unvested PSUs as of September 30, 2023 was $
21
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Note 17. Earnings Per Share
Earnings (loss) per share, including a reconciliation of the number of shares used for our earnings (loss) per share calculation, was as follows:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Numerator |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings (loss) attributable to common shareholders - continuing operations |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Less: dividend-equivalents declared for equity based awards |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Net earnings (loss) available to common shareholders - continuing operations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Net earnings attributable to common shareholders - discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net earnings (loss) available to common shareholders |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Denominator |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of shares outstanding - basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Weighted average number of shares outstanding - diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (loss) per share attributable to Pactiv Evergreen Inc. common shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
||||
From continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
From discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
There were
On
Note 18. Segment Information
In the second quarter of 2023, in conjunction with the Beverage Merchandising Restructuring, we implemented a new operating and reporting structure resulting in the combination of our legacy Food Merchandising and Beverage Merchandising segments, creating our Food and Beverage Merchandising segment. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details. We also reorganized the management of certain product lines from our Foodservice segment to our Food and Beverage Merchandising segment.
As of the end of the second quarter of 2023, we analyzed the results of our business through our Foodservice and Food and Beverage Merchandising segments. All prior periods have been recast to reflect the current reportable segment structure and the change in the management of certain product lines. These reportable segments reflect our operating structure and the manner in which our Chief Operating Decision Maker (“CODM”), who is our President and Chief Executive Officer, assesses information for decision-making purposes. The key factors used to identify these reportable segments are the organization of our internal operations and the nature of our products. This reflects how our CODM
22
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
monitors performance, allocates capital and makes strategic and operational decisions. Our reportable segments are described as follows:
Foodservice - Manufactures a broad range of products that enable consumers to eat and drink where they want and when they want with convenience. Foodservice manufactures food containers, drinkware (hot and cold cups and lids), tableware, serviceware and other products which make eating on-the-go more enjoyable and easy to do.
Food and Beverage Merchandising - Manufactures products that protect and attractively display food and beverages while preserving freshness. Food and Beverage Merchandising products include cartons for fresh refrigerated beverage products, primarily serving dairy (including plant-based, organic and specialties), juice and other specialty beverage end-markets, clear rigid-display containers, containers for prepared and ready-to-eat food, trays for meat and poultry and egg cartons. It also produces fiber-based liquid packaging board for its internal requirements and to sell to other fresh beverage carton manufacturers. Prior to June 2023, it also produced a range of paper-based products which it sold to paper and packaging converters.
Other/Unallocated - In addition to our reportable segments, we had other operating segments that did not meet the threshold for presentation as a reportable segment. These operating segments comprised the remaining components of our former closures business, which generated revenue from the sale of caps and closures, and are presented as “Other.” As of March 31, 2023, we had disposed of all of the remaining components of our former closures business. Unallocated includes corporate costs, primarily relating to general and administrative functions such as finance, tax and legal and the effects of the PPPE.
Information by Segment
We present reportable segment Adjusted EBITDA as this is the financial measure by which management and our CODM allocate resources and analyze the performance of our reportable segments.
A segment’s Adjusted EBITDA represents its earnings before interest, tax, depreciation and amortization and is further adjusted to exclude certain items, including but not limited to restructuring, asset impairment and other related charges, gains or losses on the sale of businesses and noncurrent assets, non-cash pension income or expense, operational process engineering-related consultancy costs, business acquisition and integration costs and purchase accounting adjustments, unrealized gains or losses on derivatives, foreign exchange gains or losses on cash and gains or losses on certain legal settlements.
23
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
|
|
Foodservice |
|
|
Food and Beverage |
|
|
Reportable |
|
|||
For the Three Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Net revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Intersegment revenues |
|
|
— |
|
|
|
|
|
|
|
||
Total reportable segment net revenues |
|
|
|
|
|
|
|
|
|
|||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
For the Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|||
Net revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Intersegment revenues |
|
|
— |
|
|
|
|
|
|
|
||
Total reportable segment net revenues |
|
|
|
|
|
|
|
|
|
|||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
For the Nine Months Ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Net revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Intersegment revenues |
|
|
— |
|
|
|
|
|
|
|
||
Total reportable segment net revenues |
|
|
|
|
|
|
|
|
|
|||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
For the Nine Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|||
Net revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Intersegment revenues |
|
|
— |
|
|
|
|
|
|
|
||
Total reportable segment net revenues |
|
|
|
|
|
|
|
|
|
|||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|||
|
|
Foodservice |
|
|
Food and Beverage |
|
|
Reportable |
|
|||
As of September 30, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of December 31, 2022 |
|
|
|
|
|
|
|
|
|
|||
24
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Reportable segment Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Unallocated |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments to reconcile to income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization (excluding restructuring-related charges) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Beverage Merchandising Restructuring charges |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Other restructuring and asset impairment charges (reversals) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Gain (loss) on sale of businesses and noncurrent assets |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||
Non-cash pension (expense) income |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Operational process engineering-related consultancy costs |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Business integration costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Unrealized gains (losses) on commodity derivatives |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Foreign exchange losses on cash |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Executive transition charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
(Losses) gains on legal settlements |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
Costs associated with legacy facility |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Income (loss) from continuing operations before tax |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The following table presents a reconciliation of reportable segment assets to consolidated assets:
|
|
As of |
|
|
As of |
|
||
Reportable segment assets(1) |
|
$ |
|
|
$ |
|
||
Unallocated(2) |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
25
Pactiv Evergreen Inc.
Notes to the Condensed Consolidated Financial Statements
(In millions, except per share data and unless otherwise indicated)
(Unaudited)
Information in Relation to Products
Net revenues by product line are as follows:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Foodservice |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Drinkware |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Containers |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tableware |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Serviceware and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Food and Beverage Merchandising |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cartons for fresh beverage products |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bakery/snack/produce/fruit containers |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Meat trays |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liquid packaging board |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tableware |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Prepared food trays |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Egg cartons |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Paper products |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reportable segment net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other / Unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Intersegment eliminations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
For all product lines, there is a relatively short time period between the receipt of the order and the transfer of control over the goods to the customer.
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Our discussion and analysis is intended to help the reader understand our results of operations and financial condition and is provided as an addition to, and should be read in connection with, our condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q.
Our Company
We are a leading manufacturer and distributor of fresh foodservice and food merchandising products and fresh beverage cartons in North America. We produce a broad range of on-trend and feature-rich products that protect, package and display food and beverages for today’s consumers. Our products include containers, drinkware (such as hot and cold cups and lids), cartons for fresh refrigerated beverage products, tableware, meat and poultry trays, liquid packaging board, serviceware, prepared food trays and egg cartons. Our products, many of which are made with recycled, recyclable or renewable materials, are sold to a diversified mix of customers, including restaurants, foodservice distributors, retailers, food and beverage producers, packers and processors.
Change in Segments
In the second quarter of 2023, in conjunction with the Beverage Merchandising Restructuring, we implemented a new operating and reporting structure resulting in the combination of our legacy Food Merchandising and Beverage Merchandising segments, creating our Food and Beverage Merchandising segment. We also reorganized the management of certain product lines from our Foodservice segment to our Food and Beverage Merchandising segment.
As of the end of the second quarter of 2023, we analyzed the results of our business through our Foodservice and Food and Beverage Merchandising segments. All prior periods have been recast to reflect the current reportable segment structure and the change in the management of certain product lines.
In addition, we provided certain unaudited recast financial information for the years ended December 31, 2022 and 2021, the four quarters of the year ended December 31, 2022 and the three months ended March 31, 2023 in a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on August 2, 2023.
Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, and Note 18, Segment Information, for additional details.
Business Environment
During 2023, we experienced a continued moderation in consumer demand for certain of our products, primarily driven by sustained high levels of inflation and general macroeconomic uncertainty. While we have not seen a material economic contraction to-date, these pressures may continue to impact consumer demand and thus our customers’ purchasing decisions and order patterns throughout the remainder of 2023 and into 2024.
Our input costs have largely stabilized and have begun to moderate in certain circumstances as compared to recent periods. We believe our pricing strategy provides us with flexibility to manage our market position through cost recovery mechanisms and strategic competitive pricing. In this dynamic environment, we remain focused on servicing our customers and improving manufacturing productivity across our business.
During the second quarter of 2023, we ceased operations at our Canton, North Carolina mill and our converting facility in Olmsted Falls, Ohio, and production from the Olmsted Falls facility was reallocated to other sites. We expect these actions will allow us to solidify our leadership position in large, growing end markets while prioritizing our distinctive core strengths.
Elevated interest rates, sustained high levels of inflation, geopolitical factors and the resulting volatility within the capital markets over the last year have created uncertainty with respect to the economic outlook. If economic conditions were to deteriorate, a further decline in consumer spending may result, which could lead to a meaningful decline in demand for our products in the remainder of 2023 and beyond.
Recent Developments and Items Impacting Comparability
Beverage Merchandising Restructuring
On March 6, 2023, we announced the Beverage Merchandising Restructuring, a plan approved by our Board of Directors to take significant restructuring actions related to our Beverage Merchandising operations. We expect these actions to increase our production efficiency, streamline our management structure and reduce our ongoing capital expenditures and overhead costs.
27
We expect that the Beverage Merchandising Restructuring will enable us to maintain our strong position in the liquid packaging market by increasing our overall productivity over time and optimizing our manufacturing footprint. It also resulted in our exit from the uncoated freesheet paper market.
We also continue to explore strategic alternatives for our Pine Bluff, Arkansas mill and our Waynesville, North Carolina facility. We have not set a timetable in relation to this process.
The operations impacted by the Beverage Merchandising Restructuring did not qualify for presentation as discontinued operations.
Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details.
Dispositions
On January 4, 2022, we entered into a definitive agreement with SIG Schweizerische Industrie-Gesellschaft GmbH to sell Beverage Merchandising Asia. The transaction closed on August 2, 2022, and we received proceeds of $336 million. We recognized a gain on sale of $239 million during the three months ended September 30, 2022. Sales of liquid packaging board to our former Beverage Merchandising Asia operations, which were previously eliminated in consolidation, are recorded as external net revenues subsequent to the transaction’s completion.
During the third quarter of 2022, we committed to a plan to sell our remaining closures businesses included in the Other operating segment and recognized a charge to earnings of $56 million within restructuring, asset impairment and other related charges. We completed the sale of a substantial portion of these businesses on October 31, 2022, and the remaining operations on March 1, 2023, all for an immaterial amount.
On March 29, 2022, we completed the sale of our equity interests in Naturepak Beverage, our 50% joint venture with Naturepak Limited, to affiliates of Elopak ASA. We received proceeds of $47 million and recognized a gain on the sale of our equity interests of $27 million during the nine months ended September 30, 2022.
None of these dispositions qualified for presentation as discontinued operations.
Pension Partial Settlement Transactions
On September 20, 2022 and February 24, 2022, using PPPE assets, we purchased non-participating group annuity contracts from insurance companies and transferred a portion of the PPPE’s projected benefit obligations. In each instance, the respective insurance companies have assumed responsibility for pension benefits and annuity administration. The following table provides details regarding each transaction:
|
|
|
|
(In millions) |
|
|
|
|
||||||||||
Transaction Date |
|
Reporting Period |
|
Assets Transferred |
|
|
Projected Benefit Obligations Transferred |
|
|
Settlement Gain Recognized |
|
|
Number of Participants Impacted |
|
||||
September 20, 2022 |
|
Q3 2022 |
|
$ |
629 |
|
|
$ |
656 |
|
|
$ |
47 |
|
|
|
10,200 |
|
February 24, 2022 |
|
Q1 2022 |
|
|
1,260 |
|
|
|
1,257 |
|
|
|
10 |
|
|
|
13,300 |
|
Non-GAAP Measures – Adjusted EBITDA from Continuing Operations
In addition to financial measures determined in accordance with GAAP, we make use of the non-GAAP financial measure Adjusted EBITDA from continuing operations to evaluate and manage our business and to plan and make near-term and long-term operating and strategic decisions.
Adjusted EBITDA from continuing operations is defined as net income (loss) from continuing operations calculated in accordance with GAAP, plus the sum of income tax expense, net interest expense, depreciation and amortization and further adjusted to exclude certain items, including but not limited to restructuring, asset impairment and other related charges, gains or losses on the sale of businesses and noncurrent assets, non-cash pension income or expense, operational process engineering-related consultancy costs, business acquisition and integration costs and purchase accounting adjustments, unrealized gains or losses on derivatives, foreign exchange gains or losses on cash and gains or losses on certain legal settlements.
We present Adjusted EBITDA from continuing operations because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, make strategic decisions and incentivize and reward our employees. Accordingly, we believe that Adjusted EBITDA from continuing operations provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and Board of Directors. We also believe that using Adjusted EBITDA from continuing operations facilitates operating performance comparisons on a period-to-period basis because it excludes variations primarily caused by changes in the items noted above.
28
In addition, our chief operating decision maker, who is our President and Chief Executive Officer, uses Adjusted EBITDA of each reportable segment to evaluate the operating performance of such segments.
Our use of Adjusted EBITDA from continuing operations has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Instead, you should consider it alongside other financial performance measures, including our net income (loss) from continuing operations and other GAAP results. In addition, in evaluating Adjusted EBITDA from continuing operations, you should be aware that in the future we will incur expenses such as those that are the subject of adjustments made in deriving Adjusted EBITDA from continuing operations, and you should not infer from our presentation of Adjusted EBITDA from continuing operations that our future results will not be affected by these expenses or any unusual or non-recurring items. The following is a reconciliation of our net income (loss) from continuing operations, the most directly comparable GAAP financial measure, to Adjusted EBITDA from continuing operations for each of the periods indicated:
|
|
For the Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
(In millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net income (loss) from continuing operations (GAAP) |
|
$ |
28 |
|
|
$ |
175 |
|
|
$ |
(244 |
) |
|
$ |
292 |
|
Income tax expense (benefit) |
|
|
22 |
|
|
|
79 |
|
|
|
(5 |
) |
|
|
160 |
|
Interest expense, net |
|
|
61 |
|
|
|
59 |
|
|
|
188 |
|
|
|
158 |
|
Depreciation and amortization (excluding restructuring-related charges) |
|
|
81 |
|
|
|
85 |
|
|
|
247 |
|
|
|
255 |
|
Beverage Merchandising Restructuring charges(1) |
|
|
32 |
|
|
|
— |
|
|
|
435 |
|
|
|
— |
|
Other restructuring and asset impairment charges (reversals)(2) |
|
|
— |
|
|
|
57 |
|
|
|
— |
|
|
|
58 |
|
(Gain) loss on sale of businesses and noncurrent assets(3) |
|
|
— |
|
|
|
(239 |
) |
|
|
1 |
|
|
|
(266 |
) |
Non-cash pension expense (income)(4) |
|
|
2 |
|
|
|
(44 |
) |
|
|
6 |
|
|
|
(52 |
) |
Operational process engineering-related consultancy costs(5) |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
7 |
|
Business integration costs(6) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6 |
|
Unrealized (gains) losses on commodity derivatives |
|
|
(1 |
) |
|
|
10 |
|
|
|
— |
|
|
|
4 |
|
Foreign exchange losses on cash |
|
|
2 |
|
|
|
— |
|
|
|
4 |
|
|
|
2 |
|
Executive transition charges(7) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
Losses (gains) on legal settlements(8) |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
(15 |
) |
Costs associated with legacy facility(9) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6 |
|
Other |
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
1 |
|
Adjusted EBITDA from continuing operations (Non-GAAP) |
|
$ |
227 |
|
|
$ |
187 |
|
|
$ |
633 |
|
|
$ |
618 |
|
29
Results of Operations
Three Months Ended September 30, 2023 and 2022
Consolidated Results
|
|
For the Three Months Ended September 30, |
|
|||||||||||||||||||||
(In millions, except for %) |
|
2023 |
|
|
% of |
|
|
2022 |
|
|
% of |
|
|
Change |
|
|
% Change |
|
||||||
Net revenues |
|
$ |
1,379 |
|
|
|
100 |
% |
|
$ |
1,609 |
|
|
|
100 |
% |
|
$ |
(230 |
) |
|
|
(14 |
)% |
Cost of sales |
|
|
(1,098 |
) |
|
|
(80 |
)% |
|
|
(1,377 |
) |
|
|
(86 |
)% |
|
|
279 |
|
|
|
20 |
% |
Gross profit |
|
|
281 |
|
|
|
20 |
% |
|
|
232 |
|
|
|
14 |
% |
|
|
49 |
|
|
|
21 |
% |
Selling, general and administrative expenses |
|
|
(137 |
) |
|
|
(10 |
)% |
|
|
(145 |
) |
|
|
(9 |
)% |
|
|
8 |
|
|
|
6 |
% |
Restructuring, asset impairment and other related charges |
|
|
(28 |
) |
|
|
(2 |
)% |
|
|
(57 |
) |
|
|
(4 |
)% |
|
|
29 |
|
|
|
51 |
% |
Other (expense) income, net |
|
|
(3 |
) |
|
|
— |
% |
|
|
239 |
|
|
|
15 |
% |
|
|
(242 |
) |
|
NM |
|
|
Operating income from continuing operations |
|
|
113 |
|
|
|
8 |
% |
|
|
269 |
|
|
|
17 |
% |
|
|
(156 |
) |
|
|
58 |
% |
Non-operating (expense) income, net |
|
|
(2 |
) |
|
|
— |
% |
|
|
44 |
|
|
|
3 |
% |
|
|
(46 |
) |
|
NM |
|
|
Interest expense, net |
|
|
(61 |
) |
|
|
(4 |
)% |
|
|
(59 |
) |
|
|
(4 |
)% |
|
|
(2 |
) |
|
|
(3 |
)% |
Income from continuing operations before tax |
|
|
50 |
|
|
|
4 |
% |
|
|
254 |
|
|
|
16 |
% |
|
|
(204 |
) |
|
|
80 |
% |
Income tax expense |
|
|
(22 |
) |
|
|
(2 |
%) |
|
|
(79 |
) |
|
|
(5 |
)% |
|
|
57 |
|
|
|
72 |
% |
Income from continuing operations |
|
|
28 |
|
|
|
2 |
% |
|
|
175 |
|
|
|
11 |
% |
|
|
(147 |
) |
|
|
84 |
% |
Income from discontinued operations, net of income taxes |
|
|
2 |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
1 |
|
|
|
|
|||
Net income |
|
$ |
30 |
|
|
|
|
|
$ |
176 |
|
|
|
|
|
$ |
(146 |
) |
|
|
|
|||
Adjusted EBITDA from continuing operations(1) |
|
$ |
227 |
|
|
|
16 |
% |
|
$ |
187 |
|
|
|
12 |
% |
|
$ |
40 |
|
|
|
21 |
% |
NM indicates that the calculation is “not meaningful”.
Components of Change in Reportable Segment Net Revenues
|
|
Price/Mix |
|
|
Volume |
|
|
Dispositions / Mill Closure |
|
|
FX |
|
|
Total |
|
|||||
Net revenues |
|
|
(2 |
)% |
|
|
(4 |
)% |
|
|
(9 |
)% |
|
|
1 |
% |
|
|
(14 |
)% |
By reportable segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foodservice |
|
|
(5 |
)% |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
(5 |
)% |
Food and Beverage Merchandising |
|
|
— |
% |
|
|
(6 |
)% |
|
|
(18 |
)% |
|
|
1 |
% |
|
|
(23 |
)% |
Net Revenues. Net revenues for the three months ended September 30, 2023 decreased by $230 million, or 14%, to $1,379 million compared to the prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill during the second quarter of 2023, lower sales volume and unfavorable pricing due to lower material costs. Lower sales volume was largely due to a focus on value over volume and the market softening amid inflationary pressures within our Food and Beverage Merchandising segment.
Cost of Sales. Cost of sales for the three months ended September 30, 2023 decreased by $279 million, or 20%, to $1,098 million compared to the prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill, lower material costs and lower sales volume.
Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended September 30, 2023 decreased by $8 million, or 6%, to $137 million compared to the prior year period. The decrease was primarily due to lower employee-related costs.
30
Restructuring, Asset Impairment and Other Related Charges. Restructuring, asset impairment and other related charges for the three months ended September 30, 2023 decreased by $29 million, or 51%, to $28 million compared to the prior year period. The current period expense related to activities associated with the Beverage Merchandising Restructuring. The prior year period expense was primarily due to a $56 million impairment charge related to the decision to exit our remaining closures businesses. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details.
Other (Expense) Income, Net. During the three months ended September 30, 2023, we recognized $3 million of expense compared to $239 million of income for the three months ended September 30, 2022. The change was primarily attributable to the $239 million gain on the sale of Beverage Merchandising Asia in the prior year period.
Non-operating (Expense) Income, Net. Non-operating expense, net, for the three months ended September 30, 2023 was $2 million of expense compared to $44 million of income for the three months ended September 30, 2022. The change was primarily due to a $47 million pension settlement gain recognized in the prior year period. Refer to Note 10, Employee Benefits, for additional details.
Interest Expense, Net. Interest expense, net, for the three months ended September 30, 2023 increased by $2 million, or 3%, to $61 million, compared to the prior year period. The increase was primarily due to an increase in the interest rate on our floating rate term loans, partially offset by a reduction in total debt outstanding. Refer to Note 8, Debt, for additional details.
Income Tax Benefit (Expense). During the three months ended September 30, 2023, we recognized a tax expense of $22 million on income from continuing operations before tax of $50 million, compared to tax expense of $79 million on income from continuing operations before tax of $254 million for the prior year period. The effective tax rate during the current year period was driven primarily by the inability to recognize a tax benefit on all interest expense. The effective tax rate during the prior year period was primarily attributable to tax impacts from the sale of our businesses.
Income from Continuing Operations. Income from continuing operations for the three months ended September 30, 2023 decreased $147 million, or 84%, to $28 million compared to the prior year period. The prior year period included a $239 million gain on the sale of Beverage Merchandising Asia and a $47 million pension settlement gain, partially offset by a $56 million impairment charge due to the decision to exit our remaining closures businesses. The change in income from continuing operations was also impacted by a $57 million decrease in tax expense, largely driven by the discrete tax effect of the gain on sale in the prior year period, a $49 million increase in gross profit, primarily from lower material and transportation costs, partially offset by $28 million in current year period charges related to the Beverage Merchandising Restructuring.
Adjusted EBITDA from Continuing Operations. Adjusted EBITDA from continuing operations for the three months ended September 30, 2023 increased by $40 million, or 21%, to $227 million compared to the prior year period. The increase was primarily attributable to lower material costs, net of costs passed through, and lower transportation and manufacturing costs, partially offset by the closure of our Canton, North Carolina mill and lower sales volume.
Segment Information
Foodservice
|
|
For the Three Months Ended September 30, |
|
|||||||||||||
(In millions, except for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
||||
Total segment net revenues |
|
$ |
675 |
|
|
$ |
713 |
|
|
$ |
(38 |
) |
|
|
(5 |
)% |
Segment Adjusted EBITDA |
|
$ |
117 |
|
|
$ |
107 |
|
|
$ |
10 |
|
|
|
9 |
% |
Segment Adjusted EBITDA margin(1) |
|
|
17 |
% |
|
|
15 |
% |
|
|
|
|
|
|
||
Total Segment Net Revenues. Foodservice total segment net revenues for the three months ended September 30, 2023 decreased by $38 million, or 5%, to $675 million compared to the prior year period. The decrease was mainly due to unfavorable pricing, primarily due to lower material costs.
Adjusted EBITDA. Foodservice Adjusted EBITDA for the three months ended September 30, 2023 increased by $10 million, or 9%, to $117 million compared to the prior year period. The increase was primarily due to lower transportation and material costs, net of costs passed through.
31
Food and Beverage Merchandising
|
|
For the Three Months Ended September 30, |
|
|||||||||||||
(In millions, except for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
||||
Total segment net revenues |
|
$ |
712 |
|
|
$ |
920 |
|
|
$ |
(208 |
) |
|
|
(23 |
)% |
Segment Adjusted EBITDA |
|
$ |
130 |
|
|
$ |
102 |
|
|
$ |
28 |
|
|
|
27 |
% |
Segment Adjusted EBITDA margin |
|
|
18 |
% |
|
|
11 |
% |
|
|
|
|
|
|
||
Total Segment Net Revenues. Food and Beverage Merchandising total segment net revenues for the three months ended September 30, 2023 decreased by $208 million, or 23%, to $712 million compared to the prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill and lower sales volume. Sales volume was lower mainly due to a focus on value over volume and the market softening amid inflationary pressures.
Adjusted EBITDA. Food and Beverage Merchandising Adjusted EBITDA for the three months ended September 30, 2023 increased by $28 million, or 27%, to $130 million compared to the prior year period. The increase was primarily due to lower material costs, net of costs passed through, and lower transportation and manufacturing costs, partially offset by the closure of our Canton, North Carolina mill and lower sales volume.
Nine Months Ended September 30, 2023 and 2022
Consolidated Results
|
|
For the Nine Months Ended September 30, |
|
|||||||||||||||||||||
(In millions, except for %) |
|
2023 |
|
|
% of |
|
|
2022 |
|
|
% of |
|
|
Change |
|
|
% Change |
|
||||||
Net revenues |
|
$ |
4,236 |
|
|
|
100 |
% |
|
$ |
4,744 |
|
|
|
100 |
% |
|
$ |
(508 |
) |
|
|
(11 |
)% |
Cost of sales |
|
|
(3,756 |
) |
|
|
(89 |
)% |
|
|
(3,972 |
) |
|
|
(84 |
)% |
|
|
216 |
|
|
|
5 |
% |
Gross profit |
|
|
480 |
|
|
|
11 |
% |
|
|
772 |
|
|
|
16 |
% |
|
|
(292 |
) |
|
|
(38 |
)% |
Selling, general and administrative expenses |
|
|
(403 |
) |
|
|
(10 |
)% |
|
|
(435 |
) |
|
|
(9 |
)% |
|
|
32 |
|
|
|
7 |
% |
Restructuring, asset impairment and other related charges |
|
|
(133 |
) |
|
|
(3 |
)% |
|
|
(58 |
) |
|
|
(1 |
)% |
|
|
(75 |
) |
|
|
(129 |
)% |
Other income, net |
|
|
1 |
|
|
|
— |
% |
|
|
279 |
|
|
|
6 |
% |
|
|
(278 |
) |
|
|
(100 |
)% |
Operating (loss) income from continuing operations |
|
|
(55 |
) |
|
|
(1 |
)% |
|
|
558 |
|
|
|
12 |
% |
|
|
(613 |
) |
|
NM |
|
|
Non-operating (expense) income, net |
|
|
(6 |
) |
|
|
— |
% |
|
|
52 |
|
|
|
1 |
% |
|
|
(58 |
) |
|
NM |
|
|
Interest expense, net |
|
|
(188 |
) |
|
|
(4 |
)% |
|
|
(158 |
) |
|
|
(3 |
)% |
|
|
(30 |
) |
|
|
(19 |
)% |
(Loss) income from continuing operations before tax |
|
|
(249 |
) |
|
|
(6 |
)% |
|
|
452 |
|
|
|
10 |
% |
|
|
(701 |
) |
|
NM |
|
|
Income tax benefit (expense) |
|
|
5 |
|
|
|
— |
% |
|
|
(160 |
) |
|
|
(3 |
)% |
|
|
165 |
|
|
NM |
|
|
(Loss) income from continuing operations |
|
|
(244 |
) |
|
|
(6 |
)% |
|
|
292 |
|
|
|
6 |
% |
|
|
(536 |
) |
|
NM |
|
|
Income from discontinued operations, net of income taxes |
|
|
2 |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
1 |
|
|
|
|
|||
Net (loss) income |
|
$ |
(242 |
) |
|
|
|
|
$ |
293 |
|
|
|
|
|
$ |
(535 |
) |
|
|
|
|||
Adjusted EBITDA from continuing operations(1) |
|
$ |
633 |
|
|
|
15 |
% |
|
$ |
618 |
|
|
|
13 |
% |
|
$ |
15 |
|
|
|
2 |
% |
Components of Change in Reportable Segment Net Revenues
|
|
Price/Mix |
|
|
Volume |
|
|
Dispositions / Mill Closure |
|
|
FX |
|
|
Total |
|
|||||
Net revenues |
|
|
— |
% |
|
|
(4 |
)% |
|
|
(7 |
)% |
|
|
— |
% |
|
|
(11 |
)% |
By reportable segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foodservice |
|
|
(4 |
)% |
|
|
(4 |
)% |
|
|
— |
% |
|
|
— |
% |
|
|
(8 |
)% |
Food and Beverage Merchandising |
|
|
4 |
% |
|
|
(5 |
)% |
|
|
(12 |
)% |
|
|
1 |
% |
|
|
(12 |
)% |
32
Net Revenues. Net revenues for the nine months ended September 30, 2023 decreased by $508 million, or 11%, to $4,236 million compared to the prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill during the second quarter of 2023, lower sales volume and the disposition of Beverage Merchandising Asia on August 2, 2022. Lower sales volume was mainly due to a focus on value over volume and the market softening amid inflationary pressures. Favorable pricing in our Food and Beverage Merchandising segment, driven by pricing actions, was offset by unfavorable pricing in our Foodservice segment, mainly due to the contractual pass-through of lower material costs.
Cost of Sales. Cost of sales for the nine months ended September 30, 2023 decreased by $216 million, or 5%, to $3,756 million compared to the prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill, lower sales volume, lower material costs, the disposition of Beverage Merchandising Asia and lower transportation costs. This decrease was partially offset by $298 million of charges related to the Beverage Merchandising Restructuring as well as higher manufacturing costs. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details of the Beverage Merchandising Restructuring.
Selling, General and Administrative Expenses. Selling, general and administrative expenses for the nine months ended September 30, 2023 decreased by $32 million, or 7%, to $403 million compared to the prior year period. The decrease was primarily due to lower employee-related costs, including the impact of cost savings from the Beverage Merchandising Restructuring and the sale of Beverage Merchandising Asia in the prior year.
Restructuring, Asset Impairment and Other Related Charges. Restructuring, asset impairment and other related charges for the nine months ended September 30, 2023 increased by $75 million, or 129%, to $133 million compared to the prior year period. The current year period expense arose from Beverage Merchandising Restructuring charges. The prior year period expense was primarily related to an impairment charge related to the decision to exit our remaining closures businesses Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details.
Other Income, Net. Other Income, Net, for the nine months ended September 30, 2023 decreased by $278 million to $1 million, compared to the prior year period. The prior year period included a $239 million gain on the sale of Beverage Merchandising Asia, a $27 million gain on the sale of our equity interests in Naturepak Beverage and a gain of $15 million, net of costs, related to the settlement of a historical legal action.
Non-operating (Expense) Income, Net. Non-operating (expense) income, net, for the nine months ended September 30, 2023 was $6 million of expense compared to $52 million of income for the nine months ended September 30, 2022. The change was principally due to $57 million of pension settlement gains recognized in the prior year period. Refer to Note 10, Employee Benefits, for additional details.
Interest Expense, Net. Interest expense, net, for the nine months ended September 30, 2023 increased by $30 million, or 19%, to $188 million, compared to the prior year period. The increase was primarily due to an increase in the interest rate on our floating rate term loans, partially offset by a reduction in total debt outstanding. Refer to Note 8, Debt, for additional details.
Income Tax Benefit (Expense). During the nine months ended September 30, 2023, we recognized a tax benefit of $5 million on a loss from continuing operations before tax of $249 million, compared to tax expense of $160 million on income from continuing operations before tax of $452 million for the prior year period. The effective tax rate during the current year period was driven primarily by the inability to recognize a tax benefit on all interest expense. The effective tax rate during the prior year period was driven primarily by the inability to recognize a tax benefit on all interest expense and the tax impacts from the sales of our businesses.
(Loss) Income from Continuing Operations. (Loss) income from continuing operations for the nine months ended September 30, 2023 was a loss of $244 million compared to income of $292 million for the nine months ended September 30, 2022. The change was impacted by $435 million of current year period charges related to the Beverage Merchandising Restructuring and a $165 million decrease in tax expense, largely driven by the discrete tax effects of restructuring charges in the current year period and gains on sales in the prior year period. In addition, the prior year period included $266 million of gains on the sale of businesses and $57 million of pension settlement gains, partially offset by a $56 million impairment charge due to the decision to exit our remaining closures businesses.
Adjusted EBITDA from Continuing Operations. Adjusted EBITDA from continuing operations for the nine months ended September 30, 2023 increased by $15 million, or 2%, to $633 million compared to the prior year period. The increase reflects lower material costs, net of costs passed through, and lower transportation costs, partially offset by higher manufacturing costs, lower sales volume as well as the impact from the closure of our Canton, North Carolina mill and the disposition of Beverage Merchandising Asia.
33
Segment Information
Foodservice
|
|
For the Nine Months Ended September 30, |
|
|||||||||||||
(In millions, except for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
||||
Total segment net revenues |
|
$ |
1,945 |
|
|
$ |
2,115 |
|
|
$ |
(170 |
) |
|
|
(8 |
)% |
Segment Adjusted EBITDA |
|
$ |
351 |
|
|
$ |
378 |
|
|
$ |
(27 |
) |
|
|
(7 |
)% |
Segment Adjusted EBITDA margin |
|
|
18 |
% |
|
|
18 |
% |
|
|
|
|
|
|
||
Total Segment Net Revenues. Foodservice total segment net revenues for the nine months ended September 30, 2023 decreased by $170 million, or 8%, to $1,945 million compared to the prior year period. The decrease was mainly due to unfavorable pricing, largely due to lower material costs, and lower sales volume, primarily due to the cumulative impact of our strategy focused on value over volume.
Adjusted EBITDA. Foodservice Adjusted EBITDA for the nine months ended September 30, 2023 decreased by $27 million, or 7%, to $351 million compared to the prior year period. The decrease was primarily due to higher manufacturing costs and lower sales volume, partially offset by lower transportation and material costs, net of costs passed through.
Food and Beverage Merchandising
|
|
For the Nine Months Ended September 30, |
|
|||||||||||||
(In millions, except for %) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|
% Change |
|
||||
Total segment net revenues |
|
$ |
2,367 |
|
|
$ |
2,677 |
|
|
$ |
(310 |
) |
|
|
(12 |
)% |
Segment Adjusted EBITDA |
|
$ |
340 |
|
|
$ |
303 |
|
|
$ |
37 |
|
|
|
12 |
% |
Segment Adjusted EBITDA margin |
|
|
14 |
% |
|
|
11 |
% |
|
|
|
|
|
|
||
Total Segment Net Revenues. Food and Beverage Merchandising total segment net revenues for the nine months ended September 30, 2023 decreased by $310 million, or 12%, to $2,367 million compared to the prior year period. The decrease was primarily due to the closure of our Canton, North Carolina mill, lower sales volume and the disposition of Beverage Merchandising Asia. Lower sales volume was driven by a focus on value over volume and the market softening amid inflationary pressures. The decrease was partially offset by favorable pricing, due to pricing actions taken to offset higher input costs, including pricing benefit from the extension of key business, and the contractual pass-through of higher material costs.
Adjusted EBITDA. Food and Beverage Merchandising Adjusted EBITDA for the nine months ended September 30, 2023 increased by $37 million, or 12%, to $340 million compared to the prior year period. The increase was primarily due to favorable pricing, net of material costs passed through, and lower transportation costs, partially offset by higher manufacturing costs, lower sales volume, the closure of our Canton, North Carolina mill and the disposition of Beverage Merchandising Asia.
Liquidity and Capital Resources
We manage our capital structure in an effort to most effectively execute our strategic priorities and maximize shareholder value. We believe that we have sufficient liquidity to support our ongoing operations and to re-invest in our business to drive future growth. Our projected operating cash flows, cash on-hand and available capacity under our revolving credit facility are our primary sources of liquidity for the next 12 months. We expect our liquidity to fund capital expenditures, payments of interest and principal on our debt, cash-based restructuring charges and distributions to shareholders that require approval by our Board of Directors. Additionally, we may continue to utilize portions of our excess cash to repurchase certain amounts of our long-term debt prior to maturity depending on market conditions, among other factors.
Cash flows
Our cash flows for the nine months ended September 30, 2023 and 2022 were as follows:
|
|
For the Nine Months Ended September 30, |
|
|||||
(In millions) |
|
2023 |
|
|
2022 |
|
||
Net cash provided by operating activities |
|
$ |
453 |
|
|
$ |
241 |
|
Net cash (used in) provided by investing activities |
|
|
(167 |
) |
|
|
196 |
|
Net cash used in financing activities |
|
|
(587 |
) |
|
|
(79 |
) |
Effect of exchange rate on cash, cash equivalents and restricted cash |
|
|
1 |
|
|
|
(6 |
) |
Net (decrease) increase in cash, cash equivalents and restricted cash |
|
$ |
(300 |
) |
|
$ |
352 |
|
34
Net cash flows were an outflow of $300 million in the current year period compared to an inflow of $352 million in the prior year period primarily due to $515 million of early debt repayments during 2023 and proceeds received from the sale of Beverage Merchandising Asia and Naturepak Beverage during the prior year, partially offset by higher net cash provided by operating activities. Net cash provided by operating activities increased primarily due to favorable changes in inventory balances, driven in part by the strategic inventory build during the prior year that did not recur, partially offset by cash payments made related to the Beverage Merchandising Restructuring, higher incentive compensation payments and higher cash interest payments.
During the nine months ended September 30, 2023, our primary source of cash was $453 million of net cash provided by operating activities. The net cash provided by operating activities reflects income from operations, partially offset by $177 million of cash interest payments and $51 million of cash taxes. Our primary uses of cash for the same period were $515 million of early debt repayments, $178 million of capital expenditures and $54 million of dividends paid.
During the nine months ended September 30, 2022, our primary sources of cash were $364 million in combined proceeds related to the sale of Beverage Merchandising Asia and our equity interests in Naturepak Beverage and $241 million of net cash provided by operating activities. The net cash provided by operating activities reflects income from operations, partially offset by $132 million of cash interest payments and $64 million of cash taxes. Our primary uses of cash for the same period were $169 million of capital expenditures and $54 million of dividends paid.
Dividends
During each of the nine months ended September 30, 2023 and 2022, we paid cash dividends of $54 million. On October 31, 2023, our Board of Directors declared a dividend of $0.10 per share to be paid on December 15, 2023 to shareholders of record as of November 30, 2023.
Our Credit Agreement and Notes limit the ability to make dividend payments, subject to specified exceptions. Our Board of Directors must review and approve future dividend payments and will determine whether to declare additional dividends based on our operating performance, expected future cash flows, debt levels, liquidity needs and investment opportunities.
Financing and capital resources
As of September 30, 2023, we had $3,632 million of total principal amount of borrowings. Refer to Note 8, Debt, for additional details. Of our total debt, $1,705 million is subject to variable interest rates, representing borrowings drawn under our Credit Agreement.
On April 17, 2023, we amended the Credit Agreement, replacing the LIBOR-based reference rate with a SOFR-based reference rate, effective for interest payments for the period commencing April 28, 2023. As of September 30, 2023, the underlying one-month SOFR for amounts borrowed under our Credit Agreement was 5.43%.
On July 26, 2023, we further amended the Credit Agreement to extend the maturity date on our $250 million Revolving Tranche facility from August 5, 2024 to August 5, 2025. There were no other material changes to the terms of the Credit Agreement as a result of this amendment.
During the nine months ended September 30, 2023, we repaid an aggregate of $515 million of our U.S. term loans Tranche B-2.
During the fourth quarter of 2022, we entered into derivative financial instruments with large institutions that fixed the LIBO rate at a weighted average rate of 4.12% for an aggregate notional amount of $1,000 million to hedge a portion of the interest rate exposure resulting from our U.S. term loans and classified the instruments as cash flow hedges. Our cash flow hedge contracts mature in October 2025. During the second quarter of 2023, we amended our interest rate swap agreements, replacing the LIBOR-based reference rate with a SOFR-based reference rate, effective for swap payments for the period commencing April 28, 2023. The weighted average fixed rate of 4.12% for our interest rate swap agreements was unchanged as a result of these amendments.
Based on the one-month SOFR as of September 30, 2023, and including the impact of our interest rate swap agreements, our 2023 annual cash interest obligations on our borrowings are expected to be approximately $257 million.
35
Under the Credit Agreement, we may incur additional indebtedness either by satisfying certain incurrence tests or by incurring such additional indebtedness under certain specific categories of permitted debt. Incremental senior secured indebtedness under the Credit Agreement and senior secured or unsecured notes in lieu thereof are permitted to be incurred up to an aggregate principal amount of $750 million subject to pro forma compliance with the Credit Agreement’s total secured leverage ratio covenant. In addition, we may incur senior secured indebtedness in an unlimited amount as long as our total secured leverage ratio does not exceed 4.50 to 1.00 on a pro forma basis, and (in the case of incremental senior secured indebtedness under the Credit Agreement only) we are in pro forma compliance with the Credit Agreement’s total secured leverage ratio covenant. The incurrence of unsecured indebtedness, including the issuance of senior notes, and unsecured subordinated indebtedness is also permitted (subject to the terms of the Credit Agreement) if the fixed charge coverage ratio is at least 2.00 to 1.00 on a pro forma basis.
Under the respective indentures governing the Notes, we may incur additional indebtedness either by satisfying certain incurrence tests or by incurring such additional indebtedness under certain specific categories of permitted debt. Indebtedness may be incurred under the incurrence tests if the fixed charge coverage ratio is at least 2.00 to 1.00 on a pro forma basis or the consolidated total leverage ratio is no greater than 5.50 to 1.00 and the liens securing first lien secured indebtedness do not exceed a 4.10 to 1.00 consolidated secured first lien leverage ratio.
We are required to make annual prepayments of term loans with up to 50% of excess cash flow (which will be reduced to 25% or 0% if specified senior secured first lien leverage ratios are met) as determined in accordance with the Credit Agreement. No excess cash flow prepayments were due for the year ended December 31, 2022.
Liquidity and working capital
Our liquidity position is summarized in the table below:
(In millions, except for current ratio) |
|
As of September 30, 2023 |
|
|
As of December 31, 2022 |
|
||
Cash and cash equivalents(1) |
|
$ |
233 |
|
|
$ |
531 |
|
Availability under revolving credit facility |
|
|
201 |
|
|
|
200 |
|
|
|
$ |
434 |
|
|
$ |
731 |
|
Working capital(2) |
|
|
831 |
|
|
|
1,305 |
|
Current ratio |
|
|
2.0 |
|
|
|
2.4 |
|
As of September 30, 2023, we had $233 million of cash and cash equivalents on-hand. We also had $201 million available under our revolving credit facility, net of $49 million utilized in the form of letters of credit under the facility. Our next debt maturity is $217 million of Pactiv Debentures due in December 2025, excluding amortization payments related to our U.S. term loans Tranche B-3 under our Credit Agreement.
36
We believe that we have sufficient liquidity to support our ongoing operations in the next 12 months and to invest in future growth to create further value for our shareholders. Our primary drivers of decreased liquidity for the nine months ended September 30, 2023 were $515 million of debt repayments, $178 million of capital expenditures and $54 million of dividends paid. These drivers of decreased liquidity were partially offset by net operating cash flows of $453 million during the same period. We currently anticipate cash payments of approximately $280 million for capital expenditures and approximately $120 million for restructuring charges during 2023.
During the nine months ended September 30, 2023, our working capital decreased $474 million, or 36%, primarily due to our use of cash for $515 million of early debt repayments, capital expenditures and dividend payments, and reductions of our inventory levels which were partially offset by income from continuing operations. Our working capital position provides us the flexibility for further consideration of strategic initiatives, including reinvestment in our business and deleveraging of our balance sheet. As a result, we may continue to utilize portions of our excess cash to repurchase certain amounts of our long-term debt prior to maturity depending on market conditions, among other factors.
Our ability to borrow under our revolving credit facility or to incur additional indebtedness may be limited by the terms of such indebtedness or other indebtedness, including the Credit Agreement and the Notes. The Credit Agreement and the respective indentures governing the Notes generally allow our subsidiaries to transfer funds in the form of cash dividends, loans or advances within the Company.
Other than short-term leases executed in the normal course of business, we have no material off-balance sheet obligations.
Critical Accounting Policies, Estimates and Assumptions
The most critical accounting policies and estimates are those that are most important to the portrayal of our financial condition and results of operations and require us to make the most difficult and subjective judgments, often estimating the outcome of future events that are inherently uncertain. Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022. Our critical accounting estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022.
Recent Accounting Pronouncements
New accounting standards that we have recently adopted, as well as accounting standards that have been recently issued but not yet adopted by us, is included in Note 1, Nature of Operations and Basis of Presentation.
37
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
There have been no material changes to our market risk during the nine months ended September 30, 2023. For additional information, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, in our Annual Report on Form 10-K for the year ended December 31, 2022.
Item 4. Controls and Procedures.
a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. In connection with the preparation of this report, management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2023, our disclosure controls and procedures were effective.
b) Changes in Internal Control over Financial Reporting
There were no material changes in our internal control over financial reporting that occurred during the three months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
38
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The information required to be set forth under this heading is incorporated by reference from Note 12, Commitments and Contingencies, to the interim Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors.
There have been no material changes to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the three months ended September 30, 2023,
39
Item 6. Exhibits.
The following exhibits are filed as part of, or are incorporated by reference in, this report:
|
|
|
|
Incorporated by Reference |
||
Exhibit |
Exhibit Title |
Filed Herewith |
Furnished Herewith |
Form |
Exhibit No. |
Date Filed |
3.1 |
Amended and Restated Certificate of Incorporation of the Registrant. |
|
|
8-K |
3.1 |
Sept. 21, 2020 |
3.2 |
|
|
8-K |
3.2 |
Sept. 21, 2020 |
|
31.1 |
X |
|
|
|
|
|
31.2 |
X |
|
|
|
|
|
32.1 |
|
X |
|
|
|
|
32.2 |
|
X |
|
|
|
|
101.INS |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
|
|
40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
PACTIV EVERGREEN INC. |
|
|
|
(Registrant) |
|
|
|
|
|
By: |
|
/s/ Jonathan H. Baksht |
|
|
|
Jonathan H. Baksht |
|
|
|
Chief Financial Officer (principal financial officer and principal accounting officer) |
|
|
|
November 1, 2023 |
|
|
|
|
41
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael J. King, certify that:
Date: November 1, 2023 |
|
By: |
/s/ Michael J. King |
|
|
|
Michael J. King |
|
|
|
President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jonathan H. Baksht, certify that:
Date: November 1, 2023 |
|
By: |
/s/ Jonathan H. Baksht |
|
|
|
Jonathan H. Baksht |
|
|
|
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pactiv Evergreen Inc (the “Company”) on Form 10-Q for the period ending September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: November 1, 2023 |
|
By: |
/s/ Michael J. King |
|
|
|
Michael J. King |
|
|
|
President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pactiv Evergreen Inc (the “Company”) on Form 10-Q for the period ending September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: November 1, 2023 |
|
By: |
/s/ Jonathan H. Baksht |
|
|
|
Jonathan H. Baksht |
|
|
|
Chief Financial Officer |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Statement of Other Comprehensive Income [Abstract] | ||||
| Net income (loss) | $ 30 | $ 176 | $ (242) | $ 293 |
| Other comprehensive (loss) income, net of income taxes: | ||||
| Currency translation adjustments | (5) | (6) | 19 | (12) |
| Defined benefit plans | (1) | 41 | (2) | (62) |
| Interest rate derivatives | 4 | 12 | ||
| Other comprehensive (loss) income | (2) | 35 | 29 | (74) |
| Comprehensive income (loss) | 28 | 211 | (213) | 219 |
| Comprehensive income attributable to non-controlling interests | (1) | (2) | (1) | |
| Comprehensive income (loss) attributable to Pactiv Evergreen Inc. common shareholders | $ 27 | $ 211 | $ (215) | $ 218 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Allowance for accounts receivable | $ 2 | $ 3 |
| Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
| Common stock, shares issued (in shares) | 178,452,889 | 177,926,081 |
| Common stock, shares outstanding (in shares) | 178,452,889 | 177,926,081 |
| Preferred stock, par value (USD per share) | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
| Preferred stock, shares issued (in shares) | 0 | 0 |
| Preferred stock, shares outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statements of Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Statement of Stockholders' Equity [Abstract] | ||||
| Common stock, dividends | $ 0.1 | $ 0.1 | $ 0.3 | $ 0.3 |
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Statement of Cash Flows [Abstract] | ||
| Right-of-use assets and lease liabilities recorded during period | $ 63 | $ 49 |
Pay vs Performance Disclosure - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Pay vs Performance Disclosure | ||||
| Net Income (Loss) | $ 29 | $ 176 | $ (244) | $ 292 |
Insider Trading Arrangements |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Trading Arrangements, by Individual | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
Nature of Operations and Basis of Presentation |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Nature of Operations and Basis of Presentation | Note 1. Nature of Operations and Basis of Presentation The accompanying condensed consolidated financial statements comprise the accounts of Pactiv Evergreen Inc. (“PTVE”) and its subsidiaries (“we”, “us”, “our” or the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods and should be read in conjunction with the consolidated financial statements and the related notes thereto included in our latest Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 7, 2023. Operating results for interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. All intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Although our current estimates contemplate current conditions and how we expect them to change in the future, as appropriate, it is reasonably possible that actual conditions could differ from what was anticipated in those estimates, which could materially affect our results of operations, balance sheet and cash flows. Among other effects, such changes could result in future impairments of goodwill, intangibles and long-lived assets, and adjustments to reserves for employee benefits and income taxes. The estimated recoverable amounts associated with asset impairments represent Level 3 measurements in the fair value hierarchy, which include inputs that are not based on observable market data. Revision to Restricted Cash During the nine months ended September 30, 2023, we revised the presentation of restricted cash balances on our condensed consolidated statements of cash flows to include $24 million of noncurrent restricted cash in the beginning and ending balances for all periods presented. There was no impact to our operating, investing or financing cash flow activities, and there was no impact to our condensed consolidated balance sheets or our condensed consolidated statements of income (loss), comprehensive income (loss) or equity. The impact to all previously reported interim and annual periods was not material. Recent Accounting Pronouncements We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our condensed consolidated financial statements. |
Dispositions |
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Sep. 30, 2023 | |
| Business Combinations [Abstract] | |
| Dispositions | Note 2. Dispositions Beverage Merchandising Asia On January 4, 2022, we entered into a definitive agreement with SIG Schweizerische Industrie-Gesellschaft GmbH to sell our carton packaging and filling machinery businesses in China, Korea and Taiwan (“Beverage Merchandising Asia”) included in the Food and Beverage Merchandising segment. The transaction closed on August 2, 2022, and we received proceeds of $336 million. We recognized a gain on sale of $239 million during the three months ended September 30, 2022 which was reflected in other income, net. The operations of Beverage Merchandising Asia did not meet the criteria to be presented as discontinued operations. Income from operations before income taxes for Beverage Merchandising Asia for the three and nine months ended September 30, 2022 was $2 million and $13 million, respectively. Closures Businesses During the third quarter of 2022, we committed to a plan to sell our remaining closures businesses included in the Other operating segment. As a result, we classified the related assets and liabilities of these businesses as held for sale and recognized an impairment charge of $56 million during the prior year quarter within restructuring, asset impairment and other related charges to reduce the carrying value of the disposal group to its fair value less costs to sell. This impairment charge included $26 million of cumulative currency translation adjustment losses. We completed the sale of a substantial portion of these businesses on October 31, 2022, and the remaining operations on March 1, 2023, all for an immaterial amount. We recognized a partial reversal of the initial impairment charge of $1 million during the nine months ended September 30, 2023 which was reflected in restructuring, asset impairment and other related charges. The operations of the remaining closures businesses did not meet the criteria to be presented as discontinued operations. The remaining closures businesses’ income from operations before income taxes for the nine months ended September 30, 2023 and 2022 was immaterial. Naturepak Beverage On March 29, 2022, we completed the sale of our equity interests in Naturepak Beverage Packaging Co. Ltd. (“Naturepak Beverage”), our 50% joint venture with Naturepak Limited, to affiliates of Elopak ASA. We received proceeds of $47 million and recognized a gain on the sale of our equity interests of $27 million during the nine months ended September 30, 2022 which was reflected in other income, net. Our interests in Naturepak Beverage did not meet the criteria to be presented as discontinued operations. The income from operations before income taxes from our equity interests in Naturepak Beverage for the nine months ended September 30, 2022 was immaterial. Other During the third quarter of 2023, we committed to a plan to sell certain properties within our Foodservice and Food and Beverage Merchandising segments. As a result, we classified the related assets as held for sale on the condensed consolidated balance sheet as of September 30, 2023. We expect to recognize an immaterial gain upon the sale of these properties. |
Restructuring, Asset Impairment and Other Related Charges |
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| Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring, Asset Impairment and Other Related Charges | Note 3. Restructuring, Asset Impairment and Other Related Charges On March 6, 2023, we announced the Beverage Merchandising Restructuring, a plan approved by our Board of Directors to take significant restructuring actions related to our Beverage Merchandising operations. The Beverage Merchandising Restructuring includes, among other things: • Closure of our Canton, North Carolina mill, including the cessation of mill operations, during the second quarter of 2023; • Closure of our Olmsted Falls, Ohio converting facility and concurrent reallocation of production to our remaining converting facilities during the second quarter of 2023; and • Reorganizing our operating and reporting structure to achieve increased efficiencies and related cost savings. The Beverage Merchandising Restructuring resulted in a workforce reduction of approximately 1,300 employees. We also continue to explore strategic alternatives for our Pine Bluff, Arkansas mill and our Waynesville, North Carolina facility. We have not set a timetable in relation to this process. As a result of the Beverage Merchandising Restructuring, we incurred charges during the three and nine months ended September 30, 2023, and we estimate we will incur further charges in future periods, as follows:
(1) We expect to incur these charges primarily during 2023. These estimates are provisional and include significant management judgments and assumptions that could change materially as we execute our plans. Actual results may differ from these estimates, and the execution of our plan could result in additional restructuring charges or impairments not reflected above. (2) Total cash charges exclude the benefit of any potential cash proceeds related to possible sales of any property, plant and equipment that may be disposed of as part of our ongoing restructuring activities. During the third quarter of 2023, we classified $4 million of properties as held for sale related to our Beverage Merchandising Restructuring and expect to recognize an immaterial gain on the sale of these properties. (3) Other non-cash charges include the write-down of certain spare parts classified as inventories on our condensed consolidated balance sheet, the write-off of scrapped raw materials and certain construction in-progress balances and accelerated amortization expense for certain operating lease right-of-use assets. (4) Exit, disposal and other transition costs are primarily related to equipment decommissioning and dismantlement, transition labor associated with the facility closures and management restructuring, site remediation, contract terminations, systems conversion and other related costs. The Beverage Merchandising Restructuring charges and other restructuring and asset impairment charges (net of reversals) were classified on our condensed consolidated statements of income (loss) as follows by segment:
During the three months ended September 30, 2022, we recorded a of $56 million related to our remaining closures businesses, which is reported within the Other operating segment. Accordingly, the carrying value of the remaining closures businesses was reduced to fair value, as described in Note 2, Acquisitions and Dispositions. The impairment arose as a result of our decision to sell the remaining closures businesses. During the three and nine months ended September 30, 2022, we recorded employee termination costs and other restructuring charges of $1 million and $2 million, respectively, within the Food and Beverage Merchandising segment. The following table summarizes the changes to our restructuring liability related to the Beverage Merchandising Restructuring during the nine months ended September 30, 2023:
(1) Included $41 million classified within accrued and other current liabilities and $2 million classified within other noncurrent liabilities as of September 30, 2023. |
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Inventories |
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| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories | Note 4. Inventories The components of inventories consisted of the following:
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Property, Plant and Equipment, Net |
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment, Net | Note 5. Property, Plant and Equipment, Net Property, plant and equipment, net consisted of the following:
Depreciation expense related to property, plant and equipment was recognized in the following components in the condensed consolidated statements of income (loss):
(1) For the three and nine months ended September 30, 2023, total depreciation expense included $4 million and $271 million, respectively, of accelerated depreciation expense related to the Beverage Merchandising Restructuring, substantially all of which was included in cost of sales. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details. |
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| Goodwill and Intangible Assets | Note 6. Goodwill and Intangible Assets Goodwill by reportable segment was as follows:
In the second quarter of 2023, in conjunction with the Beverage Merchandising Restructuring, we implemented a new operating and reporting structure resulting in the combination of our legacy Food Merchandising and Beverage Merchandising segments, creating our Food and Beverage Merchandising segment. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details. We also reorganized the management of certain product lines from our Foodservice segment to our Food and Beverage Merchandising segment. Refer to Note 18, Segment Information, for additional details. The change in the management of certain product lines resulted in a $35 million reclassification of goodwill between the segments based on the estimated relative fair value of the product lines compared to the estimated fair value of the Foodservice reporting unit. We have reflected these changes in our segments in the table above. Intangible assets, net consisted of the following:
Amortization expense for intangible assets of $15 million, $45 million, $16 million and $46 million for the three and nine months ended September 30, 2023 and 2022, respectively, was recognized in selling, general and administrative expenses. |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued and Other Current Liabilities | Note 7. Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following:
(1) Restructuring costs relate to the Beverage Merchandising Restructuring. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details. (2) Other included items such as freight, utilities and property and other non-income related taxes. |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | Note 8. Debt Debt consisted of the following:
We were in compliance with all debt covenants during the nine months ended September 30, 2023 and the year ended December 31, 2022. Credit Agreement PTVE and certain of its U.S. subsidiaries are parties to a senior secured credit agreement dated August 5, 2016 as amended (the “Credit Agreement”). As of September 30, 2023, the Credit Agreement comprised the following term and revolving tranches:
(1) The Revolving Tranche represents a $250 million facility. The amount utilized is in the form of letters of credit. We repaid a total of $515 million of our U.S. term loans Tranche B-2 during the nine months ended September 30, 2023, of which $225 million was repaid during the third quarter of 2023. The repayments were first applied to the remaining U.S term loans Tranche B-2 quarterly amortization payments, thereby eliminating all remaining quarterly amortization payments for the U.S term loans Tranche B-2, with the residual balance applied to the outstanding principal balance due at maturity. On April 17, 2023, we amended the Credit Agreement, replacing the LIBOR-based reference rate with a Secured Overnight Financing Rate (“SOFR”) based reference rate, effective for interest payments for the period commencing April 28, 2023. Other than the foregoing, the material terms of the Credit Agreement remain unchanged, and our election to use certain practical expedients under Accounting Standards Codification Topic 848: Reference Rate Reform resulted in no material impacts on our condensed consolidated financial statements. On July 26, 2023, we further amended the Credit Agreement to extend the maturity date on our $250 million Revolving Tranche facility from August 5, 2024 to August 5, 2025. There were no other material changes to the terms of the Credit Agreement as a result of this amendment. The weighted average contractual interest rates related to our U.S. term loans Tranche B-2 and B-3 for the nine months ended September 30, 2023 and 2022 were 8.18%, 8.24%, 4.47% and 4.79%, respectively. Including the impact of interest rate swap agreements, which were entered into in the fourth quarter of 2022, the weighted average rate on our U.S. term loans was 7.77% for the nine months ended September 30, 2023. The effective interest rates of our debt obligations under the Credit Agreement are not materially different from the contractual interest rates. Refer to Note 9, Financial Instruments, for additional details regarding the interest rate swap agreements. PTVE and certain of its U.S. subsidiaries have guaranteed on a senior basis the obligations under the Credit Agreement to the extent permitted by law. The borrowers and the guarantors have granted security over substantially all of their assets to support the obligations under the Credit Agreement. This security is expected to be shared on a first priority basis with the holders of the Notes. Indebtedness under the Credit Agreement may be voluntarily repaid, in whole or in part, and must be mandatorily repaid in certain circumstances. We are required to make quarterly amortization payments of 0.25% of the principal amount of our U.S. term loans Tranche B-3. Additionally, we are required to make annual prepayments of term loans with up to 50% of excess cash flow (which will be reduced to 25% or 0% if specified senior secured first lien leverage ratios are met) as determined in accordance with the Credit Agreement. No excess cash flow prepayments were due for the year ended December 31, 2022. The Credit Agreement contains customary covenants which restrict us from certain activities including, among others, incurring debt, creating liens over assets, selling assets and making restricted payments, in each case except as permitted under the Credit Agreement. Notes As of September 30, 2023, our outstanding notes were as follows:
The effective interest rates of our debt obligations under the Notes are not materially different from the contractual interest rates. PTVE and certain of its U.S. subsidiaries have guaranteed on a senior basis the obligations under the Notes (as defined below) to the extent permitted by law. The issuers and the guarantors have granted security over substantially all of their assets to support the obligations under the Notes. This security is expected to be shared on a first priority basis with the creditors under the Credit Agreement. The respective indentures governing the 4.000% Senior Secured Notes due 2027 (“4.000% Notes”) and the 4.375% Senior Secured Notes due 2028 (together with the 4.000% Notes, the “Notes”) contain customary covenants which restrict us from certain activities including, among others, incurring debt, creating liens over assets, selling assets and making restricted payments, in each case except as permitted under the respective indentures governing the Notes. Under the respective indentures governing the Notes, we can, at our option, elect to redeem the Notes under terms and conditions specified in the indentures. Under the respective indentures governing the Notes, in certain circumstances which would constitute a change in control, the holders of the Notes have the right to require us to repurchase the Notes at a premium. Pactiv Debentures As of September 30, 2023, our outstanding debentures (together, the “Pactiv Debentures”) were as follows:
The effective interest rates of our debt obligations under the Pactiv Debentures are not materially different from the contractual interest rates. The Pactiv Debentures are not guaranteed and are unsecured. The indentures governing the Pactiv Debentures contain a negative pledge clause limiting the ability of certain of our entities, subject to certain exceptions, to (i) incur or guarantee debt that is secured by liens on “principal manufacturing properties” (as such term is defined in the indentures governing the Pactiv Debentures) or on the capital stock or debt of certain subsidiaries that own or lease any such principal manufacturing property and (ii) sell and then take an immediate lease back of such principal manufacturing property. The 8.375% Debentures due 2027 may be redeemed at any time at our option, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus a make-whole premium, if any, plus accrued and unpaid interest to the date of the redemption. Other borrowings Other borrowings represented finance lease obligations of $43 million and $49 million as of September 30, 2023 and December 31, 2022, respectively. Scheduled maturities Below is a schedule of required future repayments on our debt outstanding as of September 30, 2023:
Fair value of our long-term debt The fair value of our long-term debt as of September 30, 2023 and December 31, 2022 is a Level 2 fair value measurement. Below is a schedule of carrying values and fair values of our debt outstanding:
Interest expense, net Interest expense, net consisted of the following:
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments | Note 9. Financial Instruments We had the following derivative instruments recorded at fair value in our condensed consolidated balance sheets:
Our derivatives are comprised of commodity and interest rate swaps. All derivatives represent Level 2 financial assets and liabilities. Our derivatives are valued using an income approach based on the observable market index prices less the contract rate multiplied by the notional amount or based on pricing models that rely on market observable inputs such as commodity prices and interest rates. Our calculation of the fair value of these financial instruments takes into consideration the risk of non-performance, including counterparty credit risk. The majority of our derivative contracts do not have a legal right of set-off. We manage the credit risk in connection with our derivatives by limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties. During the fourth quarter of 2022, we entered into derivative financial instruments with several large financial institutions which swapped the LIBO rate for a weighted average fixed rate of 4.120% for an aggregate notional amount of $1,000 million to hedge a portion of the interest rate exposure resulting from our U.S. term loans. These instruments are classified as cash flow hedges and mature in October 2025. In April 2023, we amended our interest rate swap agreements to replace the interest rate benchmark from LIBOR to SOFR, effective for swap payments for the period commencing April 28, 2023. Other than the foregoing, the material terms of the interest rate swap agreements remain unchanged, including the weighted average fixed rate of 4.120%, and our election to use certain practical expedients under Accounting Standards Codification Topic 848: Reference Rate Reform resulted in no material impacts on our condensed consolidated financial statements. During the three months ended September 30, 2023, we recognized an unrealized gain of $1 million in cost of sales, for our commodity swap contracts. There was no unrealized gain or loss during the nine months ended September 30, 2023 for our commodity swap contracts. During the three and nine months ended September 30, 2022, we recognized unrealized losses of $10 million and $4 million, respectively, in cost of sales, for our commodity swap contracts. During the three and nine months ended September 30, 2023, we recognized realized gains of $3 million and $6 million, respectively, within interest expense, net and unrealized gains of $8 million and $22 million, respectively, within other comprehensive income (loss) for our interest rate derivatives. At September 30, 2023, we expected to reclassify $9 million of gains, net of tax, from accumulated other comprehensive loss (“AOCL”) to earnings over the next twelve months. The actual amount that will be reclassified to future earnings may vary from this amount as a result of changes in market conditions. The following table provides the detail of outstanding commodity derivative contracts as of September 30, 2023:
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Employee Benefits |
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| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee Benefits | Note 10. Employee Benefits Net periodic benefit (expense) income for our defined benefit pension plans and other post-employment benefit plans consisted of the following:
(1) Refer to the Pension Partial Settlement Transactions section below for additional details.
Net periodic benefit (expense) income for defined benefit pension plans and other post-employment benefit plans was recognized as follows:
Contributions to the Pension Plan for Pactiv Evergreen (“PPPE”) during the year ending December 31, 2023 are expected to be less than $1 million. Pension Partial Settlement Transactions On September 20, 2022 and February 24, 2022, using PPPE assets, we purchased non-participating group annuity contracts from insurance companies and transferred $656 million and $1,257 million, respectively, of the PPPE’s projected benefit obligations. In each instance, the respective insurance companies have assumed responsibility for pension benefits and annuity administration. These transactions resulted in the recognition of non-cash, pre-tax settlement gains. |
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| Other (Expense) Income, Net | Note 11. Other (Expense) Income, Net Other (expense) income, net consisted of the following:
(1) Reflects a gain, net of costs, arising from the settlement of a historical legal action. |
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Commitments and Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Note 12. Commitments and Contingencies We are from time to time party to litigation, legal proceedings and tax examinations arising from our operations. Most of these matters involve allegations of damages against us relating to employment matters, personal injury and commercial or contractual disputes. We are also involved in various administrative and other proceedings relating to environmental matters that arise in the normal course of business, and we may become involved in similar matters in the future. We record estimates for claims and proceedings that constitute a present obligation when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of such obligation can be made. While it is not possible to predict the outcome of any of these matters, based on our assessment of the facts and circumstances, we do not believe any of these matters, individually or in the aggregate, will have a material adverse effect on our balance sheet, results of operations or cash flows. However, actual outcomes may differ from those expected and could have a material effect on our balance sheet, results of operations or cash flows in a future period. Except for amounts provided, there were no legal proceedings pending other than those for which we have determined that the possibility of a material outflow is remote. Indemnities As part of the agreements for the sale of various businesses, we have provided certain warranties and indemnities to the respective purchasers as set out in the respective sale agreements. These warranties and indemnities are subject to various terms and conditions affecting the duration and total amount of the indemnities. Any claims pursuant to these warranties and indemnities, if successful, could have a material effect on our balance sheet, results of operations or cash flows. |
Accumulated Other Comprehensive Loss |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Loss | Note 13. Accumulated Other Comprehensive Loss The following table summarizes the changes in our balances of each component of AOCL:
(1) Net actuarial gain (loss) relates to the interim remeasurements of the PPPE due to the pension partial settlement transactions completed in September 2022 and February 2022. Net actuarial gain arising during the three months ended September 30, 2022 was primarily due to an increase in the discount rate utilized in measuring plan obligations, reflecting changes in market rates, partially offset by asset returns. Net actuarial loss arising during the nine months ended September 30, 2022 was primarily due to asset returns, partially offset by an increase in the discount rate utilized in measuring plan obligations, reflecting changes in market rates. Refer to Note 10, Employee Benefits, for additional details. (2) Reclassifications upon sale of businesses are recorded in other (expense) income, net. |
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Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Note 14. Income Taxes The effective tax rates for the three and nine months ended September 30, 2023 and 2022 represent our estimate of the annual effective tax rates expected to be applicable for the respective full fiscal years, adjusted for any discrete events which are recorded in the period that they occur. During the three months ended September 30, 2023, we recognized a tax expense of $22 million on income from continuing operations before tax of $50 million. During the nine months ended September 30, 2023, we recognized a tax benefit of $5 million on a loss from continuing operations before tax of $249 million. The effective tax rate for the aforementioned periods was driven primarily by the inability to recognize a tax benefit on all interest expense. During the three months ended September 30, 2022, we recognized a tax expense of $79 million on income from continuing operations before tax of $254 million. During the nine months ended September 30, 2022, we recognized a tax expense of $160 million on income from continuing operations before tax of $452 million. The effective tax rate for the aforementioned periods was primarily driven by the inability to recognize a tax benefit on all interest expense and the tax impacts from the sales of our businesses. We are under audit by the Internal Revenue Service (“IRS”) and other taxing authorities. The IRS is currently auditing our U.S. income tax returns for 2016-2017. As of September 30, 2023, we have not received any proposed adjustments from taxing authorities that would be material. Although the ultimate timing is uncertain, it is reasonably possible that a reduction of up to $9 million of unrecognized tax benefits could occur within the next twelve months due to changes in audit status, settlements of tax assessments and other events. |
Related Party Transactions |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions | Note 15. Related Party Transactions As of September 30, 2023, approximately 77% of our shares were owned by PFL. Transactions with our related parties are detailed below. All of our related parties are commonly controlled by Mr. Graeme Hart, our controlling shareholder, except for our joint ventures.
(1) All transactions with joint ventures are settled in cash. Sales of goods and services are negotiated based on market rates. All amounts are unsecured, non-interest bearing and settled on normal trade terms. (2) We sell and purchase various goods and services with Reynolds Consumer Products Inc. (“RCPI”) under contractual arrangements that expire over a variety of periods through December 31, 2027. During the first quarter of 2023, we amended these contractual arrangements with RCPI, which, among other things, extended the expiration date for certain arrangements and included price adjustments for certain goods we sold to and purchased from RCPI in the current and prior periods. The price adjustments resulted in $22 million of incremental net revenues and $9 million of incremental costs of goods sold recognized during the nine months ended September 30, 2023. We also lease a portion of two facilities to RCPI and are party to an information technology services agreement with RCPI. We do not trade with Graham Packaging Company Inc. (“GPCI”) on an ongoing basis. We also are party to a transition services agreement with GPCI. (3) These charges are for various costs incurred including services provided under a transition services agreement, an insurance sharing agreement and an investment advisory agreement with Rank Group Limited (“Rank”). All amounts are unsecured, non-interest bearing and settled on normal trade terms. |
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Equity Based Compensation |
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| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Based Compensation | Note 16. Equity Based Compensation We established the Pactiv Evergreen Inc. Equity Incentive Plan for purposes of granting stock or other equity based compensation awards to our employees (including our senior management), directors, consultants and advisors. Equity based compensation costs were $9 million, $24 million, $6 million and $16 million for the three and nine months ended September 30, 2023 and 2022, respectively, substantially all of which was recognized in selling, general and administrative expenses. Restricted Stock Units During the nine months ended September 30, 2023, we granted restricted stock units (“RSUs”) to certain members of management and certain members of our Board of Directors. These RSUs require future service to be provided and vest in annual installments over a period ranging from to three years beginning on the first anniversary of the grant date. During the vesting period, the RSUs carry dividend-equivalent rights, but the RSUs do not have voting rights. The RSUs and any related dividend-equivalent rights are forfeited in the event the holder is no longer an employee on the vesting date, unless the holder satisfies certain retirement-eligibility criteria. The following table summarizes RSU activity during 2023:
(1) Includes 86 thousand shares reserved for issuance upon the settlement of dividend-equivalent rights carried by the reported RSUs concurrently with the settlement of such RSUs for shares. Unrecognized compensation cost related to unvested RSUs as of September 30, 2023 was $11 million, which is expected to be recognized over a weighted average period of 2.1 years. The total vest date fair value of shares that vested during the nine months ended September 30, 2023 was $6 million. Performance Share Units During the nine months ended September 30, 2023, we granted performance share units (“PSUs”) to certain members of management which vest on the third anniversary of the grant date. Based on the achievement of a company performance target during a performance period set by our Compensation Committee of our Board of Directors, upon vesting, the PSUs are exchanged for a number of shares of common stock equal to the number of PSUs multiplied by a factor between 0% and 200%. We use our stock price on the grant date to estimate the fair value of our PSUs. We adjust the expense based on the likelihood of future achievement of performance metrics. If any of the performance targets are not achieved, the awards are forfeited. During the vesting period, the PSUs carry dividend-equivalent rights, but the PSUs do not have voting rights. The PSUs and any related dividend-equivalent rights are forfeited in the event the holder is no longer an employee on the vesting date, unless the holder satisfies certain retirement-eligibility criteria. The following table summarizes PSU activity during 2023:
(1) Includes 168 thousand shares reserved for issuance upon the settlement of dividend-equivalent rights carried by the reported PSUs concurrently with the settlement of such PSUs for shares. Unrecognized compensation cost related to unvested PSUs as of September 30, 2023 was $21 million, which is expected to be recognized over a weighted average period of 2.2 years. |
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Earnings Per Share |
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| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share | Note 17. Earnings Per Share Earnings (loss) per share, including a reconciliation of the number of shares used for our earnings (loss) per share calculation, was as follows:
There were no anti-dilutive potential common shares excluded from the calculation above for the three months ended September 30, 2023. The weighted average number of anti-dilutive potential common shares excluded from the calculation above was 0.8 million for the nine months ended September 30, 2023 and 0.2 million shares and 0.7 million shares for the three and nine months ended September 30, 2022, respectively. On October 31, 2023, our Board of Directors declared a dividend of $0.10 per share to be paid on December 15, 2023 to shareholders of record as of November 30, 2023. |
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Segment Information |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information | Note 18. Segment Information In the second quarter of 2023, in conjunction with the Beverage Merchandising Restructuring, we implemented a new operating and reporting structure resulting in the combination of our legacy Food Merchandising and Beverage Merchandising segments, creating our Food and Beverage Merchandising segment. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details. We also reorganized the management of certain product lines from our Foodservice segment to our Food and Beverage Merchandising segment. As of the end of the second quarter of 2023, we analyzed the results of our business through our Foodservice and Food and Beverage Merchandising segments. All prior periods have been recast to reflect the current reportable segment structure and the change in the management of certain product lines. These reportable segments reflect our operating structure and the manner in which our Chief Operating Decision Maker (“CODM”), who is our President and Chief Executive Officer, assesses information for decision-making purposes. The key factors used to identify these reportable segments are the organization of our internal operations and the nature of our products. This reflects how our CODM monitors performance, allocates capital and makes strategic and operational decisions. Our reportable segments are described as follows: Foodservice - Manufactures a broad range of products that enable consumers to eat and drink where they want and when they want with convenience. Foodservice manufactures food containers, drinkware (hot and cold cups and lids), tableware, serviceware and other products which make eating on-the-go more enjoyable and easy to do. Food and Beverage Merchandising - Manufactures products that protect and attractively display food and beverages while preserving freshness. Food and Beverage Merchandising products include cartons for fresh refrigerated beverage products, primarily serving dairy (including plant-based, organic and specialties), juice and other specialty beverage end-markets, clear rigid-display containers, containers for prepared and ready-to-eat food, trays for meat and poultry and egg cartons. It also produces fiber-based liquid packaging board for its internal requirements and to sell to other fresh beverage carton manufacturers. Prior to June 2023, it also produced a range of paper-based products which it sold to paper and packaging converters. Other/Unallocated - In addition to our reportable segments, we had other operating segments that did not meet the threshold for presentation as a reportable segment. These operating segments comprised the remaining components of our former closures business, which generated revenue from the sale of caps and closures, and are presented as “Other.” As of March 31, 2023, we had disposed of all of the remaining components of our former closures business. Unallocated includes corporate costs, primarily relating to general and administrative functions such as finance, tax and legal and the effects of the PPPE. Information by Segment We present reportable segment Adjusted EBITDA as this is the financial measure by which management and our CODM allocate resources and analyze the performance of our reportable segments. A segment’s Adjusted EBITDA represents its earnings before interest, tax, depreciation and amortization and is further adjusted to exclude certain items, including but not limited to restructuring, asset impairment and other related charges, gains or losses on the sale of businesses and noncurrent assets, non-cash pension income or expense, operational process engineering-related consultancy costs, business acquisition and integration costs and purchase accounting adjustments, unrealized gains or losses on derivatives, foreign exchange gains or losses on cash and gains or losses on certain legal settlements.
Reportable segment assets consisted of the following:
Information in Relation to Products Net revenues by product line are as follows:
For all product lines, there is a relatively short time period between the receipt of the order and the transfer of control over the goods to the customer. |
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Nature of Operations and Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Revision to Restricted Cash | Revision to Restricted Cash During the nine months ended September 30, 2023, we revised the presentation of restricted cash balances on our condensed consolidated statements of cash flows to include $24 million of noncurrent restricted cash in the beginning and ending balances for all periods presented. There was no impact to our operating, investing or financing cash flow activities, and there was no impact to our condensed consolidated balance sheets or our condensed consolidated statements of income (loss), comprehensive income (loss) or equity. The impact to all previously reported interim and annual periods was not material. |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our condensed consolidated financial statements. |
Restructuring, Asset Impairment and Other Related Charges (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Incurred and Further Charges in Future Periods Due to Restructuring Plan | As a result of the Beverage Merchandising Restructuring, we incurred charges during the three and nine months ended September 30, 2023, and we estimate we will incur further charges in future periods, as follows:
(1) We expect to incur these charges primarily during 2023. These estimates are provisional and include significant management judgments and assumptions that could change materially as we execute our plans. Actual results may differ from these estimates, and the execution of our plan could result in additional restructuring charges or impairments not reflected above. (2) Total cash charges exclude the benefit of any potential cash proceeds related to possible sales of any property, plant and equipment that may be disposed of as part of our ongoing restructuring activities. During the third quarter of 2023, we classified $4 million of properties as held for sale related to our Beverage Merchandising Restructuring and expect to recognize an immaterial gain on the sale of these properties. (3) Other non-cash charges include the write-down of certain spare parts classified as inventories on our condensed consolidated balance sheet, the write-off of scrapped raw materials and certain construction in-progress balances and accelerated amortization expense for certain operating lease right-of-use assets. (4)
Exit, disposal and other transition costs are primarily related to equipment decommissioning and dismantlement, transition labor associated with the facility closures and management restructuring, site remediation, contract terminations, systems conversion and other related costs. |
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| Summary of Restructuring, Asset Impairment and Other Related Charges | The Beverage Merchandising Restructuring charges and other restructuring and asset impairment charges (net of reversals) were classified on our condensed consolidated statements of income (loss) as follows by segment:
The following table summarizes the changes to our restructuring liability related to the Beverage Merchandising Restructuring during the nine months ended September 30, 2023:
(1)
Included $41 million classified within accrued and other current liabilities and $2 million classified within other noncurrent liabilities as of September 30, 2023. |
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Inventories (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of the Components of Inventory | The components of inventories consisted of the following:
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Property, Plant and Equipment, Net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Property, Plant and Equipment, Net and Depreciation Expense | Property, plant and equipment, net consisted of the following:
Depreciation expense related to property, plant and equipment was recognized in the following components in the condensed consolidated statements of income (loss):
(1)
For the three and nine months ended September 30, 2023, total depreciation expense included $4 million and $271 million, respectively, of accelerated depreciation expense related to the Beverage Merchandising Restructuring, substantially all of which was included in cost of sales. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details. |
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Goodwill and Intangible Assets (Tables) |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Goodwill by Reportable Segment | Goodwill by reportable segment was as follows:
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| Summary of Indefinite-Lived Intangible Assets | Intangible assets, net consisted of the following:
Amortization expense for intangible assets of $15 million, $45 million, $16 million and $46 million for the three and nine months ended September 30, 2023 and 2022, respectively, was recognized in selling, general and administrative expenses. |
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Accrued and Other Current Liabilities (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accrued and Other Current Liabilities | Accrued and other current liabilities consisted of the following:
(1) Restructuring costs relate to the Beverage Merchandising Restructuring. Refer to Note 3, Restructuring, Asset Impairment and Other Related Charges, for additional details. (2)
Other included items such as freight, utilities and property and other non-income related taxes. |
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Debt (Tables) |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Debt | Debt consisted of the following:
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| Summary of Components of the Credit Agreement | the Credit Agreement comprised the following term and revolving tranches:
(1)
The Revolving Tranche represents a $250 million facility. The amount utilized is in the form of letters of credit. |
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| Schedule of Outstanding Notes | As of September 30, 2023, our outstanding notes were as follows:
As of September 30, 2023, our outstanding debentures (together, the “Pactiv Debentures”) were as follows:
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| Schedule of Required Future Repayments of Outstanding Debt | Below is a schedule of required future repayments on our debt outstanding as of September 30, 2023:
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| Schedule of Carrying Values and Fair Values of Debt Outstanding | Below is a schedule of carrying values and fair values of our debt outstanding:
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| Interest Expense, Net | Interest expense, net consisted of the following:
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Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Instruments | We had the following derivative instruments recorded at fair value in our condensed consolidated balance sheets:
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| Summary of Outstanding Commodity Derivative Contracts | The following table provides the detail of outstanding commodity derivative contracts as of September 30, 2023:
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Employee Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Periodic Benefit (Expense) Income for Defined Benefit Pension Plans and Other Post-employment Benefit Plans | Net periodic benefit (expense) income for our defined benefit pension plans and other post-employment benefit plans consisted of the following:
(1) Refer to the Pension Partial Settlement Transactions section below for additional details. Net periodic benefit (expense) income for defined benefit pension plans and other post-employment benefit plans was recognized as follows:
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Other (Expense) Income, Net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other (Expense) Income, Net | Other (expense) income, net consisted of the following:
(1)
Reflects a gain, net of costs, arising from the settlement of a historical legal action. |
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Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accumulated Other Comprehensive Loss | The following table summarizes the changes in our balances of each component of AOCL:
(1) Net actuarial gain (loss) relates to the interim remeasurements of the PPPE due to the pension partial settlement transactions completed in September 2022 and February 2022. Net actuarial gain arising during the three months ended September 30, 2022 was primarily due to an increase in the discount rate utilized in measuring plan obligations, reflecting changes in market rates, partially offset by asset returns. Net actuarial loss arising during the nine months ended September 30, 2022 was primarily due to asset returns, partially offset by an increase in the discount rate utilized in measuring plan obligations, reflecting changes in market rates. Refer to Note 10, Employee Benefits, for additional details. (2)
Reclassifications upon sale of businesses are recorded in other (expense) income, net. |
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Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Transactions |
(1) All transactions with joint ventures are settled in cash. Sales of goods and services are negotiated based on market rates. All amounts are unsecured, non-interest bearing and settled on normal trade terms. (2) We sell and purchase various goods and services with Reynolds Consumer Products Inc. (“RCPI”) under contractual arrangements that expire over a variety of periods through December 31, 2027. During the first quarter of 2023, we amended these contractual arrangements with RCPI, which, among other things, extended the expiration date for certain arrangements and included price adjustments for certain goods we sold to and purchased from RCPI in the current and prior periods. The price adjustments resulted in $22 million of incremental net revenues and $9 million of incremental costs of goods sold recognized during the nine months ended September 30, 2023. We also lease a portion of two facilities to RCPI and are party to an information technology services agreement with RCPI. We do not trade with Graham Packaging Company Inc. (“GPCI”) on an ongoing basis. We also are party to a transition services agreement with GPCI. (3)
These charges are for various costs incurred including services provided under a transition services agreement, an insurance sharing agreement and an investment advisory agreement with Rank Group Limited (“Rank”). All amounts are unsecured, non-interest bearing and settled on normal trade terms. |
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Equity Based Compensation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units (RSUs) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Restricted Stock Unit Activity | The following table summarizes RSU activity during 2023:
(1)
Includes 86 thousand shares reserved for issuance upon the settlement of dividend-equivalent rights carried by the reported RSUs concurrently with the settlement of such RSUs for shares. |
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| Performance Stock Units (PSU) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Performance Stock Unit Activity | The following table summarizes PSU activity during 2023:
(1)
Includes 168 thousand shares reserved for issuance upon the settlement of dividend-equivalent rights carried by the reported PSUs concurrently with the settlement of such PSUs for shares. |
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Earnings Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of the Basic and Diluted Earnings (Loss) Per Share | Earnings (loss) per share, including a reconciliation of the number of shares used for our earnings (loss) per share calculation, was as follows:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Segment Reporting Information |
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| Reconciliation of Operating Profit (Loss) | The following table presents a reconciliation of reportable segment Adjusted EBITDA to consolidated income (loss) from continuing operations before income taxes:
The following table presents a reconciliation of reportable segment assets to consolidated assets:
(1) Reportable segment assets represent trade receivables, inventory and property, plant and equipment. (2) Unallocated is comprised of cash and cash equivalents, other current assets, assets held for sale, entity-wide property, plant and equipment, operating lease right-of-use assets, goodwill, intangible assets, related party receivables and other noncurrent assets. |
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| Reconciliation of Assets from Segment to Consolidated | The following table presents a reconciliation of reportable segment assets to consolidated assets:
(1) Reportable segment assets represent trade receivables, inventory and property, plant and equipment. (2)
Unallocated is comprised of cash and cash equivalents, other current assets, assets held for sale, entity-wide property, plant and equipment, operating lease right-of-use assets, goodwill, intangible assets, related party receivables and other noncurrent assets. |
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| Summary of Net Revenues by Product Line | Net revenues by product line are as follows:
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Nature of Operations and Basis of Presentation - Additional Information (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
| Noncurrent restricted cash | $ 24 | $ 24 | $ 24 | $ 24 |
Dispositions - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Mar. 29, 2022 |
Jan. 04, 2022 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Acquisitions And Dispositions [Line Items] | |||||
| Proceeds from sale of business | $ 47 | ||||
| Gain on sale of businesses | $ (1) | 266 | |||
| Percentage of dispositions joint venture | 50.00% | ||||
| Preliminary gain on sale of equity interests | 27 | ||||
| Charges related to assets and liabilities held-for-sale | $ 56 | $ 1 | |||
| Cumulative currency translation adjustment losses | 26 | ||||
| Discontinued operations, disposed of by sale | SIG Schweizerische Industrie-Gesellschaft GmbH | Beverage Merchandising Asia | |||||
| Acquisitions And Dispositions [Line Items] | |||||
| Proceeds from sale of business | $ 336 | ||||
| Gain on sale of businesses | 239 | ||||
| Income from operations before income taxes | $ 2 | $ 13 | |||
Restructuring, Asset Impairment and Other Related Charges - Additional Information (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
Employees
|
Sep. 30, 2022
USD ($)
|
|
| Beverage Merchandising | ||||
| Restructuring Cost And Reserve [Line Items] | ||||
| Restructuring and related activities, announcement date | Mar. 06, 2023 | |||
| Estimated workforce reduction of employees | Employees | 1,300 | |||
| Incurred Charges | $ 32 | $ 435 | ||
| Food and Beverage Merchandising | ||||
| Restructuring Cost And Reserve [Line Items] | ||||
| Other restructuring charges | $ 2 | $ 2 | ||
| Employee termination costs | $ 1 | $ 1 | ||
| Other | ||||
| Restructuring Cost And Reserve [Line Items] | ||||
| Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] | Restructuring Costs Asset Impairment And Other Related Charges Excluding Goodwill Impairment Charges | |||
| Non-cash impairment charge | $ 56 | |||
Restructuring, Asset Impairment and Other Related Charges - Incurred and Further Charges in Future Periods Due to Restructuring Plan (Parenthetical) (Details) - Beverage Merchandising - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
|
| Restructuring Cost and Reserve [Line Items] | ||
| Incurred Charges | $ 32 | $ 435 |
| Properties held for sale | $ 4 |
Restructuring, Asset Impairment and Other Related Charges - Changes to Restructuring Liability (Details) - Beverage Merchandising $ in Millions |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Restructuring Reserve [Roll Forward] | |
| Charges to Earnings | $ 120 |
| Cash Paid | (77) |
| Restructuring liability, ending balance | 43 |
| Severance, Termination and Related Costs | |
| Restructuring Reserve [Roll Forward] | |
| Charges to Earnings | 42 |
| Cash Paid | (29) |
| Restructuring liability, ending balance | 13 |
| Exit, Disposal and Other Transition Costs | |
| Restructuring Reserve [Roll Forward] | |
| Charges to Earnings | 78 |
| Cash Paid | (48) |
| Restructuring liability, ending balance | $ 30 |
Restructuring, Asset Impairment and Other Related Charges - Changes to Restructuring Liability (Parenthetical) (Details) $ in Millions |
Sep. 30, 2023
USD ($)
|
|---|---|
| Restructuring Cost And Reserve [Line Items] | |
| Restructuring reserve, current | $ 41 |
| Accrued and Other Current Liabilities | |
| Restructuring Cost And Reserve [Line Items] | |
| Restructuring reserve, current | 41 |
| Other Noncurrent Liabilities | |
| Restructuring Cost And Reserve [Line Items] | |
| Restructuring reserve, noncurrent | $ 2 |
Inventories - Summary of the Components of Inventory (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Raw materials | $ 206 | $ 260 |
| Work in progress | 87 | 101 |
| Finished goods | 455 | 596 |
| Spare parts | 98 | 105 |
| Inventories | $ 846 | $ 1,062 |
Property, Plant and Equipment, Net - Summary of Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Property, plant and equipment, at cost | $ 4,536 | $ 4,407 |
| Less: accumulated depreciation | (3,067) | (2,634) |
| Property, plant and equipment, net | 1,469 | 1,773 |
| Land and Land Improvements | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, plant and equipment, at cost | 72 | 72 |
| Buildings and Building Improvements | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, plant and equipment, at cost | 676 | 661 |
| Machinery and Equipment | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, plant and equipment, at cost | 3,632 | 3,485 |
| Construction in Progress | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, plant and equipment, at cost | $ 156 | $ 189 |
Property, Plant and Equipment, Net - Depreciation Expense Related to Property, Plant and Equipment (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Property, Plant and Equipment [Abstract] | ||||
| Cost of sales | $ 62 | $ 63 | $ 448 | $ 191 |
| Selling, general and administrative expenses | 8 | 6 | 25 | 18 |
| Total depreciation expense | $ 70 | $ 69 | $ 473 | $ 209 |
Property, Plant and Equipment, Net - Depreciation Expense Related to Property, Plant and Equipment (Parenthetical) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Property, Plant and Equipment [Line Items] | ||||
| Total depreciation expense | $ 70 | $ 69 | $ 473 | $ 209 |
| Beverage Merchandising | Restructuring, Asset Impairment and Other Related Charges | ||||
| Property, Plant and Equipment [Line Items] | ||||
| Total depreciation expense | $ 4 | $ 271 | ||
Goodwill and Intangible Assets - Summary of Goodwill by Reportable Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
|
| Goodwill [Line Items] | ||
| Beginning Balance | $ 1,815 | |
| Ending Balance | $ 1,815 | 1,815 |
| Reportable Segments | Foodservice | ||
| Goodwill [Line Items] | ||
| Beginning Balance | 993 | |
| Reclassified due to segment composition change | (35) | |
| Ending Balance | 958 | 958 |
| Reportable Segments | Foodservice and Food Merchandising | ||
| Goodwill [Line Items] | ||
| Beginning Balance | 822 | |
| Reclassified due to segment composition change | 35 | 35 |
| Ending Balance | $ 857 | $ 857 |
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Reportable Segments | Foodservice and Food Merchandising | ||||
| Finite Lived Intangible Assets [Line Items] | ||||
| Reclassified due to segment composition change | $ 35 | $ 35 | ||
| Selling, General and Administrative Expenses | ||||
| Finite Lived Intangible Assets [Line Items] | ||||
| Amortization expense | $ 15 | $ 16 | $ 45 | $ 46 |
Accrued and Other Current Liabilities - Schedule of Accrued and Other Current Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Rebates and credits | $ 117 | $ 108 |
| Personnel costs | 122 | 160 |
| Restructuring costs | 41 | |
| Interest | 40 | 17 |
| Other | 127 | 130 |
| Accrued and other current liabilities | $ 447 | $ 415 |
Debt - Summary of Debt (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Debt Instrument [Line Items] | ||
| Total principal amount of borrowings | $ 3,632 | $ 4,160 |
| Deferred debt issuance costs ("DIC") | (13) | (14) |
| Original issue discounts, net of premiums (“OID”) | (8) | (10) |
| Debt, net | 3,611 | 4,136 |
| Less: current portion | (18) | (31) |
| Long-term debt | 3,593 | 4,105 |
| 4.000% Senior Secured Notes due 2027 | Senior Notes | ||
| Debt Instrument [Line Items] | ||
| Long-term debt, gross | 1,000 | 1,000 |
| 4.375% Senior Secured Notes due 2028 | Senior Notes | ||
| Debt Instrument [Line Items] | ||
| Long-term debt, gross | 500 | 500 |
| 7.950% Debentures due 2025 | Unsecured Debt | ||
| Debt Instrument [Line Items] | ||
| Long-term debt, gross | 217 | 217 |
| 8.375% Debentures due 2027 | Unsecured Debt | ||
| Debt Instrument [Line Items] | ||
| Long-term debt, gross | 167 | 167 |
| Other | ||
| Debt Instrument [Line Items] | ||
| Long-term debt, gross | 43 | 49 |
| Secured Debt | Credit Agreement | Line of Credit | ||
| Debt Instrument [Line Items] | ||
| Long-term debt, gross | $ 1,705 | $ 2,227 |
Debt - Summary of Debt (Parenthetical) (Details) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| 4.000% Senior Secured Notes due 2027 | Senior Notes | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 4.00% | 4.00% |
| Debt instrument maturity year | 2027 | 2027 |
| 4.375% Senior Secured Notes due 2028 | Senior Notes | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 4.375% | 4.375% |
| Debt instrument maturity year | 2028 | 2028 |
| 7.950% Debentures due 2025 | Unsecured Debt | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 7.95% | 7.95% |
| Debt instrument maturity year | 2025 | 2025 |
| 8.375% Debentures due 2027 | Unsecured Debt | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 8.375% | 8.375% |
| Debt instrument maturity year | 2027 | 2027 |
Debt - Summary of Components of the Credit Agreement (Details) - Line of Credit - Credit Agreement - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Jul. 26, 2023 |
Sep. 30, 2023 |
|
| U S Term Loans Tranche B2 | ||
| Line Of Credit Facility [Line Items] | ||
| Debt Instrument Maturity Date | Feb. 05, 2026 | |
| Long-term debt, gross | $ 710 | |
| U S Term Loans Tranche B2 | Secured Overnight Financing Rate (SOFR) | ||
| Line Of Credit Facility [Line Items] | ||
| Variable rate floor | 0.00% | |
| Basis spread on variable rate | 3.25% | |
| U S Term Loans Tranche B3 | ||
| Line Of Credit Facility [Line Items] | ||
| Debt Instrument Maturity Date | Sep. 24, 2028 | |
| Long-term debt, gross | $ 995 | |
| U S Term Loans Tranche B3 | Secured Overnight Financing Rate (SOFR) | ||
| Line Of Credit Facility [Line Items] | ||
| Variable rate floor | 0.50% | |
| Basis spread on variable rate | 3.25% | |
| U.S. Revolving Loans | ||
| Line Of Credit Facility [Line Items] | ||
| Debt Instrument Maturity Date | Aug. 05, 2025 | Aug. 05, 2025 |
| Long-term debt, gross | $ 49 |
Debt - Summary of Components of the Credit Agreement (Parenthetical) (Details) - USD ($) |
Sep. 30, 2023 |
Jul. 26, 2023 |
|---|---|---|
| Line of Credit | Credit Agreement | U.S. Revolving Loans | ||
| Line Of Credit Facility [Line Items] | ||
| Line of credit facility, maximum borrowing capacity | $ 250,000,000 | $ 250,000,000 |
Debt - Schedule of Outstanding Notes (Details) - Senior Notes |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| 4.000% Senior Secured Notes due 2027 | |
| Debt Instrument [Line Items] | |
| Maturity Date | Oct. 15, 2027 |
| Interest Payment Dates | April 15 and October 15 |
| 4.375% Senior Secured Notes due 2028 | |
| Debt Instrument [Line Items] | |
| Maturity Date | Oct. 15, 2028 |
| Interest Payment Dates | April 15 and October 15 |
Debt - Schedule of Outstanding Notes (Parenthetical) (Details) - Senior Secured Notes |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| 4.000% Senior Secured Notes due 2027 | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 4.00% | 4.00% |
| Debt instrument maturity year | 2027 | 2027 |
| 4.375% Senior Secured Notes due 2028 | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 4.375% | 4.375% |
| Debt instrument maturity year | 2028 | 2028 |
Debt - Notes - Additional Information (Details) - Senior Notes |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| 4.000% Senior Secured Notes due 2027 | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 4.00% | 4.00% |
| 4.375% Senior Secured Notes due 2028 | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 4.375% | 4.375% |
Debt - Schedule of Outstanding Debentures (Details) - Unsecured Debt |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| 7.950% Debentures due 2025 | |
| Debt Instrument [Line Items] | |
| Maturity Date | Dec. 15, 2025 |
| Interest Payment Dates | June 15 and December 15 |
| 8.375% Debentures due 2027 | |
| Debt Instrument [Line Items] | |
| Maturity Date | Apr. 15, 2027 |
| Interest Payment Dates | April 15 and October 15 |
Debt - Schedule of Outstanding Debentures (Parenthetical) (Details) - Unsecured Debt |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| 7.950% Debentures due 2025 | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 7.95% | 7.95% |
| Debt instrument maturity year | 2025 | 2025 |
| 8.375% Debentures due 2027 | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 8.375% | 8.375% |
| Debt instrument maturity year | 2027 | 2027 |
Debt - Debentures - Additional Information (Details) - Unsecured Debt - 8.375% Debentures due 2027 |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Debt Instrument [Line Items] | ||
| Interest rate | 8.375% | 8.375% |
| Redemption price percentage | 100.00% |
Debt - Other Debt - Additional Information (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Other | ||
| Debt Instrument [Line Items] | ||
| Long-term debt, gross | $ 43 | $ 49 |
Debt - Schedule of Required Future Repayments of Outstanding Debt (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| 2023 | $ 5 | |
| 2024 | 17 | |
| 2025 | 233 | |
| 2026 | 726 | |
| 2027 | 1,183 | |
| Thereafter | 1,468 | |
| Total principal amount of borrowings | $ 3,632 | $ 4,160 |
Debt - Schedule of Carrying Values and Fair Values of Debt Outstanding (Parenthetical) (Details) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Senior Notes | 4.000% Senior Secured Notes due 2027 | ||
| Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
| Interest rate | 4.00% | 4.00% |
| Debt instrument maturity year | 2027 | 2027 |
| Senior Notes | 4.375% Senior Secured Notes due 2028 | ||
| Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
| Interest rate | 4.375% | 4.375% |
| Debt instrument maturity year | 2028 | 2028 |
| Unsecured Debt | 7.950% Debentures due 2025 | ||
| Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
| Interest rate | 7.95% | 7.95% |
| Debt instrument maturity year | 2025 | 2025 |
| Unsecured Debt | 8.375% Debentures due 2027 | ||
| Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
| Interest rate | 8.375% | 8.375% |
| Debt instrument maturity year | 2027 | 2027 |
Debt - Interest Expense, Net (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Debt Instrument [Line Items] | ||||
| Interest income | $ (3) | $ (1) | $ (10) | $ (2) |
| Amortization of DIC and OID | 1 | 2 | 3 | 4 |
| Realized derivative gains | (3) | (6) | ||
| Net foreign currency exchange losses | 1 | |||
| Other | 2 | 4 | 3 | |
| Interest expense, net | 61 | 59 | 188 | 158 |
| Line of Credit | Secured Debt | Credit Agreement | ||||
| Debt Instrument [Line Items] | ||||
| Interest expense, debt | 41 | 32 | 127 | 76 |
| Senior Notes | ||||
| Debt Instrument [Line Items] | ||||
| Interest expense, debt | 15 | 15 | 46 | 46 |
| Unsecured Debt | ||||
| Debt Instrument [Line Items] | ||||
| Interest expense, debt | $ 8 | $ 11 | $ 24 | $ 30 |
Financial Instruments - Schedule of Derivative Instruments (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Derivative [Line Items] | ||
| Asset Derivatives | $ 15 | $ 8 |
| Liability Derivatives | (5) | (14) |
| Other current assets | ||
| Derivative [Line Items] | ||
| Asset Derivatives | 12 | 7 |
| Other noncurrent assets | ||
| Derivative [Line Items] | ||
| Asset Derivatives | 3 | 1 |
| Other noncurrent liabilities | ||
| Derivative [Line Items] | ||
| Liability Derivatives | (1) | (11) |
| Commodity swap contracts | ||
| Derivative [Line Items] | ||
| Liability Derivatives | (5) | (5) |
| Interest rate derivatives | ||
| Derivative [Line Items] | ||
| Asset Derivatives | 15 | 8 |
| Liability Derivatives | (9) | |
| Accrued and other current liabilities | ||
| Derivative [Line Items] | ||
| Liability Derivatives | $ (4) | $ (3) |
Financial Instruments - Additional information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Derivative [Line Items] | ||||
| Unrealized gain (loss) on derivatives | $ 1 | $ (10) | $ (4) | |
| Realized gain on derivatives | 3 | $ 6 | ||
| Commodity swap contracts | ||||
| Derivative [Line Items] | ||||
| Unrealized gain (loss) on derivatives | 1 | $ (10) | 0 | $ (4) |
| Interest rate derivatives | ||||
| Derivative [Line Items] | ||||
| Unrealized gain (loss) on derivatives | 8 | 22 | ||
| Realized gain on derivatives | $ 3 | 6 | ||
| Expected reclassification of gains in the next twelve months from ACOL to earnings | $ 9 | |||
| US Term Loans | LIBO Rate | ||||
| Derivative [Line Items] | ||||
| Weighted average fixed rate | 4.12% | 4.12% | ||
| Aggregate notional amount | $ 1,000 | $ 1,000 | ||
| US Term Loans | LIBO Rate | Interest rate swap | ||||
| Derivative [Line Items] | ||||
| Weighted average fixed rate | 4.12% | 4.12% | ||
Financial Instruments - Summary of Outstanding Commodity Derivative Contracts (Details) - Natural gas swaps |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / gal
gal
| |
| Derivative [Line Items] | |
| Contracted volume | gal | 3,511,030 |
| Minimum | |
| Derivative [Line Items] | |
| Contracted price range | 3.94 |
| Maximum | |
| Derivative [Line Items] | |
| Contracted price range | 5.37 |
Employee Benefits - Net Periodic Benefit (Expense) Income for Defined Benefit Pension Plans and Other Post-employment Benefit Plans (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Retirement Benefits [Abstract] | ||||
| Service cost | $ (1) | $ (1) | ||
| Interest cost | $ (13) | $ (17) | (38) | (54) |
| Expected return on plan assets | 10 | 14 | 30 | 49 |
| Amortization of actuarial gains | 1 | 2 | ||
| Ongoing net periodic benefit cost | (2) | (3) | (7) | (6) |
| Income due to settlements | 47 | 57 | ||
| Total net periodic benefit (expense) income | $ (2) | $ 44 | $ (7) | $ 51 |
Employee Benefits - Net periodic benefit (expense) income for defined benefit pension plans and other post-employment benefit plans recognized (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total net periodic benefit (expense) income | $ (2) | $ 44 | $ (7) | $ 51 |
| Pension plans defined benefit member | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total net periodic benefit (expense) income | (2) | 44 | (7) | 51 |
| Cost of Sales | Pension plans defined benefit member | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total net periodic benefit (expense) income | (1) | (1) | ||
| Non-operating (expense) income, net | Pension plans defined benefit member | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total net periodic benefit (expense) income | $ (2) | $ 44 | $ (6) | $ 52 |
Employee Benefits - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2023 |
Feb. 24, 2022 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||||||
| Non-cash settlement gain | $ 2 | $ (44) | $ 6 | $ (52) | ||
| Pension Plan for Pactiv Evergreen | ||||||
| Defined Benefit Plan Disclosure [Line Items] | ||||||
| Projected benefit obligations | $ 656 | $ 656 | $ 1,257 | |||
| Pension Plan for Pactiv Evergreen | Forecast | ||||||
| Defined Benefit Plan Disclosure [Line Items] | ||||||
| Contributions made | $ 1 | |||||
Other (Expense) Income, Net - Schedule of Other (Expense) Income, Net (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Other Income and Expenses [Abstract] | ||||
| Gain (loss) on sale of businesses and noncurrent assets | $ 239 | $ (1) | $ 266 | |
| Gain on legal settlement | (1) | 15 | ||
| Other | $ (3) | 2 | (2) | |
| Other (expense) income, net | $ (3) | $ 239 | $ 1 | $ 279 |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|||||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
| Beginning balance | $ 1,285 | $ 1,269 | $ 1,553 | $ 1,288 | ||||
| Net derivative gain | 4 | 12 | ||||||
| Ending balance | 1,304 | 1,467 | 1,304 | 1,467 | ||||
| Interest rate derivatives | ||||||||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
| Beginning balance | 7 | (1) | ||||||
| Net derivative gain | 8 | 22 | ||||||
| Deferred tax expense on net derivative gain | (2) | (6) | ||||||
| Loss (gain) reclassified from AOCL | (3) | (6) | ||||||
| Deferred tax expense on reclassification | 1 | 2 | ||||||
| Other comprehensive (loss) income | 4 | 12 | ||||||
| Ending balance | 11 | 11 | ||||||
| Currency translation adjustments | ||||||||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
| Beginning balance | (165) | (213) | (189) | (207) | ||||
| Currency translation adjustments | (5) | (6) | 19 | (12) | ||||
| Other comprehensive (loss) income | (5) | (6) | 19 | (12) | ||||
| Ending balance | (170) | (219) | (170) | (219) | ||||
| Defined benefit plans | ||||||||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
| Beginning balance | 87 | 5 | 88 | 108 | ||||
| Net actuarial gain (loss) arising during year | [1] | 101 | (25) | |||||
| Deferred tax (expense) benefit on net actuarial gain (loss) | (25) | 6 | ||||||
| Reclassification upon sale of businesses | [2] | 1 | 1 | |||||
| Amortization of experience gains | (1) | (2) | ||||||
| Defined benefit plan settlement gain | (47) | (57) | ||||||
| Deferred tax expense on reclassification | 11 | 13 | ||||||
| Other comprehensive (loss) income | (1) | 41 | (2) | (62) | ||||
| Ending balance | 86 | 46 | 86 | 46 | ||||
| Accumulated Other Comprehensive Loss | ||||||||
| AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||
| Beginning balance | (71) | (208) | (102) | (99) | ||||
| Other comprehensive (loss) income | (2) | 35 | 29 | (74) | ||||
| Ending balance | $ (73) | $ (173) | $ (73) | $ (173) | ||||
| ||||||||
Income Taxes - Additional information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Income Tax Disclosure [Abstract] | ||||
| Income (loss) from continuing operations before tax | $ 50 | $ 254 | $ (249) | $ 452 |
| Income tax expense (benefit) | $ 22 | $ 79 | (5) | $ 160 |
| Unrecognized tax benefits decrease in income tax returns | $ 9 | |||
Related Party Transactions - Additional Information (Details) |
Sep. 30, 2023 |
|---|---|
| Packaging Finance Limited And Other Entities | |
| Related Party Transaction [Line Items] | |
| Ownership percentage | 77.00% |
Related Party Transactions - Related Party Transactions (Parenthetical) (Details) - Reynolds Consumer Products Inc. $ in Millions |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Related Party Transaction [Line Items] | |
| Incremental net revenues | $ 22 |
| Incremental cost of goods sold | $ 9 |
Equity Based Compensation - Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
shares
| |
| Number of Stock Units | |
| Beginning balance, Non-vested | shares | 1,983 |
| Granted | shares | 1,744 |
| Forfeited | shares | (233) |
| Vested | shares | (653) |
| Ending balance, Non-vested | shares | 2,841 |
| Weighted-Average Grant Date Fair Value | |
| Beginning balance, Non-vested | $ / shares | $ 11.89 |
| Granted | $ / shares | 9.64 |
| Forfeited | $ / shares | 12.08 |
| Vested | $ / shares | 12.89 |
| Ending balance, Non-vested | $ / shares | $ 10.26 |
Equity Based Compensation - Summary of Restricted Stock Unit Activity (Parenthetical) (Details) shares in Thousands |
Sep. 30, 2023
shares
|
|---|---|
| Restricted Stock Units (RSUs) | |
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
| Shares reserved for issuance | 86 |
Equity Based Compensation - Summary of Performance Share Units Activity (Details) - Performance Stock Units (PSU) shares in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
shares
| |
| Number of Stock Units | |
| Beginning balance, Non-vested | shares | 1,155 |
| Granted | shares | 1,729 |
| Forfeited | shares | (91) |
| Ending balance, Non-vested | shares | 2,793 |
| Weighted-Average Grant Date Fair Value | |
| Beginning balance, Non-vested | $ / shares | $ 9.29 |
| Granted | $ / shares | 9.37 |
| Forfeited | $ / shares | 9.54 |
| Ending balance, Non-vested | $ / shares | $ 9.33 |
Equity Based Compensation - Summary of Performance Share Units Activity (Parenthetical) (Details) shares in Thousands |
Sep. 30, 2023
shares
|
|---|---|
| Performance Stock Units (PSU) | |
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
| Shares reserved for issuance | 168 |
Earnings Per Share - Additional Information (Details) - $ / shares shares in Millions |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Oct. 31, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Earnings Per Share Basic [Line Items] | |||||
| Weighted average number of shares outstanding (in shares) | 0.0 | 0.2 | 0.8 | 0.7 | |
| Subsequent Event | |||||
| Earnings Per Share Basic [Line Items] | |||||
| Dividends payable, per share | $ 0.1 | ||||
| Dividends payable, date declared | Oct. 31, 2023 | ||||
| Dividends payable, date to be paid | Dec. 15, 2023 | ||||
| Dividends payable, date of record | Nov. 30, 2023 | ||||
Segment Information - Reconciliation of EBITDA to Income (Loss) from Continuing Operations Before Income Tax (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Segment Reporting Information [Line Items] | ||||
| Adjusted EBITDA | $ 227 | $ 187 | $ 633 | $ 618 |
| Interest expense, net | (61) | (59) | (188) | (158) |
| Depreciation and amortization (excluding restructuring related charges) | (81) | (85) | (247) | (255) |
| Beverage Merchandising Restructuring charges | (32) | (435) | ||
| Other restructuring and asset impairment charges (reversals) | (57) | (58) | ||
| Gain (loss) on sale of businesses and noncurrent assets | 239 | (1) | 266 | |
| Non-cash pension (expense) income | (2) | 44 | (6) | 52 |
| Operational process engineering-related consultancy costs | (3) | (7) | ||
| Business integration costs | (6) | |||
| Unrealized gains (losses) on commodity derivatives | 1 | (10) | (4) | |
| Foreign exchange losses on cash | (2) | (4) | (2) | |
| Executive transition charges | (2) | |||
| (Losses) gains on legal settlements | (1) | 15 | ||
| Costs associated with legacy facility | (6) | |||
| Other | (2) | (1) | ||
| Income (loss) from continuing operations before tax | 50 | 254 | (249) | 452 |
| Operating Segments | Reportable Segments | ||||
| Segment Reporting Information [Line Items] | ||||
| Adjusted EBITDA | 247 | 209 | 691 | 681 |
| Operating Segments | Other | ||||
| Segment Reporting Information [Line Items] | ||||
| Adjusted EBITDA | 1 | 3 | ||
| Unallocated | ||||
| Segment Reporting Information [Line Items] | ||||
| Adjusted EBITDA | $ (20) | $ (23) | $ (58) | $ (66) |
Segment Information - Net Revenues by Product Lines (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Segment Reporting Information [Line Items] | ||||
| Net revenues | $ 1,379 | $ 1,609 | $ 4,236 | $ 4,744 |
| Reportable Segments | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 1,379 | 1,583 | 4,234 | 4,669 |
| Reportable Segments | Foodservice | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 675 | 713 | 1,945 | 2,115 |
| Reportable Segments | Food and Beverage Merchandising | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 704 | 870 | 2,289 | 2,554 |
| Operating Segments | Reportable Segments | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 1,387 | 1,633 | 4,312 | 4,792 |
| Operating Segments | Reportable Segments | Foodservice | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 675 | 713 | 1,945 | 2,115 |
| Operating Segments | Reportable Segments | Foodservice | Drinkware | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 324 | 322 | 892 | 934 |
| Operating Segments | Reportable Segments | Foodservice | Containers | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 233 | 256 | 700 | 798 |
| Operating Segments | Reportable Segments | Foodservice | Tableware | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 72 | 76 | 215 | 214 |
| Operating Segments | Reportable Segments | Foodservice | Serviceware and other | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 46 | 59 | 138 | 169 |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 712 | 920 | 2,367 | 2,677 |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | Tableware | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 103 | 112 | 309 | 325 |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | Cartons for fresh beverage products | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 177 | 197 | 554 | 644 |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | Bakery/snack/produce/fruit containers | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 123 | 148 | 389 | 435 |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | Meat trays | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 108 | 103 | 323 | 278 |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | Liquid packaging board | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 68 | 152 | 317 | 388 |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | Prepared food trays | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 38 | 42 | 110 | 124 |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | Egg cartons | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 33 | 30 | 103 | 87 |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | Paper products | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 73 | 74 | 213 | |
| Operating Segments | Reportable Segments | Food and Beverage Merchandising | Other | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 62 | 63 | 188 | 183 |
| Operating Segments | Other | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 26 | 2 | 75 | |
| Intersegment Eliminations | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | (8) | (50) | (78) | (123) |
| Intersegment Eliminations | Reportable Segments | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | 8 | 50 | 78 | 123 |
| Intersegment Eliminations | Reportable Segments | Food and Beverage Merchandising | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | $ 8 | $ 50 | $ 78 | $ 123 |