Pactiv(US:PTVE)2021-11-04 14:45Acquisition and Investments - The company completed the acquisition of Fabri-Kal for a preliminary purchase price of $377 million, expected to broaden its portfolio of sustainable packaging products and expand manufacturing capacity [148]. - Anticipated capital expenditures for fiscal year 2021 are approximately $282 million [224]. Financial Performance - Adjusted EBITDA from continuing operations for Q3 2021 was $119 million, down 31% from $173 million in Q3 2020 [164]. - Net revenues for the three months ended September 30, 2021 increased by $199 million, or 17%, to $1,394 million compared to the same period in 2020 [173]. - Adjusted EBITDA from continuing operations decreased by $54 million, or 31%, to $119 million, attributed to higher manufacturing and logistics costs [183]. - Adjusted EBITDA from continuing operations for the nine months ended September 30, 2021 decreased by $119 million, or 27%, to $326 million compared to the same period in 2020 [205]. Segment Performance - Net revenues for the Foodservice segment increased by 26% to $594 million in Q3 2021, compared to $473 million in Q3 2020 [170]. - The Food Merchandising segment's net revenues rose by 10% to $391 million in Q3 2021, up from $354 million in Q3 2020 [170]. - The Beverage Merchandising segment reported a 12% increase in net revenues to $403 million in Q3 2021, compared to $361 million in Q3 2020 [170]. - Total segment net revenues for the Foodservice segment increased by $268 million, or 20%, to $1,619 million for the nine months ended September 30, 2021 compared to the same period in 2020 [207]. - Total segment net revenues for the Food Merchandising segment increased by $75 million, or 7%, to $1,121 million for the nine months ended September 30, 2021 compared to the same period in 2020 [209]. - Total segment net revenues for the Beverage Merchandising segment increased by $41 million to $1,147 million for the nine months ended September 30, 2021 compared to the same period in 2020 [211]. Costs and Expenses - Cost of sales for the same period increased by $280 million, or 28%, to $1,291 million, primarily due to higher material and manufacturing costs [174]. - Cost of sales for the nine months ended September 30, 2021 increased by $567 million, or 19%, to $3,549 million compared to the same period in 2020 [195]. - Selling, general and administrative expenses decreased by $12 million, or 10%, to $104 million, mainly due to lower strategic review and transaction-related costs [175]. Non-Operating Income and Expenses - Non-operating income increased by $23 million to $40 million, primarily due to a pension settlement gain [179]. - Non-operating income, net, for the nine months ended September 30, 2021 increased by $38 million, or 76%, to $88 million compared to the same period in 2020 [201]. - Interest expense decreased by $30 million, or 34%, to $57 million, due to reduced principal amounts outstanding [180]. - Interest expense, net, for the nine months ended September 30, 2021 decreased by $134 million, or 49%, to $141 million compared to the same period in 2020 [202]. Cash Flow and Financing - Cash provided by operating activities decreased by $80 million to $190 million for the nine months ended September 30, 2021 compared to $270 million for the same period in 2020 [215]. - Cash used in investing activities decreased by $119 million to $201 million for the nine months ended September 30, 2021 compared to $320 million for the same period in 2020 [216]. - Net cash provided by financing activities decreased by $363 million to $173 million for the nine months ended September 30, 2021, compared to $536 million for the same period in 2020 [218]. - Cash dividends paid amounted to $53 million during the nine months ended September 30, 2021, with no dividends paid in the same period of 2020 [219]. - Total principal amount of borrowings as of September 30, 2021, was $4,277 million [221]. - The company incurred $1,505 million of debt during the nine months ended September 30, 2021, net of repayments [218]. - Projected annual cash interest obligations on borrowings for 2021 are expected to be approximately $165 million [223]. Market and Economic Conditions - The company expects continued improvement in business performance for the remainder of 2021 as economies recover from the COVID-19 pandemic [158]. - The company has not experienced significant supply chain issues due to the COVID-19 pandemic, maintaining material sourcing and logistics [157]. Impact of Natural Events - The Beverage Merchandising segment incurred $7 million in incremental costs due to damage from Tropical Storm Fred, affecting operations at the Canton, North Carolina paper mill [149]. - Incremental costs of approximately $50 million were incurred during the first half of 2021 due to Winter Storm Uri, with the Beverage Merchandising segment facing the highest impact [154]. Taxation - The effective tax rate for the three months ended September 30, 2021 was influenced by a $9 million discrete tax benefit from the partial release of the valuation allowance for deferred interest deductions [181]. Interest Rate Sensitivity - A 100 basis point increase in interest rates would result in an $18 million increase in interest expense on term loans [232].