Pactiv Evergreen Inc.

Third-quarter 2024 revenue was $1.3 billion. Adjusted EBITDA was $214 million, down 6% year over year, with a 16% margin that was flat versus last year and 240 basis points above Q2. Adjusted EPS was $0.36 and free cash flow was $190 million. Net revenues declined about 3% year over year and volumes were down 5%; Foodservice revenue was $670 million, Foodservice EBITDA was $120 million, and Food & Beverage Merchandising revenue declined 6% year over year with EBITDA down 15%. For 2024, management raised adjusted EBITDA guidance to $800 million to $810 million, cut capex guidance to $240 million to $250 million from $260 million, kept free cash flow guidance at $180 million to $200 million, and reiterated net leverage around 4x by year-end.

Michael King framed the quarter as proof that the company is executing its transition away from paper mills and toward a more focused North American converting business. He said the divestiture should reduce volatility, lower future CapEx needs, and create more room to invest in innovation, sustainability, and new products. His tone was cautiously optimistic, emphasizing that the company is building momentum for 2025 and 2026 through portfolio repositioning, cost actions, and customer-aligned growth initiatives.

Jon Baksht said Q3 adjusted EBITDA of $214 million was pressured by higher manufacturing costs and lower volume, partly offset by favorable pricing, mix, and lower incentive compensation. He noted free cash flow of $190 million helped reduce net debt by $170 million and bring net leverage to 4.3x, with a stated path toward about 4x by year-end. He also said the Pine Bluff sale improved the pro forma leverage ratio to 4.1x as of September 30 and lowered full-year capex guidance to $240 million to $250 million due to timing of project spend.

Analysts pressed management on how to think about 2025 EBITDA growth, the timing of value-over-volume impacts in Food & Beverage Merchandising, and whether new products can be quantified. Management said the 2025 bridge starts with pro forma 2024 EBITDA of $838 million to $848 million, then includes about $20 million of footprint benefits less $5 million of nonrecurring SG&A savings, with EBITDA also helped by lower Pine Bluff drag and a full-year benefit from efficiency actions. They also said incentive compensation benefited 2024 by about $7 million, volumes should grow at roughly GDP in the base business, and new growth initiatives would be incremental. On Q4, they guided to low-single-digit foodservice declines and low-single-digit growth in Food & Beverage Merchandising, while saying Q3 volumes were broadly in line with expectations.