Good day, and thank you for standing by. Welcome to the Pactiv Evergreen First Quarter 2024 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Curt Worthington, Vice President of Strategy and Investor Relations. You may begin. Thank you, operator, and good morning, everyone. Welcome to our first quarter 2024 earnings call. With me on the call today, we have Michael King, President and CEO, and Jon Baksht, CFO. Please visit the events section of our investor relations website at www.pactivevergreen.com and access our supplemental earnings presentation. Management's remarks today should be heard in tandem with reviewing this presentation. Before we begin our formal remarks, I want to remind everyone that our discussions today will include forward-looking statements, including those regarding our guidance for 2024. These forward-looking statements are not guarantees of future performance, and actual results could differ materially from those contemplated by our forward-looking statements. Therefore, you should not put undue reliance on those statements. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings, including our annual report on Form 10-K for the year ended December 31, 2023, and our quarterly report on Form 10-Q for the quarter ended March 31, 2024, for a more detailed discussion of those risks. The forward-looking statements we make on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements except as required by law. Lastly, during today's call, we will discuss certain GAAP and non-GAAP financial measures, which we believe can be useful in evaluating our performance. Our non-GAAP measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP, and reconciliations to the most directly comparable GAAP measures are available in our earnings release and the appendix to today's presentation. Unless otherwise stated, all figures discussed during today's call are for continuing operations only. With that, let me turn the call over to Pactiv Evergreen's President and CEO, Michael King. Mike? Thanks, Curt, and good morning, everyone. Thank you for joining us today. Let me begin by commending our team on their efforts and contributions during the first quarter of 2024. The team's dedication to our continuous improvement culture and commitment to delivering for our customers positions Pactiv Evergreen to adapt to dynamic market conditions and create value for all stakeholders. Turning to slide four. I'll start by highlighting the progress we made against our strategic priorities during the first quarter. Then I'll discuss some internal and external dynamics we have been observing and actions we are taking to position the business for long-term success. Jon will then provide updates on our key financial metrics and discuss our outlook for 2024. At the end of the call, we'll open it up for Q&A. Turning to slide five. I will start with a few key themes that underpin our performance during the first quarter and also provide some context on our progress against our strategic priorities. First, despite the first quarter presenting us with an irregular business environment, our team delivered solid results. Adjusted EBITDA for Q1 of 2024 was $168 million, which was at the high end of our guidance provided during our fourth quarter earnings call. Our results largely reflect a lower pricing environment, which was partially driven by lower raw material costs and the cumulative effect of sustained price inflation on consumer spending, resulting in lower volumes. We also saw higher employee-related costs, partially offset by lower manufacturing and transportation costs. Volumes decreased 3% in the quarter compared to the prior year, primarily due to a focus on value over volume in the Food and Beverage Merchandising segment. Volumes also reflected the market softening amid inflationary pressures. During the fourth quarter earnings call, we highlighted weather-related reductions in restaurant foot traffic and the residual impact on our customer supply chains. We were able to mostly offset this dynamic as well as the impact it had on our results. Second, we find ourselves navigating a landscape that remains dynamic. While there are signs the economy is still buoyant and overall inflation has moderated compared to the last two years, we hear from our customers that the financial health of the average consumer in the United States is still strained. Since early 2020, consumer prices have increased 21%, while food prices have increased 26%. At the same time, reports indicate that the total household savings have been depleted to below pre-pandemic levels. The net effect is a cautious consumer who is still adjusting to a potentially lasting step change in the cost of living. Third, I want to underscore that we are executing on a multi-year playbook of cost management initiatives. As I mentioned earlier, the broader market environment remains dynamic. We believe our disciplined approach and focus on managing our costs will help us navigate the current market conditions. From manufacturing cost reductions to logistics process improvements, our teams are focused on identifying inefficiencies and eliminating unnecessary expenses. We expect sequential improvements into the second half of the year, providing an additional layer of earnings momentum in 2024. While we expect the effects from the recent inflationary uptick to persist through the second quarter, before seeing signs of improvement during the second half of the year, our focus remains on building volume momentum. We are leveraging our long-standing partnerships with blue-chip customers, in addition to our innovative product portfolio, to gain share across our end markets. On that front, we've entered into agreements with new and existing customers across our business, including QSRs, distributors, and CPG customers, and expect those to ramp up during the second half of 2024, demonstrating our ability to execute and win. We continue to invest in robust data analytics that enable us to better allocate resources to the markets that maximize our profitability. We are then able to leverage this capability to make informed choices that ultimately guide our portfolio and underpin our value-over-volume approach. We are also prioritizing our customer service levels, which have remained strong. The actions we are taking today are consistent with our transformational journey, and we believe they position us for long-term, sustained growth. Fourth, we are reiterating our full-year outlook. While Jon will provide greater detail around our specific assumptions, I want to provide some context. We are well positioned and expect to see an improvement in volumes during the second half, partly due to seasonality, but also due to our pipeline of customer wins, which are expected to ramp as we progress through the rest of the year. In addition, we have line of sight to a number of cost-saving actions through the second half of 2024 that we expect to help us generate year-over-year Adjusted EBITDA growth. Given the actions that we have taken previously, our company is better equipped to adjust to market signals than in past years. We are able to scale quickly to evolving market conditions while simultaneously capturing cost savings opportunities. Regarding the recent rise in inflation data, which is a bit of a divergence from the previous multiyear improvement trend, we do not currently anticipate a meaningful change in the market dynamics during the second quarter. If the recent uptick in inflation and the resulting effect on both the consumer and our customers persist beyond the second quarter, we would expect our full year guidance to come in at the lower end of our guidance range. Turning to Slide 6, I'll address other key drivers influencing our performance through 2024. Year-to-date, restaurant foot traffic is down compared to last year, reflecting weakened consumer health and continued trading down to lower-cost food options, and to a lesser extent, the severe weather experienced in January. We continue to leverage our unique value proposition with our customers, which we believe has allowed our Food service business to outpace its end markets and has supported strategic value-over-volume decisions within our Food and Beverage Merchandising segment. Over the last few months, the pace of inflation has accelerated, which has made the current environment less conducive to a volume improvement. Many of our customers that were able to grow earnings over the past several years by trading volumes for pricing are leaning more heavily on their own cost structures to offset heightened price sensitivity by consumers. We have reached a point where, after several years of persistent inflation, consumers are less able to absorb further food price increases. While commodity input costs have trended down over the past two years, recent macroeconomic developments suggest that raw material costs may trend a bit upwards. For example, the price of oil has recently increased, which has introduced more volatility in resin prices compared to last year. That said, we ultimately pass the resin costs on to our customers and do not expect recent volatility to have a material impact on results in the near future. We are also taking actions to mitigate the impact of higher oil prices on our transportation costs. We continue to monitor and navigate the dynamic nature of our business. We are confident in the actions we have taken over the last several quarters to position us to deliver against our long-term strategy, as evidenced by our Q1 results. With that, I would now like to turn the call over to Jon. Jon? Thank you, Mike. I'll start with our first quarter highlights on Slide 8. Before I cover the results in detail, I'll provide some context for our performance in the quarter. As we outlined in March, we expected our Q1 results to be impacted by lower volumes and the continued adjustment of consumers to higher-for-longer inflation. We also outlined the actions we're taking to build earnings momentum for the remainder of 2024, including volume growth and cost improvements. Based on that backdrop, Q1 was generally as expected. We reported net revenues of $1.3 billion for the quarter, which represents a decrease of about 13% compared to last year. The decrease was largely due to the closure of our Canton, North Carolina, mill operations during the second quarter of 2023, lower pricing due to the pass-through of lower material costs, and lower sales volume. Lower sales volume generally reflected a focus on value over volume in the food and beverage merchandising segment and market softness amid inflationary pressures. Excluding the impact of the Canton mill closure, our revenue was down approximately $95 million, or 7%. Overall, volumes were down 3% in the quarter. Food service volumes were slightly negative year-over-year, but outpaced industry foot traffic trends, which were down more than 3% during the quarter. Food and beverage merchandising volumes decreased mainly due to strategic value-over-volume decisions as we continue to optimize the portfolio. Underlying industry demand in food and beverage merchandising was roughly flat outside of those actions.... Price mix was down 4%, which was mostly a function of lower contractual pass-throughs, driven by lower raw material costs compared to the prior year period. Adjusted EBITDA was $168 million at the high end of our guidance range provided in March, but an 11% decrease compared to the prior year. The decrease in adjusted EBITDA reflects lower pricing, net of material costs passed through, reduced sales volume, and higher employee-related costs, partially offset by favorable manufacturing and transportation costs. Our adjusted EBITDA margin was 13.4%, compared to 13.2% in the prior year period. Our year-over-year adjusted EBITDA comparison also reflects the one-time impact from the extension of key business of approximately $8 million in Q1 of last year. This had a positive impact on prior year adjusted EBITDA margins. During the first quarter, free cash flow was negative $74 million, which was impacted by seasonal factors, including typical inventory build ahead of the summer season in Q2 and Q3. By comparison, during Q1 of last year, we experienced a working capital benefit as we were in the process of working down our strategic inventory build from 2022. Entering this year, our inventories are closer to normalized levels. As a result, I would characterize the inventory build in Q1 as more typical for our company. We remain committed to deleveraging our balance sheet and are focused on maximizing long-term free cash flow generation. From a quarter-over-quarter perspective, revenues declined 2% due to lower sales volume. The decrease is generally driven by seasonal trends in the Food service segment. Adjusted EBITDA was 19% lower, mostly due to higher manufacturing and material costs and lower sales volume, primarily due to seasonal trends in the Food service segment. Continuing to slide 9, we will look at results by segment, beginning with Food service. Net revenues were down 3% year-over-year, mainly due to lower pricing, reflecting the pass-through of lower material costs and unfavorable product mix. Volumes are down marginally. Foodservice is still contending with challenging consumer dynamics, but we believe our business is more resilient than the broader industry, with our segment volumes outpacing industry foot traffic data. Price mix was down 2%, reflecting lower than expected demand from some of our higher margin transactional relationships, as well as a higher weighting to lower margin product categories. Price was down slightly due to the lower contractual pass-throughs. As Mike previewed during his prepared remarks, we have started to see increased price sensitivity from some of our foodservice customers. While we were largely able to offset this dynamic during the quarter, we anticipate this headwind will persist through the balance of the year. Adjusted EBITDA decreased 15% compared to last year to $90 million, and adjusted EBITDA margins decreased by just over 200 basis points. The margin variance reflects unfavorable product mix, higher manufacturing costs, and lower pricing, net of cost pass-through. On a quarter-over-quarter basis, our results were impacted mainly by lower volumes, which are attributable to seasonal trends. Similar to our year-over-year comparisons, our volumes on a quarter-over-quarter basis outperformed broader industry foot traffic trends, which is consistent with our strategy to align with customers winning in their respective end markets. Net revenues were down 5% sequentially, mostly due to seasonal volume dynamics. Adjusted EBITDA declined 20%, driven by lower sales volume and higher manufacturing costs. Turning to slide 10. Food and beverage merchandising experienced a continuation of the themes from the fourth quarter, as retail food at home prices are still elevated compared to historical levels, despite moderating more noticeably than food away from home prices. The end result is that consumers are curbing their spending and weighing their budgets towards staples like protein and eggs. Our produce packaging benefited from easier comps as heavy rains and flooding in California last year delayed the harvest into the later part of 2023. Our beverage carton business also benefited from non-dairy drinks that utilize our packaging formats. On a year-over-year basis, net revenues were down 22%. Volumes are down, mostly due to the Canton, North Carolina mill closure in May 2023, and lower pricing, largely due to the pass-through of lower material costs and lower sales volume. Excluding the Canton impact, volumes are down 4%, mainly due to a focus on value over volume and lower demand for discretionary food products like bakery items. Adjusted EBITDA decreased 1% compared to the last year, primarily due to lower sales volume, unfavorable product mix, lower pricing, net of material costs passed through, partially offset by lower manufacturing costs. Adjusted EBITDA margins increased by just over 300 basis points due to progress in our beverage merchandise restructuring. First quarter of 2023 also included the one-time impact from the extension of key business of approximately $8 million in Q1 of last year, mentioned previously. On a sequential basis, net revenues were up 1% due to a marginal improvement in sales volume, while pricing and mix were consistent over the prior period. Adjusted EBITDA declined 12%, largely due to higher manufacturing and raw material costs, partially offset by lower transportation costs. Turning to slide 11. We have a summary of our balance sheet and key components of our cash flow. The slight uptick in our leverage during the quarter was expected as a result of an increase in net debt and lower LTM adjusted EBITDA. However, we still anticipate ending 2024 with a net leverage ratio in the high threes. In terms of free cash flow, we experienced a $74 million outflow, which partially reflects lower profitability compared to last year, as well as a seasonal inventory build heading into the summer months. On Wednesday, we further amended the credit agreement to increase the capacity on our revolving credit facility from $250 million to $1.1 billion, materially enhancing our available liquidity and extending the maturity date to May 1, 2029. We also amended the applicable interest rate and other pricing terms, including by replacing the facility fee with a lower fee on unutilized capacity. There were no other material changes to the terms of the credit agreement. As it relates to our capital allocation priorities, our approach remains aligned with our long-term strategy and underlying consumer trends. We are committed to delivering profitable growth, which in turn will allow us to meet our goals to delever the balance sheet and preserve liquidity. Our strong cash flow generating capabilities provide us with the opportunity to reinvest in our business for growth, and we believe these actions will enable us to serve our customer base more effectively and operate more efficiently while enhancing returns to stakeholders. Turning to slide 12. As Mike mentioned, we are reiterating our financial guidance for fiscal 2024, including our Adjusted EBITDA range of $850 million-$870 million. We expect near-term challenges, such as lower consumer demand, to persist into the second quarter. That said, we are also optimistic about the actions we are taking to mitigate costs, drive operational improvement, and increase volumes during the second half of the year. As Mike noted earlier, our Q2 results may be unfavorably impacted by the recent rise in the Consumer Price Index and overall food prices in March, which may temper the magnitude of the volume inflection outside of typical seasonal factors during Q2. Against that backdrop, we believe the actions we have taken to build volume momentum in the second half of the year, in addition to cost reduction initiatives we have implemented, position us to achieve Adjusted EBITDA within our full year guidance range. To put a finer point on the second half inflection we are guiding to, we expect an improvement in Adjusted EBITDA for the second half of the year of more than 30% compared to the first half. Approximately half of that improvement is related to our Pine Bluff mill, which just completed a planned outage in April. For the remaining sequential Adjusted EBITDA growth, volume accounts for the majority of the expected improvement, while the remainder is attributable to cost savings and favorable price mix. For further context on the volume growth component, we expect most of that to be driven by seasonality and general market improvement, with the remainder resulting from our strategy of aligning with core customers that are outperforming their end markets. In addition, our full year guidance is based on modest improvement in industry volumes, predicated on continued moderation in inflation throughout the year, coupled with expanded volumes with several new and existing customers. If inflation pressures persist and impact the consumer, our full year results will trend towards the lower end of our guidance range. Our full year guidance for capital spending and free cash flow remains unchanged versus our original guidance, and we still expect net leverage to be in the high threes by year-end. With respect to the beverage merchandising restructuring, we have narrowed our guidance to approximately $160 million of cash restructuring charges and approximately $330 million of non-cash restructuring charges. As of Q1, we have recorded substantially all of the expected restructuring costs for that initiative. With respect to our footprint optimization plan, the expected restructuring charges remain at $50 million-$65 million, and total non-cash restructuring charges remain at $20 million-$40 million. These costs are expected to occur in 2024 and 2025. We'll provide further updates on the footprint optimization as it is implemented. To wrap up, our first quarter tracked closely to our expectations, driven mainly by the actions we undertook to position our business for second half momentum and long-term growth. While we expect relative weakness in the near term, we are confident in our plans for the rest of the year. Within both segments of our business, we expect to deliver margin expansion in the second half of the year, paired with improvements in the trajectory of volume and mix. Our team remains focused on executing our strategy and positioning our business to build momentum and achieve our full year guidance. With that, I'll turn the call back over to Mike. Thanks, Jon. Before we open up the line to Q&A, I want to reiterate that we believe we have a robust platform that enables profitable growth and sustainable returns long term. We're an industry leader in Food service and food and beverage merchandising and remain focused on generating sustainable returns. Our management team has demonstrated a willingness to optimize the portfolio and deliver on our commitments. We continue to leverage our long-standing strategic partnerships with our customer base, many of which are blue chip companies, and are constantly working to innovate and develop the highest quality, sustainable products. We expect that the actions we are taking today will yield solid Adjusted EBITDA and Free Cash Flow generation, which we carefully manage to drive deleveraging and further growth through our disciplined capital allocation process. In closing, I would like to thank all of the Pactiv Evergreen workforce for their continued commitment and hard work. I would also like to thank our valued customer and vendor partners for their continued commitment to our mutual success. That concludes our prepared remarks. With that, let's open up the line to questions. Operator? Certainly. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one. ... One moment for our first question. Our first question will be coming from Anthony Pettinari of Citi. Your line is open. Morning, this is Bryan Burgmeier on for Anthony. Thank you for taking the question. Maybe just to start, you know, just a question on kind of the revised outlook. You know, I totally understand that ongoing inflation is a concern. Can you just maybe help us kind of understand the magnitude? Is it greater on the top line in the form of consumer spending and volumes? Is it gonna be greater on the bottom line from rising costs? And can you help us frame maybe which segment is seeing the greater impact right now? Yeah, I'll take the front end of that. So we reiterated our guidance. We didn't revise our guidance, so I just want to make sure we get that out there. Got it. Got it. Yep, definitely. Yep, and then, Jon, I don't know if you want to follow up with. Yeah, sure. I'll reiterate a few comments that I made in the prepared remarks here, just to give you a sense of where the improvement is coming from. So, you know, the second half improvements, we're expecting 30% growth year-over-year from the first half to the second half from an EBITDA perspective. So 50% or approximately 50% is coming from Pine Bluff. So I mentioned we had a planned outage in April, which is now behind us. We also had some weather-related downtime at that mill in the first quarter. So there'll be a meaningful improvement from just the operations of Pine Bluff. The remainder, the majority is driven by volume. Some of that is seasonality going into the back part of the year. Part of that is general market improvements as some of the current market environment, we're expecting some easing there. And as we mentioned, growing with some key customers, and so we've had some customer wins that will ramp up with some volume going into the second half of the year. The remainder is cost savings and some favorable price mix that we're expecting. Got it. Got it. Thank you. Thanks for that detail. And then maybe just on those new business wins that you flagged, you know, you've been talking about kind of winning alongside your strategic customers for a while now. You know, maybe just which end market is maybe winning the most? It sounds like it's in QSR. And then is there any sort of trends? Are people asking for more paper, more plastic? Is it about cups or trays? Just any detail on kind of where those business wins are. Thanks. I'll turn it over. Yeah, good question. So, yeah, I wouldn't say it's in any one segment. I'd say we're seeing our partnership across all of our end markets yield success. So as we've partnered, you know, both on the beverage and food merchandising side, as well as the Food service side, you know, we're seeing new volume and share gains in just about every one of our channels. I would tell you, you know, we are not seeing any substrate, you know, major substrate shift or anything at the moment. It's really pretty mixed across both fiber-based and poly. So, hope that covers it. One moment for our next question. Our next question will be coming from Ghansham Panjabi of Baird. Your line is open. Hey, guys. Good morning. Morning. Michael, you know, just kind of going back to your comments, you know, and just trying to reconcile them. So, you know, at least from our vantage point, you know, last year was the year of a recession, if you sold into the CPG channels. And, you know, it's logical to assume that that sort of morphs into the Food service channel as well. Is it, is it your assumption that-- I mean, are you, are you assuming that things, you know, get tougher in terms of Food service as the year goes on, or are you actually seeing that? I'm just trying to disaggregate your comments. Yeah. So if you take Q1 as an indicator, you know, the broader Food service end markets, I think if you look at foot traffic, it's, you know, we look at foot traffic as one of our indicators, down close to 4%. And if you look at our performance, you know, we were substantially less at low single digit, you know, 1.5-ish type down on the units for Food service end markets. And if you think about, you know, kind of the early days of Q2 here and, you know, our key customer earnings reports on the Food service side, it's no secret that they're beat up right now, and that there needs to be, you know, a change. And so back half, you know, volume recovery for us and kind of what we're anticipating is kind of that low single digit recovery. So promotional activity, you know, we've seen inventories, you know, get healthy here over Q1 with our customers, and we fully expect that, you know, the joint kind of recovery would be, you know, the value they're trying to create in the supply chain, our customers are creating in the supply chain, creates the ability for them to promote, and we'll see that come through largely in that low to single digit recovery with the end customer. Okay, thanks for that. And then your comments on, you know, the customers less able to push pricing and, you know, focusing on the cost structures. Maybe you can expand on that, and then just, corollary to that would be, if your Food service customers start stressing the value portion of their menus, which seems to be the case, just judging by the comments they've made this week, how does that impact you, if at all? ... Yeah, it definitely has an impact. You know, we reported in Q4 that we started to see the, you know, the customer approach start to shift. You know, they certainly are looking for ways to create value, and they, they've turned to, you know, their vendor bases, and so we're not insulated from that. And so as we, you know, partner with our customers, you know, we're looking for ways to help them, A, to create value within their own portfolios, and then B, you know, there certainly continues to be pressure on, you know, the entire cost structure. So I would say that has certainly ramped up here in Q1, and we don't expect that to slow down in Q2. So yeah, I think you get that right. I don't anticipate, you know, a shift in, you know, their inventory approaches or anything that would, you know, make the supply chain more fragile, but I do expect that, you know, our customers, and certainly we are looking to leverage our inventory health to grow sales and promote the customers' foot traffic, especially in Food service. Okay, perfect. Thank you so much. One moment for our next question. Our next question will be coming from Phil Ng of Jefferies. Phil, your line is open. Hey, guys. Mike, I guess, piggybacking on Ghansham's question, where perhaps you're seeing your customers under more stress. Is that largely a Food service comment? Because a lot of the packaging companies that have more food and beverage consumer staple exposures are talking about, hey, the destock happened in fourth quarter. Things are kind of bottoming out in one Q and perhaps getting a little better in Q2. Just kind of help us contextualize perhaps where things are a little more choppier, and how we think about the back half, I guess, perhaps. Yeah, thanks for clarifying that. It was certainly a Food service comment. I kind of took Ghansham's question specific to Food service, and yeah, I would say it's more mixed broadly. So we do, you know, a little better than half of our business is FooF service, and the other bit is our food and beverage merchandising segments. And so those segments, you know, largely, it's a mixed bag, really. And so, you know, the destocking, I would agree with your comments on the destocking largely being over, and we've now seen, you know, real normal seasonality and the normal consumption trends happening. So heading into Memorial Day, Mother's Day, Father's Day, you know, we're seeing protein season kick in, grilling season with our protein business. Eggs have been really strong. It's the lowest cost protein in the market. Produce season's ahead of last year, and it's ramping up sooner as we enter Q2, so that's a good thing. If you think about last year when we had all the flooding, which delayed the berry season and the fresh produce season, which we participate in. And then, you know, we've also seen, you know, to the mix point, you know, we participate in retail, and so we still see a very depressed, you know, baked goods, bakery with the consumer electing to spend their discretionary dollars elsewhere than on sweets and discretionary cakes and those kinds of things. So hopefully that... I think I answered your question with that. Okay. But in terms of volumes for your food and beverage, food and beverage merchandise segment, I know there's some noise with the, compares with, the mill and business you're exiting. But, like, on an organic basis, apples-to-apples basis, we, we shouldn't expect your, your volume cadence in 2Q to be the worst, to be softer, right, on a year-over-year basis? Maybe some modest improvement? Yeah, we're flat to maybe low single digit improvement. Yeah, that's what we're looking at. Okay. Helpful. And then one question for John. You gave some color in terms of how to think about the first half versus back half, shape of the year from an EBITDA standpoint. It sounds like 2Q will, in all likelihood, be down a little bit on a year-over-year basis. Do you inflect positively by 3Q, and what are some of the things that you have at your disposal? I know last quarter you were talking about playing catch up on COLA. We're obviously seeing some movement on inflation, on res, but just kind of help us think through the EBITDA cadence on a year-over-year basis in 2Q, kind of progressing to 3Q. And certainly, you guys sound pretty upbeat about the back half. Yeah. No, thanks. It's a good question. And so that's the right way to think about it. Q2, you know, maybe I'll just start with Q2, and then we can talk about the back half a bit further. So, you know, Q2 does benefit from seasonality on a sequential basis, and then if you look at year-over-year, you know, volumes are relatively gonna be, you know, flattish, you know, building on Mike's comment. One thing to note about Q2 as it relates to just kind of EBITDA, I mentioned that we have the Pine Bluff planned outage that was completed in April. You know, and the net effect of that is probably a $20 million impact to Q2. That's complete behind us. We don't have any other planned outages for the remainder of the year. And then, you know, if you look at Q2, we still are in fact anticipating the impact of inflation on food prices, consumers still being felt. We're seeing that still in April. I think as you kind of go on to the back part of the year, you know, we're expecting some of the actions that we've talked about to build some volume momentum in the second half. And so part of that is on the top line. You know, we talked to Mike answered a question around customer wins earlier during the call. So we are expecting some of that to start being sales. And then the cost initiatives, as you mentioned-... You know, the COLA, COLA does have a bit of a lag effect. We tend to do some of our labor increases at the start of the year. And as those labor kind of add backs come back in, you'll start seeing that kick in more as the year goes on. Plus, we have several cost initiatives that are underway, and those do take a bit of time to start to recognize that in the PNL. But we expect several of those cost initiatives and cost savings to start building up throughout the year. And when I'm talking about some of those cost savings, you know, even just bifurcating that, there is PEPS, continuous improvement. Those are initiatives that are underway, and those are more than just back half of the year benefits. Those are longer-term programs that we have in place that we believe will continue to see some savings on. And then just also to delineate the footprint optimization, which is the bigger program we introduced last quarter. I mentioned last quarter's call, just to reiterate, a lot of those benefits will be seen really starting 2025, although we will see some benefits of that program kick in in Q4. Oh, I appreciate the color, guys. Yeah, thank you. One moment for our next question. Our next question will be coming from Arun Viswanathan of RBC Capital. Arun, your line's open. Great, thanks for taking my question. Just wanted to maybe get your on food bev merch. Seems like, there's been some improvement there, and you guys are still going through some restructuring, but it's nice to see a little bit of improvement there. So maybe it sounds like Food service could be a little bit softer, but what are you seeing on the food bev merch side? Thanks. Yeah, I think on the food and bev merch, it's like I said in the prior question, it's still mixed. I think we're ahead of where we could be given year-over-year seasonality. So I mentioned the ag season. I think the biggest thing you're seeing improvement-wise in our food bev merch is some pricing fidelity. And so as we've kind of eclipsed some contracts and started to get some help on the price cost side, you know, we're our value over volume strategy is starting to come through in that business, which was a little behind our Food service business, if you recall from the Q4 call. So, you know, overall, that team's doing well. I think they're also benefiting quite a bit from the PEPS improvements we've made, and so as those operations become more stable, that's also flowing through. Great. Thanks for that. And then I guess just on price cost, you know, resin prices may be ticking up here a little bit. Obviously, you guys have pretty robust pass-through mechanisms, but maybe you can just give us your thoughts on, you know, potential volatility, if that would cause any volatility on your margin side, and what maybe your outlook is for the, yeah, next couple of quarters. Sure. In terms of some of the impact of kind of inflation impacts on resins, we are seeing some of that. I think we're seeing on a cost perspective, in probably two places in resin, and then also on maybe on some transportation. I'll take them in pieces. So from a resin standpoint, we largely have pass-throughs on the resin for the majority of our business, and so we do expect to recover that. We've made a lot of efforts to reduce the lag that we have for those recovery programs. And so really on a year over- on a this year basis, you really shouldn't see much of an impact. Really, where you might see it is if we have a big spike or a big decrease at the end of the year, kind of November, December, and we don't recover that within a year, that might have an impact on our annual results. But really, anything that you're seeing, kind of in the near midterm, really shouldn't be an impact to the PNL. We do pass a lot of that through. I think the... And then as it relates to the transportation, we're relatively flat. We pass that through as well. We have some good capacities as it relates to customers. Where it impacts us, it could see an impact is on our transfer freight as we move some products within our network. But we have other cost initiatives, savings programs. We're getting more efficient there, which will largely offset any impacts to the increase. So, net net, we're really not factoring in anything for the year in terms of we should be able to insulate the business from any type of volatility in material pricing. And just lastly, sorry, just on the leverage. So it sounds like you guys are pretty committed and pretty confident that you will finish the year in the high threes. Obviously, the deleveraging, I imagine, will continue. So what's kind of the optimal target that you ultimately want to strive for over the next couple of years? Yeah, we're, you know, we're continuing to deleverage. You know, we've only put out targets for this year. We haven't put out multi-year targets, but I could just say that we're not gonna be satisfied in the high threes. That's where we can get to this year, and we're gonna keep going. And we're looking to substantially improve. We feel like some of the actions we've undertaken to date have helped, and we're continuing just down that path. And, you know, even on top of that, we took a substantial action in increasing our liquidity and our available capacity under our revolving credit facility.... I'll just take a minute to point that out, in terms of raising our borrowing capacity from $250 million to $1.1 billion. It is something that, from a liquidity standpoint, it is a substantial improvement to our total credit profile on top of the delevering that we're undertaking. Thanks a lot. One moment for our next question. Our next question will be coming from Adam Samuelson of Goldman Sachs. Your line is open. Yeah, thank you. Good morning, everyone. So I guess the first question, Jon, maybe just to be clear and try and tie together the point on the $20 million cost of the Pine Bluff downtime turnaround and the EBITDA cadence between the first and second half. You're kind of implying second quarter EBITDA is ± about $200 million, would be how that works, if you're at least tracking in the lower half of the full year range. Is that the right understanding? You're generally on the right track, Adam. I think if you take my comments, we're not providing explicit guidance for Q2, but what I would tell you is when you look at my comments around second half improvements, it's 30%+. You know, at the midpoint of our guidance range, that would imply $206 for Q2, roughly speaking, just the math. But, you know, we're expecting a 30%+ improvement, so really that, you know, that will take you down to lower than the $206 from the, you know, over 30%. And so we're tracking to that. I think the $20 million with Pine Bluff is something that will impact Q2, that's factoring into the results there, or expectations there, I should say. Got it. That's very helpful. And then as we think about the footprint optimization and the beverage merchandising restructuring, from a cash perspective, there was the beverage merchandising restructuring. The cash expenses are almost complete. There's only $2 million left if I'm doing what you had spent last year and cash expenses this year. I just want to confirm that. And then from a footprint optimization, there was $8 million spent, and so that's still. Most of that program is still to come, I presume, over the balance of this year. Is that correct? Yes, that's correct. So we haven't changed any of our guidance for the footprint optimization, as that program is really just getting underway. And maybe taking pieces, the food and beverage merchandising restructuring, as I mentioned on this call, we are largely complete with that program, and so our total cash charges did end up around the $160 million mark that we had guided to from a cash basis. And just to reiterate on the footprint optimization, we're anticipating in this year, we're anticipating 2024 cash charges in the $15 million-$20 million area for this year. Okay, that's helpful. And then just one final one. I know seasonally working capital, that ticks up in the first quarter, and that's what you saw. Do you think that there is room to get cash out of working capital this year, especially given the more muted volume environment that you're seeing in the near term? Yes. I think that's, I think that's, that is the right way to think about it. I think working capital, we, we do expect to get some benefits there, despite the negative working capital in Q1. You know, the big piece of that clearly was some of the timing of our accounts receivable. And if you look back to last year, Q1 had a similar dynamic, and we anticipate that that should be worked through the remainder of the year, and we will get some benefit of working capital. It is included in our $200 million guide, $200 million plus guide for free cash flow for the year. All right. That's, that's all really helpful. I'll pass it on. Thank you. Thank you. One moment for our next question. Our last question will come from George Staphos of Bank of America. Your line's open. Hi, thanks very much. Good morning, guys. Thank you for the details. Can you hear me okay? Yeah. Yeah. Morning, George. Good morning. So two questions. One, can you give us a sort of deeper dive into PEPS, how you're integrating that, where you stand in terms of the continuous improvement program there, and what it could mean in terms of margin the next couple of quarters and the next couple of years across the two segments? Second question, to the extent that, you know, freight and rail and trucking have been relatively benign, to some degree, that is, it creates a competitive disadvantage for you because of your logistics and distribution network. To the extent we saw a reversal, you know, and are you seeing that at any, by any chance, how do you leverage your, you know, Pactiv distribution model and network, to, you know, improve volume and share and competitive advantage versus your peers? Thank you, guys. Good luck in the quarter. Yeah, I'll take the PEPS. So good question. So we're still early days in PEPS. I just want to reiterate that. And so we've got 18 sites that have certified bronze, 3 silver, and we just had our first gold site in Kinston, North Carolina. And so 22 sites total certified. The program has largely been rolled out from an independent standpoint, so independent evaluations have happened across the board. So all plants are operating on the same operating system... In terms of actually value creation, so if you think about the first stage of PEPS, it's really about stability, George. And so having the plants all in one system, it creates the portability of talent, allows us to insulate ourselves from labor challenges and be able to move labor. And so we have a total labor management system that allows us to leverage that. And when you can go from plant to plant and understand the operating system's the same in every facility, it really allows us to leverage that. So the first stage is really about cost avoidance and stability. When you get to silver, you start to see cost improvement. Our CI teams are building Six Sigma projects. And when you're gold, you actually have a forecasted savings that we build into the system. So with only one gold site, it's really, you know, not about the dollars, today, but long term, you know, we look at this as a lever that will do a lot more than just offset inflation, and really generate, you know, that ability, that lever to handle, you know, true EBITDA growth and performance. We're not there yet. You know, we have 31 more sites to be certified, and that's gonna happen over the coming quarters, well into next year. So, you know, no victory speech there yet, but we are seeing green shoots. We are seeing a shift in our plant's ability to be proactive, and it's allowed us to really kind of stay ahead of the inflation that used to really hamper us on a Q-over-Q. One of the reasons we've been able to weather some of the mixed market and inflationary pressures we've gotten is because of PEPS so far. And so we expect more out of that. Too early to really quantify it, George, but it's something we look forward to, you know, updating the market on. But presumably, Mike, without putting a number on it, I appreciate that. As you roll this out more and more, and to the degree you get more stability across your system, you should get also requirement for less working capital. You'll be able to take inventory out of the system. You'll be able to, you know, obviously produce at a more predictable level, not that you're obviously out of one right now, and that should accrue benefits on return as well, which I think sometimes we don't appreciate. I'm sorry, go ahead. Yeah, you're 100% right. And that, in fact, we are, it's like from an avoidance standpoint and efficiency standpoint, we are seeing those things come through. But you're exactly right. On the Pactiv distribution network, and whether you're able to really leverage that or not at this juncture? Yeah, George, I'll- Where and rail is, trucking is... Excuse me. Yeah, I'll take that one. And I think if I understand your question right, I think you're implying that without seeing more inflation in the logistics side of the business, maybe our distribution network, which is a differentiator, isn't quite as differentiating. That's correct. Yep, that's correct. I don't know if- At least from- Yeah, I don't know if I would necessarily agree with that. I mean, it is still a differentiator for our business and having the built-out distribution network and being a light, low-cost distributor and having that value add to our customers. I mean, to your point, you know, it's still a value add and differentiator for us, and if pricing was to go up across the network for everyone, I suppose that competitive bridge or the moat would only increase. But it's still there today, and it's something that we are able to take a benefit from. You know, the add I would make to this is, if you look at, if you look at our Food service business as an indicator, foot traffic was down near 4%. The fact that we're able to provide mixed product and create value that our customers don't have to rely on themselves for, regardless of inflation, continues to set us aside. We saw that with our performance in the, you know, the 1.5 type percent down on a unit basis. We outpaced Food service foot traffic, largely because of our ability to create value and, and partner with the customers that, that see that value. Now, what I'd also tell you is our network is scalable. So, I would tell you to your earlier question on PEPS, you know, one of the good things about our hub and spoke network is, you know, we can adapt our plant operations to regional demand signals. We can adapt it to broader market and product trend signals. And so our ability to scale back or scale up is something that's for us been a focus, and we've seen that come through as well. So whereas a big supply chain could often be a weight in an economic downturn, we use it as a lever to actually adjust and scale. If that makes sense. It does. It does. Thank you for the thoughts, guys. I'll turn it over. I'm showing no further questions. I would now like to turn the call back to Mike for closing remarks. Thank you. As we close today, I want to again thank the entire Pactiv Evergreen team for their hard work during the first quarter. We are executing on our strategy and will continue to progress on our transformational journey in 2024. We look forward to updating you during our second quarter conference call. Thank you for joining today. This concludes today's conference. Thank you for participating. You may now disconnect.