S&P changes Pactiv outlook to positive

S&P said it changed its outlook for Pactiv Evergreen Inc. to positive from stable and affirmed its B+ issuer rating.

Pactiv bolstered its balance sheet by repaying $659 million in long-term debt over the last two years. It ended the year with S&P Global Ratings-adjusted debt to EBITDA of 4.8x.

“In our view, the significant reduction in the company's debt illustrates its focus on improving its net leverage. We believe management will continue to adopt a more conservative financial policy by prioritizing lower leverage over debt-funded acquisitions or aggressive shareholder returns. Our forecast assumes Pactiv Evergreen will generate close to $200 million of reported free cash flow in 2024, which it will use a portion of to pay its dividend and scheduled quarterly term loan repayments,” S&P said in a press release.

The agency said it sees the company generating nearly $200 million in free cash flow, of which it will use a portion to pay its dividend and scheduled quarterly term loan repayments driving its S&P Global Ratings-adjusted debt to EBITDA toward 4x over the next 12 months.

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