Second Quarter Net Revenues of $930M, Retail
Revenue Growth of 1% Ahead of Expectations
Second Quarter Net Income and Adjusted
EBITDA Increased 47% and 15%
Full Year Net Revenue, Adjusted EBITDA and
Net Income Guide Raised
Net Debt Leverage1 Reduced to 2.4x at
Quarter End with Strong Cash Flow; $50M Debt Prepayment Made After
Quarter End
Reynolds Consumer Products Inc. (the “Company” or “RCP”)
(Nasdaq: REYN) today reported financial results for the second
quarter ended June 30, 2024.
Second Quarter 2024 Highlights
- Net Revenues of $930 million vs. $940 million in Q2 2023
- Retail Net Revenues increased 1% to $892 million, exceeding
Company expectations
- Non-retail Net Revenues, which consist of sales to food service
customers, classified as related party net revenues, and industrial
customers, decreased $16 million to $39 million
- Net Income and Adjusted Net Income of $97 million
vs. $66 million in Q2 2023
- Adjusted EBITDA of $172 million vs. $150 million in Q2
2023
- Earnings Per Share and Adjusted Earnings Per
Share of $0.46 vs. $0.32 in Q2 2023
- Operating Cash Flow of $183 million in first six months
of 2024
Retail volume outperformed Company expectations and was
unchanged versus the second quarter of 2023 including a headwind of
over 1% from product portfolio optimization. The Company continued
to outperform its categories with several categories performing
better than expected, resulting in improved performance versus the
first quarter.
Net Income increased $31 million and Adjusted EBITDA increased
$22 million driven by manufacturing volume output and lower
operational costs, partially offset by higher personnel costs and
increased investment in advertising. Net Income benefited from
these same factors as well as lower interest and income tax
expense.
The Company further reduced Net Debt to Trailing Twelve Months
Adjusted EBITDA1 from 2.7x on December 31, 2023 to 2.4x on June 30,
2024.
“Strong retail revenue performance in each of our business units
resulted in RCP outperforming our categories during the quarter,”
said Lance Mitchell, CEO and President of Reynolds Consumer
Products. “As a result, we delivered another quarter of strong
financial results demonstrating our marketplace leadership as well
as our effectiveness in driving operational excellence. We are
commercializing and expanding our strong innovation pipeline,
unlocking Reyvolution programs to reduce operational costs and
investing in strategic opportunities to drive long term
growth.”
1Net Debt is defined as current portion of
long-term debt plus long-term debt less cash and cash equivalents.
Net Debt Leverage is defined as Net Debt divided by Trailing Twelve
Months Adjusted EBITDA. See “Use of Non-GAAP Financial Measures”
for additional information.
Reynolds Cooking & Baking
- Net revenues decreased $17 million to $304 million driven by
non-retail revenues, which consist of sales to food service
customers, classified as related party net revenues, and industrial
customers
- Adjusted EBITDA increased $16 million to $56 million
Adjusted EBITDA increased $16 million driven by increased
production and lower operational costs.
Volume decreased 5% and was driven by an expected 5-point impact
from low margin non-retail sales. Retail volume was unchanged and
reflected additional share gains in household foil and continued
growth in parchment paper, particularly behind Reynolds Kitchens®
Stay Flat Parchment with SmartGrid® and Reynolds Kitchens® Air
Fryer liners.
The Company launched a new grilling campaign consisting of
multi-product advertising and digital executions which are
performing well versus expectations. As part of that campaign,
Reynolds Wrap® has partnered with ButcherBox, the leading
direct-to-consumer meat brand, to create limited edition BBQterie
kits to participate in the charcuterie trend popular with younger
consumers.
Hefty Waste & Storage
- Net revenues increased $9 million to $238 million
- Adjusted EBITDA increased $7 million to $69 million
Adjusted EBITDA increased $7 million driven by lower operational
costs and higher revenue, partially offset by increased investments
in advertising.
Volume increased 2%, consistent with category trends which were
better than expected.
Hefty Waste Bags had a successful second quarter expanding
Hefty® Ultra Strong with Coastal Plastic and Fabuloso Citrus &
Fruits and launching additional innovation including new Hefty®
Compostable Press-To-Close Food Bags.
The Company continues to shift to a broader sustainable
portfolio by expanding Hefty® Waste Bags with Post Consumer
Recycled Materials and shipping slider bags made without PFAS. In
addition, the Hefty® ReNew™ Program continued to expand, launching
in Columbus, Dayton and Tucson during the second quarter.
Hefty Tableware
- Net revenues decreased $6 million to $245 million
- Adjusted EBITDA decreased $6 million to $39 million
Adjusted EBITDA performed in line with Company expectations,
reflecting the implementation of price pack architecture
initiatives and increased advertising and promotional
investments.
Volume performance improved to down 1% in the quarter from down
6% in the first quarter and down 8% in the second half of 2023, in
each case as compared to the same prior year period.
The Hefty Tableware portfolio outperformed its categories driven
by multiple products including party cups and plates. Hefty®
ZooPals® also continued to perform well, gaining additional retail
distribution.
Presto Products
- Net revenues increased $5 million to $150 million
- Adjusted EBITDA increased $9 million to $37 million
Adjusted EBITDA increased $9 million to a second quarter record
$37 million driven by volume growth and lower operational
costs.
Volume increased 2% driven by continued growth in the food bag
category.
Product innovations including 25% plant-based compostable press
to close food bags, bio-based sandwich bags made with 20% plant
& ocean materials and half gallon storage and freezer bags
contributed to strong retail performance. Presto plans a record
number of product launches in 2024.
Year to Date 2024 Highlights
- Net Revenues of $1,764 million vs. $1,814 million in the
comparable prior year period
- Retail Net Revenues decreased 1%, exceeding Company
expectations
- Non-retail Net Revenues decreased to $77 million
- Net Income and Adjusted Net Income of $145
million vs. $83 million in the comparable prior year period
- Adjusted EBITDA of $294 million vs. $232 million in the
comparable prior year period
- Earnings Per Share and Adjusted Earnings Per
Share of $0.69 vs. $0.40 in the comparable prior year
period
Retail volume outperformed Company expectations, decreasing 1%
and included a headwind of over 1% from product portfolio
optimization. The Company continued to lead its categories with
several performing better than expected year to date.
Net Income and Adjusted EBITDA each increased $62 million driven
by manufacturing volume output and lower operational costs,
partially offset by higher personnel costs and increased investment
in advertising. Net Income increased by the same amount as Adjusted
EBITDA as lower interest expense was offset by higher income tax
expense.
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents were $101 million at June 30, 2024,
and debt was $1,784 million resulting in Net Debt of $1,683
million, $34 million lower than at December 31, 2023. The Company
further reduced Net Debt to Trailing Twelve Months Adjusted EBITDA1
from 2.7x on December 31, 2023 to 2.4x on June 30, 2024.
Operating cash flow of $183 million in the six months ended June
30, 2024 was driven by strong profitability and disciplined working
capital management.
Subsequent to quarter end, the Company made a voluntary
principal payment of $50 million on its term loan facility.
Fiscal Year and Third Quarter Outlook
The Company updates its earnings outlook for the full year as
follows:
Prior
Full Year 2024 Outlook
Current
Full Year 2024 Outlook
Net Revenues
$3,530 to $3,640 million
$3,590 to $3,670 million
Net Income and Adj Net Income
$341 to $357 million
$346 to $358 million
Adjusted EBITDA
$660 to $680 million
$670 to $685 million
Earnings Per Share and Adj Earnings Per
Share
$1.62 to $1.70
$1.65 to $1.71
Net Debt at December 31, 2024
$1.5 to $1.6 billion
$1.5 to $1.6 billion
The Company guides full-year 2024 Net Revenues to be
approximately $3,590 million to $3,670 million versus prior year
Net Revenues of $3,756 million consisting of the following
assumptions:
1% reduction from pricing 1% reduction to 1%
increase from retail volume, at or better than category forecasts
2.5% reduction from lower non-retail volume and optimization of the
retail product portfolio
The following table sets forth the estimated impact of these
factors on our prior 2024 outlook and our current 2024 outlook, as
well as the difference in estimated impact between those
outlooks.
Net Revenue Full-Year 2024
Guide
Prior
2024 Outlook
Current
2024 Outlook
Difference between Prior & Current 2024
Outlook
Low
Mid
High
Low
Mid
High
Low
Mid
High
Pricing
(1.0)%
(1.0)%
(1.0)%
(1.0)%
(1.0)%
(1.0)%
—%
—%
—%
Retail Volume
(2.0)%
(0.5)%
1.0%
(1.0)%
—%
1.0%
1.0%
0.5%
—%
Non-Retail Volume & Product Portfolio
Optimization
(3.0)%
(3.0)%
(3.0)%
(2.5)%
(2.5)%
(2.5)%
0.5%
0.5%
0.5%
Commodity rates are expected to remain more stable than in
recent years.
The Company forecasts Adjusted EBITDA growth driven by retail
volume at or above category forecasts, improvements in product mix,
the Reynolds Cooking & Baking business’s recovery of historical
earnings and delivery of additional Reyvolution cost savings.
Net income growth is forecasted to be driven by the same factors
driving Adjusted EBITDA, in addition to an approximately $20
million expected reduction in interest expense compared to 2023 net
interest expense of $119 million.
The Company continues to expect the relative contribution of
each quarter’s Adjusted EBITDA to the full year’s Adjusted EBITDA
returning to historical averages.
The Company introduces its third quarter 2024 outlook as
follows:
Q3 2024
Outlook
Net Revenues
$885 to $915 million
Net Income and Adj Net Income
$82 to $90 million
Adjusted EBITDA
$165 to $175 million
Earnings Per Share and Adjusted Earnings
Per Share
$0.39 to $0.43
The Company guides third quarter 2024 Net Revenues to be
approximately $885 million to $915 million versus prior year Net
Revenues of $935 million consisting of the following
assumptions:
1% reduction from pricing 2.5% reduction to
0.5% increase from retail volume, including the reversal of a
benefit from estimated retailer order timing moving from the third
quarter into the second quarter 2% reduction from lower non-retail
volume and optimization of the retail product portfolio
“RCP is performing well against the commercial and financial
objectives established at the start of the year and we are
increasing our guide as a result,” said Scott Huckins, Chief
Financial Officer. “We are operating with discipline in a dynamic
consumer environment and plan to continue driving our categories
while expanding margins, driving cash flow and increasing financial
flexibility.”
Quarterly Dividend
The Company’s Board of Directors has approved a quarterly
dividend of $0.23 per common share. The Company expects to pay this
dividend on August 30, 2024, to shareholders of record as of August
16, 2024.
Earnings Webcast
The Company will host a live webcast this morning at 7:00 a.m.
CT (8:00 a.m. ET). A link to the webcast and all related earnings
materials will be available on the Company’s Investor Relations
website at https://investors.reynoldsconsumerproducts.com.
About Reynolds Consumer Products Inc.
Reynolds Consumer Products is a leading provider of household
products that simplify daily life so consumers can enjoy what
matters most. With a presence in 95% of households across the
United States, Reynolds Consumer Products manufactures and sells
products that people use in their homes for cooking, serving,
cleanup and storage. Iconic brands include Reynolds Wrap® aluminum
foil and Hefty® trash bags and disposable tableware, as well as
dedicated store brands which are strategically important to retail
customers. Overall, Reynolds Consumer Products holds the No. 1 or
No. 2 U.S. market share position in the majority of product
categories it serves. For more information, visit
https://investors.reynoldsconsumerproducts.com.
Forward Looking Statements
This press release contains statements reflecting our views
about our future performance that constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, including our third quarter and fiscal year
2024 guidance. In some cases, you can identify these statements by
forward-looking words such as “may,” “might,” “will,” “should,”
“expects,” “intends,” “outlook,” “forecast”, “position”,
“committed,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “model”, “assumes,” “confident,” “look forward,”
“potential” “on track”, 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 and recovery of profitability, management of
costs and other disruptions and other strategies, and anticipated
trends in our business, including expected levels of commodity
costs and volume. 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 but not
limited to the risk factors set forth in our most recent Annual
Report on Form 10-K and in our Quarterly Reports on Form 10-Q.
For additional information on these and other factors that could
cause our actual results to materially differ from those set forth
herein, please see our filings with the Securities and Exchange
Commission, including our most recent Annual Report on Form 10-K
and subsequent filings. Investors are cautioned not to place undue
reliance on any such forward-looking statements, which speak only
as of the date they are made. The Company undertakes no obligation
to update any forward-looking statement, whether as a result of new
information, future events or otherwise.
REYN-F
Reynolds Consumer Products
Inc.
Consolidated Statements of
Income
(amounts in millions, except for
per share data)
For the Three Months
Ended
For the Six Months
Ended
June 30,
June 30,
2024
2023
2024
2023
Net revenues
$
914
$
922
$
1,726
$
1,774
Related party net revenues
16
18
38
40
Total net revenues
930
940
1,764
1,814
Cost of sales
(674
)
(712
)
(1,306
)
(1,430
)
Gross profit
256
228
458
384
Selling, general and administrative
expenses
(116
)
(107
)
(227
)
(212
)
Other income (expense), net
—
(1
)
—
(1
)
Income from operations
140
120
231
171
Interest expense, net
(25
)
(31
)
(51
)
(60
)
Income before income taxes
115
89
180
111
Income tax expense
(18
)
(23
)
(35
)
(28
)
Net income
$
97
$
66
$
145
$
83
Earnings per share:
Basic
$
0.46
$
0.32
$
0.69
$
0.40
Diluted
$
0.46
$
0.32
$
0.69
$
0.40
Weighted average shares outstanding:
Basic
210.1
210.0
210.1
210.0
Diluted
210.2
210.0
210.2
210.0
Reynolds Consumer Products
Inc.
Consolidated Balance
Sheets
(amounts in millions, except for
per share data)
(Unaudited)
As of June 30,
2024
As of December 31,
2023
Assets
Cash and cash equivalents
$
101
$
115
Accounts receivable (net of allowance for
doubtful accounts of $1 and $1)
371
347
Other receivables
5
7
Related party receivables
7
7
Inventories
584
524
Other current assets
45
41
Total current assets
1,113
1,041
Property, plant and equipment (net of
accumulated depreciation of $938 and $897)
729
732
Operating lease right-of-use assets,
net
79
56
Goodwill
1,895
1,895
Intangible assets, net
987
1,001
Other assets
62
55
Total assets
$
4,865
$
4,780
Liabilities
Accounts payable
$
310
$
219
Related party payables
29
34
Current operating lease liabilities
19
16
Income taxes payable
1
22
Accrued and other current liabilities
164
187
Total current liabilities
523
478
Long-term debt
1,784
1,832
Long-term operating lease liabilities
63
42
Deferred income taxes
359
357
Long-term postretirement benefit
obligation
16
16
Other liabilities
80
72
Total liabilities
$
2,825
$
2,797
Stockholders’ equity
Common stock, $0.001 par value; 2,000
shares authorized; 210.1 shares issued and
outstanding
—
—
Additional paid-in capital
1,404
1,396
Accumulated other comprehensive income
51
50
Retained earnings
585
537
Total stockholders’ equity
2,040
1,983
Total liabilities and stockholders’
equity
$
4,865
$
4,780
Reynolds Consumer Products
Inc.
Consolidated Statements of
Cash Flows
(amounts in millions)
Six Months Ended June
30,
2024
2023
Cash provided by operating
activities
Net income
$
145
$
83
Adjustments to reconcile net income to
operating cash flows:
Depreciation and amortization
63
61
Deferred income taxes
—
2
Stock compensation expense
9
6
Change in assets and liabilities:
Accounts receivable, net
(23
)
(38
)
Other receivables
2
11
Related party receivables
—
—
Inventories
(60
)
108
Accounts payable
92
(15
)
Related party payables
(5
)
(12
)
Income taxes payable / receivable
(22
)
(11
)
Accrued and other current liabilities
(21
)
19
Other assets and liabilities
3
(7
)
Net cash provided by operating
activities
183
207
Cash used in investing
activities
Acquisition of property, plant and
equipment
(48
)
(51
)
Net cash used in investing
activities
(48
)
(51
)
Cash used in financing
activities
Repayment of long-term debt
(50
)
(12
)
Dividends paid
(96
)
(96
)
Other financing activities
(3
)
(3
)
Net cash used in financing
activities
(149
)
(111
)
Net (decrease) increase in cash and cash
equivalents
(14
)
45
Cash and cash equivalents at beginning of
period
115
38
Cash and cash equivalents at end of
period
$
101
$
83
Cash paid:
Interest - long-term debt, net of interest
rate swaps
51
58
Income taxes
56
36
Reynolds Consumer Products
Inc.
Segment Results
(amounts in millions)
Reynolds Cooking
& Baking
Hefty Waste &
Storage
Hefty Tableware
Presto Products
Unallocated(1)
Total
Revenues
Three Months Ended June 30, 2024
$
304
$
238
$
245
$
150
$
(7
)
$
930
Three Months Ended June 30, 2023
321
229
251
145
(6
)
940
Six Months Ended June 30, 2024
568
468
450
293
(15
)
1,764
Six Months Ended June 30, 2023
604
463
475
288
(16
)
1,814
Adjusted EBITDA
Three Months Ended June 30, 2024
$
56
$
69
$
39
$
37
$
(29
)
$
172
Three Months Ended June 30, 2023
40
62
45
28
(25
)
150
Six Months Ended June 30, 2024
89
134
70
66
(65
)
294
Six Months Ended June 30, 2023
43
117
76
47
(51
)
232
(1)
The unallocated net revenues include
elimination of inter-segment revenues and other revenue
adjustments. The unallocated Adjusted EBITDA represents the
combination of corporate expenses which are not allocated to our
segments and other unallocated revenue adjustments.
Components of Change in Net
Revenues for the Three Months Ended June 30, 2024 vs. the Three
Months Ended June 30, 2023
Price
Volume/Mix
Total
Retail
Non-Retail
Reynolds Cooking & Baking
—
%
—
%
(5)
%
(5)
%
Hefty Waste & Storage
2
%
2
%
—
%
4
%
Hefty Tableware
(1)
%
(1)
%
—
%
(2)
%
Presto Products
1
%
2
%
—
%
3
%
Total RCP
—
%
—
%
(1)
%
(1)
%
Components of Change in Net
Revenues for the Six Months Ended June 30, 2024 vs. the Six Months
Ended June 30, 2023
Price
Volume/Mix
Total
Retail
Non-Retail
Reynolds Cooking & Baking
—
%
(1)
%
(5)
%
(6)
%
Hefty Waste & Storage
1
%
—
%
—
%
1
%
Hefty Tableware
(2)
%
(3)
%
—
%
(5)
%
Presto Products
1
%
1
%
—
%
2
%
Total RCP
—
%
(1)
%
(2)
%
(3)
%
Use of Non-GAAP Financial Measures
We use non-GAAP financial measures “Adjusted EBITDA,” “Adjusted
Net Income,” “Adjusted Earnings Per Share,” “Net Debt” and “Net
Debt to Trailing Twelve Months Adjusted EBITDA,” in evaluating our
past results and future prospects. We define Adjusted EBITDA as net
income calculated in accordance with GAAP, plus the sum of income
tax expense, net interest expense, depreciation and amortization
and further adjusted to exclude certain non-recurring items, if
applicable. We define Adjusted Net Income and Adjusted Earnings Per
Share (“Adjusted EPS”) as Net Income and Earnings Per Share (“EPS”)
calculated in accordance with GAAP, plus the sum of certain
non-recurring items, if applicable. We define Net Debt as the
current portion of long-term debt plus long-term debt less cash and
cash equivalents. We define Net Debt to Trailing Twelve Months
Adjusted EBITDA as Net Debt (as defined above) as of the end of the
period to Adjusted EBITDA (as defined above) for the period.
We present Adjusted EBITDA because it is a key measure used by
our management team to evaluate our operating performance, generate
future operating plans and make strategic decisions. In addition,
our chief operating decision maker uses Adjusted EBITDA of each
reportable segment to evaluate the operating performance of such
segments. We use Adjusted Net Income and Adjusted Earnings Per
Share as supplemental measures to evaluate our business’
performance in a way that also considers our ability to generate
profit without the impact of certain items. We use Net Debt as we
believe it is a more representative measure of our liquidity. We
use Net Debt to Trailing Twelve Months Adjusted EBITDA because it
reflects our ability to service our debt obligations. Accordingly,
we believe presenting these measures provide 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.
Non-GAAP information should be considered as supplemental in
nature and is not meant to be considered in isolation or as a
substitute for the related financial information prepared in
accordance with GAAP. In addition, our non-GAAP financial measures
may not be the same as or comparable to similar non-GAAP financial
measures presented by other companies.
Guidance for fiscal year and third quarter 2024, where adjusted,
is provided on a non-GAAP basis. The Company cannot reconcile its
expected Net Debt at December 31, 2024 to expected total debt
without reasonable effort because certain items that impact total
debt and other reconciling measures are out of the Company’s
control and/or cannot be reasonably predicted at this time, to
which unavailable information could have a significant impact on
the Company’s GAAP financial results.
Please see reconciliations of Non-GAAP measures used in this
release (with the exception of our December 31, 2024 Net Debt
outlook, as described above) to the most directly comparable GAAP
measures, beginning on the following page.
Reynolds Consumer Products
Inc.
Reconciliation of Net Income
to Adjusted EBITDA
(amounts in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(in millions)
(in millions)
Net income – GAAP
$
97
$
66
$
145
$
83
Income tax expense
18
23
35
28
Interest expense, net
25
31
51
60
Depreciation and amortization
32
30
63
61
Adjusted EBITDA (Non-GAAP)
$
172
$
150
$
294
$
232
Reynolds Consumer Products
Inc.
Reconciliation of Trailing
Twelve Months Net Income to Trailing Twelve Months Adjusted
EBITDA
(amounts in millions)
Twelve Months Ended June 30,
2024
Twelve Months Ended December
31, 2023
Net income – GAAP
$
360
$
298
Income tax expense
102
95
Interest expense, net
110
119
Depreciation and amortization
126
124
Adjusted EBITDA (Non-GAAP)
$
698
$
636
Reynolds Consumer Products
Inc.
Reconciliation of Total Debt
to Net Debt and Calculation of Net Debt to Trailing Twelve Months
Adjusted EBITDA
(amounts in millions, except for
Net Debt to Trailing Twelve Months Adjusted EBITDA)
As of June 30, 2024
Current portion of long-term debt
$
—
Long-term debt
1,784
Total debt
1,784
Cash and cash equivalents
(101
)
Net debt (Non-GAAP)
$
1,683
For the twelve months ended June 30,
2024
Adjusted EBITDA (Non-GAAP)
$
698
Net Debt to Trailing Twelve Months
Adjusted EBITDA
2.4x
As of December 31, 2023
Current portion of long-term debt
$
—
Long-term debt
1,832
Total debt
1,832
Cash and cash equivalents
(115
)
Net debt (Non-GAAP)
$
1,717
For the twelve months ended December
31, 2023
Adjusted EBITDA (Non-GAAP)
$
636
Net Debt to Trailing Twelve Months
Adjusted EBITDA
2.7x
Reynolds Consumer Products
Inc.
Reconciliation of Q3 2024 and
FY2024 Net Income Guidance to Adjusted EBITDA Guidance
(amounts in millions)
Three Months Ended September
30, 2024
Year Ended December 31,
2024
Low
High
Low
High
Net income (GAAP)
$
82
$
90
$
346
$
358
Income tax expense
27
29
99
102
Interest expense, net
25
25
100
100
Depreciation and amortization
31
31
125
125
Adjusted EBITDA
$
165
$
175
$
670
$
685
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807962049/en/
Investor Contact Mark Swartzberg
Mark.Swartzberg@reynoldsbrands.com (847) 482-4081
Reynolds Consumer Products (NASDAQ:REYN)
Historical Stock Chart
From Aug 2024 to Sep 2024
Reynolds Consumer Products (NASDAQ:REYN)
Historical Stock Chart
From Sep 2023 to Sep 2024