I am an enthusiastic equity research and investment analyst with a strong interest in applying my valuation and research skills. I am a certified FMVA (Financial Modeling & Valuation Analyst) and FPWMP (Financial Planning & Wealth Management Professional), credentials that have equipped me with the tools to analyze financial statements, build valuation models, and construct diversified investment portfolios. I participated in the CFA Research Challenge, where I gained practical experience in equity analysis ...

Core Viewpoint - Reynolds Consumer Products (REYN), a manufacturer of kitchen consumables such as aluminum foil, cling film, and garbage bags, saw a 4% increase in its stock price following its selection for inclusion in the S&P SmallCap 600 Index, effective September 24, reflecting the company's strong market performance [1]. Group 1 - Reynolds Consumer Products was selected for inclusion in the S&P SmallCap 600 Index [1]. - The inclusion is set to take effect on September 24 [1]. - The stock price of Reynolds Consumer Products increased by 4% in early trading [1].

Group 1 - Reynolds Consumer Products Inc. will replace SpartanNash Co. in the S&P SmallCap 600 [1] - The change will take effect prior to the opening of trading on Wednesday, September 24 [1]

Group 1 - The company is focused on building and retaining a world-class team, having added key accomplished executives this year while maintaining a balance with tenured veterans [2] - The company's aspirations include two main principles: consistent organic volume growth and margin expansion [3] - Key strategies for achieving these aspirations involve innovation, share gain opportunities, and significant investment in revenue growth management to support household formation [3]

Financial Data and Key Metrics Changes - The company is focused on consistent organic volume growth and margin expansion as primary business aspirations [3][4] - The outlook for revenue growth is maintained at low single digits, with a shift from volume to pricing recovery due to cost headwinds [14][36] Business Line Data and Key Metrics Changes - The company operates through four segments: Reynolds Cooking and Baking, Hefty Waste and Storage, Hefty Tableware, and Presto products, with long-term growth expectations in low single digits [10][11] - The foam category is experiencing double-digit declines, impacting overall category growth, while other categories are expected to remain flat [13] Market Data and Key Metrics Changes - The U.S. consumer is under pressure due to declining consumer confidence and high levels of debt, affecting spending behavior [34] - There is a trend towards larger pack sizes and lower opening price points across most categories [35] Company Strategy and Development Direction - The company emphasizes innovation and marketing to drive category growth, focusing on evolving consumer needs and sustainability [15][54] - The dual strategy of being both a branded and private label producer allows the company to serve different consumer segments and manage categories effectively [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current operating environment's challenges, including commodity volatility and tariffs, but expresses confidence in the team's ability to adapt [7][42] - The company is committed to investing in high-return opportunities and improving earnings stability through automation and other initiatives [63][64] Other Important Information - The company has made significant progress in sustainability, offering alternatives in all major categories by 2025 [53] - The company has a strong balance sheet and cash flow, enabling future investments in growth initiatives [5] Q&A Session Summary Question: Overview of categories and long-term growth expectations - The company operates in four segments with long-term growth expected in low single digits, driven by household formation and innovation [10][11] Question: Current consumer environment and category performance - The consumer is under pressure, with a stable share between branded and private label products, and a shift towards larger pack sizes [34][35] Question: Input costs and pricing power - Aluminum prices have increased, prompting the company to implement price increases, demonstrating pricing power and brand strength [36] Question: Benefits of being both a branded and private label producer - The dual strategy allows for consumer segmentation and supply chain synergies, contributing to overall profitability [30][31] Question: Capital allocation and M&A strategy - The company is focused on organic growth and has made progress in extending its brand into adjacent areas, with no direct M&A activity since the last investor meeting [55][56]

Financial Data and Key Metrics Changes - The company is focused on consistent organic volume growth and margin expansion as primary business aspirations [3][4] - The outlook for category growth this year was initially expected to decline in low single digits, but the company has outperformed the categories slightly [13][14] - Aluminum prices have increased from approximately $1.2 per pound to $1.9, prompting the company to implement a third price increase in the Reynolds Cooking and Baking business [40] Business Line Data and Key Metrics Changes - The company operates through four segments: Reynolds Cooking and Baking, Hefty Waste and Storage, Hefty Tableware, and Presto products [9][10][11] - The foam category is experiencing double-digit declines, impacting overall category expectations, while other categories are expected to remain flat [13] - The Hefty brand enjoys a 98% level of consumer awareness and has been a serial innovator, contributing to long-term share gains in the trash category [28] Market Data and Key Metrics Changes - The U.S. consumer is under pressure due to declining consumer confidence and rising debt levels, impacting overall market dynamics [38] - There is a trend towards larger pack sizes and lower opening price points across most categories [39] - The company has a U.S.-centric business model, with 90% of revenues coming from the U.S., which insulates it from tariff impacts compared to competitors relying on international supply chains [50][51] Company Strategy and Development Direction - The company aims to build a world-class team and elevate the finance team to become business partners driving results [5][6] - Innovation and marketing are critical for driving category growth, with a focus on aligning products with evolving consumer needs [15][16] - The company sees the brand and store brand business as complementary, allowing for better consumer segmentation and price point management [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current operating environment is challenging, with commodity volatility and consumer pressure being significant factors [7][38] - The company is optimistic about its ability to manage costs and drive earnings stability through a more agile team [7][8] - Future capital allocation will focus on high-return opportunities, including automation and innovation [68][69] Other Important Information - The company has made significant progress in offering sustainable alternatives across all major categories, addressing consumer demand for sustainability [58] - The company has not pursued M&A since its last investor day but has focused on organic growth and brand extension into adjacent areas [60][61] Q&A Session Summary Question: What are the long-term growth drivers for the trash category? - The Hefty brand's strong consumer awareness, innovation, and effective marketing have driven long-term share gains in the trash category [27][29] Question: How does the company view the competitive dynamics in the market? - The competitive landscape is rational, with promotional activities resembling pre-pandemic levels, and the company is focused on maintaining its brand strength [19][31] Question: What is the company's approach to managing input costs and tariffs? - The company has seen a decrease in direct tariff exposure and is focusing on onshoring production to mitigate costs [46][50]

Core Insights - Reynolds Consumer Products reported Q2 2025 GAAP revenue of $938 million, exceeding analyst expectations of $902.8 million, with a modest year-over-year increase of 0.9% [1][2] - Adjusted earnings per share were $0.39, slightly above the estimate of $0.38 but down from $0.46 in Q2 2024, reflecting a year-over-year decline of 15.2% [1][2] - The company faced challenges from rising input costs, lower retail volumes, and CEO transition-related expenses, impacting profit margins [1][6] Financial Performance - GAAP revenue increased by 0.9% from $930 million in Q2 2024 to $938 million in Q2 2025 [2] - Adjusted EBITDA decreased by 5.2% from $172 million in Q2 2024 to $163 million in Q2 2025 [2][6] - Net income fell by 24.7% to $73 million compared to $97 million in Q2 2024, influenced by $10 million in after-tax CEO transition costs [2][6] Business Overview - Reynolds Consumer Products specializes in food storage, cooking, waste management, and tableware products, with leading brands like Reynolds and Hefty found in 95% of U.S. homes [3] - The company focuses on maintaining category leadership, driving product innovation, and investing in sustainability [4] Segment Performance - The Cooking & Baking unit saw a revenue increase of $4 million but a $5 million decline in adjusted EBITDA due to weaker retail volume [7] - Hefty Waste & Storage achieved an $11 million rise in GAAP net revenues with a 6% increase in retail volume, though adjusted EBITDA remained flat [7] - The Hefty Tableware segment experienced a $9 million sales decline, attributed to a 5% drop in retail volume [7] Product Innovation - Recent product launches include Hefty Fabuloso scented trash bags, Hefty Press to Close food bags, and new compostable cutlery, reflecting ongoing investment in innovation and sustainability [8] - The company aims to align international operations with domestic product categories to support future growth opportunities [8] Dividend and Guidance - The quarterly dividend was maintained at $0.23 per share, consistent with the prior year [9] - Management reiterated full-year 2025 guidance, expecting net revenues to decline by low single digits compared to FY2024, with adjusted EBITDA projected between $650 million and $670 million [10]

Core Insights - Reynolds Consumer Products reported $938 million in revenue for the quarter ended June 2025, reflecting a year-over-year increase of 0.9% and an EPS of $0.39 compared to $0.46 a year ago, exceeding the Zacks Consensus Estimate of $902.53 million by +3.93% [1] Financial Performance - The company delivered an EPS surprise of +2.63%, with the consensus EPS estimate being $0.38 [1] - Over the past month, shares of Reynolds Consumer Products returned -1%, while the Zacks S&P 500 composite increased by +3.4% [3] Revenue Breakdown by Segment - Reynolds Cooking & Baking: $295 million, -3% year-over-year, below the average estimate of $309.04 million [4] - Hefty Waste & Storage: $255 million, +7.1% year-over-year, above the average estimate of $241.58 million [4] - Unallocated: $-7 million, compared to the average estimate of $-4.9 million, with a year-over-year change of 0% [4] - Presto Products: $153 million, +2% year-over-year, exceeding the average estimate of $149.55 million [4] - Hefty Tableware: $242 million, -1.2% year-over-year, above the average estimate of $207.03 million [4]

Core Viewpoint - Reynolds Consumer Products reported quarterly earnings of $0.39 per share, exceeding the Zacks Consensus Estimate of $0.38 per share, but down from $0.46 per share a year ago, indicating a slight earnings surprise of +2.63% [1][2] Financial Performance - The company achieved revenues of $938 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.93% and showing a slight increase from $930 million year-over-year [2] - Over the last four quarters, Reynolds Consumer Products has exceeded consensus revenue estimates three times [2] Stock Performance - The shares of Reynolds Consumer Products have declined approximately 20.1% since the beginning of the year, contrasting with the S&P 500's gain of 8.3% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.41 for the upcoming quarter and $1.58 for the current fiscal year, alongside projected revenues of $907.63 million and $3.64 billion respectively [7] - The Zacks Rank for Reynolds Consumer Products is currently 2 (Buy), suggesting that the stock is expected to outperform the market in the near future [6] Industry Context - The Consumer Products - Discretionary industry is currently ranked in the top 25% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

[Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines the company's forward-looking statements, which are subject to various risks and uncertainties, cautioning investors against undue reliance - This report contains forward-looking statements regarding future financial performance, growth, profitability, cost management, and business trends, which are subject to risks, uncertainties, and assumptions[8](index=8&type=chunk) - Key risk factors include changes in consumer preferences, relationships with major customers, competition, supply chain disruptions, raw material costs, labor issues, economic downturns, and interest rate fluctuations[8](index=8&type=chunk)[11](index=11&type=chunk) - Investors are cautioned not to place undue reliance on these statements, as actual results may differ materially, and the company is not obligated to update them[9](index=9&type=chunk) [Part I. Financial Information](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Reynolds Consumer Products Inc., including income, comprehensive income, balance sheets, equity, and cash flows, with detailed explanatory notes [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement provides a summary of the company's revenues, costs, and net income for the three and six months ended June 30, 2025 and 2024 | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Net Revenues | $938 | $930 | $1,756 | $1,764 | | Cost of Sales | $(712) | $(674) | $(1,341) | $(1,306) | | Gross Profit | $226 | $256 | $415 | $458 | | Income from Operations | $118 | $140 | $193 | $231 | | Net Income | $73 | $97 | $105 | $145 | | Basic EPS | $0.35 | $0.46 | $0.50 | $0.69 | | Diluted EPS | $0.35 | $0.46 | $0.50 | $0.69 | - Net income decreased by **25%** for the three months ended June 30, 2025, and by **28%** for the six months ended June 30, 2025, compared to the prior year periods[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement details the components of comprehensive income, including net income and other comprehensive income/loss, for the three and six months ended June 30, 2025 and 2024 | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $73 | $97 | $105 | $145 | | Other Comprehensive (Loss) Income, net of income taxes | | | | | | Currency translation adjustment | $2 | $— | $2 | $(1) | | Employee benefit plans | $(2) | $(2) | $(3) | $(3) | | Derivative instruments | $(5) | $— | $(10) | $5 | | Total Other Comprehensive (Loss) Income | $(5) | $(2) | $(11) | $1 | | Comprehensive Income | $68 | $95 | $94 | $146 | - Comprehensive income decreased by **$27 million (28%)** for the three months and **$52 million (36%)** for the six months ended June 30, 2025, primarily due to net income decline and derivative instrument losses[15](index=15&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the company's financial position, including assets, liabilities, and stockholders' equity, as of June 30, 2025, and December 31, 2024 | Metric (in millions) | As of June 30, 2025 | As of December 31, 2024 | | :------------------- | :------------------ | :---------------------- | | Total Current Assets | $1,063 | $1,101 | | Total Assets | $4,861 | $4,873 | | Total Current Liabilities | $575 | $539 | | Total Liabilities | $2,713 | $2,731 | | Total Stockholders' Equity | $2,148 | $2,142 | - Total assets slightly decreased from **$4,873 million** at December 31, 2024, to **$4,861 million** at June 30, 2025, while total stockholders' equity increased from **$2,142 million** to **$2,148 million**[18](index=18&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in stockholders' equity components, including net income, comprehensive loss, and dividends, from December 31, 2024, to June 30, 2025 | Equity Component (in millions) | Balance as of Dec 31, 2024 | Net Income (Q2 2025) | Other Comprehensive Loss (Q2 2025) | Dividends Paid (Q2 2025) | Other (Q2 2025) | Balance as of Jun 30, 2025 | | :----------------------------- | :------------------------- | :------------------- | :--------------------------------- | :----------------------- | :-------------- | :------------------------- | | Common Stock | $— | $— | $— | $— | $— | $— | | Additional Paid-in Capital | $1,413 | $— | $— | $— | $5 | $1,422 | | Retained Earnings | $694 | $73 | $— | $(48) | $1 | $702 | | Accumulated Other Comprehensive Income | $35 | $— | $(5) | $— | $— | $24 | | Total Equity | $2,142 | $73 | $(5) | $(48) | $6 | $2,148 | - Total stockholders' equity increased by **$6 million** from December 31, 2024, to June 30, 2025, driven by net income partially offset by dividends paid and other comprehensive losses[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Cash Flow Activity (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $147 | $183 | | Net cash used in investing activities | $(79) | $(48) | | Net cash used in financing activities | $(148) | $(149) | | Net decrease in cash and cash equivalents | $(80) | $(14) | | Cash and cash equivalents at end of period | $57 | $101 | - Net cash provided by operating activities decreased by **$36 million**, while net cash used in investing activities increased by **$31 million** for the six months ended June 30, 2025, compared to the prior year[22](index=22&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential details and context for the financial statements, covering business operations, accounting policies, debt, segment information, and related party transactions [Note 1 – Description of Business and Basis of Presentation](index=9&type=section&id=Note%201%20%E2%80%93%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes Reynolds Consumer Products Inc.'s business, its segments, and the basis for preparing the interim financial statements - Reynolds Consumer Products Inc. produces and sells household products under brands like Reynolds and Hefty, across four segments: Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware, and Presto Products[25](index=25&type=chunk) - The financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations, reflecting normal recurring adjustments[26](index=26&type=chunk)[27](index=27&type=chunk) - The company recorded **$20 million** in new operating lease right-of-use assets for the six months ended June 30, 2025, and had **$9 million** in obligations outstanding under its Supply Chain Finance program as of June 30, 2025[28](index=28&type=chunk)[29](index=29&type=chunk) - Factored receivables amounted to **$50 million** as of June 30, 2025, under an agreement to sell certain accounts receivable up to **$95 million**[30](index=30&type=chunk) [Note 2 – New Accounting Standards](index=10&type=section&id=Note%202%20%E2%80%93%20New%20Accounting%20Standards) This note discusses the adoption of new accounting standards and the assessment of their potential impact on the company's financial statements - The company adopted ASU 2023-07, Segment Reporting, effective for fiscal years beginning after December 15, 2023, enhancing disclosures about significant segment expenses[31](index=31&type=chunk) - ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) are issued but not yet adopted, with the company currently assessing their impact[32](index=32&type=chunk)[33](index=33&type=chunk) - The U.S. government enacted the One Big Beautiful Bill Act (OBBBA) of 2025 on July 4, 2025, which includes changes to corporate income tax, and the company is evaluating its impact[34](index=34&type=chunk) [Note 3 – Inventories](index=10&type=section&id=Note%203%20%E2%80%93%20Inventories) This note provides a breakdown of the company's inventory components, including raw materials, work in progress, finished goods, and spare parts | Inventory Component (in millions) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Raw materials | $130 | $129 | | Work in progress | $72 | $60 | | Finished goods | $366 | $318 | | Spare parts | $62 | $60 | | **Total Inventories** | **$630** | **$567** | - Total inventories increased by **$63 million** from December 31, 2024, to June 30, 2025, primarily driven by an increase in finished goods[35](index=35&type=chunk) [Note 4 – Debt](index=11&type=section&id=Note%204%20%E2%80%93%20Debt) This note details the company's debt structure, including the Term Loan Facility, its refinancing, and outstanding borrowings under the Revolving Facility | Debt Component (in millions) | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Term loan facility | $1,640 | $1,695 | | Deferred financing costs | $(7) | $(8) | | Original issue discounts | $— | $(1) | | Less: current portion | $(16) | $— | | **Long-term debt** | **$1,617** | **$1,686** | - In March 2025, the company amended its Term Loan Facility, replacing the existing facility with a new **$1,645 million** facility maturing in March 2032, and recognized a **$13 million** debt refinancing expense[37](index=37&type=chunk)[38](index=38&type=chunk) - The Term Loan Facility amortizes in equal quarterly installments of **$4 million**, commencing in June 2025. Voluntary principal payments of **$50 million** were made prior to Amendment No. 4 during the six months ended June 30, 2025[43](index=43&type=chunk) - As of June 30, 2025, there were no outstanding borrowings under the **$700 million** Revolving Facility, with **$7 million** in letters of credit outstanding[44](index=44&type=chunk) [Note 5 – Financial Instruments](index=12&type=section&id=Note%205%20%E2%80%93%20Financial%20Instruments) This note describes the company's use of interest rate swaps to manage interest rate risk and presents their fair values - The company uses interest rate swaps to fix the SOFR of its External Debt Facilities, with an aggregate notional amount of **$1,150 million** as of June 30, 2025, at an annual effective interest rate of **2.15% to 5.15%**[46](index=46&type=chunk)[47](index=47&type=chunk) - Additional interest rate swaps with a notional value of **$900 million** were entered into during Q2 2025, with forward start dates in February 2026 and maturity dates between March 2028 and March 2031, fixing SOFR at **3.33% to 3.41%**[48](index=48&type=chunk) Fair Value of Interest Rate Swaps (in millions) | Fair Value of Interest Rate Swaps (in millions) | As of June 30, 2025 | As of December 31, 2024 | | :---------------------------------------------- | :------------------ | :---------------------- | | Assets: Other current assets | $8 | $15 | | Assets: Other assets | $— | $1 | | Liabilities: Other liabilities | $2 | $— | [Note 6 – Stock-based Compensation](index=13&type=section&id=Note%206%20%E2%80%93%20Stock-based%20Compensation) This note details the company's equity incentive plan, including outstanding shares and stock-based compensation expense - The equity incentive plan, established in 2020, grants RSUs and PSUs to management and directors, with **2.0 million** shares outstanding as of June 30, 2025, up from **1.3 million** at December 31, 2024[51](index=51&type=chunk)[52](index=52&type=chunk) Stock-based Compensation Expense (in millions) | Stock-based Compensation Expense (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Expense | $5 | $5 | $11 | $9 | [Note 7 – Commitments and Contingencies](index=13&type=section&id=Note%207%20%E2%80%93%20Commitments%20and%20Contingencies) This note addresses the company's involvement in legal proceedings and management's assessment of their potential financial impact - The company is periodically involved in litigation and legal proceedings, but management does not believe any current matters will have a material adverse effect on its financial position, results of operations, or cash flows as of June 30, 2025[53](index=53&type=chunk) [Note 8 – Accumulated Other Comprehensive Income](index=13&type=section&id=Note%208%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20Income) This note provides a detailed breakdown of changes in accumulated other comprehensive income, including currency translation adjustments, employee benefit plans, and derivative instruments | AOCI Component (in millions) | Balance as of Dec 31, 2024 | Gain (loss) arising during Q2 2025 | Reclassification to earnings (Q2 2025) | Effect of deferred taxes (Q2 2025) | Balance as of Jun 30, 2025 | | :--------------------------- | :------------------------- | :--------------------------------- | :------------------------------------- | :--------------------------------- | :------------------------- | | Currency Translation Adjustments | $(10) | $2 | $— | $— | $(8) | | Employee Benefit Plans | $31 | $— | $(2) | $— | $28 | | Derivative Instruments | $14 | $(1) | $(6) | $2 | $4 | | **Total AOCI** | **$35** | **$1** | **$(8)** | **$2** | **$24** | - Accumulated other comprehensive income decreased from **$35 million** at December 31, 2024, to **$24 million** at June 30, 2025, primarily due to reclassifications to earnings and losses on derivative instruments[55](index=55&type=chunk) [Note 9 – Segment Information](index=14&type=section&id=Note%209%20%E2%80%93%20Segment%20Information) This note provides financial information by reportable segment, including net revenues and Adjusted EBITDA, and describes the company's operational structure - The company operates in four reportable segments: Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware, and Presto Products, with international business now aligned by product category[56](index=56&type=chunk)[57](index=57&type=chunk) - Adjusted EBITDA is the primary financial measure used by the Chief Operating Decision Maker (CODM) to evaluate segment performance and allocate resources[62](index=62&type=chunk) Segment Net Revenues and Adjusted EBITDA (Three Months Ended June 30) | Segment (in millions) | Net Revenues 2025 | Net Revenues 2024 | Adjusted EBITDA 2025 | Adjusted EBITDA 2024 | | :-------------------- | :---------------- | :---------------- | :------------------- | :------------------- | | Reynolds Cooking & Baking | $295 | $291 | $49 | $54 | | Hefty Waste & Storage | $255 | $244 | $71 | $71 | | Hefty Tableware | $242 | $251 | $35 | $39 | | Presto Products | $153 | $151 | $33 | $37 | | **Total Segment** | **$945** | **$937** | **$188** | **$201** | Segment Net Revenues and Adjusted EBITDA (Six Months Ended June 30) | Segment (in millions) | Net Revenues 2025 | Net Revenues 2024 | Adjusted EBITDA 2025 | Adjusted EBITDA 2024 | | :-------------------- | :---------------- | :---------------- | :------------------- | :------------------- | | Reynolds Cooking & Baking | $554 | $547 | $87 | $86 | | Hefty Waste & Storage | $496 | $479 | $129 | $138 | | Hefty Tableware | $421 | $459 | $52 | $69 | | Presto Products | $296 | $294 | $59 | $66 | | **Total Segment** | **$1,767** | **$1,779** | **$327** | **$359** | [Note 10 – Related Party Transactions](index=17&type=section&id=Note%2010%20%E2%80%93%20Related%20Party%20Transactions) This note details transactions with related parties, including the sale of PEI Group by PFL and dividend payments - PFL, the majority owner, sold PEI Group (a related party) to an unrelated party on April 1, 2025, reclassifying subsequent transactions[70](index=70&type=chunk)[71](index=71&type=chunk) | Related Party Transactions (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues from PEI Group | $0 | $16 | $17 | $38 | | Products purchased from PEI Group | $0 | $83 | $51 | $163 | | Freight and warehousing costs from PEI Group | $0 | $7 | $4 | $15 | - Dividends of **$36 million** were paid to PFL during each of the three and six months ended June 30, 2025 and 2024[73](index=73&type=chunk) [Note 11 – Subsequent Events](index=17&type=section&id=Note%2011%20%E2%80%93%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On July 24, 2025, the Board of Directors approved a cash dividend of **$0.23** per common share, payable on August 29, 2025[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and operational results, including business segments, key trends, and non-GAAP reconciliations [Description of the Company and its Business Segments](index=18&type=section&id=Description%20of%20the%20Company%20and%20its%20Business%20Segments) This section describes Reynolds Consumer Products' market position, its four core business segments, and its commitment to sustainable solutions - Reynolds Consumer Products is a market-leading consumer products company with a presence in **95%** of U.S. households, holding **1 or 2** market share in most product categories[77](index=77&type=chunk) - The company manages four segments: Reynolds Cooking & Baking (e.g., Reynolds Wrap), Hefty Waste & Storage (e.g., Hefty trash bags), Hefty Tableware (e.g., Hefty party cups), and Presto Products (primarily store brand food storage and trash bags, plus specialty closure systems)[79](index=79&type=chunk)[80](index=80&type=chunk) - The company emphasizes sustainable solutions across its product portfolio, such as recycled aluminum foil, compostable bags, and plant-based food storage bags[79](index=79&type=chunk)[80](index=80&type=chunk) [Overview](index=19&type=section&id=Overview) This section provides a high-level summary of the company's total net revenues and net income performance for the three and six months ended June 30, 2025 - Total net revenues increased by **1%** for the three months ended June 30, 2025, driven by higher pricing offsetting lower volume, and were relatively flat for the six months[82](index=82&type=chunk) - Net income decreased by **25%** for the three months and **28%** for the six months ended June 30, 2025, primarily due to timing of pricing actions relative to input cost increases, strategic initiative costs, CEO transition costs, and a prior-year tax benefit[83](index=83&type=chunk)[84](index=84&type=chunk) [Non-GAAP Measures](index=19&type=section&id=Non-GAAP%20Measures) This section defines and reconciles the company's non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS, used for performance evaluation - The company uses non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS, to evaluate operating performance and make strategic decisions[86](index=86&type=chunk)[88](index=88&type=chunk) - Adjusted EBITDA is defined as net income plus income tax expense, net interest expense, debt refinancing expense, depreciation and amortization, costs to execute strategic initiatives, and CEO transition costs[87](index=87&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income – GAAP | $73 | $97 | $105 | $145 | | Income tax expense | $23 | $18 | $33 | $35 | | Interest expense, net | $22 | $25 | $42 | $51 | | Debt refinancing expense | $— | $— | $13 | $— | | Depreciation & amortization | $33 | $32 | $65 | $63 | | Costs to execute strategic initiatives | $8 | $— | $13 | $— | | CEO transition costs | $4 | $— | $8 | $— | | **Adjusted EBITDA (Non-GAAP)** | **$163** | **$172** | **$279** | **$294** | Reconciliation of Net Income and Diluted EPS to Adjusted (Non-GAAP) | Metric (in millions, except per share) | 3 Months Ended June 30, 2025 (Net Income) | 3 Months Ended June 30, 2025 (Diluted EPS) | 3 Months Ended June 30, 2024 (Net Income) | 3 Months Ended June 30, 2024 (Diluted EPS) | | :------------------------------------- | :---------------------------------------- | :----------------------------------------- | :---------------------------------------- | :----------------------------------------- | | As Reported - GAAP | $73 | $0.35 | $97 | $0.46 | | Adjustments: Costs to execute strategic initiatives | $6 | $0.03 | $— | $— | | Adjustments: CEO transition costs | $4 | $0.02 | $— | $— | | **Adjusted (Non-GAAP)** | **$83** | **$0.39** | **$97** | **$0.46** | | Metric (in millions, except per share) | 6 Months Ended June 30, 2025 (Net Income) | 6 Months Ended June 30, 2025 (Diluted EPS) | 6 Months Ended June 30, 2024 (Net Income) | 6 Months Ended June 30, 2024 (Diluted EPS) | | :------------------------------------- | :---------------------------------------- | :----------------------------------------- | :---------------------------------------- | :----------------------------------------- | | As Reported - GAAP | $105 | $0.50 | $145 | $0.69 | | Adjustments: Debt refinancing expense | $10 | $0.05 | $— | $— | | Adjustments: Costs to execute strategic initiatives | $10 | $0.05 | $— | $— | | Adjustments: CEO transition costs | $7 | $0.03 | $— | $— | | **Adjusted (Non-GAAP)** | **$132** | **$0.63** | **$145** | **$0.69** | [Results of Operations – Three Months Ended June 30, 2025](index=21&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20Months%20Ended%20June%2030,%202025) This section details the consolidated and segment-level financial performance for the three months ended June 30, 2025, highlighting revenue increase, but gross profit and net income decreases [Total Reynolds Consumer Products (Three Months)](index=22&type=section&id=Total%20Reynolds%20Consumer%20Products%20(Three%20Months)) This section provides a consolidated overview of the company's financial results for the three months ended June 30, 2025, detailing revenues, costs, and profitability metrics | Metric (in millions) | 2025 | 2024 | Change | % Change | | :------------------- | :------- | :------- | :------- | :------- | | Total Net Revenues | $938 | $930 | $8 | 1% | | Cost of Sales | $(712) | $(674) | $(38) | (6)% | | Gross Profit | $226 | $256 | $(30) | (12)% | | SG&A Expenses | $(96) | $(116) | $20 | 17% | | Other Expense, net | $(12) | $— | $(12) | NM | | Income from Operations | $118 | $140 | $(22) | (16)% | | Interest Expense, net | $(22) | $(25) | $3 | 12% | | Income before Income Taxes | $96 | $115 | $(19) | (17)% | | Income Tax Expense | $(23) | $(18) | $(5) | (28)% | | Net Income | $73 | $97 | $(24) | (25)% | | Adjusted EBITDA | $163 | $172 | $(9) | (5)% | - Total net revenues increased by **1%** due to higher pricing, while cost of sales increased by **6%** due to higher material, manufacturing, and logistics costs[102](index=102&type=chunk)[103](index=103&type=chunk) - Selling, general and administrative expenses decreased by **17%** due to lower personnel and advertising costs, partially offsetting the decline in gross profit[103](index=103&type=chunk) - Adjusted EBITDA decreased by **5%** to **$163 million**, driven by lower retail volume and the timing of pricing actions relative to input cost increases[107](index=107&type=chunk) [Segment Information (Three Months)](index=24&type=section&id=Segment%20Information%20(Three%20Months)) This section analyzes the net revenues and Adjusted EBITDA performance of each operating segment for the three months ended June 30, 2025 Segment Performance (Three Months Ended June 30) | Segment | Total Net Revenues 2025 (in millions) | Total Net Revenues 2024 (in millions) | Adjusted EBITDA 2025 (in millions) | Adjusted EBITDA 2024 (in millions) | | :------------------------ | :------------------------------------ | :------------------------------------ | :--------------------------------- | :--------------------------------- | | Reynolds Cooking & Baking | $295 (1% increase) | $291 | $49 (9% decrease) | $54 | | Hefty Waste & Storage | $255 (5% increase) | $244 | $71 (0% change) | $71 | | Hefty Tableware | $242 (4% decrease) | $251 | $35 (10% decrease) | $39 | | Presto Products | $153 (1% increase) | $151 | $33 (11% decrease) | $37 | - Reynolds Cooking & Baking net revenues increased due to higher pricing and non-retail volume, but Adjusted EBITDA decreased due to lower retail volumes and input cost timing[109](index=109&type=chunk)[110](index=110&type=chunk) - Hefty Waste & Storage net revenues increased by **5%** due to increased volume, with Adjusted EBITDA remaining flat as higher volume and lower SG&A were offset by increased material, manufacturing, and logistics costs[111](index=111&type=chunk)[112](index=112&type=chunk) - Hefty Tableware net revenues and Adjusted EBITDA both decreased by **4%** and **10%** respectively, primarily due to foam declines[113](index=113&type=chunk)[114](index=114&type=chunk) - Presto Products net revenues increased by **1%** due to increased volume, but Adjusted EBITDA decreased by **11%** due to higher operational costs from scaling new distribution[115](index=115&type=chunk)[116](index=116&type=chunk) [Results of Operations – Six Months Ended June 30, 2025](index=26&type=section&id=Results%20of%20Operations%20%E2%80%93%20Six%20Months%20Ended%20June%2030,%202025) This section analyzes the company's consolidated and segment-level financial performance for the six months ended June 30, 2025, noting slight revenue decrease, gross profit decline, and significant net income reduction [Total Reynolds Consumer Products (Six Months)](index=27&type=section&id=Total%20Reynolds%20Consumer%20Products%20(Six%20Months)) This section provides a consolidated overview of the company's financial results for the six months ended June 30, 2025, detailing revenues, costs, and profitability metrics | Metric (in millions) | 2025 | 2024 | Change | % Change | | :------------------- | :------- | :------- | :------- | :------- | | Total Net Revenues | $1,756 | $1,764 | $(8) | 0% | | Cost of Sales | $(1,341) | $(1,306) | $(35) | (3)% | | Gross Profit | $415 | $458 | $(43) | (9)% | | SG&A Expenses | $(201) | $(227) | $26 | 11% | | Other Expense, net | $(21) | $— | $(21) | NM | | Income from Operations | $193 | $231 | $(38) | (16)% | | Interest Expense, net | $(42) | $(51) | $9 | 18% | | Debt Refinancing Expense | $(13) | $— | $(13) | NM | | Income before Income Taxes | $138 | $180 | $(42) | (23)% | | Income Tax Expense | $(33) | $(35) | $2 | 6% | | Net Income | $105 | $145 | $(40) | (28)% | | Adjusted EBITDA | $279 | $294 | $(15) | (5)% | - Total net revenues decreased slightly by **$8 million**, or **0%**, for the six months, as lower volume was mostly offset by higher pricing[125](index=125&type=chunk) - Cost of sales increased by **3%** to **$1,341 million**, driven by higher material, manufacturing, and logistics costs, leading to a **9%** decrease in gross profit[126](index=126&type=chunk) - Selling, general and administrative expenses decreased by **11%** due to lower personnel and advertising costs, while interest expense, net, decreased by **18%** due to a lower outstanding principal balance[126](index=126&type=chunk)[127](index=127&type=chunk) - A **$13 million** debt refinancing expense was recorded in connection with the March 2025 term loan facility refinancing[129](index=129&type=chunk) - Adjusted EBITDA decreased by **5%** to **$279 million**, primarily due to the timing of pricing actions relative to input cost increases and lower retail volume[131](index=131&type=chunk) [Segment Information (Six Months)](index=29&type=section&id=Segment%20Information%20(Six%20Months)) This section analyzes the net revenues and Adjusted EBITDA performance of each operating segment for the six months ended June 30, 2025 Segment Performance (Six Months Ended June 30) | Segment | Total Net Revenues 2025 (in millions) | Total Net Revenues 2024 (in millions) | Adjusted EBITDA 2025 (in millions) | Adjusted EBITDA 2024 (in millions) | | :------------------------ | :------------------------------------ | :------------------------------------ | :--------------------------------- | :--------------------------------- | | Reynolds Cooking & Baking | $554 (1% increase) | $547 | $87 (1% increase) | $86 | | Hefty Waste & Storage | $496 (4% increase) | $479 | $129 (7% decrease) | $138 | | Hefty Tableware | $421 (8% decrease) | $459 | $52 (25% decrease) | $69 | | Presto Products | $296 (1% increase) | $294 | $59 (11% decrease) | $66 | - Reynolds Cooking & Baking net revenues increased by **1%** due to higher pricing and non-retail volume, leading to a **1%** increase in Adjusted EBITDA[133](index=133&type=chunk)[134](index=134&type=chunk) - Hefty Waste & Storage net revenues increased by **4%** due to increased volume, but Adjusted EBITDA decreased by **7%** due to higher material, manufacturing, and logistics costs[135](index=135&type=chunk)[136](index=136&type=chunk) - Hefty Tableware experienced an **8%** decrease in net revenues and a **25%** decrease in Adjusted EBITDA, both attributed to foam declines and related costs[137](index=137&type=chunk)[138](index=138&type=chunk) - Presto Products net revenues increased by **1%** due to higher pricing, but Adjusted EBITDA decreased by **11%** due to higher operational costs associated with scaling new distribution[139](index=139&type=chunk)[140](index=140&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, cash flow activities, debt structure, and compliance with financial covenants - Principal liquidity sources include existing cash, cash from operations, and available borrowings under the **$700 million** Revolving Facility[142](index=142&type=chunk)[147](index=147&type=chunk) | Cash Flow Activity (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $147 | $183 | | Net cash used in investing activities | $(79) | $(48) | | Net cash used in financing activities | $(148) | $(149) | | Decrease in cash and cash equivalents | $(80) | $(14) | - Net cash from operating activities decreased by **$36 million**, and net cash used in investing activities increased by **$31 million** due to higher capital expenditures[144](index=144&type=chunk)[145](index=145&type=chunk) - The Term Loan Facility was refinanced in March 2025 with a new **$1,645 million** facility maturing in March 2032, with an outstanding balance of **$1,640 million** as of June 30, 2025[147](index=147&type=chunk)[148](index=148&type=chunk) - The company is in compliance with all covenants under its External Debt Facilities and expects sufficient liquidity to meet future needs, though actual results depend on various factors[161](index=161&type=chunk)[166](index=166&type=chunk) - Factored receivables were **$50 million** as of June 30, 2025, and obligations under the Supply Chain Finance program were **$9 million**[162](index=162&type=chunk)[163](index=163&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights critical accounting policies and estimates that involve subjective judgments and can materially impact the financial statements - Critical accounting policies and estimates involve subjective judgments and assumptions with a material impact on financial statements, detailed in the Annual Report on Form 10-K for December 31, 2024[168](index=168&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no material changes in the company's exposure to market risk during the six months ended June 30, 2025, compared to prior disclosures - No material changes in exposure to market risk occurred during the six months ended June 30, 2025[170](index=170&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as assessed by the CEO and CFO - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[173](index=173&type=chunk) [Changes in Internal Control over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports that no material changes occurred in internal control over financial reporting during the quarter ended June 30, 2025 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect it[173](index=173&type=chunk) [Part II. Other Information](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes information on legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and a list of exhibits [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates legal proceedings information from Note 7, indicating no material adverse effect is expected from current matters - Information on legal proceedings is incorporated by reference from Note 7 – Commitments and Contingencies[176](index=176&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for December 31, 2024 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds for the period - None[180](index=180&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports no defaults upon senior securities during the period - None[182](index=182&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section clarifies that mine safety disclosures are not applicable to the company's operations - Not applicable[184](index=184&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) This section confirms no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[186](index=186&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including organizational documents, agreements, certifications, and XBRL files - The report includes various exhibits such as Amended and Restated Certificate of Incorporation, By-Laws, Separation Agreement, and certifications from principal executive and financial officers[188](index=188&type=chunk) - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase, and Cover Page Interactive Data File are also filed as exhibits[188](index=188&type=chunk) [Signatures](index=40&type=section&id=SIGNATURES) This section contains the official signatures certifying the accuracy and completeness of the report - The report was signed on behalf of Reynolds Consumer Products Inc. by Chris Mayrhofer, Senior Vice President and Controller (Principal Accounting Officer), on July 30, 2025[191](index=191&type=chunk)