Reynolds Consumer Products(REYN) - 2024 Q3 - Quarterly Report

General Information This section provides general information about Reynolds Consumer Products Inc., including its filer status and outstanding common stock - The registrant, Reynolds Consumer Products Inc., is a large accelerated filer and has filed all required reports and interactive data files during the preceding 12 months[3][4] - As of October 25, 2024, there were 210,145,957 shares of common stock outstanding[3][4] Forward-Looking Statements This section outlines the forward-looking statements in the report, subject to various risks and uncertainties, with no obligation for updates - This report contains forward-looking statements subject to risks, uncertainties, and assumptions, including changes in consumer preferences, customer relationships, competition, supply chain disruptions, raw material costs, labor issues, economic downturns, and interest rate changes[7][8] - Investors are cautioned not to place undue reliance on these statements, and the company is not obligated to update them[7][8] PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including income, comprehensive income, balance sheets, equity, and cash flows, with notes Condensed Consolidated Statements of Income This section details the company's unaudited condensed consolidated statements of income for the three and nine months ended September 30, 2024 Condensed Consolidated Statements of Income (in millions) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:---------------------|:----------------------------|:----------------------------|:----------------------------|:----------------------------| | Total Net Revenues | $910 | $935 | $2,675 | $2,750 | | Cost of Sales | $(671) | $(686) | $(1,977) | $(2,117) | | Gross Profit | $239 | $249 | $698 | $633 | | Income from Operations | $138 | $134 | $369 | $306 | | Interest Expense, Net| $(25) | $(31) | $(76) | $(91) | | Income Before Income Taxes | $113 | $103 | $293 | $215 | | Income Tax Expense | $(27) | $(25) | $(62) | $(54) | | Net Income | $86 | $78 | $231 | $161 | | Basic EPS | $0.37 | $0.37 | $1.10 | $0.77 | | Diluted EPS | $0.37 | $0.37 | $1.10 | $0.77 | - For the three months ended September 30, 2024, net income increased by 10% to $86 million, primarily due to lower selling, general and administrative expenses, lower material and manufacturing costs, and lower interest expense, partially offset by higher income tax expense[9][70] - For the nine months ended September 30, 2024, net income increased by 43% to $231 million, driven mainly by lower material and manufacturing costs and lower interest expense, partially offset by higher income tax expense[9][71] Condensed Consolidated Statements of Comprehensive Income This section presents the unaudited condensed consolidated statements of comprehensive income for the specified interim periods Condensed Consolidated Statements of Comprehensive Income (in millions) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:--------------------------------------|:----------------------------|:----------------------------|:----------------------------|:----------------------------| | Net Income | $86 | $78 | $231 | $161 | | Other Comprehensive Loss, Net of Income Taxes | $(17) | $0 | $(16) | $0 | | Comprehensive Income | $69 | $78 | $215 | $161 | Condensed Consolidated Balance Sheets This section provides the unaudited condensed consolidated balance sheets as of September 30, 2024, and December 31, 2023 Condensed Consolidated Balance Sheets (in millions) | Metric | As of Sep 30, 2024 | As of Dec 31, 2023 | |:---------------------|:-------------------|:-------------------| | Total Current Assets | $1,105 | $1,041 | | Total Assets | $4,843 | $4,780 | | Total Current Liabilities | $543 | $478 | | Long-Term Debt | $1,735 | $1,832 | | Total Liabilities | $2,778 | $2,797 | | Total Stockholders' Equity | $2,065 | $1,983 | - Total assets increased by $63 million to $4,843 million as of September 30, 2024, compared to December 31, 2023, while total liabilities decreased by $19 million to $2,778 million[13] - Inventories increased by $100 million to $624 million as of September 30, 2024, from $524 million at December 31, 2023, primarily in finished goods[13][29] Condensed Consolidated Statements of Stockholders' Equity This section presents the unaudited condensed consolidated statements of stockholders' equity for the interim periods Condensed Consolidated Statements of Stockholders' Equity (in millions) | Metric | As of Sep 30, 2024 | As of Dec 31, 2023 | |:---------------------------------------|:-------------------|:-------------------| | Additional Paid-in Capital | $1,409 | $1,396 | | Retained Earnings | $622 | $537 | | Accumulated Other Comprehensive Income | $34 | $50 | | Total Stockholders' Equity | $2,065 | $1,983 | - Total stockholders' equity increased by $82 million to $2,065 million as of September 30, 2024, primarily due to net income generation, partially offset by dividends paid and other comprehensive losses[15] - The company declared and paid quarterly cash dividends of $0.23 per share during the three and nine months ended September 30, 2024[15] Condensed Consolidated Statements of Cash Flows This section details the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 Condensed Consolidated Statements of Cash Flows (in millions) | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:----------------------------------------|:----------------------------|:----------------------------| | Net Cash Provided by Operating Activities | $307 | $423 | | Net Cash Used in Investing Activities | $(79) | $(77) | | Net Cash Used in Financing Activities | $(247) | $(260) | | Net (Decrease) Increase in Cash and Cash Equivalents | $(19) | $86 | | Cash and Cash Equivalents at End of Period | $96 | $124 | - Net cash provided by operating activities decreased by $116 million to $307 million for the nine months ended September 30, 2024, primarily due to higher net investment in inventory and higher income tax payments, partially offset by higher net income and lower interest payments[16][113] - Net cash used in investing activities increased by $2 million to $79 million, driven by an increase in capital expenditures[16][114] - Net cash used in financing activities decreased by $13 million to $247 million, mainly due to the absence of scheduled amortization payments on the Term Loan Facility in the current period, following prior voluntary prepayments[16][115] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed notes accompanying the unaudited condensed consolidated financial statements, explaining accounting policies and specific items Note 1 – Description of Business and Basis of Presentation This note describes Reynolds Consumer Products Inc.'s business segments and the basis of presentation for the financial statements - Reynolds Consumer Products Inc. produces and sells cooking, waste and storage, and tableware products under brands like Reynolds and Hefty, as well as store brands[18] - The company operates through four business segments: Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware, and Presto Products[18] - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations, reflecting normal recurring adjustments[19][20] - New operating lease right-of-use assets obtained in exchange for lease liabilities amounted to $32 million for the nine months ended September 30, 2024[21] - The company initiated a voluntary Supply Chain Finance (SCF) program in March 2023[22][24] - As of September 30, 2024, outstanding obligations confirmed under the SCF were $8 million, down from $19 million at December 31, 2023[22][24] Note 2 – New Accounting Standards This note outlines the adoption of new accounting standards and the assessment of their potential impact on the financial statements - The company adopted ASU 2022-04 (Supplier Finance Programs) as of January 1, 2023, for disclosure purposes, with no impact on financial statements[25] - The company is currently assessing the impact of ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Taxes), and SEC Release No. 33-11275 (Climate-Related Disclosures) on its financial statements, with various effective dates in late 2023, 2024, and 2025[26][27][28] Note 3 – Inventories This note provides a breakdown of inventory components and their changes as of September 30, 2024, and December 31, 2023 Inventory Components (in millions) | Inventory Component | As of Sep 30, 2024 | As of Dec 31, 2023 | |:----------------------------------|:-------------------|:-------------------| | Raw Materials | $139 | $153 | | Work in Progress | $53 | $60 | | Finished Goods | $375 | $260 | | Spare Parts | $57 | $51 | | Total Inventories | $624 | $524 | - Total inventories increased by $100 million to $624 million as of September 30, 2024, primarily driven by a significant increase in finished goods inventory[29] Note 4 – Debt This note details the company's long-term debt, including the Term Loan Facility and Revolving Facility, and related transactions Debt Components (in millions) | Debt Component | As of Sep 30, 2024 | As of Dec 31, 2023 | |:-------------------------------------|:-------------------|:-------------------| | Term Loan Facility | $1,745 | $1,845 | | Deferred Financing Transaction Costs | $(9) | $(12) | | Original Issue Discounts | $(1) | $(1) | | Long-Term Debt | $1,735 | $1,832 | - Long-term debt decreased by $97 million to $1,735 million as of September 30, 2024, primarily due to voluntary principal payments on the Term Loan Facility[31][36] - The Term Loan Facility matures in February 2027[36] - The company made voluntary principal payments of $50 million and $100 million during the three and nine months ended September 30, 2024, respectively[36] - The Revolving Facility matures in February 2026, with no outstanding borrowings and $6 million in letters of credit as of September 30, 2024[38] Note 5 - Financial Instruments This note describes the company's use of financial instruments, specifically interest rate swaps, to manage market risk - The company uses interest rate swaps to hedge a portion of its Term Loan Facility's interest rate exposure[40][41] - As of September 30, 2024, the aggregate notional amount of these swaps was $1,150 million, with SOFR fixed at an annual rate of 0.40% to 3.40% (effective 2.15% to 5.15% including margin)[40][41] Financial Instruments (in millions) | Metric | As of Sep 30, 2024 | As of Dec 31, 2023 | |:---------------------|:-------------------|:-------------------| | Notional Amount | $1,150 | $1,150 | | Fair Value - Other Assets | $14 | $23 | Note 6 – Stock-based Compensation This note details stock-based compensation expense and outstanding awards for the reported interim periods Stock-based Compensation Expense (in millions) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:---------------------------------|:----------------------------|:----------------------------|:----------------------------|:----------------------------| | Stock-based Compensation Expense | $5 | $3 | $14 | $10 | - Stock-based compensation expense increased to $5 million for the three months and $14 million for the nine months ended September 30, 2024, compared to prior year periods[42] - Awards outstanding increased to 1.4 million shares as of September 30, 2024, from 0.8 million shares at December 31, 2023[42] Note 7 – Commitments and Contingencies This note addresses the company's legal proceedings, commitments, and contingencies, assessing their potential financial impact - The company is involved in various legal proceedings but does not believe any, individually or in aggregate, will have a material adverse effect on its financial position, results of operations, or cash flows as of September 30, 2024[44] Note 8 – Accumulated Other Comprehensive Income This note provides a breakdown of accumulated other comprehensive income components and their changes over the period Accumulated Other Comprehensive Income (in millions) | Component | As of Sep 30, 2024 | As of Dec 31, 2023 | |:---------------------------------------|:-------------------|:-------------------| | Currency Translation Adjustments | $(7) | $(7) | | Employee Benefit Plans | $30 | $34 | | Derivative Instruments | $11 | $23 | | Total Accumulated Other Comprehensive Income | $34 | $50 | - Accumulated other comprehensive income decreased to $34 million as of September 30, 2024, from $50 million at December 31, 2023, primarily due to losses arising from derivative instruments[45] Note 9 - Income Taxes This note details income tax expense, income before taxes, and effective tax rates for the reported interim periods Income Taxes | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:-------------------------|:----------------------------|:----------------------------|:----------------------------|:----------------------------| | Income Tax Expense | $27 | $25 | $62 | $54 | | Income Before Income Taxes | $113 | $103 | $293 | $215 | | Effective Tax Rate | 24.1% | 24.5% | 21.1% | 24.9% | - The effective tax rate for the nine months ended September 30, 2024, decreased to 21.1% from 24.9% in the prior year, primarily due to a discrete tax benefit from the remeasurement of deferred tax liabilities[46][102] Note 10 – Segment Information This note provides financial information by reportable segment, including net revenues and Adjusted EBITDA, for performance evaluation - The company operates in four reportable segments: Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware, and Presto Products[47][52] - Adjusted EBITDA is the key financial measure used by management to evaluate segment performance[47][52] Segment Net Revenues (in millions) | Segment Net Revenues | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:-----------------------------------|:----------------------------|:----------------------------|:----------------------------|:----------------------------| | Reynolds Cooking & Baking | $305 | $312 | $873 | $916 | | Hefty Waste & Storage | $248 | $244 | $715 | $705 | | Hefty Tableware | $217 | $233 | $667 | $708 | | Presto Products | $149 | $152 | $443 | $441 | | Total Segment Net Revenues | $919 | $941 | $2,698 | $2,770 | Segment Adjusted EBITDA (in millions) | Segment Adjusted EBITDA | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:--------------------------------------|:----------------------------|:----------------------------|:----------------------------|:----------------------------| | Reynolds Cooking & Baking | $51 | $51 | $140 | $94 | | Hefty Waste & Storage | $71 | $71 | $205 | $188 | | Hefty Tableware | $26 | $41 | $95 | $117 | | Presto Products | $33 | $31 | $100 | $78 | | Total Segment Adjusted EBITDA | $181 | $194 | $540 | $477 | Net Revenues by Product Line (in millions) | Net Revenues by Product Line | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:-------------------------------------------|:----------------------------|:----------------------------|:----------------------------|:----------------------------| | Waste and Storage Products | $397 | $396 | $1,158 | $1,146 | | Cooking Products | $305 | $312 | $873 | $916 | | Tableware | $217 | $233 | $667 | $708 | | Unallocated | $(9) | $(6) | $(23) | $(20) | | Total Net Revenues | $910 | $935 | $2,675 | $2,750 | Note 11 – Related Party Transactions This note details transactions with related parties, including revenues, purchases, and dividends involving the PEI Group and PFL Related Party Transactions (in millions) | Related Party Transaction | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:----------------------------------------|:----------------------------|:----------------------------|:----------------------------|:----------------------------| | Revenues from products sold to PEI Group | $18 | $21 | $57 | $61 | | Products purchased from PEI Group | $83 | $92 | $246 | $291 | | Freight and warehousing costs from PEI Group | $6 | $9 | $22 | $28 | | Dividends paid to PFL | $36 | $36 | $107 | $107 | - PFL, the majority owner, facilitates various goods and services transactions with PEI Group[62] - Revenues from sales to PEI Group decreased, while purchases from PEI Group also decreased for both the three and nine months ended September 30, 2024[62] Note 12 – Subsequent Events This note discloses significant events occurring after the balance sheet date, including dividend approvals and debt facility amendments - On October 24, 2024, a cash dividend of $0.23 per common share was approved, payable on November 29, 2024[63] - Subsequent to September 30, 2024, the company made an additional voluntary principal payment of $50 million on its Term Loan Facility[63] - The company amended its External Debt Facilities to replace the undrawn $250 million revolving facility (maturing February 2026) with an undrawn $700 million revolving facility maturing in October 2029[63] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition, results of operations, liquidity, and capital resources for the interim periods Description of the Company and its Business Segments This section describes Reynolds Consumer Products' market position and its four operating segments with strong brand portfolios - 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[66] - Over 65% of revenue comes from 1 categories[66] - The company manages four operating segments: Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware, and Presto Products, each with strong brand positions and product portfolios, including sustainable solutions[68] Overview This section provides a high-level overview of the company's total net revenues and net income performance for the interim periods - Total net revenues decreased by 3% for both the three and nine months ended September 30, 2024, primarily due to lower volume[69] - Net income increased by 10% for the three months and 43% for the nine months ended September 30, 2024, driven by lower selling, general and administrative expenses, reduced material and manufacturing costs, and lower interest expense, partially offset by higher income tax expense[70][71] Non-GAAP Measures This section defines and reconciles non-GAAP financial measures, specifically Adjusted EBITDA, used for performance evaluation - Adjusted EBITDA, a non-GAAP measure, is used by management to evaluate operating performance and make strategic decisions[72][73] - It is defined as net income plus income tax expense, net interest expense, depreciation and amortization, and certain non-recurring items[72][73] Non-GAAP Measures (in millions) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:-------------------------|:----------------------------|:----------------------------|:----------------------------|:----------------------------| | Net Income – GAAP | $86 | $78 | $231 | $161 | | Adjusted EBITDA (Non-GAAP) | $171 | $165 | $465 | $398 | Results of Operations – Three Months Ended September 30, 2024 This section analyzes the company's financial performance for the three months ended September 30, 2024, across key metrics Total Reynolds Consumer Products This section provides a consolidated analysis of Reynolds Consumer Products' financial results for the three months ended September 30, 2024 Total Reynolds Consumer Products (in millions) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Net Revenues | $910 | $935 | $(25) | (3)% | | Cost of Sales | $(671) | $(686) | $15 | 2% | | Gross Profit | $239 | $249 | $(10) | (4)% | | Selling, General and Administrative Expenses | $(101) | $(115) | $14 | 12% | | Income from Operations | $138 | $134 | $4 | 3% | | Interest Expense, Net | $(25) | $(31) | $6 | 19% | | Income Before Income Taxes | $113 | $103 | $10 | 10% | | Net Income | $86 | $78 | $8 | 10% | | Adjusted EBITDA | $171 | $165 | $6 | 4% | - Total net revenues decreased by $25 million (3%) to $910 million, primarily due to lower volume[82][83] - Cost of sales decreased by $15 million (2%) due to lower material and manufacturing costs and lower volume[82][83] - Selling, general and administrative expenses decreased by $14 million (12%) to $101 million, mainly due to lower personnel costs[83][84] - Interest expense, net, decreased by $6 million (19%) to $25 million due to a lower outstanding principal balance[83][84] - Adjusted EBITDA increased by $6 million (4%) to $171 million, driven by lower SG&A and material/manufacturing costs, partially offset by lower volume[86] Reynolds Cooking & Baking This section analyzes the financial performance of the Reynolds Cooking & Baking segment for the three months ended September 30, 2024 Reynolds Cooking & Baking (in millions) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Segment Net Revenues | $305 | $312 | $(7) | (2)% | | Segment Adjusted EBITDA | $51 | $51 | $0 | 0% | | Segment Adjusted EBITDA Margin | 17% | 16% | | | - Total segment net revenues decreased by $7 million (2%) to $305 million, primarily due to lower retail volume[88] - Adjusted EBITDA remained flat at $51 million, as lower material and manufacturing costs offset the impact of lower revenue[88] Hefty Waste & Storage This section analyzes the financial performance of the Hefty Waste & Storage segment for the three months ended September 30, 2024 Hefty Waste & Storage (in millions) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Segment Net Revenues | $248 | $244 | $4 | 2% | | Segment Adjusted EBITDA | $71 | $71 | $0 | 0% | | Segment Adjusted EBITDA Margin | 29% | 29% | | | - Total segment net revenues increased by $4 million (2%) to $248 million, primarily due to higher volume[89][90] - Adjusted EBITDA remained flat at $71 million, as increased revenue was offset by higher advertising costs[89][90] Hefty Tableware This section analyzes the financial performance of the Hefty Tableware segment for the three months ended September 30, 2024 Hefty Tableware (in millions) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Segment Net Revenues | $217 | $233 | $(16) | (7)% | | Segment Adjusted EBITDA | $26 | $41 | $(15) | (37)% | | Segment Adjusted EBITDA Margin | 12% | 18% | | | - Total segment net revenues decreased by $16 million (7%) to $217 million, mainly due to lower foam volume and lower pricing[91][92] - Adjusted EBITDA decreased by $15 million (37%) to $26 million, driven by lower revenue and higher material and manufacturing costs[91][92] Presto Products This section analyzes the financial performance of the Presto Products segment for the three months ended September 30, 2024 Presto Products (in millions) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Segment Net Revenues | $149 | $152 | $(3) | (2)% | | Segment Adjusted EBITDA | $33 | $31 | $2 | 6% | | Segment Adjusted EBITDA Margin | 22% | 20% | | | - Total segment net revenues decreased by $3 million (2%) to $149 million, primarily due to lower volume[93][94] - Adjusted EBITDA increased by $2 million (6%) to $33 million, driven by product portfolio optimization[93][94] Results of Operations – Nine Months Ended September 30, 2024 This section analyzes the company's financial performance for the nine months ended September 30, 2024, across key metrics Total Reynolds Consumer Products This section provides a consolidated analysis of Reynolds Consumer Products' financial results for the nine months ended September 30, 2024 Total Reynolds Consumer Products (in millions) | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Net Revenues | $2,675 | $2,750 | $(75) | (3)% | | Cost of Sales | $(1,977) | $(2,117) | $140 | 7% | | Gross Profit | $698 | $633 | $65 | 10% | | Selling, General and Administrative Expenses | $(329) | $(327) | $(2) | (1)% | | Income from Operations | $369 | $306 | $63 | 21% | | Interest Expense, Net | $(76) | $(91) | $15 | 16% | | Income Before Income Taxes | $293 | $215 | $78 | 36% | | Net Income | $231 | $161 | $70 | 43% | | Adjusted EBITDA | $465 | $398 | $67 | 17% | - Total net revenues decreased by $75 million (3%) to $2,675 million, driven by lower volume in both retail and non-retail businesses[99][100] - Cost of sales decreased by $140 million (7%) due to lower revenue and reduced material and manufacturing costs[99][100] - Selling, general and administrative expenses increased by $2 million (1%) to $329 million, primarily due to higher advertising costs[100][101] - Interest expense, net, decreased by $15 million (16%) to $76 million due to a lower outstanding principal balance on external debt facilities[100][101] - Adjusted EBITDA increased by $67 million (17%) to $465 million, mainly attributable to lower material and manufacturing costs, partially offset by lower revenue and higher advertising costs[103] Reynolds Cooking & Baking This section analyzes the financial performance of the Reynolds Cooking & Baking segment for the nine months ended September 30, 2024 Reynolds Cooking & Baking (in millions) | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Segment Net Revenues | $873 | $916 | $(43) | (5)% | | Segment Adjusted EBITDA | $140 | $94 | $46 | 49% | | Segment Adjusted EBITDA Margin | 16% | 10% | | | - Total segment net revenues decreased by $43 million (5%) to $873 million, primarily due to lower volume in both non-retail and retail businesses[104][105] - Adjusted EBITDA increased by $46 million (49%) to $140 million, driven by lower material and manufacturing costs[104][105] Hefty Waste & Storage This section analyzes the financial performance of the Hefty Waste & Storage segment for the nine months ended September 30, 2024 Hefty Waste & Storage (in millions) | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Segment Net Revenues | $715 | $705 | $10 | 1% | | Segment Adjusted EBITDA | $205 | $188 | $17 | 9% | | Segment Adjusted EBITDA Margin | 29% | 27% | | | - Total segment net revenues increased by $10 million (1%) to $715 million, primarily due to higher pricing[106][107] - Adjusted EBITDA increased by $17 million (9%) to $205 million, driven by lower material and manufacturing costs and the benefit of increased revenue[106][107] Hefty Tableware This section analyzes the financial performance of the Hefty Tableware segment for the nine months ended September 30, 2024 Hefty Tableware (in millions) | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Segment Net Revenues | $667 | $708 | $(41) | (6)% | | Segment Adjusted EBITDA | $95 | $117 | $(22) | (19)% | | Segment Adjusted EBITDA Margin | 14% | 17% | | | - Total segment net revenues decreased by $41 million (6%) to $667 million, primarily due to lower volume and pricing[108][109] - Adjusted EBITDA decreased by $22 million (19%) to $95 million, driven by the impact of lower revenue[108][109] Presto Products This section analyzes the financial performance of the Presto Products segment for the nine months ended September 30, 2024 Presto Products (in millions) | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | Change ($) | Change (%) | |:-------------------------------|:----------------------------|:----------------------------|:-----------|:-----------| | Total Segment Net Revenues | $443 | $441 | $2 | 0% | | Segment Adjusted EBITDA | $100 | $78 | $22 | 28% | | Segment Adjusted EBITDA Margin | 23% | 18% | | | - Total segment net revenues increased by $2 million (0%) to $443 million, driven by higher pricing offset by lower volume[110][111] - Adjusted EBITDA increased by $22 million (28%) to $100 million, primarily due to lower material and manufacturing costs and product portfolio optimization[110][111] Liquidity and Capital Resources This section discusses the company's liquidity sources, cash flow activities, debt management, and capital resource outlook - The company's primary liquidity sources are existing cash, cash from operations, and available borrowings under its Revolving Facility[112] Cash Flow (in millions) | Cash Flow | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | |:----------------------------------------|:----------------------------|:----------------------------| | Net Cash Provided by Operating Activities | $307 | $423 | | Net Cash Used in Investing Activities | $(79) | $(77) | | Net Cash Used in Financing Activities | $(247) | $(260) | | Net (Decrease) Increase in Cash and Cash Equivalents | $(19) | $86 | - Operating cash flow decreased by $116 million due to higher inventory investment and income tax payments, partially offset by higher net income and lower interest payments[113] - Investing cash flow increased by $2 million due to higher capital expenditures[114] - Financing cash flow decreased by $13 million due to the non-recurrence of scheduled debt amortization payments[115] - As of September 30, 2024, the Term Loan Facility had an outstanding balance of $1,745 million and matures in February 2027[116] - The Revolving Facility was undrawn, with $6 million in letters of credit outstanding[116] - Subsequent to September 30, 2024, the company made a $50 million voluntary principal payment on the Term Loan Facility and replaced its $250 million revolving facility (maturing Feb 2026) with a new $700 million facility maturing in October 2029[118][121] - The company is in compliance with all covenants under its Amended External Debt Facilities[128][136] - It expects sufficient liquidity to meet future debt service, capital expenditures, and working capital needs[128][136] - The company had no outstanding balance under its accounts receivable factoring arrangement as of September 30, 2024[131][134] - Obligations outstanding under the Supply Chain Finance program were $8 million[131][134] - Quarterly cash dividends of $0.23 per share were declared and paid, with expectations to continue, subject to Board discretion and financial conditions[135] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section confirms no material changes in the company's market risk exposure during the nine months ended September 30, 2024 - No material changes in market risk exposure occurred during the nine months ended September 30, 2024[138] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and reports no material changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2024[140] - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2024[141] PART II. OTHER INFORMATION This section provides additional information not covered in Part I, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings This section incorporates legal proceedings information from Note 7, expecting no material adverse financial effects - Information on legal proceedings is incorporated by reference from Note 7, indicating no material adverse effect on financial position, results of operations, or cash flows is expected[143][44] Item 1A. Risk Factors This section confirms no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[144] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities or use of proceeds during the reporting period - None[146] Item 3. Defaults Upon Senior Securities This section indicates no defaults upon senior securities occurred during the reporting period - None[146] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company's operations - Not applicable[146] Item 5. Other Information This section confirms no Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers - No directors or officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended September 30, 2024[147] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents and certifications - The report includes various exhibits such as the Amended and Restated Certificate of Incorporation, By-Laws, Amendment No. 3 to the Credit Agreement, certifications of principal executive and financial officers, and Inline XBRL documents[149] Signatures This section contains the required signatures, certifying the filing of the report on behalf of Reynolds Consumer Products Inc - The report is duly signed by Chris Mayrhofer, Senior Vice President and Controller (Principal Accounting Officer) of Reynolds Consumer Products Inc., on October 30, 2024[150]