Reynolds Consumer Products(REYN) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights This section summarizes Reynolds Consumer Products' Q2 and YTD 2025 financial performance and management's strategic commentary Second Quarter 2025 Financial Highlights Reynolds Consumer Products reported mixed financial results for Q2 2025, with Net Income and Adjusted Net Income decreasing due to CEO transition costs, strategic investments, lower retail volume, and pricing actions, while Net Revenues saw a modest increase driven by non-retail sales Second Quarter 2025 Financial Highlights (Amounts in Millions) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :------------ | | Net Revenues | $938 | $930 | +$8 | | Retail Net Revenues | $887 | $887 | Flat | | Non-Retail Revenues | $51 | $39 | +$12 | | Net Income | $73 | $97 | -$24 | | Adjusted Net Income | $83 | $97 | -$14 | | Adjusted EBITDA | $163 | $172 | -$9 | | EPS | $0.35 | $0.46 | -$0.11 | | Adjusted EPS | $0.39 | $0.46 | -$0.07 | - Adjusted EBITDA decreased due to lower retail volume and the timing of pricing actions relative to input cost increases, partially offset by reductions in SG&A[4] - Net Income included $10 million of after-tax CEO transition costs and strategic investments in cost savings and revenue growth initiatives[4] Year to Date 2025 Financial Highlights For the first half of 2025, the company experienced a decline in Net Income and Adjusted Net Income compared to the prior year, influenced by debt refinancing costs, CEO transition expenses, and strategic investments, with Adjusted EBITDA also decreasing due to lower retail volume, including first-quarter retailer inventory destocking Year to Date 2025 Financial Highlights (Amounts in Millions) | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :------------ | | Net Revenues | $1,756 | $1,764 | -$8 | | Retail Net Revenues | Decreased 2% | N/A | -2% | | Non-retail Revenues | $104 | N/A | Increased | | Net Income | $105 | $145 | -$40 | | Adjusted Net Income | $132 | $145 | -$13 | | Adjusted EBITDA | $279 | $294 | -$15 | | EPS | $0.50 | $0.69 | -$0.19 | | Adjusted EPS | $0.63 | $0.69 | -$0.06 | - Net Income included $27 million of after-tax debt refinancing costs, CEO transition costs, and strategic investments[12] - Retail volume decreased 2% year-to-date, driven by retailer destocking in the first quarter[19] Management Commentary Management emphasized strong execution in a challenging environment, highlighting investments in long-term potential, growth, margin, and returns, noting progress on programs to strengthen revenue and margin with benefits expected late in the year, and reiterating the full-year 2025 outlook - The Company is executing well in a challenging operating environment while investing in long-term potential, leveraging its US-centric business model for competitive advantage[3] - Results were in line with expectations, with pricing and other tools used to offset cost inflation[13] - Progress is being made on programs to strengthen revenue and margin potential, with benefits anticipated to begin late in 2025[13] Segment Performance This section details the financial performance of Reynolds Consumer Products' key segments, highlighting revenue and Adjusted EBITDA trends and their underlying drivers Reynolds Cooking & Baking The Reynolds Cooking & Baking segment experienced a decrease in Adjusted EBITDA due to lower retail volumes and the timing of pricing actions relative to input cost increases, despite a slight increase in Net Revenues Reynolds Cooking & Baking Financials (Amounts in Millions) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :---------------- | :------------------ | :------------------ | :------------ | | Net Revenues | $295 | $291 | +$4 | | Adjusted EBITDA | $49 | $54 | -$5 | - Retail volume decreased 5% primarily reflecting promotional timing[6] Hefty Waste & Storage Hefty Waste & Storage saw strong retail volume growth, driven by new product launches, leading to an increase in Net Revenues, while Adjusted EBITDA remained unchanged as higher revenue benefits were offset by increased operational costs and a slight decrease in pricing due to new product investments Hefty Waste & Storage Financials (Amounts in Millions) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :---------------- | :------------------ | :------------------ | :------------ | | Net Revenues | $255 | $244 | +$11 | | Adjusted EBITDA | $71 | $71 | Unchanged | - Retail volume increased 6%, with strong growth from Hefty Fabuloso® waste bags, Hefty Press to Close food bags, and other new products[7] - Investment in new product launches contributed to a 1% decrease in pricing[7] Hefty Tableware The Hefty Tableware segment experienced declines in both Net Revenues and Adjusted EBITDA, primarily driven by lower foam volume and related costs Hefty Tableware Financials (Amounts in Millions) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :---------------- | :------------------ | :------------------ | :------------ | | Net Revenues | $242 | $251 | -$9 | | Adjusted EBITDA | $35 | $39 | -$4 | - Retail volume decreased 5%, driven exclusively by foam declines[8] Presto Products Presto Products saw a modest increase in Net Revenues and retail volume, gaining additional share in store brand food bags, but Adjusted EBITDA decreased due to higher operational costs associated with scaling new distribution Presto Products Financials (Amounts in Millions) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (YoY) | | :---------------- | :------------------ | :------------------ | :------------ | | Net Revenues | $153 | $151 | +$2 | | Adjusted EBITDA | $33 | $37 | -$4 | - Retail volume increased 1% as Presto's portfolio gained additional share in store brand food bags[9] Components of Change in Net Revenues by Segment The overall 1% increase in total Net Revenues for Q2 2025 was driven by a 1% price increase and a 1% increase in non-retail volume, partially offset by a 1% decrease in retail volume, while year-to-date, total Net Revenues were flat, with a 1% price increase offset by a 2% retail volume decline Components of Change in Net Revenues (Q2 2025 vs. Q2 2024) | Segment | Price | Retail Volume/Mix | Non-Retail | Total | | :------------------------ | :---- | :---------------- | :--------- | :---- | | Reynolds Cooking & Baking | 4% | (5)% | 2% | 1% | | Hefty Waste & Storage | (1)% | 6% | —% | 5% | | Hefty Tableware | 1% | (5)% | —% | (4)% | | Presto Products | —% | 1% | —% | 1% | | Total RCP | 1%| (1)% | 1% | 1%| Components of Change in Net Revenues (Six Months Ended June 30, 2025 vs. 2024) | Segment | Price | Retail Volume/Mix | Non-Retail | Total | | :------------------------ | :---- | :---------------- | :--------- | :---- | | Reynolds Cooking & Baking | 3% | (4)% | 2% | 1% | | Hefty Waste & Storage | (1)% | 5% | —% | 4% | | Hefty Tableware | 2% | (10)% | —% | (8)% | | Presto Products | 1% | —% | —% | 1% | | Total RCP | 1%| (2)% | 1% | —%| Financial Outlook & Capital Allocation This section presents the company's financial outlook for Q3 and full-year 2025, alongside key balance sheet metrics and dividend information Full Year 2025 Outlook The company reiterated its full-year 2025 guidance, expecting Net Revenues to be down low single digits, with Adjusted EBITDA between $650 million and $670 million, and Adjusted EPS between $1.54 and $1.61 Full Year 2025 Outlook | Metric | Guidance | | :-------------- | :------------------- | | Net Revenues | Down low single digits | | Adjusted EBITDA | $650M - $670M | | Adjusted EPS | $1.54 - $1.61 | - Expected Adjusted Net Income reflects estimated adjustments including debt refinancing costs and $25 to $35 million of pre-tax CEO transition costs and strategic investments[16] - Full-year 2025 expected Adjusted EBITDA excludes estimated depreciation and amortization of approximately $130 million[16] Third Quarter 2025 Outlook For the third quarter of 2025, Net Revenues are projected to be down low single digits compared to Q3 2024, with Adjusted EBITDA expected in the range of $160 million to $170 million, and Adjusted EPS between $0.37 and $0.41 Third Quarter 2025 Outlook | Metric | Guidance | | :-------------- | :------------------- | | Net Revenues | Down low single digits | | Adjusted EBITDA | $160M - $170M | | Adjusted EPS | $0.37 - $0.41 | Balance Sheet and Cash Flow Highlights As of June 30, 2025, the company maintained a healthy balance sheet with Net Debt within its target leverage range, indicating effective management of its debt obligations Balance Sheet Highlights (June 30, 2025) (Amounts in Millions) | Metric | Amount | | :---------------------- | :---------------- | | Cash and cash equivalents | $57 | | Debt | $1,633 | | Net Debt | $1,576 | | Net Debt to TTM Adjusted EBITDA | 2.4x | - Net Debt to Trailing Twelve Months Adjusted EBITDA was 2.4x, which is within the Company's target leverage range[13] Quarterly Dividend The Board of Directors approved a quarterly dividend of $0.23 per common share, payable on August 29, 2025, to shareholders of record as of August 15, 2025 - A quarterly dividend of $0.23 per common share was approved[17] - The dividend is expected to be paid on August 29, 2025, to shareholders of record as of August 15, 2025[17] Company Overview & Forward-Looking Statements This section introduces Reynolds Consumer Products' business profile and outlines the nature and limitations of forward-looking statements About Reynolds Consumer Products Inc. Reynolds Consumer Products is a leading provider of household essentials, offering trusted solutions for cooking, cleanup, and food storage, with a portfolio of iconic brands like Reynolds Wrap® and Hefty® holding No. 1 or No. 2 market share in most categories it serves - Reynolds Consumer Products is a leading provider of household essentials, found in 95% of U.S. homes[20] - The portfolio features iconic brands such as Reynolds Wrap® aluminum foil and Hefty® trash bags and disposable tableware[20] - The Company holds the No. 1 or No. 2 market share in most of the categories it serves[20] Forward-Looking Statements This section outlines the nature of forward-looking statements within the press release, emphasizing that they are predictions based on current expectations and subject to risks, uncertainties, and assumptions, cautioning investors against undue reliance, and stating the company undertakes no obligation to update these statements - The press release contains forward-looking statements reflecting views about future performance, identifiable by words like 'believe,' 'expect,' 'will,' and 'outlook'[21] - These statements are predictions based on current expectations and are subject to important factors that could cause actual results to differ materially[21] - The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise[22] Consolidated Financial Statements This section provides the company's consolidated statements of income, balance sheets, and cash flows, reflecting its financial position and operational results Consolidated Statements of Income The consolidated statements of income show a decrease in Net Income for both the three and six months ended June 30, 2025, compared to the prior year, primarily driven by higher cost of sales and increased other expenses, despite a slight increase in total net revenues Consolidated Statements of Income (Amounts in Millions, Except Per Share Data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 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 | | Selling, general and administrative expenses | $(96) | $(116) | $(201) | $(227) | | Other expense, net | $(12) | — | $(21) | — | | Income from operations | $118 | $140 | $193 | $231 | | Interest expense, net | $(22) | $(25) | $(42) | $(51) | | Debt refinancing expense | — | — | $(13) | — | | Income before income taxes | $96 | $115 | $138 | $180 | | Income tax expense | $(23) | $(18) | $(33) | $(35) | | Net income | $73 | $97 | $105 | $145 | | Diluted EPS | $0.35 | $0.46 | $0.50 | $0.69 | Consolidated Balance Sheets The consolidated balance sheet as of June 30, 2025, shows a slight decrease in total assets and total liabilities compared to December 31, 2024, with cash and cash equivalents decreasing significantly while inventories increased Consolidated Balance Sheets (Amounts in Millions) | Asset/Liability/Equity | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Cash and cash equivalents | $57 | $137 | | Accounts receivable | $333 | $337 | | Inventories | $630 | $567 | | Total current assets | $1,063 | $1,101 | | Property, plant and equipment, net | $787 | $758 | | Goodwill | $1,895 | $1,895 | | Intangible assets, net | $958 | $972 | | Total assets | $4,861 | $4,873 | | Accounts payable | $393 | $319 | | Total current liabilities | $575 | $539 | | Long-term debt | $1,617 | $1,686 | | Total liabilities | $2,713 | $2,731 | | Total stockholders' equity | $2,148 | $2,142 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities decreased compared to the prior year, cash used in investing activities increased primarily due to higher acquisition of property, plant, and equipment, and financing activities saw significant proceeds and repayments related to term loan refinancing Consolidated Statements of Cash Flows (Amounts in Millions) | Cash Flow Activity | YTD 2025 | YTD 2024 | | :----------------------------- | :------- | :------- | | Net income | $105 | $145 | | Depreciation and amortization | $65 | $63 | | Inventories (change) | $(63) | $(60) | | Accounts payable (change) | $49 | $92 | | Net cash provided by operating activities | $147 | $183 | | Acquisition of property, plant and equipment | $(79) | $(48) | | Net cash used in investing activities | $(79) | $(48) | | Repayment of long-term debt | $(54) | $(50) | | Dividends paid | $(96) | $(96) | | Proceeds from term loan refinancing | $743 | — | | Repayments of existing term loan | $(743) | — | | 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 | Non-GAAP Financial Measures & Reconciliations This section defines and reconciles non-GAAP financial measures, such as Adjusted EBITDA and Net Debt, to their GAAP equivalents for enhanced financial analysis Use of Non-GAAP Financial Measures The company utilizes several non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt, and Net Debt to Trailing Twelve Months Adjusted EBITDA, to provide additional insights into its operating performance, liquidity, and debt servicing capabilities, excluding certain non-recurring or non-operational items - 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[36] - Adjusted Net Income and Adjusted EPS exclude the after-tax impact of debt refinancing expense, strategic initiative costs, and CEO transition costs[36] - These non-GAAP measures are used by management to evaluate operating performance, generate future plans, and make strategic decisions, providing useful information to investors[37] Reconciliation of Net Income to Adjusted EBITDA This section provides a reconciliation of GAAP Net Income to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, detailing the adjustments made for income tax, interest, depreciation, and specific non-recurring costs Reconciliation of Net Income to Adjusted EBITDA (Amounts in Millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 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 and 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 EPS to Adjusted Net Income and Adjusted EPS This section reconciles GAAP Net Income and EPS to their adjusted non-GAAP counterparts for the three and six months ended June 30, 2025 and 2024, by accounting for the after-tax impact of debt refinancing, strategic initiatives, and CEO transition costs Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS (Q2 2025 vs. Q2 2024) (Amounts in Millions, Except Per Share Data) | Metric (Q2) | Net Income | Shares | Diluted EPS | | :--------------------------- | :--------- | :----- | :---------- | | As Reported - GAAP (2025) | $73 | 210.3 | $0.35 | | Adjustments (2025) | $10 | — | $0.05 | | Adjusted (Non-GAAP) (2025) | $83 | 210.3| $0.39 | | As Reported - GAAP (2024) | $97 | 210.2 | $0.46 | | Adjustments (2024) | — | — | — | | Adjusted (Non-GAAP) (2024) | $97 | 210.2| $0.46 | Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS (YTD 2025 vs. YTD 2024) (Amounts in Millions, Except Per Share Data) | Metric (YTD) | Net Income | Shares | Diluted EPS | | :--------------------------- | :--------- | :----- | :---------- | | As Reported - GAAP (2025) | $105 | 210.3 | $0.50 | | Adjustments (2025) | $27 | — | $0.13 | | Adjusted (Non-GAAP) (2025) | $132 | 210.3| $0.63 | | As Reported - GAAP (2024) | $145 | 210.2 | $0.69 | | Adjustments (2024) | — | — | — | | Adjusted (Non-GAAP) (2024) | $145 | 210.2| $0.69 | Reconciliation of Trailing Twelve Months Net Income to Adjusted EBITDA This section provides the reconciliation of Trailing Twelve Months (TTM) GAAP Net Income to TTM Adjusted EBITDA as of June 30, 2025, and December 31, 2024, showing the adjustments for non-operating and non-recurring items Reconciliation of TTM Net Income to TTM Adjusted EBITDA (Amounts in Millions) | Metric | TTM Ended June 30, 2025 | TTM Ended Dec 31, 2024 | | :------------------------- | :---------------------- | :--------------------- | | Net income – GAAP | $312 | $352 | | Income tax expense | $97 | $99 | | Interest expense, net | $90 | $98 | | Debt refinancing expense | $13 | — | | Depreciation and amortization | $131 | $129 | | Costs to execute strategic initiatives | $13 | — | | CEO transition costs | $8 | — | | Adjusted EBITDA (Non-GAAP) | $664 | $678 | Reconciliation of Total Debt to Net Debt and Net Debt to TTM Adjusted EBITDA This section details the calculation of Net Debt from Total Debt and its ratio to Trailing Twelve Months Adjusted EBITDA, providing a key indicator of the company's leverage and financial health as of June 30, 2025, and December 31, 2024 Reconciliation of Total Debt to Net Debt and Net Debt to TTM Adjusted EBITDA (Amounts in Millions) | Metric | As of June 30, 2025 | As of Dec 31, 2024 | | :----------------------------------- | :------------------ | :----------------- | | Current portion of long-term debt | $16 | — | | Long-term debt | $1,617 | $1,686 | | Total debt | $1,633 | $1,686 | | Cash and cash equivalents | $(57) | $(137) | | Net debt (Non-GAAP) | $1,576 | $1,549 | | TTM Adjusted EBITDA (Non-GAAP) | $664 | $678 | | Net Debt to TTM Adjusted EBITDA | 2.4x | 2.3x |