Reynolds Consumer Products(US:REYN)2023-05-10 18:39Financial Data and Key Metrics Changes - For Q1 2023, net revenues increased by 3% compared to the prior year, driven by price increases that offset a 2% volume decline [16] - Adjusted EBITDA for Q1 2023 is expected to be in the range of $135 million to $145 million, up from $118 million in the prior year [1] - For the full year 2023, net revenues are expected to be flat, plus or minus 1%, with adjusted EBITDA projected between $605 million and $635 million [3] Business Line Data and Key Metrics Changes - Reynolds Cooking & Baking segment is stabilizing with operational improvements, but still faces headwinds from higher material costs [19] - Hefty Waste & Storage and Hefty Tableware segments are operating at restored levels of profitability, with Hefty Waste Bags gaining market share [56][117] - Foil consumption is up 3% compared to pre-pandemic levels, and Hefty is gaining share across all generational groups, especially millennials [8][16] Market Data and Key Metrics Changes - Higher-income consumers are purchasing larger sizes, while lower-income households are opting for smaller sizes due to price sensitivity [25] - Disposable dish consumption is slightly above pre-pandemic levels, with Hefty dishes gaining share [26] - The competitive environment is described as rational, with some increases in promotional activities across categories [28] Company Strategy and Development Direction - The company is focused on returning Reynolds Cooking & Baking to historical profitability levels through operational efficiencies and cost management [55][58] - Investment in innovation and advertising is expected to drive growth, with plans to increase trade investment and promotional activities [60][61] - The company is developing a long-term strategic plan, with an Investor Day expected to provide more details later in the year [97][107] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving earnings growth for 2023, supported by a recovery plan for Reynolds Cooking & Baking [14][58] - The company is monitoring consumer behavior closely due to inflationary pressures and is prepared to adjust pricing strategies as necessary [62][119] - Management anticipates that the recovery plan is on track and expects to see improvements in margins and profitability in the second half of 2023 [19][90] Other Important Information - The search for a new CFO is progressing well, with an announcement expected before the fourth quarter results [4][11] - Cash conversion has improved compared to the previous year, and the company plans to remain disciplined in capital spending [10][127] Q&A Session Summary Question: What drove the higher unallocated costs in the quarter? - Higher professional fees were part of the costs, which were expected and included in the overall guidance [125] Question: How is the competitive environment affecting pricing and promotions? - The competitive environment is rational, with some increases in promotional activities, but the company has planned for this [28] Question: What are the expectations for volume growth during normal times? - The company expects low single-digit volume growth across most categories during normal conditions [109] Question: How is the company addressing consumer behavior changes? - The company is monitoring consumer behavior closely and adjusting pricing strategies as necessary to maintain market share [62][119]