Reynolds Consumer Products(US:REYN)2022-05-10 16:22Financial Data and Key Metrics Changes - Net revenues for Q1 2022 were $845 million, a 12% increase from $757 million in Q1 2021, primarily driven by price increases [22] - Adjusted EBITDA for Q1 2022 was $112 million, down 20% from $140 million in Q1 2021, due to higher costs and lower volume [23] - Adjusted earnings per share for the quarter was $0.26 [23] Business Line Data and Key Metrics Changes - Volume in Hefty Waste & Storage grew by 6%, driven by strong demand and easing of staffing and logistics challenges [24] - Volume in Hefty Tableware increased by 10%, supported by strength across the Hefty and store brand portfolio [24] - Volume in Reynolds Cooking & Baking declined by 14%, with over half of the decline attributed to timing of retailer inventory replenishment [24] - Presto Products volume declined by 3% [25] Market Data and Key Metrics Changes - RCP branded dollar share and volume share in waste bags, disposable tableware, and other categories increased compared to the previous year [16] - Consumers are eating out less often due to inflation, impacting product consumption patterns [15] Company Strategy and Development Direction - The company is focused on restoring pre-pandemic profitability through additional pricing and cost savings initiatives [11] - Innovation is a key growth driver, with new product introductions planned, including compostable wax paper and new Hefty products [18] - The company is committed to improving working capital and cash flow management amid rising commodity costs [25][32] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation has accelerated since early February, creating a challenging environment [20] - The company expects net revenues to grow by 6% to 8% in Q2 2022, with adjusted EBITDA projected between $110 million and $120 million [26] - Management anticipates better alignment between shipments and consumer demand in the latter half of the year [28] Other Important Information - The company expects total additional cost pressures of approximately $450 million for the year, up from $400 million previously estimated [29] - Capital spending for the year is expected to be between $150 million and $170 million, focusing on automation and other initiatives [30] Q&A Session Summary Question: Can you talk about Cooking & Baking and the components behind the decline? - Management indicated that the decline was driven by inventory adjustments and changes in consumer trends, with half of the decline event-driven [37] Question: Can you provide more detail on category growth and share progression? - Management reported that the brand gained dollar and EQ share in 70% of categories, with continued growth in most product lines [45] Question: Can you break down the $50 million increase in costs? - Management explained that two-thirds of the cost increase was due to materials, particularly aluminum and polyethylene [60] Question: What are your second quarter volume assumptions? - Management expects RCO volume to be down mid to high single digits, with better alignment between shipments and household consumption anticipated [53] Question: How are you addressing the pricing and commodity dynamics? - Management stated that they have historically been able to recover margins when commodity prices decrease and are adjusting price points accordingly [91]