First Quarter Net Income and Adjusted EBITDA
Increased 188% and 49%
Full Year Net Income Guide Increased, Net
Revenue and Adjusted EBITDA Guide Reiterated
Record Q1 Cash Flow and $50 Million
Voluntary Principal Payment Made After Quarter End
Net Debt Leverage1 Reduced to 2.5x at
Quarter End
Reynolds Consumer Products Inc. (“RCP” or the “Company”)
(Nasdaq: REYN) today reported financial results for the first
quarter ended March 31, 2024.
First Quarter 2024 Highlights
- Net Revenues of $833 million vs. $874 million in Q1 2023
- Retail Net Revenues decreased 3% to $794 million, at the high
end of Company expectations
- Non-retail Net Revenues decreased 32% to $39 million, as
expected
- Net Income and Adjusted Net Income of $49 million
vs. $17 million in Q1 2023
- Adjusted EBITDA of $122 million vs. $82 million in Q1
2023
- Earnings Per Share and Adjusted Earnings Per
Share of $0.23 vs. $0.08 in Q1 2023
- Operating Cash Flow of $99 million vs. $88 million in Q1
2023
Retail volume performed at the high end of Company expectations,
decreasing 3% which includes over 1% of portfolio optimization. The
Company continued to lead its categories with several performing
slightly better than expected in the quarter.
Net Income increased $32 million and Adjusted EBITDA increased
$40 million, or 49%, over the first quarter of 2023 driven by
manufacturing output and lower operational costs across all four
businesses. Net Income benefited from the same factors as the
increase in Adjusted EBITDA as well as lower interest expense from
the significant reduction in debt in 2023.
The Company further reduced Net Debt to Trailing Twelve Months
Adjusted EBITDA from 2.7x on December 31, 2023 to 2.5x on March 31,
2024.
“We delivered strong first quarter results reflecting our
commitment to driving our categories, expanding margins and
increasing financial flexibility,” said Lance Mitchell, CEO and
President of Reynolds Consumer Products. “Our business is
performing well and we are implementing plans to advance this
performance while investing in strategic opportunities to drive
growth.”
1Net Debt is defined as current portion of long-term debt plus
long-term debt less cash and cash equivalents. Net Debt Leverage is
defined as Net Debt divided by Trailing Twelve Months Adjusted
EBITDA. See “Use of Non-GAAP Financial Measures” for additional
information.
Reynolds Cooking & Baking
- Net Revenues decreased $19 million to $264 million, slightly
ahead of Company expectations, driven by a decrease in low margin
non-retail sales
- Adjusted EBITDA increased $29 million to $33 million
Adjusted EBITDA increased significantly, driven by improved
operational stability and lower operational costs.
Volume was down 8%, with performance slightly ahead of
expectations. Retail volume decreased 2%, including 3 points from
product portfolio optimization, and outperformed the household foil
and other cooking & baking categories. Six points of the
8-point volume headwind was from low margin non-retail sales, as
expected.
Key commercial highlights for the quarter include higher volume
and improving share trends in parchment paper driven by the
national rollout of Reynolds Kitchens® Stay Flat Parchment with
SmartGrid® and further distribution gains by Reynolds Kitchens® Air
Fryer liners. The Company launched Chef’s Kiss marketing campaign
to drive awareness with young cooks, during the quarter. The brand
launched multi-product advertising with influencers, highlighting
products in the portfolio which was amplified in digital and social
channels.
Hefty Waste & Storage
- Net Revenues decreased $4 million to $229 million, in-line with
Company expectations
- Adjusted EBITDA increased $11 million to $66 million
Adjusted EBITDA increased $11 million driven by lower
operational costs. Volume decreased 2%, consistent with category
trends.
Innovation highlights include the successful launch of Hefty®
Ultra Strong with Coastal Plastic and Fabuloso Citrus & Fruits,
while Hefty Ultra Strong Fabuloso® continued to demonstrate strong
growth reaching $180 million in annual retail sales over the last
twelve months. The shift to a broader sustainable portfolio
continued with significant distribution gains for Hefty® Waste Bags
made with post-consumer recycled materials.
During the quarter, the Company launched a new omnichannel
advertising campaign calling attention to the everyday moments
requiring all types of strength to take out the trash. The campaign
featuring John Cena highlights “strength that is anything but
ordinary” and will continue to roll out over the course of the year
showcasing the strength and durability of Hefty® Ultra Strong trash
bags.
Hefty Tableware
- Net Revenues decreased $19 million to $205 million, in-line
with Company expectations
- Adjusted EBITDA was unchanged at $30 million
Volume decreased 6% and improved, by comparison, to the second
half and fourth quarter 2023 performance. Lower operational costs
offset the decline in revenues resulting in unchanged Adjusted
EBITDA.
Hefty Tableware is implementing comprehensive plans to drive
improved trends including optimized trade programs, lower pack
counts at competitive price points, cross portfolio promotions and
introduction and expansion of multiple new products. Highlights of
the quarter included accelerated sustainable product growth,
expanded distribution of Hefty® ZooPals® and growth of Hefty
containers.
Presto Products
- Net Revenues decreased $1 million to $143 million
- Adjusted EBITDA increased $10 million to $29 million
Adjusted EBITDA increased $10 million driven by lower
operational costs.
Volume decreased 1% reflecting sequential improvement in private
label food bags, partially offset by continued optimization of the
retail product portfolio. Strong retail performance continued to
benefit from product innovation including press to close stand and
fill bags and bio-based sandwich bags with 20% plant & ocean
materials which continues to be the number one selling sustainable
food bag in the U.S.
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents were $135 million at March 31, 2024,
and debt was $1,833 million resulting in Net Debt of $1,698
million, $19 million lower than at December 31, 2023.
Operating cash flow of $99 million was a record for the first
quarter and was an enabler of the $50 million voluntary payment on
the term loan facility subsequent to quarter end.
Fiscal Year and Second Quarter Outlook
The Company reiterates its full year outlook for Net Revenues,
Adjusted EBITDA and Net Debt, and increases its full year outlook
for Net Income and Earnings Per Share as follows:
Prior FY
2024 Outlook
Current
FY 2024 Outlook
Net Revenues
$3,530 to $3,640 million
$3,530 to $3,640 million
Net Income and Adjusted Net Income
$331 to $347 million
$341 to $357 million1
Adjusted EBITDA
$660 to $680 million
$660 to $680 million
Earnings Per Share and Adjusted Earnings
Per Share
$1.57 to $1.65
$1.62 to $1.701
Net Debt at December 31, 2024
$1.5 to $1.6 billion
$1.5 to $1.6 billion
The Company introduces its second quarter 2024 outlook as
follows:
Q2 2024
Outlook
Net Revenues
$875 to $900 million
Net Income and Adjusted Net Income
$88 to $96 million1
Adjusted EBITDA
$160 to $170 million
Earnings Per Share and Adjusted Earnings
Per Share
$0.42 to $0.461
1Second quarter and full-year Net Income estimates include an
approximate $10 million tax benefit, or approximately $0.05 per
share, resulting from updated expectations on income taxes.
The Company guides full-year 2024 Net Revenues to be
approximately $3,530 million to $3,640 million versus prior year
Net Revenues of $3,756 million consisting of the following
assumptions (unchanged):
1% reduction from pricing 2% reduction to 1%
increase from retail volume at or better than category forecasts 3%
reduction from lower non-retail volume and further optimization of
the retail product portfolio
The Company guides second quarter 2024 Net Revenues to be
approximately $875 million to $900 million versus prior year Net
Revenues of $940 million consisting of the following
assumptions:
Pricing flat 3.5% to 0.5% reduction from
retail volume at or better than category forecasts 3.5% reduction
from lower non-retail volume and optimization of the retail product
portfolio
Commodity rates are expected to remain more stable than in
recent years.
The Company forecasts Adjusted EBITDA growth driven by retail
volume at or above category forecasts, improvements in product mix,
the Reynolds Cooking & Baking business’s recovery of historical
earnings and delivery of additional Reyvolution cost savings.
Net Income growth is forecasted to be driven by the same factors
driving Adjusted EBITDA, in addition to an approximately $20
million expected reduction in interest expense compared to 2023 net
interest expense of $119 million.
The Company continues to expect the relative contribution of
each quarter’s Adjusted EBITDA to the full year’s Adjusted EBITDA
returning to historical averages.
“We continued to drive our categories, expand margins and
execute our Reyvolution program across RCP in the first quarter,
together with record operating cash flow performance, allowing us
to further reduce leverage,” said Scott Huckins, Chief Financial
Officer. “Our business model is durable and competitively
advantaged and we are executing well in an evolving macroeconomic
environment, giving us continued confidence in our programs to
drive share, expand margins and reduce leverage to within our
target range by year end.”
Quarterly Dividend
The Company’s Board of Directors has approved a quarterly
dividend of $0.23 per common share. The Company expects to pay this
dividend on May 31, 2024, to shareholders of record as of May 17,
2024.
Earnings Webcast
The Company will host a live webcast this morning at 7:00 a.m.
CT (8:00 a.m. ET). A link to the webcast and all related earnings
materials will be available on the Company’s Investor Relations
website at https://investors.reynoldsconsumerproducts.com.
About Reynolds Consumer Products Inc.
Reynolds Consumer Products is a leading provider of household
products that simplify daily life so consumers can enjoy what
matters most. With a presence in 95% of households across the
United States, Reynolds Consumer Products manufactures and sells
products that people use in their homes for cooking, serving,
cleanup and storage. Iconic brands include Reynolds Wrap® aluminum
foil and Hefty® tableware and trash bags, as well as dedicated
store brands which are strategically important to retail customers.
Overall, Reynolds Consumer Products holds the No. 1 or No. 2 U.S.
market share position in the majority of product categories it
serves. For more information, visit
https://investors.reynoldsconsumerproducts.com/
Forward Looking Statements
This press release contains statements reflecting our views
about our future performance that constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, including our second quarter and fiscal year
2024 guidance. In some cases, you can identify these statements by
forward-looking words such as “may,” “might,” “will,” “should,”
“expects,” “intends,” “outlook,” “forecast”, “position”,
“committed,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “model”, “assumes,” “confident,” “look forward,”
“potential” “on track”, or “continue,” the negative of these terms
and other comparable terminology. These forward-looking statements,
which are subject to risks, uncertainties and assumptions about us,
may include projections of our future financial performance, our
anticipated growth and recovery of profitability, management of
costs and other disruptions and other strategies, and anticipated
trends in our business, including expected levels of commodity
costs and volume. These statements are only predictions based on
our current expectations and projections about future events. There
are important factors that could cause our actual results, level of
activity, performance or achievements to differ materially from the
results, level of activity, performance or achievements expressed
or implied by the forward-looking statements, including but not
limited to the risk factors set forth in our most recent Annual
Report on Form 10-K.
For additional information on these and other factors that could
cause our actual results to materially differ from those set forth
herein, please see our filings with the Securities and Exchange
Commission, including our most recent Annual Report on Form 10-K
and subsequent filings. Investors are cautioned not to place undue
reliance on any such forward-looking statements, which speak only
as of the date they are made. The Company undertakes no obligation
to update any forward-looking statement, whether as a result of new
information, future events or otherwise.
REYN-F
Reynolds Consumer Products
Inc. Consolidated Statements of Income (amounts in
millions, except for per share data)
For the Three Months
Ended
March 31,
2024
2023
Net revenues
$
811
$
852
Related party net revenues
22
22
Total net revenues
833
874
Cost of sales
(632
)
(719
)
Gross profit
201
155
Selling, general and administrative
expenses
(111
)
(105
)
Other income, net
—
2
Income from operations
90
52
Interest expense, net
(25
)
(29
)
Income before income taxes
65
23
Income tax expense
(16
)
(6
)
Net income
$
49
$
17
Earnings per share:
Basic
$
0.23
$
0.08
Diluted
$
0.23
$
0.08
Weighted average shares outstanding:
Basic
210.1
209.9
Diluted
210.1
209.9
Reynolds Consumer Products
Inc. Consolidated Balance Sheets (amounts in millions,
except for per share data)
As of March 31,
2024
As of December 31,
2023
Assets
Cash and cash equivalents
$
135
$
115
Accounts receivable (net of allowance for
doubtful accounts of $1 and $1)
330
347
Other receivables
8
7
Related party receivables
7
7
Inventories
570
524
Other current assets
41
41
Total current assets
1,091
1,041
Property, plant and equipment (net of
accumulated depreciation of $918 and $897)
730
732
Operating lease right-of-use assets,
net
84
56
Goodwill
1,895
1,895
Intangible assets, net
994
1,001
Other assets
64
55
Total assets
$
4,858
$
4,780
Liabilities
Accounts payable
$
290
$
219
Related party payables
30
34
Current operating lease liabilities
18
16
Income taxes payable
37
22
Accrued and other current liabilities
142
187
Total current liabilities
517
478
Long-term debt
1,833
1,832
Long-term operating lease liabilities
68
42
Deferred income taxes
358
357
Long-term postretirement benefit
obligation
16
16
Other liabilities
77
72
Total liabilities
$
2,869
$
2,797
Stockholders’ equity
Common stock, $0.001 par value; 2,000
shares authorized; 210.1 shares issued and outstanding
—
—
Additional paid-in capital
1,399
1,396
Accumulated other comprehensive income
53
50
Retained earnings
537
537
Total stockholders’ equity
1,989
1,983
Total liabilities and stockholders’
equity
$
4,858
$
4,780
Reynolds Consumer Products
Inc. Consolidated Statements of Cash Flows (amounts in
millions)
Three Months Ended March
31,
2024
2023
Cash provided by operating
activities
Net income
$
49
$
17
Adjustments to reconcile net income to
operating cash flows:
Depreciation and amortization
32
30
Deferred income taxes
(1
)
(9
)
Stock compensation expense
4
3
Change in assets and liabilities:
Accounts receivable, net
17
6
Other receivables
—
12
Related party receivables
—
(11
)
Inventories
(45
)
40
Accounts payable
77
(15
)
Related party payables
(4
)
19
Income taxes payable / receivable
15
12
Accrued and other current liabilities
(45
)
(15
)
Other assets and liabilities
—
(1
)
Net cash provided by operating
activities
99
88
Cash used in investing
activities
Acquisition of property, plant and
equipment
(29
)
(22
)
Net cash used in investing
activities
(29
)
(22
)
Cash used in financing
activities
Repayment of long-term debt
—
(6
)
Dividends paid
(48
)
(48
)
Other financing activities
(2
)
—
Net cash used in financing
activities
(50
)
(54
)
Net increase in cash and cash
equivalents
20
12
Cash and cash equivalents at beginning of
period
115
38
Cash and cash equivalents at end of
period
$
135
$
50
Cash paid:
Interest - long-term debt, net of interest
rate swaps
25
28
Reynolds Consumer Products
Inc. Segment Results (amounts in millions)
Reynolds Cooking
& Baking
Hefty Waste &
Storage
Hefty Tableware
Presto Products
Unallocated(1)
Total
Revenues
Three Months Ended March 31, 2024
$
264
$
229
$
205
$
143
$
(8
)
$
833
Three Months Ended March 31, 2023
283
233
224
144
(10
)
874
Adjusted EBITDA
Three Months Ended March 31, 2024
$
33
$
66
$
30
$
29
$
(36
)
$
122
Three Months Ended March 31, 2023
4
55
30
19
(26
)
82
(1)
The unallocated net revenues include
elimination of intersegment revenues and other revenue adjustments.
The unallocated Adjusted EBITDA represents the combination of
corporate expenses which are not allocated to our segments and
other unallocated revenue adjustments.
Components of Change in Net Revenues for the
Three Months Ended March 31, 2024 vs. the Three Months Ended March
31, 2023
Price
Volume/Mix
Total
Retail
Non-Retail
Reynolds Cooking & Baking
1
%
(2)
%
(6)
%
(7)
%
Hefty Waste & Storage
—
%
(2)
%
—
%
(2)
%
Hefty Tableware
(2)
%
(6)
%
—
%
(8)
%
Presto Products
—
%
(1)
%
—
%
(1)
%
Total RCP
—
%
(3)
%
(2)
%
(5)
%
Use of Non-GAAP Financial Measures
We use non-GAAP financial measures “Adjusted EBITDA,” “Adjusted
Net Income,” “Adjusted Earnings Per Share,” “Net Debt” and “Net
Debt to Trailing Twelve Months Adjusted EBITDA,” in evaluating our
past results and future prospects. We define Adjusted EBITDA as net
income calculated in accordance with GAAP, plus the sum of income
tax expense, net interest expense, depreciation and amortization
and further adjusted to exclude certain non-recurring items, if
applicable. We define Adjusted Net Income and Adjusted Earnings Per
Share (“Adjusted EPS”) as Net Income and Earnings Per Share (“EPS”)
calculated in accordance with GAAP, plus the sum of certain
non-recurring items, if applicable. We define Net Debt as the
current portion of long-term debt plus long-term debt less cash and
cash equivalents. We define Net Debt to Trailing Twelve Months
Adjusted EBITDA as Net Debt (as defined above) as of the end of the
period to Adjusted EBITDA (as defined above) for the period.
We present Adjusted EBITDA because it is a key measure used by
our management team to evaluate our operating performance, generate
future operating plans and make strategic decisions. In addition,
our chief operating decision maker uses Adjusted EBITDA of each
reportable segment to evaluate the operating performance of such
segments. We use Adjusted Net Income and Adjusted Earnings Per
Share as supplemental measures to evaluate our business’
performance in a way that also considers our ability to generate
profit without the impact of certain items. We use Net Debt as we
believe it is a more representative measure of our liquidity. We
use Net Debt to Trailing Twelve Months Adjusted EBITDA because it
reflects our ability to service our debt obligations. Accordingly,
we believe presenting these measures provide useful information to
investors and others in understanding and evaluating our operating
results in the same manner as our management team and board of
directors.
Non-GAAP information should be considered as supplemental in
nature and is not meant to be considered in isolation or as a
substitute for the related financial information prepared in
accordance with GAAP. In addition, our non-GAAP financial measures
may not be the same as or comparable to similar non-GAAP financial
measures presented by other companies.
Guidance for fiscal year and second quarter 2024, where
adjusted, is provided on a non-GAAP basis. The Company cannot
reconcile its expected Net Debt at December 31, 2024 to expected
total debt, or expected ratios involving Net Debt, without
reasonable effort because certain items that impact total debt and
other reconciling measures are out of the Company’s control and/or
cannot be reasonably predicted at this time, to which unavailable
information could have a significant impact on the Company’s GAAP
financial results.
Please see reconciliations of Non-GAAP measures used in this
release (with the exception of our December 31, 2024 Net Debt
outlook, as described above) to the most directly comparable GAAP
measures, beginning on the following page.
Reynolds Consumer Products
Inc. Reconciliation of Net Income to Adjusted EBITDA
(amounts in millions)
Three Months Ended March
31,
2024
2023
Net income – GAAP
$
49
$
17
Income tax expense
16
6
Interest expense, net
25
29
Depreciation and amortization
32
30
Adjusted EBITDA (Non-GAAP)
$
122
$
82
Reynolds Consumer Products
Inc. Reconciliation of Trailing Twelve Months Net Income to
Trailing Twelve Months Adjusted EBITDA (amounts in
millions)
Twelve Months Ended March 31,
2024
Twelve Months Ended December
31, 2023
Net income – GAAP
$
330
$
298
Income tax expense
105
95
Interest expense, net
115
119
Depreciation and amortization
126
124
Adjusted EBITDA (Non-GAAP)
$
676
$
636
Reynolds Consumer Products
Inc. Reconciliation of Total Debt to Net Debt and Calculation of
Net Debt to Trailing Twelve Months Adjusted EBITDA (amounts in
millions, except for Net Debt to Trailing Twelve Months Adjusted
EBITDA)
As of March 31, 2024
Current portion of long-term debt
$
—
Long-term debt
1,833
Total debt
1,833
Cash and cash equivalents
(135
)
Net debt (Non-GAAP)
$
1,698
For the twelve months ended March 31,
2024
Adjusted EBITDA (Non-GAAP)
$
676
Net Debt to Trailing Twelve Months
Adjusted EBITDA
2.5x
As of December 31, 2023
Current portion of long-term debt
$
—
Long-term debt
1,832
Total debt
1,832
Cash and cash equivalents
(115
)
Net debt (Non-GAAP)
$
1,717
For the twelve months ended December
31, 2023
Adjusted EBITDA (Non-GAAP)
$
636
Net Debt to Trailing Twelve Months
Adjusted EBITDA
2.7x
Reynolds Consumer Products
Inc. Reconciliation of Q2 2024 and FY2024 Net Income
Guidance to Adjusted EBITDA Guidance (amounts in millions)
Three Months Ended June 30,
2024
Year Ended December 31,
2024
Low
High
Low
High
Net income (GAAP)
$
88
$
96
$
341
$
357
Income tax expense
16
18
98
102
Interest expense, net
26
26
100
100
Depreciation and amortization
30
30
121
121
Adjusted EBITDA
$
160
$
170
$
660
$
680
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508685049/en/
Investor Contact Mark Swartzberg
Mark.Swartzberg@reynoldsbrands.com (847) 482-4081
Reynolds Consumer Products (NASDAQ:REYN)
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