Reynolds Consumer Products Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
REYN$24.11-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0001628280-24-021395
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001628280-24-035405
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 126 current paragraphs.
72 unchanged; 21 reworded; 23 added; 9 removed; 0 previous and 10 current paragraphs rearranged.
Tables are not compared: 9 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Total net revenues decreased 3% in the six months ended June 30, 2024 compared to the same period in 2023. The revenue decrease was primarily due to lower volume, 2% of which was in our lower-margin non-retail business and 1% of which was in our retail business.
Current report
During the three months ended June 30, 2024, our net income increased by 47%, driven by lower material and manufacturing costs, as well as a reduction in interest expense as a result of a lower outstanding principal balance due to repayments made on our term loan facility and lower income tax expense primarily due to a discrete tax benefit in the quarter. These were partially offset by higher selling, general and administrative expenses.
Current report
Total Net Revenues. Total net revenues decreased by $10 million, or 1%, to $930 million. The decrease was drivenby lower volume in our non-retail business. Our retail net revenue increased by $6 million, in contrast to a $16 million decline in our lower-margin non-retail net revenue.
Current report
Income Tax Expense. Our effective tax rate declined by 9.4%, from 25.4% for the three months ended June 30, 2023 to 16.0% for the three months ended June 30, 2024. The decrease was primarily due to the recognition of a discrete tax benefit for the remeasurement of deferred tax liabilities.
Current report
Total Segment Net Revenues. Reynolds Cooking & Baking total segment net revenues decreased by $17 million, or 5%, to $304 million. The decrease in net revenues was primarily due to a $16 million decline in our non-retail business.
Current report
Adjusted EBITDA. Hefty Waste & Storage Adjusted EBITDA increased by $7 million, or 11%, to $69 million. The increase in Adjusted EBITDA was primarily driven by lower material and manufacturing costs and the benefit from increased revenue, partially offset by higher advertising costs.
Current report
Adjusted EBITDA. Hefty Tableware Adjusted EBITDA decreased by $6 million, or 13%, to $39 million. The decrease in Adjusted EBITDA was primarily driven by higher material and manufacturing costs and the impact of lower revenue.
Current report
Total Segment Net Revenues. Presto Products total segment net revenues increased by $5 million, or 3%, to $150 million. The increase in net revenues was primarily due to higher volume and higher pricing associated with the contractual pass through of commodity costs.
Current report
Results of Operations – Six Months Ended June 30, 2024
Current report
Six Months Ended June 30, 2024 Compared with the Six Months Ended June 30, 2023
Current report
Total Reynolds Consumer Products
Current report
Total Net Revenues. Total net revenues decreased by $50 million, or 3%, to $1,764 million. The decrease was driven by a $35 million decline in our lower-margin non-retail net revenue as well as a $15 million decline in our retail net revenue.
Current report
Other Expense, Net. Other expense, net was zero in the six months ended June 30, 2024 compared to $1 million in the six months ended June 30, 2023.
Current report
Interest Expense, Net. Interest expense, net decreased by $9 million, or 15%, to $51 million. The decrease was primarily due to a lower outstanding principal balance as a result of voluntary principal payments made on our term loan facility.
Current report
Income Tax Expense. Our effective tax rate declined by 6.1%, from 25.3% for the six months ended June 30, 2023 to 19.2% for the six months ended June 30, 2024. The decrease was primarily due to the recognition of a discrete tax benefit for the remeasurement of deferred tax liabilities.
Current report
Adjusted EBITDA. Adjusted EBITDA increased by $62 million, or 27%, to $294 million. The increase in Adjusted EBITDA was primarily attributable to lower material and manufacturing costs, partially offset by higher selling, general and administrative expenses.
Current report
Segment Information
Current report
Adjusted EBITDA. Reynolds Cooking & Baking Adjusted EBITDA increased by $46 million, or 107%, to $89 million. The increase in Adjusted EBITDA was primarily driven by lower material and manufacturing costs.
Current report
Total Segment Net Revenues. Hefty Waste & Storage total segment net revenues increased by $5 million, or 1%, to $468 million. The increase in net revenues was primarily driven by higher pricing due to timing of promotional spend.
Current report
Adjusted EBITDA. Hefty Waste & Storage Adjusted EBITDA increased by $17 million, or 15%, to $134 million. The increase in Adjusted EBITDA was primarily driven by lower material and manufacturing costs and the benefit of higher revenue, partially offset by higher advertising costs.
Current report
Adjusted EBITDA. Hefty Tableware Adjusted EBITDA decreased by $6 million, or 8%, to $70 million. The decrease in Adjusted EBITDA was primarily driven by the impact of lower revenue, partially offset by lower material and manufacturing costs.
Current report
Total Segment Net Revenues. Presto Products total segment net revenues increased by $5 million, or 2%, to $293 million. The increase in net revenues was primarily driven by higher volume and higher pricing associated with the contractual pass through of commodity costs.
Current report
Net cash used in financing activities increased by $38 million to $149 million. The increase was primarily attributable to a voluntary principal payment of $50 million related to our Term Loan Facility made during the second quarter of 2024, compared to the scheduled amortization payments in the same prior year period.
Removed paragraphs (9)
Previous report
Total Net Revenues. Total net revenues decreased by $41 million, or 5%, to $833 million. The 5% decrease consisted of lower volume in both our retail and non-retail businesses. Our retail and lower-margin non-retail net revenue declined by $23 million and $18 million, respectively.
Previous report
Income Tax Expense. We recognized income tax expense of $16 million on income before income taxes of $65 million (an effective tax rate of 24.9%) for the three months ended March 31, 2024 compared to income tax expense of $6 million on income before income taxes of $23 million (an effective tax rate of 24.9%) for the three months ended March 31, 2023.
Previous report
Reynolds Cooking & Baking
Previous report
Hefty Waste & Storage
Previous report
Hefty Tableware
Previous report
Adjusted EBITDA. Hefty Tableware Adjusted EBITDA remained flat, with lower material and manufacturing costs offset by lower volume.
Previous report
Presto Products
Previous report
Total Segment Net Revenues. Presto Products total segment net revenues were relatively flat during the three months ended March 31, 2024, compared to the prior year period.
Previous report
Net cash used in financing activities decreased by $4 million to $50 million. The decrease was primarily driven by voluntary principal payments related to our Term Loan Facility, which were made in 2023 and first applied to pay the remaining quarterly amortization payments in full. As a result, no quarterly amortization payments were made during the three months ended March 31, 2024, compared to $6 million of amortization payments made during the three months ended March 31, 2023.
Reworded paragraphs (21)
Previous wording
Total net revenues decreased 5% in the three months ended March 31, 2024 compared to the same period in 2023. The revenue decrease consisted of lower volume in both our retail and non-retail businesses. Our retail and lower-margin non-retail net revenue declined by $23 million and $18 million, respectively.
Current wording
Total net revenues decreased 1% in thethree months ended June 30, 2024 compared to the same period in 2023. The revenue decrease was due to lower volume in our non-retail business. Our retail net revenue grew by $6 million, in contrast to a $16 million decline in our lower-margin non-retail net revenue.
Previous wording
During the three months ended March 31, 2024, net income increased $32 million driven by declines in material and manufacturing costs, as well as a reduction in interest expense as a result of a lower outstanding principal balance due to repayments made on our term loan facility throughout 2023.
Current wording
During the six months ended June 30, 2024, our net income increased by 75%, primarily driven by declines in material and manufacturing costs, as well as a reduction in interest expense as a result of a lower outstanding principal balance due to repayments made on our term loan facility. These were partially offset by higher selling, general and administrative expenses.
Previous wording
Certain discussions in this section provide a breakdown of net revenues between our retail and non-retail businesses. Our retail business net revenues consist of sales to grocery stores, mass merchants, warehouse clubs, discount chains, dollar stores, drug stores, home improvement stores, military outlets and eCommerce retailers. Our non-retail business net revenues consist of sales to food service customers, which are classified as related party revenues, and industrial customers.
Current wording
Certain discussions in this section provide a breakdown of net revenues between our retail and non-retail businesses. Our retail business net revenues consist of sales to grocery stores, mass merchants, warehouse clubs, discount chains, dollar stores, drug stores, home improvement stores, military outlets and eCommerce retailers. Our non-retail business net revenues consist of aluminum sales to food service customers, which are classified as related party revenues, and industrial customers.
Previous wording
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $6 million, or 6%, to $111 million, primarily due to higher personnel costs and advertising costs.
Current wording
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $9 million, or 8%, to $116 million, primarily due to higher personnel and advertising costs.
Previous wording
Other Income, Net. Other income, net was zero in the three months ended March 31, 2024 compared to $2 million in the three months ended March 31, 2023.
Current wording
Other Expense, Net. Other expense, net was zero in the three months ended June 30, 2024 compared to $1 million in the three months ended June 30, 2023.
Previous wording
Interest Expense, Net. Interest expense, net decreased by $4 million, or 14%, to $25 million. The decrease was primarily due to a lower outstanding principal balance on our external debt facilities as a result of principal payments made throughout 2023.
Current wording
Interest Expense, Net. Interest expense, net decreased by $6 million, or 19%, to $25 million. The decrease was primarily due to a lower outstanding principal balance as a result of voluntary principal payments made on our term loan facility.
Previous wording
Adjusted EBITDA. Adjusted EBITDA increased by $40 million, or 49%, to $122 million. The increase in Adjusted EBITDA was primarily due to lower material and manufacturing costs.
Current wording
Adjusted EBITDA. Adjusted EBITDA increased by $22 million, or 15%, to $172 million. The increase in Adjusted EBITDA was primarily due to lower material and manufacturing costs, partially offset by higher selling, general and administrative expenses.
Previous wording
Adjusted EBITDA. Reynolds Cooking & Baking Adjusted EBITDA increased by $29 million, or 725%, to $33 million. The increase in Adjusted EBITDA was primarily driven by lower material and manufacturing costs.
Current wording
Adjusted EBITDA. Reynolds Cooking & Baking Adjusted EBITDA increased by $16 million, or 40%, to $56 million. The increase in Adjusted EBITDA was primarily driven by lower material and manufacturing costs.
Previous wording
Total Segment Net Revenues. Hefty Waste & Storage total segment net revenues decreased $4 million, or 2%, to $229 million. The decrease in net revenues was primarily due to lower volume.
Current wording
Total Segment Net Revenues. Hefty Waste & Storage total segment net revenues increased $9 million, or 4%, to $238 million. The increase in net revenues was primarily due to higher pricing due to timing of promotional spend and increased volume.
Previous wording
Total Segment Net Revenues. Hefty Tableware total segment net revenues decreased by $19 million, or 8%, to $205 million. The decrease in net revenues was primarily due to lower volume and lower pricing.
Current wording
Total Segment Net Revenues. Hefty Tableware total segment net revenues decreased by $6 million, or 2%, to $245 million. The decrease in net revenues was primarily due to lower pricing and volume.
Previous wording
Adjusted EBITDA. Presto Products Adjusted EBITDA increased by $10 million, or 53%, to $29 million. The increase was primarily driven by lower material and manufacturing costs.
Current wording
Adjusted EBITDA. Presto Products Adjusted EBITDA increased by $9 million, or 32%, to $37 million. The increase in Adjusted EBITDA was primarily driven by lower material and manufacturing costs and the benefit from increased revenue.
Previous wording
Cost of Sales. Cost of sales decreased by $87 million, or 12%, to $632 million. The decrease was primarily driven by lower volume as well as lower material and manufacturing costs.
Current wording
Cost of Sales. Cost of sales decreased by $124 million, or 9%, to $1,306 million. The decrease was driven by lower material and manufacturing costs, as well as lower volume.
Previous wording
Total Segment Net Revenues. Reynolds Cooking & Baking total segment net revenues decreased by $19 million, or 7%, to $264 million. The decrease in net revenues was primarily due to an $18 million decline in our non-retail net revenues driven by lower volume.
Current wording
Total Segment Net Revenues. Reynolds Cooking & Baking total segment net revenues decreased by $36 million, or 6%, to $568 million. The decrease in net revenues was primarily due to a $35 million decline in our lower-margin non-retail net revenues driven by lower volume.
Previous wording
Adjusted EBITDA. Hefty Waste & Storage Adjusted EBITDA increased by $11 million, or 20%, to $66 million. The increase in Adjusted EBITDA was primarily driven by lower material and manufacturing costs.
Current wording
Adjusted EBITDA. Presto Products Adjusted EBITDA increased by $19 million, or 40%, to $66 million. The increase in Adjusted EBITDA was primarily driven by lower material and manufacturing costs and the benefit of increased revenue.
Previous wording
Net cash from operating activities increased by $11 million to $99 million in the three months ended March 31, 2024. The increase was primarily driven by the benefit from working capital initiatives and higher net income, partially offset by higher net investment in inventory during the current period.
Current wording
Net cash from operating activities decreased by $24 million to $183 million in the six months ended June 30, 2024. The decrease was primarily driven by higher net investment in inventory during the current period and higher income tax payments due to higher taxable income, partially offset by higher net income and higher accounts payable due to working capital initiatives.
Previous wording
Net cash used in investing activities increased by $7 million to $29 million. The increase was driven by increased cash outlays for capital expenditures.
Current wording
Net cash used in investing activities decreased by $3 million to $48 million. The decrease was driven by a decrease in cash outlays for capital expenditures.
Previous wording
As of March 31, 2024, the outstanding balance under the Term Loan Facility was $1,845 million. As of March 31, 2024, we had no outstanding borrowings under the Revolving Facility, and we had $6 million of letters of credit outstanding, which reduces the borrowing capacity under the Revolving Facility.
Current wording
As of June 30, 2024, the outstanding balance under the Term Loan Facility was $1,795 million. As of June 30, 2024, we had no outstanding borrowings under the Revolving Facility, and we had $6 million of letters of credit outstanding, which reduces the borrowing capacity under the Revolving Facility.
Previous wording
During 2020 and 2022, we entered into a series of interest rate swaps to fix the LIBOR of our External Debt Facilities. In February 2023, we amended our interest rate swaps to replace the interest rate benchmark from LIBOR to SOFR. Other than the foregoing, the material terms of the interest rate swap agreements remained unchanged, and our election to use practical expedients under ASUs 2020-04 and 2021-01 resulted in no material impacts on the condensed consolidated financial statements. The aggregate notional amount of the interest rate swaps still in effect as of March 31, 2024 was $1,150 million, and the SOFR is fixed at an annual rate of 0.40% to 3.40% (for an annual effective interest rate of 2.15% to 5.15%, including margin). These interest rate swaps hedge a portion of the interest rate exposure resulting from our Term Loan Facility for periods ranging from two to three years.
Current wording
During 2020 and 2022, we entered into a series of interest rate swaps to fix the LIBOR of our External Debt Facilities. In February 2023, we amended our interest rate swaps to replace the interest rate benchmark from LIBOR to SOFR. Other than the foregoing, the material terms of the interest rate swap agreements remained unchanged, and our election to use practical expedients under ASUs 2020-04 and 2021-01 resulted in no material impacts on the condensed consolidated financial statements. The aggregate notional amount of the interest rate swaps still in effect as of June 30, 2024 was $1,150 million, and the SOFR is fixed at an annual rate of 0.40% to 3.40% (for an annual effective interest rate of 2.15% to 5.15%, including margin). These interest rate swaps hedge a portion of the interest rate exposure resulting from our Term Loan Facility for periods ranging from one to two years.
Previous wording
Subsequent to March 31, 2024, we made an additional voluntary principal payment of $50 million related to the Term Loan Facility.
Current wording
During the three months ended June 30, 2024, we made a voluntary principal payment of $50 million related to our Term Loan Facility, which was applied to the outstanding principal balance due at maturity. Subsequent to June 30, 2024, we made an additional voluntary principal payment of $50 million related to the Term Loan Facility.
Previous wording
All outstanding amounts related to suppliers participating in the SCF are recorded within accounts payable in our condensed consolidated balance sheet and associated payments are included as an operating cash flow in the condensed consolidated statement of cash flows. As of March 31, 2024, the amount of obligations outstanding that we have confirmed as valid under the SCF was$9 million. As of March 31, 2023, there were no obligations outstanding that we had confirmed as valid under the SCF.
Current wording
All outstanding amounts related to suppliers participating in the SCF are recorded within accounts payable in our condensed consolidated balance sheet and associated payments are included as an operating cash flow in the condensed consolidated statement of cash flows. As of June 30, 2024, the amount of obligations outstanding that we have confirmed as valid under the SCF was $9 million. As of December 31, 2023, the amount of obligations outstanding that we had confirmed as valid under the SCF was $19 million.
Previous wording
During the three months ended March 31, 2024, a cash dividend of $0.23 per share was declared and paid. On April 25, 2024, a quarterly cash dividend of $0.23 per share was declared and is to be paid on May 31, 2024. We expect to continue paying cash dividends on a quarterly basis; however, future dividends are at the discretion of our Board of Directors and will depend upon our earnings, capital requirements, financial condition, contractual limitations (including under the Amended External Debt Facilities) and other factors.
Current wording
During the three and six months ended June 30, 2024, cash dividends of $0.23 and $0.46 per share, respectively, were declared and paid. On July 25, 2024, a quarterly cash dividend of $0.23 per share was declared and is to be paid on August 30, 2024. We expect to continue paying cash dividends on a quarterly basis; however, future dividends are at the discretion of our Board of Directors and will depend upon our earnings, capital requirements, financial condition, contractual limitations (including under the Amended External Debt Facilities) and other factors.
Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
Cost of Sales. Cost of sales decreased by $38 million, or 5%, to $674 million. The decrease was primarily driven by lower material and manufacturing costs and lower volume.
Current report — wording carried from elsewhere
The following discussion should be read in conjunction with our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Detailed comparisons of revenue and results are presented in the discussions of the operating segments, which follow our consolidated results discussion.
Current report — wording carried from elsewhere
Aggregation of Segment Revenue and Adjusted EBITDA
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(2)Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures” for details, including a reconciliation between net income and Adjusted EBITDA.
Current report — wording carried from elsewhere
NM - Percentage change is not meaningful.
Current report — wording carried from elsewhere
(1)Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures” for details, including a reconciliation between net income and Adjusted EBITDA.
Current report — wording carried from elsewhere
Components of Change in Net Revenues for the Six Months Ended June 30, 2024 vs. the Six Months Ended June 30, 2023
Current report — wording carried from elsewhere
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $15 million, or 7%, to $227 million primarily due to higher personnel and advertising costs.
Current report — wording carried from elsewhere
Total Segment Net Revenues. Hefty Tableware total segment net revenues decreased by $25 million, or 5%, to $450 million. The decrease in net revenues was primarily driven by lower volume and lower pricing.