false 0001786431 0001786431 2022-08-09 2022-08-09

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 9, 2022

 

REYNOLDS CONSUMER PRODUCTS INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware		001-39205		45-3464426
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

1900 W. Field Court Lake Forest, Illinois		60045
(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (800) 879-5067

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 Par Value		REYN		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

---

 

 

Item 2.02. Results of Operations and Financial Condition

On August 9, 2022, Reynolds Consumer Products Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information included in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

Exhibit No.		Description
99.1		Press Release issued by Reynolds Consumer Products Inc., dated August 9, 2022
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

---

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 9, 2022
		REYNOLDS CONSUMER PRODUCTS INC.
		By:		/s/ David Watson
				David Watson
				General Counsel and Secretary

 

 

Exhibit 99.1

 

 

Reynolds Consumer Products Reports Second Quarter 2022 Financial Results

Continued Pricing Significantly Offsetting Cost Increases

Market Share Remains Strong

Stepping Up Advertising & Promotion

Expanding Reyvolution Cost Savings

LAKE FOREST, IL, August 9, 2022 – (BUSINESSWIRE) – Reynolds Consumer Products Inc. (“Reynolds,” “RCP” or the “Company”) (Nasdaq: REYN) today reported results for the second quarter ended June 30, 2022.

 

Second Quarter 2022 Highlights

 

 

Net revenues increased 5% over second quarter 2021 net revenues, driven by price increases, partially offset by a decline in volume.  Net income was $52 million, down 35% versus last year’s second quarter net income, and Adjusted EBITDA was $118 million, down 20% versus last year’s second quarter Adjusted EBITDA.  The decline in Adjusted EBITDA was driven by lower volume primarily due to declines in foil consumption as well as higher material, manufacturing, logistics and advertising costs, which were significantly offset by price increases across our entire portfolio.

 

“We narrowed the gap between pricing and cost increases in the second quarter and delivered earnings in line with our expectations in spite of slowing demand for foil,” said Lance Mitchell, President and Chief Executive Officer.  “The Reynolds Cooking & Baking business unit’s second quarter earnings were down due to lower foil consumption and higher aluminum costs in inventory.  We are taking corrective promotional price actions to improve foil trends and have seen consumption declines moderate since late June.  We also expect a substantial improvement in Reynolds Cooking & Baking margins during the fourth quarter as we ship foil reflecting lowering aluminum costs.  Our cumulative pricing actions and easing commodity costs position us for increasing investment in our categories which we expect will deliver margin improvement in the fourth quarter and full recovery of pre-pandemic profitability in 2023.”

Reynolds Cooking & Baking

Net revenues decreased 3% as price increases were more than offset by lower foil consumption and reroll volume.  Lower volume drove the majority of the Adjusted EBITDA decrease.  Material, manufacturing and logistics cost increases in excess of price increases also contributed to the Adjusted EBITDA decrease.  

---

Volume decreased 19% driven primarily by lower foil consumption and reroll volume.  Timing of retailer replenishment also impacted shipments early in the quarter.

 

Category volume in key categories including parchment, bakeware, foil and cooking bags remains above pre-pandemic levels. Reynolds Wrap volume declines have begun moderating since late June with increased promotions.  Reynolds Cooking & Baking also continues to see benefits from product introductions, including Reynolds Wrap Everyday Non-stick Foil, Reynolds Kitchens Unbleached Parchment and Reynolds Kitchens Butcher Paper.  

 

Hefty Waste & Storage

Net revenues increased 8% as price increases more than offset a volume decline.  Adjusted EBITDA increased 2% as price increases offset higher material, manufacturing, and logistics costs as well as higher advertising costs.

 

Volume decreased 3% driven by lower waste and food bag usage as consumers spend less time at home.

 

The Hefty brand was recognized by Ad Age as one of 20 brands gaining Gen Z love in 2022 and was the only major waste bag brand that grew both retail dollar sales and volume in the first half, driven by innovation and base trends, according to IRI.  Hefty Fabuloso® was a major driver, extending into high count large black bag packs and new 4 and 8 gallon items and growing to nearly $100 million in annual retail sales in the quarter.  

 

Hefty Energy Bag remains the official residential collection program of hard-to-recycle plastics in the U.S. and is expanding to Chattanooga, Tennessee this month. 

Hefty Tableware

Net revenues increased 11% driven by price increases.  Adjusted EBITDA decreased 44% as pricing lagged increases in material, manufacturing and logistics costs as well as higher advertising costs.

 

Volume was flat as gains for Hefty disposable plates and private label party cups were offset by declines in other disposable tableware.  

 

Hefty Compostable Printed Paper Plates were introduced, and Hefty ECOSAVE™ was a major source of growth again in the quarter. 

Presto Products

Net revenues increased 6% as price increases were partially offset by lower volume.  Adjusted EBITDA increased 19% driven by timing of pricing actions to recover higher material, manufacturing, and logistics costs, partially offset by lower volume.

 

Volume decreased 7% driven by lower waste and food bag usage.

 

Presto maintained strong share of private label food bags, and new products remained a major source of growth.  

---

 

Year to Date 2022 Highlights

Net revenues increased 8%, driven by price increases, partially offset by lower volume.  Net income decreased 32%, and Adjusted EBITDA decreased 20%, reflecting lower volume and the impact of price increases lagging increases in material, manufacturing and logistics costs as well as higher advertising costs.

 

Balance Sheet and Cash Flow Highlights

Fiscal Year, Third Quarter and Fourth Quarter Outlook

The Company now expects the following results for its fiscal year ending December 31, 2022:

 

 

The Company also expects Net Debt to be $1.9 billion to $2.0 billion at December 31, 2022.

 

The Company assumes additional elasticity to its expectations from May 2022 and that it effectively manages staffing, third-party manufacturing and logistics related disruptions.

 

The Company estimates 2022 cost pressures of approximately $525 million (previously approximately $450 million).  Commodity rates are assumed stable-to-easing versus end of July levels.

 

The Company also expects the following results for its third quarter ending September 30, 2022:

 

 

The Company also expects the following results for its fourth quarter ending December 31, 2022:

 

 

---

 

“Our pricing actions have significantly offset cost increases in the second quarter, and we have announced additional price increases to enable full recovery of material, manufacturing and logistics cost increases,” said Michael Graham, Chief Financial Officer.  “The combination of these price increases and easing commodity costs represents increasing flexibility to invest in our categories, substantial expected margin expansion in the fourth quarter and a strong foundation for additional margin expansion and full recovery of pre-pandemic profitability in 2023.  We are also expanding Reyvolution cost savings objectives and have identified multiple opportunities for further gains in efficiencies and profitability.”

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 August 31, 2022, to shareholders of record as of August 17, 2022.

Conference Call and Webcast Presentation

The Company will host a conference call to discuss these results at 7:00 a.m. Central Time (8:00 a.m. Eastern Time) on Tuesday, August 9, 2022.  Investors interested in participating in the live call can dial 877-423-9813 from the U.S. and 201-689-8573 internationally.  A telephone replay will be available approximately two hours after the call concludes through Tuesday, August 23, 2022, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 13726944.

 

There will also be a simultaneous, live webcast available on the Investors section of the Company’s website at www.reynoldsconsumerproducts.com. The webcast will be archived for 30 days.

About Reynolds Consumer Products Inc.

RCP’s mission is to simplify daily life so consumers can enjoy what matters most. RCP is a market-leading consumer products company with a presence in 95% of households across the United States. RCP produces and sells products across three broad categories: cooking products, waste and storage products and tableware; that are sold under iconic brands such as Reynolds and Hefty, as well as under store brands that are strategically important to RCP’s customers. Overall, across both branded and store brand offerings, RCP holds the #1 or #2 U.S. market share position in the majority of product categories in which it participates.

 

Note to Investors Regarding 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 third quarter, fourth quarter and fiscal year 2022 guidance. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “intends,” “outlook,” “forecast”, “committed,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “model”, “assumes,” “confident,” “potential” 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, 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

Contact

Investors

Mark Swartzberg

Mark.Swartzberg@reynoldsbrands.com

(847) 482-4081

 

Media

Hannah Wright

ReynoldsPR@icrinc.com

(203) 682-8287

---

Reynolds Consumer Products Inc.

Condensed Consolidated Statements of Income

(amounts in millions, except for per share data)

 

---

 

Reynolds Consumer Products Inc.

Condensed Consolidated Balance Sheets

(amounts in millions, except for per share data)

 

 

---

 

Reynolds Consumer Products Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in millions)

 

 

---

 

Reynolds Consumer Products Inc.

Segment Results

(amounts in millions)

 

 

Components of Change in Net Revenues for the Three Months Ended June 30, 2022 vs. the Three Months Ended June 30, 2021

 

 

 

Components of Change in Net Revenues for the Six Months Ended June 30, 2022 vs. the Six Months Ended June 30, 2021

 

 

 

 

---

 

Use of Non-GAAP Financial Measures

We use non-GAAP financial measures “Adjusted EBITDA,” “Adjusted Net Income,” “Adjusted Earnings Per Share,” and “Net Debt” 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 IPO and separation-related costs. We define Adjusted Net Income and Adjusted Earnings Per Share as Net Income and Earnings Per Share calculated in accordance with GAAP, plus the sum of IPO and separation-related costs.  We define Net Debt as the current portion of long-term debt plus long-term debt less cash and cash equivalents.

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 metrics 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.  Accordingly, we believe presenting these metrics provides 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, third quarter and fourth quarter 2022, where adjusted, is provided on a non-GAAP basis. The Company cannot reconcile its expected Adjusted EBITDA to expected Net Income under “Fiscal Year, Third Quarter and Fourth Quarter Outlook” without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results.  In addition, the Company cannot reconcile its expected Net Debt to expected total debt without reasonable effort because certain items that impact total debt and other reconciling metrics are out of the Company’s control and/or cannot be reasonable predicted at this time, 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 third quarter, fourth quarter, and full year 2022 Adjusted EBITDA outlook and our 2022 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)

 

 

 

 

Reynolds Consumer Products Inc.

Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS

(amounts in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

---

 

 

Reynolds Consumer Products Inc.

Reconciliation of Net Debt to Total Debt

(amounts in millions)

 

 

Reynolds Consumer Products Inc.

Reconciliation of Q3 2022 Net Income and EPS Guidance to Adjusted Net Income and Adjusted EPS Guidance

(amounts in millions, except per share data)

 

Reynolds Consumer Products Inc.

Reconciliation of Q4 2022 Net Income and EPS Guidance to Adjusted Net Income and Adjusted EPS Guidance

(amounts in millions, except per share data)

 

 

Reynolds Consumer Products Inc.

Reconciliation of 2022 Net Income and EPS Guidance to Adjusted Net Income and Adjusted EPS Guidance

(amounts in millions, except per share data)