Reports record annual net revenues and
profits
Sees sustained and fundamental shift in
demand
Expects another year of record net
revenues
Announces $100 million voluntary debt
payment
Announces 5% increase in quarterly
dividend
Reynolds Consumer Products Inc. (“Reynolds,” “RCP” or the
“Company”) today reported results for the fiscal year and fourth
quarter ended December 31, 2020.
Fiscal Year 2020 Highlights
- Net Revenues of $3,263 million, up 8% on prior year net
revenues
- Net Income of $363 million; Adjusted Net Income
of $413 million 1
- Earnings Per Share of $1.77; Adjusted Earnings Per
Share of $1.971
- Adjusted EBITDA of $717 million 1 , up 9% on prior year
Adjusted EBITDA
Net revenues growth was driven by a shift to more at-home use of
Company products and the introduction of several new products. The
increase in Adjusted EBITDA was driven by the increase in net
revenues and lower material and manufacturing costs, partially
offset by higher personnel, advertising and logistics costs.
“We reported record performance in 2020, our first year as a
public company, delivering strong results because of the hard work,
dedication, and commitment of our more than 5,000 employees in a
very difficult environment,” said Lance Mitchell, President and
Chief Executive Officer. “We expect to build on last year’s
performance with another year of record net revenues. We will
continue to grow with our categories due to a sustained and
fundamental shift in consumer demand coupled with our innovations
and best in class service. Our role as category champions aligns us
with our retailers, who are also invested in continued growth. We
expect 2021 to be another dynamic year, and I look forward to a
second consecutive year of strong performance as a public
company.”
Fourth Quarter 2020 Highlights
- Net Revenues of $888 million, up 6% on prior year net
revenues
- Net Income of $112 million; Adjusted Net Income
of $119 million 2
- Earnings Per Share of $0.53; Adjusted Earnings Per
Share of $0.572
- Adjusted EBITDA of $198 million 2 , down 7% from prior
year Adjusted EBITDA
The increase in net revenues was driven by strong demand, most
significantly in our Hefty Waste & Storage segment, and the
introduction of new products. The decrease in Adjusted EBITDA was
primarily due to increased material and manufacturing, logistics,
advertising and personnel costs.
Segment Results
Reynolds Cooking & Baking
Net revenues increased 8% for the year, driven by consumer
demand and growth across the portfolio, resulting in more than $1
billion in annual retail sales for the Reynolds brand family by
yearend. In the fourth quarter, net revenues increased slightly and
were constrained by low inventory levels entering the quarter and
COVID-related staffing challenges encountered during the quarter.
The 9% decrease in Adjusted EBITDA in the fourth quarter was driven
by higher logistics and advertising costs.
Hefty Waste & Storage
Net revenues increased 15% for the year, driven by consumer
demand and the continued strength of the Hefty brand and portfolio.
In the fourth quarter, net revenues grew 22%, driven by increased
consumer demand and higher pricing, reflecting fewer trade
promotions than in the prior year. The 10% increase in Adjusted
EBITDA in the fourth quarter was due to the revenue growth,
partially offset by increased material and manufacturing costs.
Hefty Tableware
Net revenues increased 2% for the year, driven by the
introduction of several new products and recovery from an initial
fall-off in demand for business and restaurant items shortly after
the start of the COVID-19 pandemic. In the fourth quarter, net
revenues were flat versus the prior year with the impact of new
products and higher pricing, offset by softness in business and
restaurant items serviced by certain retail partners and fewer and
smaller social gatherings as a result of the COVID-19 pandemic. The
4% decrease in Adjusted EBITDA in the fourth quarter was primarily
driven by increased advertising and material and manufacturing
costs.
Presto Products
Net revenues increased 4% for the year, driven by consumer
demand and in spite of the exit of low-margin business in the fall
of 2019. In the fourth quarter, net revenues increased 6%, driven
by consumer demand. The 25% decrease in Adjusted EBITDA in the
fourth quarter was mainly due to increased material and
manufacturing costs.
Balance Sheet and Cash Flow Highlights
- At December 31, 2020, our cash and cash equivalents was $312
million, and our outstanding debt was $2,233 million, resulting in
a net debt of $1,921 million. 3
- During 2020, we made voluntary debt payments totaling $200
million on our $2,475 million senior secured term loan facility.
Subsequent to December 31, 2020, we made an additional $100 million
voluntary debt payment, bringing our outstanding balance to $2,133
million.
- Capital expenditures were $143 million for the fiscal year
ended December 31, 2020, compared to $109 million in the prior
year, driven by operational ownership of two facilities previously
managed by a related party and additional capacity in response to
increased demand.
- The Company’s Board of Directors has approved a quarterly
dividend of $0.23 per common share, reflecting a 5% increase on its
prior quarterly dividend of $0.22 per share.
Fiscal Year and First Quarter Outlook
The Company expects the following results for its fiscal year
ended December 31, 2021:
- Net revenues to grow low single digits on $3,263 million
in the prior year
- Net Income to be in the range of $400 million to $415
million; Adjusted Net Income to be in the range of $412
million to $427 million 3
- Earnings Per Share to be in the range of $1.90 to $1.98
per share; Adjusted Earnings Per Share to be in the range of
$1.96 to $2.03 per share 3
- Adjusted EBITDA to be in the range of $710 million to
$730 million3
- Net Debt to be in the range of $1.7 billion to $1.8
billion 3 at December 31, 2021
The Company expects the following results for its first quarter
ended March 31, 2021:
- Net revenues to grow mid-single digits on $730 million
in the prior year
- Net Income to be in the range of $71 million to $75
million; Adjusted Net Income to be in the range of $73
million to $77 million 3
- Earnings Per Share to be in the range of $0.34 to $0.36
per share; Adjusted Earnings Per Share to be in the range of
$0.35 to $0.37 per share 3
- Adjusted EBITDA to be in the range of $138 million to
$143 million 3
“As you can see, we expect another year of record net revenues,”
said Michael Graham, Chief Financial Officer, “and we are committed
to protecting profitability with pricing and cost management to
counter rising commodity, logistics and other costs. We expect a
strong start to the year, followed by the effect of unfavorable
volume and cost comparisons in the second and third quarters and a
benefit from more favorable cost comparisons in the fourth
quarter.”
Quarterly Dividend
The Company’s Board of Directors has approved a quarterly
dividend of $0.23 per common share, reflecting a 5% increase on its
prior quarterly dividend of $0.22 per share. The Company expects to
pay this dividend on March 9, 2021 to shareholders of record as of
February 23, 2021.
Conference Call and Webcast Presentation
The Company will host a conference call to discuss these results
today at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). Please
visit the “Events & Presentations” section of Reynolds’
Investor Relations website at
https://investors.reynoldsconsumerproducts.com/ under “News &
Events” to access the live listen-only webcast and presentation.
Investors interested in participating in the live call can dial
877-423-9813 from the U.S. and 201-689-8573 internationally. The
Company has also posted presentation slides, which are available
now on Reynolds’ Investor Relations website.
A replay will be archived online in the “Events and
Presentations” section of the Investor Relations website and will
also be available telephonically approximately two hours after the
call concludes through Tuesday, February 23, 2021, by dialing
844-512-2921 from the U.S., or 412-317-6671 from international
locations, and entering confirmation code 13714457.
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 & 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 first quarter and fiscal year
2021 guidance. In some cases, you can identify these statements by
forward-looking words such as “may,” “might,” “will,” “should,”
“expects,” “outlook”, “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential,” “sees” 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 strategies
and anticipated trends in our business. 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 and in our Quarterly
Reports on Form 10-Q.
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
(in millions, except for per
share data)
Three Months Ended December
31,
Year Ended December
31,
2020
2019
2020
2019
Net revenues
$
861
$
800
$
3,147
$
2,883
Related party net revenues
27
35
116
149
Total net revenues
888
835
3,263
3,032
Cost of sales
(621
)
(572
)
(2,290
)
(2,152
)
Gross profit
267
263
973
880
Selling, general and administrative
expenses
(98
)
(74
)
(358
)
(305
)
Other expense, net
(3
)
(31
)
(29
)
(65
)
Income from operations
166
158
586
510
Non-operating expense, net
—
(1
)
—
—
Interest expense, net
(13
)
(35
)
(70
)
(209
)
Income before income taxes
153
122
516
301
Income tax expense
(41
)
(32
)
(153
)
(76
)
Net income
$
112
$
90
$
363
$
225
Earnings per share
Basic
$
0.53
$
0.58
$
1.78
$
1.45
Diluted
$
0.53
$
0.58
$
1.77
$
1.45
Shares outstanding
Basic
209.7
155.5
204.5
155.5
Diluted
209.8
155.5
204.5
155.5
Reynolds Consumer Products
Inc.
Consolidated Balance
Sheets
As of December 31
(in millions, except for per
share data)
2020
2019
Assets
Cash and cash equivalents
$
312
$
102
Accounts receivable, net
292
13
Other receivables
9
7
Related party receivables
8
14
Inventories
419
418
Other current assets
13
16
Total current assets
1,053
570
Property, plant and equipment, net
612
537
Operating lease right-of-use assets,
net
61
42
Goodwill
1,879
1,879
Intangible assets, net
1,092
1,123
Other assets
25
9
Total assets
$
4,722
$
4,160
Liabilities
Accounts payable
$
185
$
135
Related party payables
41
72
Related party accrued interest payable
—
18
Current portion of long-term debt
25
21
Accrued and other current liabilities
181
132
Total current liabilities
432
378
Long-term debt
2,208
1,990
Long-term related party borrowings
—
2,214
Long-term operating lease liabilities
51
35
Deferred income taxes
326
294
Long-term postretirement benefit
obligation
53
48
Other liabilities
37
19
Total liabilities
$
3,107
$
4,978
Stockholders’ equity
Common stock, $0.001 par value; 2,000
shares authorized; 209.7 shares issued and outstanding
—
—
Additional paid-in capital
1,381
—
Net Parent deficit
—
(823
)
Accumulated other comprehensive income
1
5
Retained earnings
233
—
Total stockholders' equity
1,615
(818
)
Total liabilities and stockholders'
equity
$
4,722
$
4,160
Reynolds Consumer Products
Inc.
Consolidated Statements of
Cash Flows
For the Years Ended December
31
(in millions)
2020
2019
Cash provided by (used in) operating
activities
Net income
$
363
$
225
Adjustments to reconcile net income to
operating cash flows:
Depreciation and amortization
99
91
Deferred income taxes
67
1
Unrealized (gains) losses on commodity
derivatives
—
(9
)
Stock compensation expense
5
—
Change in assets and liabilities:
Accounts receivable, net
(279
)
2
Other receivables
(2
)
6
Related party receivables
5
(27
)
Inventories
—
2
Accounts payable
54
(6
)
Related party payables
(28
)
(89
)
Related party accrued interest payable
(18
)
133
Income taxes payable
7
72
Accrued and other current liabilities
38
9
Other assets and liabilities
8
(7
)
Net cash provided by operating
activities
319
403
Cash provided by (used in) investing
activities
Acquisition of property, plant and
equipment
(143
)
(109
)
Advances to related parties
—
(170
)
Repayments from related parties
—
151
Net cash used in investing
activities
(143
)
(128
)
Cash provided by (used in) financing
activities
Proceeds from long-term debt, net of
discounts
2,472
—
Repayment of long-term debt
(218
)
(21
)
Repayments of PEI Group Credit
Agreement
(8
)
—
Advances from related parties
240
67
Repayments to related parties
(3,627
)
(141
)
Deferred debt transaction costs
(28
)
(4
)
Proceeds from IPO settlement facility
1,168
—
Repayment of IPO settlement facility
(1,168
)
—
Issuance of common stock
1,410
—
Equity issuance costs
(69
)
—
Dividends paid
(124
)
—
Net transfers from (to) Parent
(14
)
(97
)
Net cash provided by (used in)
financing activities
34
(196
)
Cash and cash equivalents:
Increase (decrease) in cash and cash
equivalents
210
79
Balance as of beginning of the year
102
23
Balance as of end of the year
$
312
$
102
Cash paid:
Interest - long-term debt
60
103
Interest - related party borrowings
23
6
Income taxes
76
4
Reynolds Consumer Products
Inc.
Segment Results
($ in millions)
Reynolds Cooking &
Baking
Hefty Waste &
Storage
Hefty Tableware
Presto Products
Unallocated
Total
Revenues
Three months ended December 31, 2020
$
335
$
214
$
207
$
132
$
—
$
888
Three months ended December 31, 2019
332
176
206
124
(3
)
835
Year ended December 31, 2020
1,159
818
763
533
(10
)
3,263
Year ended December 31, 2019
1,076
709
751
511
(15
)
3,032
Adjusted EBITDA
Three months ended December 31, 2020
85
53
50
18
(8
)
198
Three months ended December 31, 2019
93
48
52
24
(3
)
214
Year ended December 31, 2020
254
236
170
98
(41
)
717
Year ended December 31, 2019
209
190
178
91
(13
)
655
Components of Change in Net Revenues for the Three Month Ended
December 31, 2020 vs. the Three Month Ended December 31, 2019
Price
Volume/Mix
Total
Reynolds Cooking & Baking
—
%
1
%
1
%
Hefty Waste & Storage
3
%
19
%
22
%
Hefty Tableware
2
%
(2
)%
—
%
Presto Products
—
%
6
%
6
%
Total RCP
1
%
5
%
6
%
Components of Change in Net Revenues for the Year Ended December
31, 2020 vs. the Year Ended December 31, 2019
Price
Volume/Mix
Total
Reynolds Cooking & Baking
(2
)%
10
%
8
%
Hefty Waste & Storage
(1
)%
16
%
15
%
Hefty Tableware
1
%
1
%
2
%
Presto Products
(1
)%
5
%
4
%
Total RCP
(1
)%
9
%
8
%
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
unrealized gains and losses on commodity derivatives, factoring
discounts (pre-IPO), the allocated related party management fee
(pre-IPO) and 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, the impact of a tax
legislation change under the CARES Act enacted March 27, 2020, as
applicable, and any unrealized gains or losses on commodity
derivatives. 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 2021, where adjusted, is provided on a
non-GAAP basis, which the Company will continue to identify as it
reports its future financial results. The Company cannot reconcile
its expected Adjusted EBITDA to expected Net Income under “First
Quarter and Fiscal Year 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 first quarter and fiscal 2021
Adjusted EBITDA outlook and Net Debt outlook, as described above)
to the most directly comparable GAAP measures, on the following
page.
Reynolds Consumer Products
Inc.
Reconciliation of Net Income
to Adjusted EBITDA
(amounts in millions)
Three Months Ended December
31,
Year Ended December
31,
2020
2019
2020
2019
(in millions)
(in millions)
Net income – GAAP
$
112
$
90
$
363
$
225
Income tax expense
41
32
153
76
Interest expense, net
13
35
70
209
Depreciation and amortization
27
28
99
91
Factoring discount
—
10
—
25
Allocated related party management fee
—
3
—
10
IPO and separation-related costs
5
19
31
31
Unrealized gains on derivatives
—
—
—
(9)
Other
—
(3)
1
(3)
Adjusted EBITDA (Non-GAAP)
$
198
$
214
$
717
$
655
Reconciliation of Net Income
and EPS to Adjusted Net Income and Adjusted EPS
(amounts in millions except per
share data)
Three Months Ended December
31, 2020
Year Ended December 31,
2020
Net Income
Diluted Shares
Diluted EPS
Net Income
Diluted Shares
Diluted EPS
As Reported - GAAP
$
112
210
$
0.53
$
363
205
$
1.77
Assume full period impact of IPO shares
(1)
—
—
—
—
5
—
Total
112
210
0.53
363
210
1.73
Adjustments:
Impact of tax legislation change from the
CARES Act
3
210
0.02
27
210
0.13
IPO and separation-related costs (2)
4
210
0.02
23
210
0.11
Adjusted (Non-GAAP)
$
119
210
$
0.57
$
413
210
$
1.97
(1)
The Company has assumed the actual shares
outstanding at December 31, 2020 to be outstanding for the full
year period rather than the weighted average shares outstanding
over the course of the period as it is a more meaningful
calculation that provides consistency in comparability.
(2)
Amounts are after tax calculated using a
tax rate of 25%, which is the Company’s effective tax rate for the
three and twelve months ended December 31, 2020.
Reynolds Consumer Products Inc.
Reconciliation of Net
Debt
(amounts in millions)
As of
December 31, 2020
Current portion of Long-Term debt
$
25
Long-Term Debt
2,208
Total Debt
2,233
Cash and Cash Equivalents
(312
)
Net Debt (Non-GAAP)
$
1,921
Reconciliation of Q1 2021 Net
Income and EPS guidance to Adjusted Net Income and Adjusted EPS
guidance
(amounts in millions except per
share data)
Net Income
Diluted shares
Diluted Earnings Per
Share
low
high
outstanding
low
high
Q1 2021 - Guidance
$
71
$
75
210
$
0.34
$
0.36
Adjustments:
IPO and separation-related costs (1)
$
2
$
2
210
$
0.01
$
0.01
Q1 2021 - Adjusted Guidance
$
73
$
77
210
$
0.35
$
0.37
Reconciliation of 2021 Net
Income and EPS guidance to Adjusted Net Income and Adjusted EPS
guidance
(amounts in millions except per
share data)
Net Income
Diluted shares
Diluted Earnings Per
Share
low
high
outstanding
low
high
Fiscal Year 2021 - Guidance
$
400
$
415
210
$
1.90
$
1.98
Adjustments:
IPO and separation-related costs (1)
$
12
$
12
210
$
0.06
$
0.06
Fiscal Year 2021 - Adjusted
Guidance
$
412
$
427
210
$
1.96
$
2.03
(1)
Amounts are after tax calculated using a
tax rate of 25%, which is the Company’s expected tax rate for Q1
and FY 2021.
__________________________________________
1 Adjusted Net Income, Adjusted Earnings Per Share and Adjusted
EBITDA are non-GAAP measures. Refer to the discussion on non-GAAP
financial measures and reconciliations included in this release. In
addition, as further described in Note 1 to the non-GAAP
reconciliation included within this release, the share count
utilized for Adjusted Earnings Per Share has been adjusted to
reflect the additional shares issued as a result of the IPO as
though they were outstanding for the entire period.
2 Adjusted Net Income, Adjusted Earnings Per Share and Adjusted
EBITDA are non-GAAP measures. Refer to the discussion on non-GAAP
financial measures and reconciliations included in this release. In
addition, as further described in Note 1 to the non-GAAP
reconciliation included within this release, the share count
utilized for Adjusted Earnings Per Share has been adjusted to
reflect the additional shares issued as a result of the IPO as
though they were outstanding for the entire period.
3 Adjusted Net Income, Adjusted Earnings Per Share, Adjusted
EBITDA and Net Debt are non-GAAP measures. Refer to the discussion
on non-GAAP financial measures and reconciliations included in this
release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210209006025/en/
Investors Mark Swartzberg
Mark.Swartzberg@reynoldsbrands.com (847) 482-4081
Media Kate Ottavio Kent Kate.OttavioKent@icrinc.com (203)
682-8276
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