Continued Pricing to Offset Cost
Increases
Market Share Remains Strong
Prioritizing Reyvolution Cost Savings
Initiatives
Reynolds Consumer Products Inc. (“Reynolds,” “RCP” or the
“Company”) (Nasdaq: REYN) today reported results for the first
quarter ended March 31, 2022.
First Quarter 2022 Highlights
- Net Revenues of $845 million, up 12% over Q1 prior year
net revenues
- Net Income of $52 million; Adjusted Net Income of
$55 million
- Adjusted EBITDA of $112 million
- Earnings Per Share of $0.25; Adjusted Earnings Per
Share of $0.26
Net revenues increased 12% on top of record first quarter net
revenues in 2021, primarily driven by price increases. Net income
was $52 million, down 30% versus last year’s first quarter net
income, and Adjusted EBITDA was $112 million, down 20% versus last
year’s first quarter Adjusted EBITDA, driven by higher material,
manufacturing, logistics and advertising costs as well as lower
volume, which were significantly offset by price increases.
“We continue growing share in most of our categories and began
2022 with another solid quarter demonstrating our commitment to
price leadership,” said Lance Mitchell, President and Chief
Executive Officer. “We are innovating and investing in our
categories while also recovering profitability in a dynamic
environment. I remain exceptionally proud of the RCP team and see
tremendous potential for our business.”
Reynolds Cooking & Baking
- Net revenues decreased $4 million, or -1%
- Adjusted EBITDA decreased $25 million, or -47%
Net revenues decreased 1% as price increases were more than
offset by lower volume. Adjusted EBITDA decreased 47% driven by
lower volume and material cost increases in excess of price
increases.
Volume decreased 14% driven by timing of retailer inventory
replenishment as well as lower consumption and reroll sales.
The Company continues to see significant benefits from recent
product introductions, including Reynolds Wrap Everyday Non-stick
Foil, Reynolds Kitchens Unbleached Parchment and Reynolds Kitchens
Butcher Paper. International also continued to grow driven by
product portfolio expansion.
Hefty Waste & Storage
- Net revenues increased $34 million, or 18%
- Adjusted EBITDA increased $1 million, or 2%
Net revenues increased 18% driven by price increases and higher
volume. Adjusted EBITDA increased 2% as higher volume and price
increases offset higher material, manufacturing and advertising
costs.
Volume increased 6% driven by strong demand and easing of
staffing and logistics related challenges.
The Hefty portfolio performed well driven by a 13% increase in
Hefty waste bag volume, continued momentum for Hefty Fabuloso® and
expanding distribution for a wide range of waste and storage
products. Hefty EnergyBag® volume was also up double-digits driven
by growth across geographies. Commercialization of new recycling
applications of Hefty EnergyBag® collected materials also continued
in the quarter.
Hefty Tableware
- Net revenues increased $40 million, or 24%
- Adjusted EBITDA decreased $11 million, or -32%
Net revenues increased 24% driven by price increases and higher
volume. Adjusted EBITDA decreased 32% as pricing actions lagged
increases in material, manufacturing and logistics costs, partially
offset by increased volume.
Volume increased 10% driven by strength across our Hefty and
store brand portfolio.
New products remained a significant driver of growth. Hefty
ECOSAVE™, the number one sustainable brand in disposable tableware
according to IRI, continued to expand distribution, and Hefty 28oz
food storage containers, Hefty 16oz party cups, Hefty cutlery, and
new private label party cups also continued to perform
strongly.
Presto Products
- Net revenues increased $15 million, or 12%
- Adjusted EBITDA increased $1 million, or 6%
Net revenues increased 12% driven by price increases and
improved portfolio mix partially offset by lower volume. Adjusted
EBITDA increased 6% driven by higher pricing and improved portfolio
mix, which was partially offset by higher material and
manufacturing costs.
Volume decreased 3% reflecting winter storms, staffing and
logistics related disruptions that have moderated since
February.
Presto gained additional share of private label food bags in the
quarter.
Balance Sheet and Cash Flow Highlights
- At March 31, 2022, our cash and cash equivalents were $101
million, and our outstanding debt was $2,107 million, resulting in
net debt of $2,006 million.
- Capital expenditures were $28 million for the quarter ended
March 31, 2022 compared to $23 million in the prior year
period.
Fiscal Year and Second Quarter Outlook
While the Company is not changing its previously issued earnings
guidance ranges for the fiscal year ending December 31, 2022, it is
updating expected performance within previously stated ranges as
follows:
- Net revenues to be at the high end of the range of 9% to
12% growth on $3,556 million in the prior year
- Net Income to be near the low end of the range of $319
million to $349 million; Adjusted Net Income to be near the
low end of the range of $327 million to $357 million
- Adjusted EBITDA to be near the low end of the range of
$615 million to $655 million
- Earnings Per Share to be near the low end of the range
of $1.52 to $1.66 per share; Adjusted Earnings Per Share to
be near the low end of the range of $1.56 to $1.70 per share
The Company also expects Net Debt to be approximately
$1.9 to $2.0 billion at December 31, 2022.
The Company assumes elasticity increases but remains below
pre-pandemic levels and that it effectively manages staffing,
third-party manufacturing and logistics related disruptions.
The Company estimates 2022 cost pressures of approximately $450
million (previously $400 million). Commodity rates are assumed
stable by comparison to end of April levels.
The Company also expects the following results for its second
quarter ending June 30, 2022:
- Net revenues to grow 6% to 8% on $873 million in the
prior year driven by price increases
- Net Income to be in the range of $47 million to $55
million; Adjusted Net Income to be in the range of $49
million to $57 million
- Adjusted EBITDA to be in the range of $110 million to
$120 million
- Earnings Per Share to be in the range of $0.22 to $0.26
per share; Adjusted Earnings Per Share to be in the range of
$0.23 to $0.27 per share
“We continue taking action to fully recover pre-pandemic
profitability and have implemented another round of price increases
to offset additional commodity cost increases,” said Michael
Graham, Chief Financial Officer. “Our commitment to profit recovery
remains unchanged as evidenced by our pricing actions. We also
remain focused on automation and other Reyvolution initiatives to
improve earnings and cash flow and expect to see a return to
earnings growth in the second half of the year.”
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, 2022, to shareholders of record as of May 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, May
10, 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, May 24, 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 second 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 and other strategies
and anticipated trends in our business, including expected levels
of increases in 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.
Condensed Consolidated
Statements of Income
(amounts in millions, except for
per share data)
For the Three Months
Ended
March 31,
2022
2021
Net revenues
$
818
$
732
Related party net revenues
27
25
Total net revenues
845
757
Cost of sales
(677
)
(565
)
Gross profit
168
192
Selling, general and administrative
expenses
(83
)
(78
)
Other expense, net
(5
)
(3
)
Income from operations
80
111
Interest expense, net
(12
)
(12
)
Income before income taxes
68
99
Income tax expense
(16
)
(25
)
Net income
$
52
$
74
Earnings per share:
Basic
$
0.25
$
0.35
Diluted
$
0.25
$
0.35
Weighted average shares outstanding:
Basic
209.8
209.7
Diluted
209.8
209.8
Reynolds Consumer Products
Inc.
Condensed Consolidated Balance
Sheets
(amounts in millions, except for
per share data)
(Unaudited)
As of March 31,
2022
As of
December 31,
2021
Assets
Cash and cash equivalents
$
101
$
164
Accounts receivable (net of allowance for
doubtful accounts of $1 and $1)
322
316
Other receivables
9
12
Related party receivables
11
10
Inventories
648
583
Other current assets
18
19
Total current assets
1,109
1,104
Property, plant and equipment (net of
accumulated depreciation of $770 and $752)
676
677
Operating lease right-of-use assets,
net
53
55
Goodwill
1,879
1,879
Intangible assets, net
1,054
1,061
Other assets
39
36
Total assets
$
4,810
$
4,812
Liabilities
Accounts payable
$
258
$
261
Related party payables
41
38
Current portion of long-term debt
25
25
Income taxes payable
18
1
Accrued and other current liabilities
140
159
Total current liabilities
482
484
Long-term debt
2,082
2,087
Long-term operating lease liabilities
44
46
Deferred income taxes
349
351
Long-term postretirement benefit
obligation
49
50
Other liabilities
37
38
Total liabilities
$
3,043
$
3,056
Stockholders’ equity
Common stock, $0.001 par value; 2,000
shares authorized; 210 shares issued and outstanding
—
—
Additional paid-in capital
1,381
1,381
Accumulated other comprehensive income
17
10
Retained earnings
369
365
Total stockholders' equity
1,767
1,756
Total liabilities and stockholders'
equity
$
4,810
$
4,812
Reynolds Consumer Products
Inc.
Condensed Consolidated
Statements of Cash Flows
(amounts in millions)
Three Months Ended
March 31,
2022
2021
Cash provided by operating
activities
Net income
$
52
$
74
Adjustments to reconcile net income to
operating cash flows:
Depreciation and amortization
28
26
Deferred income taxes
(4
)
(6
)
Stock compensation expense
2
2
Change in assets and liabilities:
Accounts receivable, net
(6
)
9
Other receivables
3
4
Related party receivables
(1
)
(2
)
Inventories
(64
)
(88
)
Accounts payable
5
23
Related party payables
3
(4
)
Income taxes payable / receivable
20
29
Accrued and other current liabilities
(18
)
(50
)
Other assets and liabilities
(1
)
(8
)
Net cash provided by operating
activities
19
9
Cash used in investing
activities
Acquisition of property, plant and
equipment
(28
)
(23
)
Net cash used in investing
activities
(28
)
(23
)
Cash used in financing
activities
Repayment of long-term debt
(6
)
(106
)
Dividends paid
(48
)
(48
)
Net cash used in financing
activities
(54
)
(154
)
Net decrease in cash and cash
equivalents
(63
)
(168
)
Cash and cash equivalents at beginning of
period
164
312
Cash and cash equivalents at end of
period
$
101
$
144
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, 2022
$
268
$
228
$
210
$
141
$
(2
)
$
845
Three Months Ended March 31, 2021
272
194
170
126
(5
)
757
Adjusted EBITDA
Three Months Ended March 31, 2022
28
45
23
19
(3
)
112
Three Months Ended March 31, 2021
53
44
34
18
(9
)
140
(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, 2022 vs. the Three
Months Ended March 31, 2021
Price
Volume/Mix
Total
Reynolds Cooking & Baking
13
%
(14
)%
(1
)%
Hefty Waste & Storage
12
%
6
%
18
%
Hefty Tableware
14
%
10
%
24
%
Presto Products
15
%
(3
)%
12
%
Total RCP
14
%
(2
)%
12
%
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 and second 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 and Second 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 second 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)
Three Months Ended March
31,
2022
2021
(in millions)
Net income – GAAP
$
52
$
74
Income tax expense
16
25
Interest expense, net
12
12
Depreciation and amortization
28
26
IPO and separation-related costs (1)
4
3
Adjusted EBITDA (Non-GAAP)
$
112
$
140
(1)
Reflects costs related to the IPO
process, as well as costs related to our separation to operate as a
stand-alone public company. These costs are included in Other
expense, net in our consolidated statements of income.
Reynolds Consumer Products
Inc.
Reconciliation of Net Income
and EPS to Adjusted Net Income and Adjusted EPS
(amounts in millions, except per
share data)
Three Months Ended March 31,
2022
Three Months Ended March 31,
2021
Net
Income
Diluted
Shares
Diluted
EPS
Net
Income
Diluted
Shares
Diluted
EPS
As Reported - GAAP
$
52
210
$
0.25
$
74
210
$
0.35
Adjustments:
IPO and separation-related costs (1)
3
210
0.01
2
210
0.01
Adjusted (Non-GAAP)
$
55
210
$
0.26
$
76
210
$
0.36
(1)
Amounts are after tax, calculated
using a tax rate of 24.3% and 25.0% for the three months ended
March 31, 2022 and 2021, respectively, which is our effective tax
rate for the periods presented.
Reynolds Consumer Products
Inc.
Reconciliation of Net Debt to
Total Debt
(amounts in millions)
As of March 31,
2022
Current portion of Long-Term debt
$
25
Long-Term debt
2,082
Total Debt
2,107
Cash and Cash Equivalents
(101
)
Net Debt (Non-GAAP)
$
2,006
Reynolds Consumer Products
Inc.
Reconciliation of Q2 2022 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
Q2 2022 - Guidance
$
47
$
55
210
$
0.22
$
0.26
Adjustments:
IPO and separation-related costs (1)
$
2
$
2
210
$
0.01
$
0.01
Q2 2022 - Adjusted Guidance
$
49
$
57
210
$
0.23
$
0.27
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)
Net Income
Diluted Shares
Diluted Earnings Per
Share
Low
High
Outstanding
Low
High
Fiscal Year 2022 - Guidance
$
319
$
349
210
$
1.52
$
1.66
Adjustments:
IPO and separation-related costs (1)
$
8
$
8
210
$
0.04
$
0.04
Fiscal Year 2022 - Adjusted
Guidance
$
327
$
357
210
$
1.56
$
1.70
(1)
Amounts are after tax calculated
using a tax rate of 25.0%, which is the Company’s expected tax rate
for Q2 and FY 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220510005449/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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