Reynolds Consumer Products Reports First Quarter 2021 Financial Results
Reynolds Consumer Products Inc. (“Reynolds,” “RCP” or the “Company”) (Nasdaq: REYN) today reported results for the first quarter 2021 ended March 31, 2021.
First Quarter 2021 Highlights
-
Net Revenues of
$757 million , up4% over Q1 prior year net revenues -
Net Income of
$74 million ; Adjusted Net Income of$76 million -
Earnings Per Share of
$0.35 ; Adjusted Earnings Per Share of$0.36 -
Adjusted EBITDA of
$140 million , up4% over Q1 prior year Adjusted EBITDA
Net revenues increased
“We delivered another quarter of strong top-line and bottom-line growth as the strength of our brands and continued momentum in our business enabled us to navigate the headwinds from February storms and unprecedented commodity cost increases,” said Lance Mitchell, President and Chief Executive Officer. “We are increasing our forecast for even stronger topline growth over the balance of the year, reflecting planned additional price increases, increasing consumption, innovation, and replenishment at retail. Our first quarter results and rest of the year revenue forecast demonstrate RCP’s business model for sustained growth.”
Segment Results
Reynolds Cooking & Baking
-
Net revenues increased
$29 million , or12% -
Adjusted EBITDA increased
$13 million , or33%
Net revenues increased
We launched and expanded distribution of multiple new products in the quarter, contributing to strong category and branded share growth for foil, parchment and other Reynolds Kitchens products.
Hefty Waste & Storage
-
Net revenues increased
$2 million , or1% -
Adjusted EBITDA decreased
$11 million , or -20%
Net revenues increased
We implemented price increases across the Hefty waste and storage product portfolio, and our brands continued to perform very well. Based on survey data, household consumption of waste and food bags also continues at rates well above pre-pandemic levels.
Hefty Tableware
-
Net revenues decreased
$8 million , or -4% -
Adjusted EBITDA decreased
$1 million , or -3%
Net revenues decreased
We expanded distribution of ECOSAVE™ tableware, cited by Product of the Year USA as 2021 disposable tableware product of the year, as well as expanded distribution of multiple new products in the quarter, contributing to dollar share gains in party cups and disposable dishes.
Presto Products
-
Net revenues decreased
$1 million , or -1% -
Adjusted EBITDA decreased
$5 million , or -22%
Net revenues decreased
The Presto Products business unit has expanded distribution for several major store brands, and we believe the business is positioned to make additional gains.
Balance Sheet and Cash Flow Highlights
-
At March 31, 2021, our cash and cash equivalents were
$144 million , and our outstanding debt was$2,127 million , resulting in net debt of$1,983 million . -
Capital expenditures were
$23 million for each of the quarters ended March 31, 2021 and 2020.
Fiscal Year and Second Quarter Outlook
The Company is updating its previously-disclosed outlook.
Building on strong first quarter net revenue growth and pricing actions, the Company is increasing its full year revenue outlook, expecting high single digit revenue growth underpinned by anticipated continued elevated consumption, innovation, retail replenishment, and pricing.
The Company is facing estimated in-year cost pressures exceeding
On an annualized basis, aggregated pricing actions are expected to cover the increases in input costs, but the Company is lowering expected full year earnings to reflect the short-term implications of pricing in an environment when costs are still increasing. As we anticipate pricing to catch up to increased input costs through the rest of the year, margins are expected to expand sequentially in the third and fourth quarters.
The Company now expects the following results for its fiscal year ending December 31, 2021:
-
Net revenues to grow high single digits on
$3,263 million in the prior year -
Net Income to be in the range of
$372 million to$395 million ; Adjusted Net Income to be in the range of$384 million to$407 million -
Earnings Per Share to be in the range of
$1.77 t o$1.88 per share; Adjusted Earnings Per Share to be in the range of$1.83 t o$1.94 per share -
Adjusted EBITDA to be in the range of
$670 million to$700 million -
Net Debt to be approximately
$1.8 billion at December 31, 2021
With additional price increases going into effect during the second quarter, the Company is expecting high single digit revenue growth in its second quarter.
Despite the expected revenue growth over the prior year quarter, the Company expects short-term earnings pressure in the second quarter, reflecting increases in commodity and logistics costs that precede price increases as well as continuing impacts from February’s storms.
The Company expects the following results for its second quarter ending June 30, 2021:
-
Net revenues to grow high single digits on
$822 million in the prior year -
Net Income to be in the range of
$73 million to$80 million ; Adjusted Net Income to be in the range of$76 million to$83 million -
Earnings Per Share to be in the range of
$0.35 t o$0.38 per share; Adjusted Earnings Per Share to be in the range of$0.36 t o$0.39 per share -
Adjusted EBITDA to be in the range of
$140 million to$150 million
“We expect 2021 to be another year of record net revenues and volume and are using all available tools, including additional pricing and expanded Reyvolution cost savings, in our plans to offset increased commodity, logistics and related costs,” said Michael Graham, Chief Financial Officer. “Our first round of price increases went into effect as planned, and a second round is underway with plans for a third round in the third quarter. However, there is a difference between the impact of recent cost increases and the timing of related price increases. We therefore expect considerable margin pressure in the second quarter, followed by sequential margin improvement in the third and fourth quarters as higher prices go into effect.”
Quarterly Dividend
The Company’s Board of Directors has approved a quarterly dividend of
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 Wednesday May 5, 2021. 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 Wednesday, May 19, 2021, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 13717992.
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
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 2021 guidance. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “outlook,” “forecast”, “committed,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “model”, “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. 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.
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For the Three Months Ended |
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March 31, |
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|||||
|
|
2021 |
|
|
2020 |
|
||
Net revenues |
|
$ |
732 |
|
|
$ |
691 |
|
Related party net revenues |
|
|
25 |
|
|
|
39 |
|
Total net revenues |
|
|
757 |
|
|
|
730 |
|
Cost of sales |
|
|
(565 |
) |
|
|
(541 |
) |
Gross profit |
|
|
192 |
|
|
|
189 |
|
Selling, general and administrative expenses |
|
|
(78 |
) |
|
|
(82 |
) |
Other expense, net |
|
|
(3 |
) |
|
|
(15 |
) |
Income from operations |
|
|
111 |
|
|
|
92 |
|
Interest expense, net |
|
|
(12 |
) |
|
|
(27 |
) |
Income before income taxes |
|
|
99 |
|
|
|
65 |
|
Income tax expense |
|
|
(25 |
) |
|
|
(39 |
) |
Net income |
|
$ |
74 |
|
|
$ |
26 |
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.35 |
|
|
$ |
0.14 |
|
Diluted |
|
$ |
0.35 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
209.7 |
|
|
|
188.8 |
|
Effect of dilutive securities |
|
|
0.1 |
|
|
|
0.2 |
|
Diluted |
|
|
209.8 |
|
|
|
189.0 |
|
Reynolds Consumer Products Inc.
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(Unaudited)
|
|
|
As of
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Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
144 |
|
|
$ |
312 |
|
Accounts receivable (net of allowance for doubtful accounts of |
|
|
283 |
|
|
|
292 |
|
Other receivables |
|
|
5 |
|
|
|
9 |
|
Related party receivables |
|
|
10 |
|
|
|
8 |
|
Inventories |
|
|
507 |
|
|
|
419 |
|
Other current assets |
|
|
22 |
|
|
|
13 |
|
Total current assets |
|
|
971 |
|
|
|
1,053 |
|
Property, plant and equipment (net of accumulated depreciation of |
|
|
611 |
|
|
|
612 |
|
Operating lease right-of-use assets, net |
|
|
62 |
|
|
|
61 |
|
Goodwill |
|
|
1,879 |
|
|
|
1,879 |
|
Intangible assets, net |
|
|
1,084 |
|
|
|
1,092 |
|
Other assets |
|
|
32 |
|
|
|
25 |
|
Total assets |
|
$ |
4,639 |
|
|
$ |
4,722 |
|
Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
203 |
|
|
$ |
185 |
|
Related party payables |
|
|
36 |
|
|
|
41 |
|
Current portion of long-term debt |
|
|
25 |
|
|
|
25 |
|
Income taxes payable |
|
|
34 |
|
|
|
6 |
|
Accrued and other current liabilities |
|
|
126 |
|
|
|
175 |
|
Total current liabilities |
|
|
424 |
|
|
|
432 |
|
Long-term debt |
|
|
2,102 |
|
|
|
2,208 |
|
Long-term operating lease liabilities |
|
|
52 |
|
|
|
51 |
|
Deferred income taxes |
|
|
322 |
|
|
|
326 |
|
Long-term postretirement benefit obligation |
|
|
54 |
|
|
|
53 |
|
Other liabilities |
|
|
42 |
|
|
|
37 |
|
Total liabilities |
|
$ |
2,996 |
|
|
$ |
3,107 |
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Common stock, outstanding |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
1,380 |
|
|
|
1,381 |
|
Accumulated other comprehensive income |
|
|
4 |
|
|
|
1 |
|
Retained earnings |
|
|
259 |
|
|
|
233 |
|
Total stockholders' equity |
|
|
1,643 |
|
|
|
1,615 |
|
Total liabilities and stockholders' equity |
|
$ |
4,639 |
|
|
$ |
4,722 |
|
Reynolds Consumer Products Inc.
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Three Months Ended |
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|||||
|
|
March 31, |
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|
|
2021 |
|
|
2020 |
|
||
Cash provided by (used in) operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
74 |
|
|
$ |
26 |
|
Adjustments to reconcile net income to operating cash flows: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
26 |
|
|
|
24 |
|
Deferred income taxes |
|
|
(6 |
) |
|
|
28 |
|
Unrealized losses on derivatives |
|
|
— |
|
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