Reynolds Consumer Products Reports First Quarter 2023 Financial Results
First Quarter In-line with Expectations
Reynolds Cooking & Baking Recovery on Track
Marketplace Leadership Continues
Full Year Guide Reaffirmed
First Quarter 2023 Highlights
-
Net Revenues of
, up$874 million 3% over Q1 prior year net revenues -
Net Income of
vs.$17 million in Q1 2022$52 million -
Adjusted EBITDA of
vs.$82 million in Q1 2022$112 million -
Earnings Per Share of
vs.$0.08 in Q1 2022; Adjusted Earnings Per Share of$0.25 vs.$0.08 in Q1 2022$0.26 -
Operating Cash Flow of
vs.$88 million in Q1 2022$19 million
Net revenues increased
“Our results for the first quarter were in-line with our expectations and we believe we are well positioned for substantial earnings growth in 2023,” said Lance Mitchell, President and Chief Executive Officer. “The Reynolds Cooking & Baking recovery is off to a strong start, and our other three segments are also performing well, reflecting our category leadership and the advantage of our integrated brand and store brand model. I am extremely proud of the RCP team and look forward to building on our marketplace momentum, in addition to reporting strong financial results for the year.”
Reynolds Cooking & Baking
-
Net revenues increased
, or$15 million 6% -
Adjusted EBITDA decreased
, or$24 million 86%
Net revenues increased
Actions to stabilize operations and improve operational efficiencies performed well against internal targets, consistent with margin objectives for the quarter and for the year.
Volume increased
Hefty Waste & Storage
-
Net revenues increased
, or$5 million 2% -
Adjusted EBITDA increased
, or$10 million 22%
Net revenues increased
Volume decreased
Increased advertising and innovation drove commercial performance in the quarter, contributing to share gains for Hefty waste bags and significantly improved share trends for Hefty slider bags. Distribution of new half-gallon freezer bags helped drive improving trends for Hefty slider bags in the last 4 weeks of the quarter.
Innovation highlights include further expansion of Hefty Fabuloso® Lavender products, increased distribution of new Hefty Fabuloso® Lemon products, and the introduction of Hefty and store branded waste bags with post-consumer recycled materials.
Hefty EnergyBag™ now includes drawstring innovation and was also relaunched as Hefty ReNew™.
Hefty Tableware
-
Net revenues increased
, or$14 million 7% -
Adjusted EBITDA increased
, or$7 million 30%
Net revenues increased
Volume decreased
Hefty Tableware gained brand share of disposable tableware in the quarter driven by continued share growth of disposable plates. Our sustainable dish portfolio also grew share in the quarter.
Presto Products
-
Net revenues increased
, or$3 million 2% - Adjusted EBITDA was flat
Net revenues increased
Volume increased
Presto gained additional share of store branded food bags in the quarter, and new products remained a contributor to growth. Innovation highlights include strength from stand-and-fill food bags, which continue to provide a point of difference for customers and consumers.
Balance Sheet and Cash Flow Highlights
At March 31, 2023, our cash and cash equivalents were
Operating cash flow of
Fiscal Year and Second Quarter Outlook
The Company reiterates its outlook for the full year and introduces its second quarter 2023 outlook as follows:
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Fiscal Year 2023 Outlook |
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Net revenues |
Flat +/- |
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Net income⁽¹⁾ |
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Adjusted EBITDA |
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Earnings per share⁽¹⁾ |
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Net debt |
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Q2 2023 Outlook |
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Net revenues |
Flat to |
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Net income⁽¹⁾ |
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||||||||||
Adjusted EBITDA |
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Earnings per share⁽¹⁾ |
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(1) | The Company is not providing projected adjusted net income or adjusted earnings per share, as it does not anticipate using or presenting such non-GAAP metrics in these periods. |
We expect to further recover pre-pandemic profitability in 2023 driven by improving performance for Reynolds Cooking & Baking and continued solid performance for Hefty Waste & Storage, Hefty Tableware and Presto.
Commodity rates are assumed to be relatively stable versus end of April levels. However, the carryover of higher cost aluminum and the impact of operational inefficiencies in Reynolds Cooking & Baking are expected to impact second quarter results, though to a lesser extent than in the first quarter.
“Our first quarter results were consistent with our expectations, driven by a solid top-line, execution of our plans to stabilize Reynolds Cooking & Baking operations and restored profitability in our Hefty Waste & Storage, Hefty Tableware and Presto segments,” said Michael Graham, Chief Financial Officer. “We expect flat to
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 the financial results at 7:00 a.m. CT (8:00 a.m. ET) today. The dial-in for the conference call is (877) 423-9813 or (201) 689-8573. A simultaneous webcast and all related earnings materials will be available on the Company’s website at https://investors.reynoldsconsumerproducts.com.
About Reynolds Consumer Products Inc.
Reynolds Consumer Products is a leading provider of household products that simplify daily life so consumers can enjoy what matters most. With a presence in
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 2023 guidance. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “intends,” “outlook,” “forecast”, “position”, “committed,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “model”, “assumes,” “confident,” “look forward,” “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 recovery of profitability, 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
Reynolds Consumer Products Inc. Consolidated Statements of Income (amounts in millions, except for per share data) |
|||||||||
|
For the Three Months Ended |
|
|||||||
|
March 31, |
|
|||||||
|
2023 |
|
2022 |
|
|||||
Net revenues |
$ |
852 |
|
|
$ |
818 |
|
|
|
Related party net revenues |
|
22 |
|
|
|
27 |
|
|
|
Total net revenues |
|
874 |
|
|
|
845 |
|
|
|
Cost of sales |
|
(719 |
) |
|
|
(677 |
) |
|
|
Gross profit |
|
155 |
|
|
|
168 |
|
|
|
Selling, general and administrative expenses |
|
(105 |
) |
|
|
(83 |
) |
|
|
Other income (expense), net |
|
2 |
|
|
|
(5 |
) |
|
|
Income from operations |
|
52 |
|
|
|
80 |
|
|
|
Interest expense, net |
|
(29 |
) |
|
|
(12 |
) |
|
|
Income before income taxes |
|
23 |
|
|
|
68 |
|
|
|
Income tax expense |
|
(6 |
) |
|
|
(16 |
) |
|
|
Net income |
$ |
17 |
|
|
$ |
52 |
|
|
|
Earnings per share: |
|
|
|
|
|||||
Basic |
$ |
0.08 |
|
|
$ |
0.25 |
|
|
|
Diluted |
$ |
0.08 |
|
|
$ |
0.25 |
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|||||
Basic |
|
209.9 |
|
|
|
209.8 |
|
|
|
Diluted |
|
209.9 |
|
|
|
209.8 |
|
|
|
Reynolds Consumer Products Inc. Consolidated Balance Sheets (amounts in millions, except for per share data) |
||||||
|
As of March 31, 2023 |
|
As of December 31, 2022 |
|||
Assets |
|
|
|
|||
Cash and cash equivalents |
$ |
50 |
|
$ |
38 |
|
Accounts receivable (net of allowance for doubtful accounts of |
|
342 |
|
|
348 |
|
Other receivables |
|
3 |
|
|
15 |
|
Related party receivables |
|
18 |
|
|
7 |
|
Inventories |
|
682 |
|
|
722 |
|
Other current assets |
|
38 |
|
|
41 |
|
Total current assets |
|
1,133 |
|
|
1,171 |
|
Property, plant and equipment (net of accumulated depreciation of |
|
714 |
|
|
722 |
|
Operating lease right-of-use assets, net |
|
62 |
|
|
65 |
|
Goodwill |
|
1,879 |
|
|
1,879 |
|
Intangible assets, net |
|
1,023 |
|
|
1,031 |
|
Other assets |
|
54 |
|
|
61 |
|
Total assets |
$ |
4,865 |
|
$ |
4,929 |
|
Liabilities |
|
|
|
|||
Accounts payable |
$ |
230 |
|
$ |
252 |
|
Related party payables |
|
65 |
|
|
46 |
|
Current portion of long-term debt |
|
25 |
|
|
25 |
|
Current operating lease liabilities |
|
15 |
|
|
14 |
|
Income taxes payable |
|
25 |
|
|
14 |
|
Accrued and other current liabilities |
|
130 |
|
|
145 |
|
Total current liabilities |
|
490 |
|
|
496 |
|
Long-term debt |
|
2,061 |
|
|
2,066 |
|
Long-term operating lease liabilities |
|
49 |
|
|
53 |
|
Deferred income taxes |
|
354 |
|
|
365 |
|
Long-term postretirement benefit obligation |
|
34 |
|
|
34 |
|
Other liabilities |
|
52 |
|
|
47 |
|
Total liabilities |
$ |
3,040 |
|
$ |
3,061 |
|
Stockholders’ equity |
|
|
|
|||
Common stock, outstanding |
|
— |
|
|
— |
|
Additional paid-in capital |
|
1,386 |
|
|
1,385 |
|
Accumulated other comprehensive income |
|
39 |
|
|
52 |
|
Retained earnings |
|
400 |
|
|
431 |
|
Total stockholders' equity |
|
1,825 |
|
|
1,868 |
|
Total liabilities and stockholders' equity |
$ |
4,865 |
|
$ |
4,929 |
|
Reynolds Consumer Products Inc. Consolidated Statements of Cash Flows (amounts in millions) |
||||||||
|
Three Months Ended March 31, |
|||||||
|
2023 |
|
2022 |
|||||
Cash provided by operating activities |
|
|
|
|||||
Net income |
$ |
17 |
|
|
$ |
52 |
|
|
Adjustments to reconcile net income to operating cash flows: |
|
|
|
|||||
Depreciation and amortization |
|
30 |
|
|
|
28 |
|
|
Deferred income taxes |
|
(9 |
) |
|
|
(4 |
) |
|
Stock compensation expense |
|
3 |
|
|
|
2 |
|
|
Change in assets and liabilities: |
|
|
|
|||||
Accounts receivable, net |
|
6 |
|
|
|
(6 |
) |
|
Other receivables |
|
12 |
|
|
|
3 |
|
|
Related party receivables |
|
(11 |
) |
|
|
(1 |
) |
|
Inventories |
|
40 |
|
|
|
(64 |
) |
|
Accounts payable |
|
(15 |
) |
|
|
5 |
|
|
Related party payables |
|
19 |
|
|
|
3 |
|
|
Income taxes payable / receivable |
|
12 |
|
|
|
20 |
|
|
Accrued and other current liabilities |
|
(15 |
) |
|
|
(18 |
) |
|
Other assets and liabilities |
|
(1 |
) |
|
|
(1 |
) |
|
Net cash provided by operating activities |
|
88 |
|
|
|
19 |
|
|
Cash used in investing activities |
|
|
|
|||||
Acquisition of property, plant and equipment |
|
(22 |
) |
|
|
(28 |
) |
|
Net cash used in investing activities |
|
(22 |
) |
|
|
(28 |
) |
|
Cash used in financing activities |
|
|
|
|||||
Repayment of long-term debt |
|
(6 |
) |
|
|
(6 |
) |
|
Dividends paid |
|
(48 |
) |
|
|
(48 |
) |
|
Net cash used in financing activities |
|
(54 |
) |
|
|
(54 |
) |
|
Net increase (decrease) in cash and cash equivalents |
|
12 |
|
|
|
(63 |
) |
|
Cash and cash equivalents at beginning of period |
|
38 |
|
|
|
164 |
|
|
Cash and cash equivalents at end of period |
$ |
50 |
|
|
$ |
101 |
|
|
|
|
|
|
|||||
Cash paid: |
|
|
|
|||||
Interest |
|
28 |
|
|
|
10 |
|
|
Reynolds Consumer Products Inc. Segment Results (amounts in millions) |
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|
Reynolds Cooking & Baking |
|
Hefty Waste & Storage |
|
Hefty Tableware |
|
Presto Products |
|
Unallocated(1) |
|
Total |
||||||||
Revenues |
|
||||||||||||||||||
Three Months Ended March 31, 2023 |
$ |
283 |
|
$ |
233 |
|
$ |
224 |
|
$ |
144 |
|
$ |
(10 |
) |
|
$ |
874 |
|
Three Months Ended March 31, 2022 |
|
268 |
|
|
228 |
|
|
210 |
|
|
141 |
|
|
(2 |
) |
|
|
845 |
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three Months Ended March 31, 2023 |
$ |
4 |
|
$ |
55 |
|
$ |
30 |
|
$ |
19 |
|
$ |
(26 |
) |
|
$ |
82 |
|
Three Months Ended March 31, 2022 |
|
28 |
|
|
45 |
|
|
23 |
|
|
19 |
|
|
(3 |
) |
|
|
112 |
(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, 2023 vs. the Three Months Ended March 31, 2022 |
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|
Price |
|
Volume/Mix |
|
Total |
|
||||
Reynolds Cooking & Baking |
3 |
% |
3 |
|
% |
6 |
% |
|||
Hefty Waste & Storage |
6 |
% |
(4 |
) |
% |
2 |
% |
|||
Hefty Tableware |
13 |
% |
(6 |
) |
% |
7 |
% |
|||
Presto Products |
— |
% |
2 |
|
% |
2 |
% |
|||
Total RCP |
5 |
% |
(2 |
) |
% |
3 |
% |
|||
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 (“Adjusted EPS”) as Net Income and Earnings Per Share (“EPS”) calculated in accordance with GAAP, plus 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 measures 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 measures provide 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 2023, where adjusted, is provided on a non-GAAP basis. The Company cannot reconcile its expected Net Debt at December 31, 2023 to expected total debt without reasonable effort because certain items that impact total debt and other reconciling measures are out of the Company’s control and/or cannot be reasonably predicted at this time, to 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 December 31, 2023 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, |
|
|||||
|
2023 |
|
2022 |
|
|||
|
(in millions) |
|
|||||
Net income – GAAP |
$ |
17 |
|
$ |
52 |
|
|
Income tax expense |
|
6 |
|
|
16 |
|
|
Interest expense, net |
|
29 |
|
|
12 |
|
|
Depreciation and amortization |
|
30 |
|
|
28 |
|
|
IPO and separation-related costs (1) |
|
— |
|
|
4 |
|
|
Adjusted EBITDA (Non-GAAP) |
$ |
82 |
|
$ |
112 |
|
(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) |
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|
Three Months Ended March 31, 2023 |
|
Three Months Ended March 31, 2022 |
|||||||||||||
|
Net Income |
|
Diluted Shares |
|
Diluted EPS |
|
Net Income |
|
Diluted Shares |
|
Diluted EPS |
|||||
As Reported - GAAP |
$ |
17 |
|
210 |
|
$ |
0.08 |
|
$ |
52 |
|
210 |
|
$ |
0.25 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|||||
IPO and separation-related costs (1) |
|
— |
|
210 |
|
|
— |
|
|
3 |
|
210 |
|
|
0.01 |
|
Adjusted (Non-GAAP) |
$ |
17 |
|
210 |
|
$ |
0.08 |
|
$ |
55 |
|
210 |
|
$ |
0.26 |
(1) |
Amounts are after tax, calculated using a tax rate of |
|
Reynolds Consumer Products Inc. Reconciliation of Net Debt to Total Debt (amounts in millions) |
||||
|
As of March 31, 2023 |
|||
Current portion of long-term debt |
$ |
25 |
|
|
Long-term debt |
|
2,061 |
|
|
Total debt |
|
2,086 |
|
|
Cash and cash equivalents |
|
(50 |
) |
|
Net debt (non-GAAP) |
$ |
2,036 |
|
|
Reynolds Consumer Products Inc. Reconciliation of Q2 2023 and FY2023 Net Income Guidance to Adjusted EBITDA Guidance (amounts in millions) |
||||||||||||
|
Three Months Ended June 30, 2023 |
|
Year Ended December 31, 2023 |
|||||||||
|
Low |
|
High |
|
Low |
|
High |
|||||
Net income (GAAP) |
$ |
57 |
|
$ |
64 |
|
$ |
274 |
|
$ |
296 |
|
Income tax expense |
|
19 |
|
|
22 |
|
|
91 |
|
|
99 |
|
Interest expense, net |
|
30 |
|
|
30 |
|
|
120 |
|
|
120 |
|
Depreciation and amortization |
|
29 |
|
|
29 |
|
|
120 |
|
|
120 |
|
Adjusted EBITDA |
$ |
135 |
|
$ |
145 |
|
$ |
605 |
|
$ |
635 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230510005218/en/
Investor Contact
Mark Swartzberg
Mark.Swartzberg@reynoldsbrands.com
(847) 482-4081
Source: Reynolds Consumer Products Inc.