REYN - Earnings call 3 2023 | Reynolds Consumer Products Inc.

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Operator

Greetings, and welcome to the Reynolds Consumer Products Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mark Swartzberg, Vice President of Investor Relations. Thank you, sir.

You may begin.

Mark Swartzberg

operator. you, Thank and Consumer everyone, for us joining Good Third thank Quarter Reynolds Products' Call. XXXX on morning, you Earnings Conference that being is Investor our this webcast website note corporate the of Relations recorded reynoldsconsumerproducts.com. at on section Please and call

and earnings are also presentation available. Our accompanying slides release press

XX. With the RCP Officer Scott and Huckins, are recently joined call Lance and Financial our President Officer; me Executive Chief Officer; November Financial becomes on and on Chief Chief Michael today Mitchell, Graham, our who

our discuss Mike environment provide third For will and our capital additional the macroeconomic Lance results, the and call, our on guide category will quarter, allocation. performance. our detail

Following call for prepared the open we remarks, questions. will

Before provide we couple to begin, of a would reminders. I like

filings, and changes refer statements uncertainties Risk differ beliefs. to risks, annual First, intend outcomes circumstances results reflect to described XX-Q. in circumstances alter subject section the today. These the Please to statements or not Please does including Form after this morning's in forward-looking discussion expectations contain statements company these in call. are note and may could from on arising Form those our report to XX-K update our forward-looking and report our events our cause that materially actual current SEC that quarterly based and Factors on to on or

release, Investor of site. press today's found on call, earnings be to GAAP these of non-GAAP Copies Relations Reconciliations presentation or non-GAAP in of section our financial Form measures. our XX-Q. during Second, are can financial we will certain deck refer the adjusted which measures available and to investor

to over the Now I'd to turn Lance. like call

Lance Mitchell

financial Scott turn Scott trends guide. the will when on turn great at over what our a detail environment, of our performance then us quarter the stronger. moment After by to improve our our I'll and tableware. Please Thank of profile company our to categories join you, everyone. begin RCP disposable discussing are good I'll strong to plan. Mark, as getting me part in to comes with volume He the our brands, and position in call results, our is in the history market the and in today welcoming call I on our and Huckins. Michael to provide more transition and doing the that, largest macroeconomic morning, we're

reflecting quarter. dynamic margin The continues environment, our to and a of our the RCP higher Reynolds Cooking of in our across all cash more earnings quickly in very significant extremely EBITDA revenues we've share at of the successful end in more earnings business & in plan. than I'm previously XXX plans effective net proud additional investments We challenging expanded team RCP, implementation businesses, effectively basis of than and We've execution resulting into our continued flow accomplished. recovery upper disciplined perform We deleveraging to that converted the delivered points our of and Baking for expectations increase anticipated. economic each

end, increased category of brand we allow which Z And products and research-driven high-quality business, acquired accelerate with Gen blends. millennials. Hefty introduced affordable We quarter sustainable material press-to-close company commercialization the and and a bag following to and in is production a that food us loyalty will

across headwinds, facing rising are other know, significant impacted staples. As and rates have including which you consumer U.S. households and volume challenges, inflation interest economic sales

advertising promotion consumers' by management unique to planned store We and and leveraging adapting of these cost and brands manufacturing meet model, in needs, business and innovating brands, increases challenges and strong continuing to continue productivity. to respond executing our including

actions and to our tableware in we implementing our is result, volume a X are trends. retail sales categories, As disposable growing improve stably largest

shifts We consumer channels. untracked are continued to also benefiting from

portion reminder, a tracked. large our business of As is not a

has team business set at by performance & objectives third the operational Plan, Baking row. job executing profit an for while gross done also quarter were the the our review now of Volume, market Reynolds will and increasing The in a Cooking share. outstanding start I Recovery the segment. year Reynolds met

production increase primary stabilized at extensive work foil has rates facility expand in production located to continues to efficiencies historical and Louisville, Our margins. further

distribution raising continued Wrap the points We XXX second flat foil have And among for share increasing household millennials. category, unaided the Reynolds among major the retaining Reynolds U.S. Reynolds and Cooking Baking Reynolds our billion parchment increased distribution air aided paper and surpasses drive the sales, capabilities, all the stay to of first Wrap now we Smart expanded increasing of of Reynolds Kitchen we retail with $X strength for share nationally. gains awareness Reynolds share nearly while quarter. penetration fryer largest half significant and demographics household and to & grow in foil volume parchment liners plans basis category, Canada, in and Reynolds and also and annual while in Kitchens Grid margins.

driven climb waste food well, and the billion, acquired Hefty additional category. driven led our Hefty integrated share largest waste brand bags, $X and growing by our are sales towards the and continue performing innovation. quarter are also and brand by businesses to bag sales brand by waste Our model. store bag in Hefty retail of

recognized ACV last XXXX and known Lemon Lavender both the pacesetter #X and Hefty previously years, to IRI Our for largest Fabuloso the scents, Circana Fabuloso as recently innovation by over as continue for brand X was increase.

market waste additional the impressions community-based plastics, largest the in Hefty recycled to and press-to-close time pickup channels Hefty And program Hefty food broke features harder August. brand, Cinema other XXXX. available and the media and more plates with in Zoo fall the gained major in bags for Hefty Greater Pals of expanded a Pals the Spice disposable food of brand third the bags, business than offer to we in in Hefty impressions limited major press-to-close extend bags curbside for consumers category, a aid come quarter. to the social share social brand. introduced online-only multiple Hefty and this October. our reintroduction Cincinnati's Presto we Our Pumpkin Zoo Hefty-branded and and X store during sizes bags launch plan Our of relaunch to drove food billion reliability media Hefty and recycling Renew,

to the exceptional recent disposable volume recovering tableware now Hefty tableware brand elasticity the to team team entire pressures, is holding an also which months, Hefty in In extensive and segment. to the profitability The in job category. opportunities impacting done Tableware response Turning are category. done identify has our trends share improve has research to the

retail sizes and hit drawing top insights with key price we result, points. a promotions on have performance, As line on comprehensive and partners consumer retail pack begun that plans to experience aligning improve our proprietary tableware's implementing extensive

to of results bring for are plans. a users, advertising recently Here lapsed some other Party disposable and cups new at modifying we we'll very feature increased the displays of from nonfood those based them the party features reminding do and lost showcasing dishes used and occasions. and Cups in We've We're in crafting trialed. the to highlights Hefty encouraging addition plates on

are from providing the counts still sizes. adjusting while seek We consumers value large they pack

price realize and example, time everyday to are for in key for we pack disposable counts pricing. improvement an reductions plate retail we take allowing sizes, plates, to size, adjusting points. trends. can And tableware promoted small pack in make reductions will volume It Disposable

with a the previous our model, on to and retail together brand have advantages store experience of that brand our our level growth. partners of drive improvement We high based categories and of managing plans product implementation in our improvement confidence our

further we've very We than a began in expected. expansion. down margin XXXX been challenging margins environment, across macroeconomic categories, anticipate committed initially faster cash successful flow expanding and We our margins that. in driving to recovered paying and debt and We're increasing RCP doing

the implementing tableware. plans beyond to improve All majority volume our earnings being this adds in well for sustaining disposable deleveraging of trends We and and are increasing we share XXXX. and in are growth very positioned to vast for further improvement business, up

I and friend. expansion a over that to CFO the like he his publicly Now will you. initiatives, lot speak a before We've hand remind like until growth including trusted Michael, of to of RCP, a early to company Michael would Consumer that role and our my financial know successful company. traded and management year. And as Over Michael's macroeconomic to all advisory I steady you Scott also for a at to transformation you I accomplished in after of next tell stress business listing retirement Reyvolution of you're through company introduction the Michael the our years the Products, I program volatility. together, I'd service business as period of many become will partner. would to remain us the to an Michael, of be unprecedented call for that Reynolds gratitude I missed the

Michael Graham

guide. turn morning, good and results Thank I by you, kind third then start words, really our reviewing and quarter the appreciate I'll Lance. everyone. to

revenues primarily volume management. consistent reflecting at expectations. reductions generated as balance of including and sheet our a inventory by working with increase points upper business strong We pricing the of driven discipline, basis consistency over our were EBITDA each Execution were Net and XXX improvement. margin demonstrated end strong guide, in X% strong in capital,

$XXX and the As by additional end September, quarter XXXX at by EBITDA X.Xx we an tolling end. of from million to XX-month comparison XXXX improved quarter of to flow leverage. made X.Xx net a at the result, debt million to subsequent of The adjusted of payment end we grew to third decreased debt nearly voluntary cash $XXX operating the the and

providing As XX% volatile environment. affording penalty this a to while floating floating our reminder, have facility and delever rate hedged rate we term of approximately us flexibility a the is predictability rate risk without interest in loan protection

quarter. for our better-than-expected earnings results upper to to earnings our end reflecting third Turning fourth expectations raised previous expectations our unchanged of the and We've quarter guide. year the full range,

we tableware of net year to X% Consolidated the the volume consisting bags estimated retail volume, volume. is resulting net which stable in volume X%. volume quarter, aluminum lower than expect food revenues, lower growing Our year. at for prior retail disposable X% the is for in is below and bags year lower to prior pricing, consolidated volume waste the be a higher retail year to revenue fourth and foil, now in of retail unchanged estimate X% . In decline X% consolidated X%

remain basis newly now annual Our quarter when our is to due of improvement, guide slightly our commodity we estimated in on results. our prior regarding Reyvolution of estimates of excess margin. be fourth estimate profit is This expectations our that the no a are effective estimates revenue expense, unchanged with earnings annual revenue are and cost considerations of approximately an executing changes to fourth provided savings There at Other expected in to tax our reporting second $XXX interest lower of mix estimates. the we last and incremental estimate. of in earnings increase rates the cost consistent rate the to midpoint points quarter quarter amortization, consists previous million significant capital XXX are representing following: and call. identified broadly our and savings. be our . Gross depreciation are guide, spite spending

to allocation, debt X.Xx net ] X capital automation, of Turning quarter stronger. our and shareholders of and capital anticipated to to our competencies. Overall, debt deleveraging discipline to growth, in current trailing This our our getting bolt-on position cash XX an reporting $X.X by consistent unchanged: we maintaining billion core a ratio in margin months marketplace compared our invest to billion deleveraging year-end. is and with results net of expansion previously our QX EBITDA adjusted adjusted equates of allocation $X.X improvement returning a EBITDA to [ to dividend faster business range second expect shared. $X.X year-end and end are acquisitions pursue And in strong X.Xx with priorities estimated further to and and and billion representing than target are at continued an

to stable largest performance tableware our categories, line business. plans we growing and volumes are to in in our Our top implementing X improve

additional have company. accelerate our cash opportunity opportunities expand the future We our giving and are deleverage the to margins to of strong, while us flows in investing

call achieved the the team I with would we've you. with immensely of Reynolds here this be incredible turn years. been operator, Consumer It's like my to truly last over acknowledge working over I'm progress pleasure to the earnings proud a call at will Products Now together the and before back the I that remarkable

for you shown special and to investor trust our In community to addition, and the a thank confidence you have team. analysts the

growth. entire and company's very be I'm Scott Reynolds phase team that of effective to the Finally, guiding will the confident RCP next

questions. Lance open As role we for turn to our that me to Q&A, in direct you operator, please an call and ask as to questions company. we With Scott remains the the that, advisory your

Operator

UBS. Peter [Operator comes first Instructions] Grom Our from question with

Peter Grom

of congratulations best working the you looking luck forward help wish moving over you. with I forward years. and for Scott, Michael, you the to and the all And thank

which bit the weaker to on revenue So especially than was guidance, about ask expected, front. retail XQ I wanted volume the a

commentary talk while I quarter, changed And for now, of retail to about for to expectation in official expect growth. you helpful quarter. just any I on last it think impact have may given always think what's maybe but versus I think do to But there's but fourth expectation weaker the was I August? would mistaken, the evolving wouldn't I volume performance see exit be rate? kind an volume 'XX non-retail understand how be you just sales Can to return the an

Lance Mitchell

-- the in are volumes revenue Michael and guide The start, the is the the tableware I'll retail we business, comments. In my business I'll decline. let change primarily seeing tableware add non-retail. in and to

category that we're business. we've a point Tableware an than XXX reminding that did XX% we basis margins categories, and increases item in in we other However, high up in completed than in our it's our we in over basis more that pricing is most our categories, categories. increase and than on a And those taken seeing have versus EBITDA the businesses. started worth other other everyone teens other X-year discretionary later the up

some some now take see the gone And to elasticity same we that Reynolds to the may with full as Reynolds knowing address right to crossed the Wrap, with get we've the . Nonetheless, get Wrap, through used right and activity of did we've have impact. benefit it's to those key volume we've promoted points, the actions category going we're time overall growth. playbook So price the it that and drive going previously. use thresholds

So the tableware. that's the primary change revenue in guidance on

Mark Swartzberg

Mark. that a to this add remind I'll very Peter, is what you just business. to non-retail Lance And business is our said low-margin

few very line, top not were having the where impacting it's any months it's versus effect we while our a So expectations on really significant earnings ago.

Peter Grom

And really wanted maybe & helpful. that's No, follow-up. I a about Waste ask Hefty just then to Storage.

and performance, was the share nice and touched on innovation see. it You to

as see all to fourth return this look been Did how So obviously impact quarter? with out category in largest this this quarter, your in mix competitor. a of the you evolving of branded am quarter? really volume growth disruption curious dynamic do there's your the And the to kind lot just but I at the results you

Lance Mitchell

expectations in latter the of waste some was saying Well, was, never any hear was company I first, that, cybersecurity and volume It's business across which on QX I of cybersecurity incident. wish any you want refresh driving particularly is in to and a start our Hefty our country. a along in competitor. continuing prior with by disappointing to benefit a our There part bags would of into share on mentioned, was incident very to already all as QX, to that our the and category happening across Clorox's factored QX guide. businesses

Operator

comes Mark question Astrachan next from Our Stifel. with

Mark Astrachan

make kind are for just much R&D M&A, question it the on get Is but of acquisition? That's to your Michael's One, M&A? than technology, it it, considering opportunistic et of and deleveraging willingness know-how, any partly was more cetera, commercialization one. you on starting questions to out of it's not anticipated? for because couple just history. of Or comments of trying trying faster too on the signaling What A notable me. out

Lance Mitchell

renewed a allocation postability. reusable unique program that Mark, company which performance economy, unique strategy novel this No, plant-based raw not our and in and thanks. Hefty has enhanced develop saw sustainable This with recycling our a products product capital circular and We partnerships aligns They development. Yes. with acquisition. opportunity manufacture our technologies very in and creates changed. materials

development opportunity as we as And So to but unique I enhance sustainable our that said, research this saw a and and change. opportunities products. doesn't

is on focus primary Our delevering.

Mark Astrachan

Got question. question related the maybe second and a it. to then And just that

what the the very you're just was then good So the to expansion, is to the flow-through It it in between real how thing? sustainability adjusted reinvestment, core the of just to about is there change the part be sort of good, margin of probably increased any gross in balance specific think how question avenue, obviously, and quarter. that about is thinking which about think second your selling? just And EBITDA. continues Or to

Lance Mitchell

repeat first ask the part to second one. answer I'll the of you the I'll question,

across So Michael has can and our our answer focus it. on But if scorecard at sustainable product always portfolios. you -- solutions look been ESG having on our product

have and consumers goal on choice our a goal. that have that across XXXX, way of of by ensure a to well categories all to sustainable our we're We a achieving product

sustainable is product of the part And your question those for you could this of part repeat for options Michael? second developing So consumers.

Mark Astrachan

basically reinvestment EBITDA It gross thinking about just and growth. expansion, balance then Yes. between was adjusted margin about and -- the

Michael Graham

Yes.

gross So our margin margin about & the expansion continued improvement and expansion, improvements, the year revolution expecting do when into think expect additional Cooking cost we you are full gross We mix future. Baking of savings. driven by additional

expectation our So forward. that going is

you of expansion of [indiscernible] -- to understand. was related you again look then So specifically part should can question second you... that the see our continuation what to Can again,

Mark Astrachan

Yes.

Just think reinvestment? incremental do EBITDA? do that do profit? you with think gross about about flow-through do what you How to How you

Michael Graham

-- be delever indicated debt on down to Anything but our continue this debt. beyond our would and we an and we'll in pay priority to continues pay delever that is dealt previously. basis, invest Well, down to and be priority business, with but as opportunistic

Operator

with Barclays. next question Our Lauren from comes Lieberman

Lauren Lieberman

I had on question tableware. One

than product of you're profitable that there -- that's So or this? that plans are existing wondering an business profitability are the that others. mix within as segments more using opportunity there's business if playbook to But was walked the You doing for the I through resuscitating reset business and tableware kind worked. of

reset kind there that as business within is a of opportunity you're broader this of like resuscitation plan? putting in as well Sort

Lance Mitchell

said is getting to Without question beyond details what the prepared Yes. into yes. the specific answer in I that remarks,

of profitability about, advertising which restored all products, to and displays, is promotional the invest across the and in adjusting features and flexibility I have increasing We which talked gives all those us actions counts activity.

Lauren Lieberman

Okay. if I another just space to incremental, to and the bag if on fits was there, if retailers remarks. press-to-close, you just and covered a sorry if I'm about did And know extent product launch, great then this shift you don't I was decision shelf prepared of bags Hefty that I kind I I how in this But this apologize, because the call. food early but into on curious the just with it's portfolio? slider replace reads is add if a to the from lineup to the

Lance Mitchell

another and category. to this press-to-close we've food store bag in much category the only been category point brands brand There's the brand brands successfully add At to X with both in is It category. slider in the time, there's the in one brands. likely and

So launched early We'll our the when an teams, to add a saw opportunity category. project. we put have We brand to together. management that we that and read it revenue through to get on a and category recently, success it's we too press-to-close the XXXX insights plan development just our

Lauren Lieberman

final kind flattish for conference, to starting And expectations. spoken you XXXX thing, at of volumes Okay. a as -- then our good just was It sorry, had point

and know in from non-retail the we side the of continued on tableware things. that I Now guess, about -- pressure

sort on growth Cooking Reynolds volumes? and Baking having much of think flattish then non-retail? tableware like began some Just Hefty process curious that's from about we thought they're that offset should and & of Like and driving a how is

Lance Mitchell

in in volume are more our middle and process complete. that's we of for year, we'll when have next expectations share Well, planning our the

largest I'm certainly, And in in -- are categories. with pleased dynamic operating our performance very We a macroeconomic our environment. we're

and stable bags, that's growing our retail and As in with CPGs brand remarks, driven and our better by factors, you waste including my management our And of largest leverage store bags. foil, heard is and their successful retail category in food . partners. than brand many our our many in business innovation, categories, model household volume prepared

XXXX retail our that prices stabilized, business ago flexibility costs profitability, price will, commodities improvement, actions and of into key I'm those on factored packs As And planning. the mentioned items gives retail will our moment partners. drive together tableware have and be time to our achieved with us I have confident as a they and has that require and adjust to levels will

Operator

[Operator question Goldman Our with Instructions] next English Jason Sachs. from comes

Jason English

stretching I have to like apologies directions. I'm multiple in advance Lauren,

So I & already that well, to ask see recovery apologies. the on if Cooking that's questions the addressed, It's case, Reynolds my great robust may you've margin Baking.

should of kind were EBITDA You, just get Is the reasonable number there. -- is at you And you'd you to for margin? effect level to do years of put so, that denominator system, to think level to off able price there? however, still right than quite that of numerator are well much we back at be in a the level a that lower hovering be how looking you that? margin few get And because the when below what a plus/minus or XX% if

Michael Graham

Look, to Yes, I still lot our you in on going in a January. answer we're detail question. a of an think midst it's the working give we're mean, in plan. and I Jason, pause great that more through so

Mark Swartzberg

Jason, of as XXXX, what what Lance our with and year I seen, add Michael expansion said all really just businesses. margin mentioned, Mark is here. seen a we've as in each And you've to you've achieved. story been that pleased in what we're it's would And

earnings As have year the expectations you move the come year. up as our know, through we for

that good we're exercise. think we going a the planning into So starting to cycle place be very in

Jason English

the with absolutely outsider agree of an would I looking -- from perspective in.

business. Turning waste and the to storage

was I Mr. think it

Clorox' Astrachan the to. benefit earlier around and who asked disruption the that's accruing question

of that in share You said benefit long I continue? an benefits you imagine is third should saw some disruption giving these How late quarter. the And mentioned opportunity to expect differently, some we higher you out Is case? to that maybe had. And promotional the have would than merchandising some been higher secure programming otherwise you far a how the you secure of to share? have able

Lance Mitchell

been plan, gains we'll us basis. wait see, have We'll for that how a plan and to we're developing sticky comment would think and accordingly. on our be I XXXX premature on sustained it these as

Operator

next Teixeira JPMorgan. from with Andrea question Our comes

Andrea Teixeira

you and And for along forward your congratulate patience the to label like would question the balance with looking you I in between and the and branded next steps you. of private your is My you understand you alluded offerings. just that think, and I me bags reduction you second of And to contractual have had wrong, the quarter in correct I'm the that, trash -- welcome, I working thank rising had all Scott, Michael, if QX price life the in to in through. the flowing on way. a that price because

price number how elasticity should probably you you've again, basis number So be bags given that in margin. And correct? points in do been your anything if because we XX of? issues. one, terms you're got the able your your experience to more looking to I Hefty wonder, thinking of competitors that's adjustments likely of improvement velocity and there it recover Is of gross And any the was thinking or conversely, two, will tableware impressive, -- to with given has gap if been price widen trash what price

If to in reinvest of promo points gaps? you level you is wanted the appropriate is a terms price bit feel more that that and in price or little

Lance Mitchell

point resin but do it's changed. We private not expect been there. decreases private stable pricing your and in seen first bags, waste bags. stabilized, To has make and label has And we label and nor any the and we waste haven't changes pricing didn't about significant

restored continue this that We been. from a can satisfied has level We've that margins So grow to to forward. we remains believe as point strategy the it we're our with. pricing

Andrea Teixeira

Go ahead.

Michael Graham

margin but I full continued gross our forward. & that we're And past about should think Cooking have But savings pretty I one improvements. we the get -- going expect going expect of benefits managed we and I was expansion the did additional, to mix gross well, obviously, margin demonstrated you the questions say, projects And we do we see that see was being speak year see benefit your as on working expansion. still in continued from path Reyvolution to to Baking we've Reyvolution to Reynolds this earlier, do in through. that cost we favorable. the there

Operator

at There now floor this time. are no questions over for like Mitchell to Lance the to comments. back would turn I closing further

Lance Mitchell

for are and really for business thank business. thank extend to I'd you say to doing hope the and team. our operator, everyone, for Wednesday, that like on to your going for RCP see a just City XX, finally, I sincere you, again contributions like They you, you. your questions calendars we also so you Investor also everyone I to all his we're company. interest thank an on New well. all We're to Michael our Thank mark Thank be reason York And Day. the performing Graham day you and XXXX, partnership. to that to your his in in will want miss I'd March to you then.

Operator

This concludes today's teleconference.

participation. your You may you your disconnect lines at this for time. Thank

Reynolds Consumer Products (REYN) 8 Nov 232023 Q3 Earnings call transcript