Reynolds Consumer Products Inc. Q1 FY2025 earnings call

• Executed well in dynamic environment, outperformed categories by 2 points at retail without increased promotional spend.
• Drove innovation, net distribution gains, including new products like Hefty Press to Close food bags, Hefty Compostable cutlery, Reynolds Kitchen Air Fryer cups.
• Delivered earnings guide despite retailer destocking, used strong balance sheet for growth and margin expansion.
• Implementing spring resets and price increases, gaining shelf space, and working with retail partners on targeted promotions and assortment changes.

Net revenues were $818 million. Retail revenues were $767 million, $28 million below Q1 2024 due to retailer destocking and foam category decline. Non-retail revenues increased $12 million. Adjusted EBITDA was $117 million, at the midpoint of the guide. Adjusted EPS was $0.23, unchanged from Q1 2024. International business has been realigned based on product category alignment, moving away from historical reporting in the Reynolds Cooking & Baking segment.

• 2025 net revenues expected to be down low single digits. Adjusted EBITDA range $650M-$670M, adjusted EPS $1.54-$1.61.
• Q2 net revenues expected down 2%-5% vs Q2 2024 ($930M), adjusted EBITDA range $155M-$165M, adjusted EPS $0.35-$0.39.
• Anticipate $20M-$40M increase in capital spending in 2025 for growth, margin expansion, and earnings model.

• Tariffs impact with $100M-$200M annualized cost headwinds from direct and indirect effects.
• Unanticipated retailer destocking in dynamic macro environment.
• Lower consumer confidence, elasticities, and retailers managing inventory levels affecting categories.

Q: Can we dig into the retailer destocking piece?

A: Scott Huckins says they saw headwind in Q1, assumption is it flows through full year, no step change expected.

Q: On strategic expenses and CapEx, how to think about investments?

A: Scott Huckins explains strategic investments focus on P&L, Nathan Lowe mentions evaluating manufacturing automation.

Q: Talk about tariff pressure source?

A: Nathan Lowe says direct tariff exposure is single digit of COGS, $100M-$200M annualized includes direct and indirect impacts, with commodities like aluminum contributing.

Q: Comment on consumption exit of quarter and pricing realization?

A: Nathan Lowe says lower EBITDA guide due to lower retail volume expectation, pricing timing related to tariff announcements. Scott Huckins talks about March performance and promotion environment.

Q: Comment on innovation pipeline?

A: Nathan Lowe mentions Hefty Fabuloso lineup expansion and Hefty Compostable cutlery launch as examples.

Q: Pricing mechanics and private label share?

A: Scott Huckins says category share stable, Nathan Lowe talks about cost flow through timing of 2-6 months.