Reynolds Consumer Products Inc. Q2 FY2025 earnings call

• Commercially, delivered volume growth across most categories, gained share in multiple areas like Hefty Waste Bags and private label food bags. - Product innovation was a key driver, with new products like Hefty Fabuloso scented waste bags and Hefty ECOSAVE compostable cutlery. - Addressed consumer affordability by adjusting pack sizes and prices, expanding distribution of certain products. - Long-term initiatives include implementing trade programs, stronger product innovation including sustainable offerings, and onshoring of production for smaller product categories. - Added key team members like Chief Commercial Officer and head of Hefty Tableware.

In the second quarter, net revenues were $938 million, with retail revenue at $887 million (flat compared to Q2 2024) and non-retail revenues at $51 million. Adjusted EBITDA was $163 million in Q2 2025, down from $172 million in Q2 2024. The company gained share in multiple areas, including Hefty Waste Bags, private label food bags, and Hefty Party Cups. Volume growth was seen across the majority of categories, with product innovation contributing to volume and share gains.

• Reiterates 2025 earnings expectations: net revenues down low single digits, adjusted EBITDA in range of $650 million to $670 million, adjusted EPS $1.54 to $1.61. - Third quarter expected: net revenues down low single digits, adjusted EBITDA between $160 million and $170 million, adjusted EPS $0.37 to $0.41. - Pricing expected to fully recover commodity and tariff impacts, with interplay between volume and price in the guide.

• Challenging consumer and operating environment, including decline in U.S. consumer confidence and reduction in SNAP benefits. - Impact of input costs, tariffs, and timing of pricing actions relative to cost increases. - Potential impact of retail inventory destocking on performance.

Q: Can you prioritize specific investment areas, especially with leverage in a good place?

A: Automation capital pipeline is a major priority, and reshoring manufacturing for smaller product categories is a new source of return.

Q: Explain gross margin, pricing cadence, and top line related to trash bags and food bags?

A: Gross margin decline not representative of ongoing profitability due to pricing in flight. Pricing expected to recover costs, with cadence of pricing throughout the year. Gained share in Hefty branded waste and private label food bags.

Q: Talk about consumer purchase patterns and confidence in executing price increases?

A: Generally executed price increases as expected, confident in brand pricing power. Promotional environment has held steady, brand-store brand mix stable. Consumer under pressure but value-seeking trends observed in club gain and online growth among lower income demographics.

Q: Thoughts on category growth and retail inventory destocking?

A: Category performance aligns with expectations. Retail inventory destocking was neutral in Q2, with no material impact.