Reynolds Consumer Products Inc. Q3 FY2025 earnings call

• Retail share increases were driven by multiple business units including Hefty Waste Bags, Hefty Party Cups, Reynolds Wrap, Reynolds Kitchen Parchment products, and store brand food bags.
• Pricing actions for aluminum foil implemented as planned, with Reynolds Wrap volume outperforming the category due to brand equity and reduced price gaps vs store brands.
• Made progress managing manufacturing, supply chain, and SG&A costs while driving categories and gaining market share.
• Operating environment remains challenging with pressure on low and middle-income consumers and retailers facing cost inflation from overseas suppliers with tariffs.
• New Chief Commercial Officer Carlen Hooker leading growth programs and revenue growth management process improvements.
• Innovation is a competitive advantage, with Reynolds Wrap Fun Foil expanding distribution, Reynolds Kitchens Air Fryer Liners recognized as a new product pacesetter, and Hefty Fabuloso Waste Bags gaining traction.
• Hired Scott Vail as Chief Operations Officer to lead manufacturing initiatives including technology, lean principles, and automation.

Third quarter net revenues were $931 million, an increase of over 2% from the year-ago period. Retail revenue was $864 million, up 1%, with retail volume growing 1% excluding foam products. All 4 business units saw improved EBITDA. Reynolds Wrap retail sales were up 7%, Hefty waste bags and store brand food bags gained market share. Net revenues from non-retail were $67 million, up $13 million from the prior year. Gross profit was down $6 million vs prior year but improved sequentially due to better alignment of pricing and input costs. SG&A was similar to second quarter levels and down $29 million year-to-date.

• Full-year 2025 net revenues expected to be flat to down 1% vs 2024 ($3.7 billion). Adjusted EBITDA $655M-$665M, adjusted EPS $1.60-$1.64.
• Fourth quarter 2025 net revenues expected down 1%-5% vs prior year ($1.021 billion), adjusted EBITDA $208M-$218M, adjusted EPS $0.56-$0.60.
• Non-retail revenue expected to contribute 1 point of growth for the year. Early flow-through of productivity gains from strategic initiatives and continued cost discipline in controllable costs.

• Operating environment poses risks such as more transactional supplier-retailer relationships, where customer shifting part of business to another supplier could occur due to the climate of economic and trade uncertainty.
• Cost inflation from overseas suppliers subject to tariffs presents challenges for retailers and the company.

Q: Robert Ottenstein asked about promo intensity during the holiday season and consumer affordability.

A: Scott Huckins responded that in waste bags and food bags, promo intensity is in line with pre-pandemic levels, consumer is under pressure with inflation, labor market cooling, and declining sentiment, and the business is positioned to serve both affluent brand shoppers and value-oriented lower income consumers.

Q: Kaumil Gajrawala asked about hiring and operational plans.

A: Scott Huckins said new executives like Carlen Hooker (Chief Commercial Officer) and Scott Vail (Chief Operations Officer) are added to drive growth initiatives and cost management, focusing on prioritized innovation, revenue growth management tools, and share gains at customer and product levels.

Q: Lauren Lieberman asked about tableware.

A: Scott Huckins said tableware volume down 13% but EBITDA grew, about 80% decline due to foam headwinds, non-foam down 20%, and foam expected to be less of a headwind next year.

Q: Andrea Teixeira asked about Hefty waste and storage.

A: Scott Huckins said promo intensity is in line, year-to-date volume up 9% due to product resonance and supply chain success, and focus on innovation for long-term growth.

Q: Peter Grom asked about promotional commentary and gross margins.

A: Scott Huckins said cost headwinds from commodities and tariffs remain 2-4 points, pricing is flowing through as expected to offset costs, and fourth quarter gross margin expected to continue the gradual recovery trend.

Q: Brian McNamara asked about consumer behavior and initiative progress.

A: Scott Huckins said the company is making progress with Carlen leading RGM initiatives and cost management on track, seeing effects flow through the P&L.