November 24, 2020

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Reynolds Consumer Products Reports Third Quarter 2020 Financial Results

Announces Net Revenues Increase of 11% Over Prior Year Increases 2020 Full Year Outlook LAKE FOREST, Ill.--(BUSINESS WIRE)--Reynolds Consumer Products Inc. (“Reynolds,” “RCP” or the “Company”), today reported results for the third quarter 2020 ended September 30, 2020. Third Quarter 2020 Financial Highlights: Net Revenues of $823 million Earnings Per Share of $0.54; Adjusted Earnings Per Share of $0.561 Net Income of $113 million; Adjusted Net Income of $117 million 1 Adjusted EBITDA of $192 million 1 Third Quarter 2020 Results Net revenues in the third quarter of 2020 were $823 million compared to $741 million in the prior year period. Growth was driven by strong demand across all business segments, reflecting the increased every day at-home use and the impact of new products. Net Income increased $50 million to $113 million in the third quarter of 2020 compared to $63 million in the third quarter of 2019 and Adjusted Net Income was $117 million for the third quarter of 2020. The increase in Net Income was primarily driven by higher revenue and lower interest expense resulting from the Company’s new debt structure that went into effect in conjunction with its IPO. Adjusted EBITDA was $192 million in the third quarter of 2020 compared to $162 million in the third quarter of 2019. The increase was primarily due to increased revenue and lower material and manufacturing costs which were partially offset by higher advertising and personnel costs. “We delivered a quarter of strong organic sales growth, Adjusted EBITDA and earnings per share, enabling us to increase our outlook for the year,” said Lance Mitchell, President and Chief Executive Officer. “Our near-term priorities remain employee health and safety, maximizing availability of our products, and continued investment in our business. We remain focused on leadership of our categories, and I could not be more pleased that we are able to simplify daily life for consumers by meeting the sustained and fundamental shift in demand for our products. We are aware of next year’s comparisons and leaning into the opportunity with capacity, innovation, and investment to support another year of strong performance.” Key Segment Results (compared to the third quarter of 2019) Reynolds Cooking & Baking Net revenues increased $29 million, or 11% Adjusted EBITDA increased $14 million, or 29% The increase in net revenues was primarily driven by increased consumer demand, partially offset by a decline in related party revenue. The increase in Adjusted EBITDA was due to the revenue increase and lower material and manufacturing costs, partially offset by higher advertising costs. Hefty Waste & Storage Net revenues increased $24 million, or 13% Adjusted EBITDA increased $14 million, or 27% The increase in net revenues was primarily driven by increased consumer demand. The increase in Adjusted EBITDA was due to the revenue increase and lower material and manufacturing costs, partially offset by higher advertising costs. Hefty Tableware Net revenues increased $18 million, or 10% Adjusted EBITDA increased $3 million, or 8% The increase in net revenues was primarily driven by increased consumer demand and the impact of new products. The increase in Adjusted EBITDA was mainly due to the increased revenue, partially offset by increased advertising and logistics costs. Presto Products Net revenues increased $7 million, or 5% Adjusted EBITDA increased $5 million, or 22% The increase in net revenues was primarily driven by increased consumer demand. The increase in Adjusted EBITDA was mainly due to the increased revenue and lower material and manufacturing costs. Year to Date Financial Results (nine-months ended September 30, 2020) Net Revenues of $2,375 million Earnings Per Share of $1.24; Adjusted Earnings Per Share of $1.402 Net Income of $251 million; Adjusted Net Income of $294 million 2 Adjusted EBITDA of $519 million 2 Net revenues for the nine months ended September 30, 2020 were $2,375 million compared to $2,197 million in the prior year period. The increase in net revenues was largely due to changes in consumer behavior driven by the COVID-19 pandemic. All business segments have experienced increased demand associated with the fundamental shift to more at-home use of our products. This was partially offset by the exit from certain low margin store branded business in the prior year, a decline in related party revenue and lower pricing. Net Income increased $116 million to $251 million for the nine months ended September 30, 2020 compared to $135 million in the prior year period. Adjusted Net Income was $294 million for the nine months ended September 30, 2020. The increase in Net Income was primarily driven by the increased revenue and lower interest expense. Adjusted EBITDA was $519 million for the nine months ended September 30, 2020 compared to $441 million in the prior year period. The increase was primarily due to the increased revenue and lower material and manufacturing costs, partially offset by higher personnel and advertising costs. Balance Sheet and Cash Flow Highlights Cash and cash equivalents was $351 million as of September 30, 2020. Total outstanding debt was $2,338 million as of September 30, 2020. For the quarter ended September 30, 2020, capital expenditures totaled $33 million, which was flat to the prior year period. For the year to date period ended September 30, 2020, capital expenditures totaled $85 million compared to $74 million in the prior year period. Net working capital totaled $520 million at September 30, 2020 compared to $296 million at December 31, 2019. The increase was due to the repurchase of previously sold accounts receivables in conjunction with the IPO, partially offset by lower inventory and higher accounts payable levels due to the strong demand. Subsequent to September 30, 2020, the Company made a $100 million voluntary payment on its $2,475 million senior secured term loan facility. Fourth Quarter and Fiscal Year Outlook The Company expects the following results for the fourth quarter of 2020: Revenue growth to be mid-single digits on revenue of $835 million in the fourth quarter of 2019 Net Income to be in the range of $111 million to $114 million Adjusted EBITDA to be in the range of $195 million to $200 million3 Considering the aforementioned guidance for the fourth quarter of 2020, the Company now expects the following results for the 2020 fiscal year: Revenue to be in the range of $3,240 million to $3,260 million Net Income to be in the range of $362 million to $365 million Earnings Per Share to be in the range of $1.77 to $1.78 per share Adjusted EBITDA to be in the range of $715 million to $720 million3 Adjusted Net Income to be in the range of $410 million to $413 million 3 Adjusted Earnings Per Share to be in the range of $1.95 to $1.97 per share 3 Net Debt to be approximately $1.9 billion3 at December 31, 2020 Conference Call and Webcast Presentation The Company will host a conference call to discuss these results today at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). Please visit the “Events & Presentations” section of Reynolds’ Investor Relations website at https://investors.reynoldsconsumerproducts.com/ under “News & Events” to access the live listen-only webcast and presentation. Investors interested in participating in the live call can dial 877-423-9813 from the U.S. and 201-689-8573 internationally. The Company has also posted presentation slides, which are available now on Reynolds’ Investor Relations website. A replay will be archived online in the “Events and Presentations” section of the Investor Relations website, and will also be available telephonically approximately two hours after the call concludes through Wednesday, November 25, 2020, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 13710417. About Reynolds Consumer Products Inc. RCP’s mission is to simplify daily life so consumers can enjoy what matters most. RCP is a market-leading consumer products company with a presence in 95% of households across the United States. RCP produces and sells products across three broad categories: cooking products, waste & storage products and tableware that are sold under iconic brands such as Reynolds and Hefty, as well as under store brands that are strategically important to RCP’s customers. Overall, across both branded and store brand offerings, RCP holds the #1 or #2 U.S. market share position in the majority of product categories in which it participates. Note to Investors Regarding 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 fourth quarter and fiscal year 2020 guidance. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “outlook”, “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “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 strategies and anticipated trends in our business. 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 and in our Quarterly Reports on Form 10-Q. 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. 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. Condensed Consolidated Statements of Income (in millions, except for per share data) (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net revenues $ 797 $ 705 $ 2,286 $ 2,083 Related party net revenues 26 36 89 114 Total net revenues 823 741 2,375 2,197 Cost of sales (558 ) (524 ) (1,669 ) (1,580 ) Gross profit 265 217 706 617 Selling, general and administrative expenses (97 ) (76 ) (260 ) (231 ) Other expense, net (5 ) (20 ) (26 ) (34 ) Income from operations 163 121 420 352 Non-operating income, net — 1 — 1 Interest expense, net (13 ) (39 ) (57 ) (174 ) Income before income taxes 150 83 363 179 Income tax expense (37 ) (20 ) (112 ) (44 ) Net income $ 113 $ 63 $ 251 $ 135 Earnings per share: Basic $ 0.54 $ 0.41 $ 1.24 $ 0.87 Diluted $ 0.54 $ 0.41 $ 1.24 $ 0.87 Weighted average shares outstanding: Basic 209.7 155.5 202.7 155.5 Effect of dilutive securities 0.1 — 0.1 — Diluted 209.8 155.5 202.8 155.5 Reynolds Consumer Products Inc. Condensed Consolidated Balance Sheets (in millions, except for per share data) (Unaudited) As of September 30, 2020 As of December 31, 2019 Assets Cash and cash equivalents $ 351 $ 102 Accounts receivable (net of allowance for doubtful accounts of $1 and $0) 288 13 Other receivables 7 7 Related party receivables 10 14 Inventories 401 418 Other current assets 22 16 Total current assets 1,079 570 Property, plant and equipment (net of accumulated depreciation of $683 and $642) 574 537 Operating lease right-of-use assets, net 68 42 Goodwill 1,879 1,879 Intangible assets, net 1,100 1,123 Other assets 24 9 Total assets $ 4,724 $ 4,160 Liabilities Accounts payable $ 169 $ 135 Related party payables 46 72 Related party accrued interest payable — 18 Current portion of long-term debt 25 21 Accrued and other current liabilities 161 132 Total current liabilities 401 378 Long-term debt 2,313 1,990 Long-term related party borrowings — 2,214 Long-term operating lease liabilities 58 35 Deferred income taxes 315 294 Long-term postretirement benefit obligation 49 48 Other liabilities 37 19 Total liabilities $ 3,173 $ 4,978 Stockholders’ equity Common stock, $0.001 par value; 2,000 shares authorized; 209.7 shares issued and outstanding — — Additional paid-in capital 1,380 — Net parent deficit — (823 ) Accumulated other comprehensive income 3 5 Retained earnings 168 — Total stockholders' equity 1,551 (818 ) Total liabilities and stockholders' equity $ 4,724 $ 4,160 Reynolds Consumer Products Inc. Condensed Consolidated Statements of Cash Flows (in millions) (Unaudited) Nine Months Ended September 30, 2020 2019 Cash provided by (used in) operating activities Net income $ 251 $ 135 Adjustments to reconcile net income to operating cash flows: Depreciation and amortization 72 63 Deferred income taxes 56 (9 ) Unrealized losses (gains) on derivatives 1 (9 ) Stock compensation expense 4 — Change in assets and liabilities: Accounts receivable, net (275 ) 1 Other receivables — 9 Related party receivables 3 (57 ) Inventories 17 (56 ) Accounts payable 34 (17 ) Related party payables (23 ) (84 ) Related party accrued interest payable (18 ) 121 Income taxes payable 2 50 Accrued and other current liabilities 28 1 Other assets and liabilities (5 ) (2 ) Net cash provided by operating activities 147 146 Cash provided by (used in) investing activities Acquisition of property, plant and equipment (85 ) (74 ) Advances to related parties — (170 ) Repayments from related parties — 151 Net cash used in investing activities (85 ) (93 ) Cash provided by (used in) financing activities Proceeds from long-term debt, net of discounts 2,472 — Repayment of long-term debt (112 ) — Repayments of RGHL Group Credit Agreement (8 ) (16 ) Advances from related parties 240 67 Repayments to related parties (3,627 ) (140 ) Deferred debt transaction costs (28 ) (2 ) Proceeds from IPO settlement facility 1,168 — Repayment of IPO settlement facility (1,168 ) — Issuance of common stock 1,410 — Equity issuance costs (69 ) — Dividends paid (77 ) — Net transfers (to) from Parent (14 ) 30 Net cash provided by (used in) financing activities 187 (61 ) Effect of exchange rate on cash and cash equivalents — — Net increase (decrease) in cash and cash equivalents 249 (8 ) Cash and cash equivalents at beginning of period 102 23 Cash and cash equivalents at end of period $ 351 $ 15 Reynolds Consumer Products Inc. Segment Results ($ in millions) Reynolds Cooking & Baking Hefty Waste & Storage Hefty Tableware Presto Products Unallocated Total Reynolds Consumer Products Revenues Three months ended September 30, 2020 $ 285 $ 209 $ 192 $ 136 $ 1 $ 823 Three months ended September 30, 2019 256 185 174 129 (3 ) 741 Adjusted EBITDA Three months ended September 30, 2020 $ 63 $ 65 $ 43 $ 28 $ (7 ) $ 192 Three months ended September 30, 2019 49 51 40 23 (1 ) 162 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 unrealized gains and losses on derivatives, factoring discounts (pre-IPO), the allocated related party management fee (pre-IPO) and IPO and separation-related costs. We define Adjusted Net Income and Adjusted Earnings Per Share as Net Income and Earnings Per Share calculated in accordance with GAAP, plus the sum of IPO and separation-related costs, the impact of tax legislation changes under the CARES Act enacted March 27, 2020 and any unrealized gains or losses on derivatives. 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 metrics 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 metrics provides 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 2020, where adjusted, is provided on a non-GAAP basis, which the Company will continue to identify as it reports its future financial results. The Company cannot reconcile its expected Adjusted EBITDA to expected Net Income under “Fourth Quarter and Fiscal Year Outlook” without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results. In addition, the Company cannot reconcile its expected Net Debt to expected total debt without reasonable effort because certain items that impact total debt and other reconciling metrics are out of the Company’s control and/or cannot be reasonable predicted at this time, 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 fourth quarter and fiscal 2020 Adjusted EBITDA outlook and Net Debt outlook, as described above) to the most directly comparable GAAP measures, on the following page. Reynolds Consumer Products Inc. Reconciliation of Net Income to Adjusted EBITDA (amounts in millions) Three months endedSeptember 30, Nine months endedSeptember 30, 2020 2019 2020 2019 Net income – GAAP $ 113 $ 63 $ 251 $ 135 Income tax expense 37 20 112 44 Interest expense, net 13 39 57 174 Depreciation and amortization 24 21 72 63 Factoring discount - 5 - 15 Allocated related party management fee - 3 - 7 IPO and separation-related costs 5 11 26 12 Unrealized gains (losses) on derivatives - (1 ) 1 (9 ) Other - 1 - - Adjusted EBITDA (Non-GAAP) $ 192 $ 162 $ 519 $ 441 Reynolds Consumer Products Inc. Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS (amounts in millions except per share data) Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Net Income DilutedShares Diluted EPS Net Income DilutedShares Diluted EPS As Reported - GAAP $ 113 210 $ 0.54 $ 251 203 $ 1.24 Assume full period impact of IPO shares (1) — — — — 7 — Total $ 113 210 $ 0.54 $ 251 210 $ 1.20 Adjustments: Impact of tax legislation change from the CARES Act — — — 23 210 0.11 IPO and separation-related costs (2) 4 210 0.02 19 210 0.09 Unrealized losses on derivatives (2) - 210 - 1 210 0.00 Adjusted (Non-GAAP) $ 117 210 $ 0.56 $ 294 210 $ 1.40 Reynolds Consumer Products Inc. Reconciliation of 2020 Net Income and EPS guidance to Adjusted Net Income and Adjusted EPS guidance (amounts in millions except per share data) Net Income Diluted shares outstanding (1) Diluted Earnings Per Share low high low high Fiscal Year 2020 - Guidance $ 362 $ 365 205 $ 1.77 $ 1.78 Assumed full year impact of IPO shares - - 5 - - Fiscal Year 2020 - Guidance with adjusted shares $ 362 $ 365 210 $ 1.72 $ 1.74 Adjustments: IPO and separation-related costs (2) 25 25 210 0.12 0.12 Impact of tax legislation change from the CARES Act 23 23 210 0.11 0.11 Fiscal Year 2020 - Adjusted Guidance $ 410 $ 413 210 $ 1.95 $ 1.97 (1) The Company has assumed the actual shares outstanding at September 30, 2020 to be outstanding for the full year period rather than the weighted average shares outstanding over the course of the period as it is a more meaningful calculation that provides consistency in comparability. (2) Amounts are after tax calculated using a tax rate of 25%, which is the Company's effective tax rate for the three and nine months ended September 30, 2020. 1 Adjusted Net Income, Adjusted Earnings Per Share and Adjusted EBITDA are non-GAAP measures. Refer to the discussion on non-GAAP financial measures and reconciliations included in this release. 2 Adjusted Net Income, Adjusted Earnings Per Share and Adjusted EBITDA are non-GAAP measures. Refer to the discussion on non-GAAP financial measures and reconciliations included in this release. In addition, as further described in Note 1 to the non-GAAP reconciliation included within this release, the share count utilized for Adjusted Earnings Per Share has been adjusted to reflect the additional shares issued as a result of the IPO as though they were outstanding for the entire period. 3 Adjusted Net Income, Adjusted Earnings Per Share, Adjusted EBITDA and Net Debt are non-GAAP measures. Refer to the discussion on non-GAAP financial measures and reconciliations included in this release. In addition, as further described in Note 1 to the non-GAAP reconciliation included within this release, the share count utilized for Adjusted Earnings Per Share has been adjusted to reflect the additional shares issued as a result of the IPO as though they were outstanding for the entire period. Contacts InvestorsMark Swartzberg [email protected](847) 482 – 4081 MediaKate Ottavio Kent [email protected](203) 682 – 8276

Announces Net Revenues Increase of 11% Over Prior Year

Increases 2020 Full Year Outlook

LAKE FOREST, Ill.–(BUSINESS WIRE)–Reynolds Consumer Products Inc. (“Reynolds,” “RCP” or the “Company”), today reported results for the third quarter 2020 ended September 30, 2020.

Third Quarter 2020 Financial Highlights:

  • Net Revenues of $823 million
  • Earnings Per Share of $0.54; Adjusted Earnings Per Share of $0.561
  • Net Income of $113 million; Adjusted Net Income of $117 million 1
  • Adjusted EBITDA of $192 million 1

Third Quarter 2020 Results

Net revenues in the third quarter of 2020 were $823 million compared to $741 million in the prior year period. Growth was driven by strong demand across all business segments, reflecting the increased every day at-home use and the impact of new products.

Net Income increased $50 million to $113 million in the third quarter of 2020 compared to $63 million in the third quarter of 2019 and Adjusted Net Income was $117 million for the third quarter of 2020. The increase in Net Income was primarily driven by higher revenue and lower interest expense resulting from the Company’s new debt structure that went into effect in conjunction with its IPO.

Adjusted EBITDA was $192 million in the third quarter of 2020 compared to $162 million in the third quarter of 2019. The increase was primarily due to increased revenue and lower material and manufacturing costs which were partially offset by higher advertising and personnel costs.

“We delivered a quarter of strong organic sales growth, Adjusted EBITDA and earnings per share, enabling us to increase our outlook for the year,” said Lance Mitchell, President and Chief Executive Officer. “Our near-term priorities remain employee health and safety, maximizing availability of our products, and continued investment in our business. We remain focused on leadership of our categories, and I could not be more pleased that we are able to simplify daily life for consumers by meeting the sustained and fundamental shift in demand for our products. We are aware of next year’s comparisons and leaning into the opportunity with capacity, innovation, and investment to support another year of strong performance.”

Key Segment Results (compared to the third quarter of 2019)

Reynolds Cooking & Baking

  • Net revenues increased $29 million, or 11%
  • Adjusted EBITDA increased $14 million, or 29%

The increase in net revenues was primarily driven by increased consumer demand, partially offset by a decline in related party revenue. The increase in Adjusted EBITDA was due to the revenue increase and lower material and manufacturing costs, partially offset by higher advertising costs.

Hefty Waste & Storage

  • Net revenues increased $24 million, or 13%
  • Adjusted EBITDA increased $14 million, or 27%

The increase in net revenues was primarily driven by increased consumer demand. The increase in Adjusted EBITDA was due to the revenue increase and lower material and manufacturing costs, partially offset by higher advertising costs.

Hefty Tableware

  • Net revenues increased $18 million, or 10%
  • Adjusted EBITDA increased $3 million, or 8%

The increase in net revenues was primarily driven by increased consumer demand and the impact of new products. The increase in Adjusted EBITDA was mainly due to the increased revenue, partially offset by increased advertising and logistics costs.

Presto Products

  • Net revenues increased $7 million, or 5%
  • Adjusted EBITDA increased $5 million, or 22%

The increase in net revenues was primarily driven by increased consumer demand. The increase in Adjusted EBITDA was mainly due to the increased revenue and lower material and manufacturing costs.

Year to Date Financial Results (nine-months ended September 30, 2020)

  • Net Revenues of $2,375 million
  • Earnings Per Share of $1.24; Adjusted Earnings Per Share of $1.402
  • Net Income of $251 million; Adjusted Net Income of $294 million 2
  • Adjusted EBITDA of $519 million 2

Net revenues for the nine months ended September 30, 2020 were $2,375 million compared to $2,197 million in the prior year period. The increase in net revenues was largely due to changes in consumer behavior driven by the COVID-19 pandemic. All business segments have experienced increased demand associated with the fundamental shift to more at-home use of our products. This was partially offset by the exit from certain low margin store branded business in the prior year, a decline in related party revenue and lower pricing.

Net Income increased $116 million to $251 million for the nine months ended September 30, 2020 compared to $135 million in the prior year period. Adjusted Net Income was $294 million for the nine months ended September 30, 2020. The increase in Net Income was primarily driven by the increased revenue and lower interest expense.

Adjusted EBITDA was $519 million for the nine months ended September 30, 2020 compared to $441 million in the prior year period. The increase was primarily due to the increased revenue and lower material and manufacturing costs, partially offset by higher personnel and advertising costs.

Balance Sheet and Cash Flow Highlights

  • Cash and cash equivalents was $351 million as of September 30, 2020.
  • Total outstanding debt was $2,338 million as of September 30, 2020.
  • For the quarter ended September 30, 2020, capital expenditures totaled $33 million, which was flat to the prior year period.
  • For the year to date period ended September 30, 2020, capital expenditures totaled $85 million compared to $74 million in the prior year period.
  • Net working capital totaled $520 million at September 30, 2020 compared to $296 million at December 31, 2019. The increase was due to the repurchase of previously sold accounts receivables in conjunction with the IPO, partially offset by lower inventory and higher accounts payable levels due to the strong demand.

Subsequent to September 30, 2020, the Company made a $100 million voluntary payment on its $2,475 million senior secured term loan facility.

Fourth Quarter and Fiscal Year Outlook

The Company expects the following results for the fourth quarter of 2020:

  • Revenue growth to be mid-single digits on revenue of $835 million in the fourth quarter of 2019
  • Net Income to be in the range of $111 million to $114 million
  • Adjusted EBITDA to be in the range of $195 million to $200 million3

Considering the aforementioned guidance for the fourth quarter of 2020, the Company now expects the following results for the 2020 fiscal year:

  • Revenue to be in the range of $3,240 million to $3,260 million
  • Net Income to be in the range of $362 million to $365 million
  • Earnings Per Share to be in the range of $1.77 to $1.78 per share
  • Adjusted EBITDA to be in the range of $715 million to $720 million3
  • Adjusted Net Income to be in the range of $410 million to $413 million 3
  • Adjusted Earnings Per Share to be in the range of $1.95 to $1.97 per share 3
  • Net Debt to be approximately $1.9 billion3 at December 31, 2020

Conference Call and Webcast Presentation

The Company will host a conference call to discuss these results today at 4:00 p.m. Central Time (5:00 p.m. Eastern Time). Please visit the “Events & Presentations” section of Reynolds’ Investor Relations website at https://investors.reynoldsconsumerproducts.com/ under “News & Events” to access the live listen-only webcast and presentation. Investors interested in participating in the live call can dial 877-423-9813 from the U.S. and 201-689-8573 internationally. The Company has also posted presentation slides, which are available now on Reynolds’ Investor Relations website.

A replay will be archived online in the “Events and Presentations” section of the Investor Relations website, and will also be available telephonically approximately two hours after the call concludes through Wednesday, November 25, 2020, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 13710417.

About Reynolds Consumer Products Inc.

RCP’s mission is to simplify daily life so consumers can enjoy what matters most. RCP is a market-leading consumer products company with a presence in 95% of households across the United States. RCP produces and sells products across three broad categories: cooking products, waste & storage products and tableware that are sold under iconic brands such as Reynolds and Hefty, as well as under store brands that are strategically important to RCP’s customers. Overall, across both branded and store brand offerings, RCP holds the #1 or #2 U.S. market share position in the majority of product categories in which it participates.

Note to Investors Regarding 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 fourth quarter and fiscal year 2020 guidance. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “outlook”, “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “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 strategies and anticipated trends in our business. 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 and in our Quarterly Reports on Form 10-Q.

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. 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.

Condensed Consolidated Statements of Income

(in millions, except for per share data)

(Unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net revenues

$

797

$

705

$

2,286

$

2,083

Related party net revenues

26

36

89

114

Total net revenues

823

741

2,375

2,197

Cost of sales

(558

)

(524

)

(1,669

)

(1,580

)

Gross profit

265

217

706

617

Selling, general and administrative expenses

(97

)

(76

)

(260

)

(231

)

Other expense, net

(5

)

(20

)

(26

)

(34

)

Income from operations

163

121

420

352

Non-operating income, net

1

1

Interest expense, net

(13

)

(39

)

(57

)

(174

)

Income before income taxes

150

83

363

179

Income tax expense

(37

)

(20

)

(112

)

(44

)

Net income

$

113

$

63

$

251

$

135

Earnings per share:

Basic

$

0.54

$

0.41

$

1.24

$

0.87

Diluted

$

0.54

$

0.41

$

1.24

$

0.87

Weighted average shares outstanding:

Basic

209.7

155.5

202.7

155.5

Effect of dilutive securities

0.1

0.1

Diluted

209.8

155.5

202.8

155.5

Reynolds Consumer Products Inc.

Condensed Consolidated Balance Sheets

(in millions, except for per share data)

(Unaudited)

As of September

30, 2020

As of December

31, 2019

Assets

Cash and cash equivalents

$

351

$

102

Accounts receivable (net of allowance for doubtful accounts of $1 and $0)

288

13

Other receivables

7

7

Related party receivables

10

14

Inventories

401

418

Other current assets

22

16

Total current assets

1,079

570

Property, plant and equipment (net of accumulated depreciation of $683 and $642)

574

537

Operating lease right-of-use assets, net

68

42

Goodwill

1,879

1,879

Intangible assets, net

1,100

1,123

Other assets

24

9

Total assets

$

4,724

$

4,160

Liabilities

Accounts payable

$

169

$

135

Related party payables

46

72

Related party accrued interest payable

18

Current portion of long-term debt

25

21

Accrued and other current liabilities

161

132

Total current liabilities

401

378

Long-term debt

2,313

1,990

Long-term related party borrowings

2,214

Long-term operating lease liabilities

58

35

Deferred income taxes

315

294

Long-term postretirement benefit obligation

49

48

Other liabilities

37

19

Total liabilities

$

3,173

$

4,978

Stockholders’ equity

Common stock, $0.001 par value; 2,000 shares authorized; 209.7 shares issued and outstanding

Additional paid-in capital

1,380

Net parent deficit

(823

)

Accumulated other comprehensive income

3

5

Retained earnings

168

Total stockholders' equity

1,551

(818

)

Total liabilities and stockholders' equity

$

4,724

$

4,160

Reynolds Consumer Products Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

(Unaudited)

Nine Months Ended

September 30,

2020

2019

Cash provided by (used in) operating activities

Net income

$

251

$

135

Adjustments to reconcile net income to operating cash flows:

Depreciation and amortization

72

63

Deferred income taxes

56

(9

)

Unrealized losses (gains) on derivatives

1

(9

)

Stock compensation expense

4

Change in assets and liabilities:

Accounts receivable, net

(275

)

1

Other receivables

9

Related party receivables

3

(57

)

Inventories

17

(56

)

Accounts payable

34

(17

)

Related party payables

(23

)

(84

)

Related party accrued interest payable

(18

)

121

Income taxes payable

2

50

Accrued and other current liabilities

28

1

Other assets and liabilities

(5

)

(2

)

Net cash provided by operating activities

147

146

Cash provided by (used in) investing activities

Acquisition of property, plant and equipment

(85

)

(74

)

Advances to related parties

(170

)

Repayments from related parties

151

Net cash used in investing activities

(85

)

(93

)

Cash provided by (used in) financing activities

Proceeds from long-term debt, net of discounts

2,472

Repayment of long-term debt

(112

)

Repayments of RGHL Group Credit Agreement

(8

)

(16

)

Advances from related parties

240

67

Repayments to related parties

(3,627

)

(140

)

Deferred debt transaction costs

(28

)

(2

)

Proceeds from IPO settlement facility

1,168

Repayment of IPO settlement facility

(1,168

)

Issuance of common stock

1,410

Equity issuance costs

(69

)

Dividends paid

(77

)

Net transfers (to) from Parent

(14

)

30

Net cash provided by (used in) financing activities

187

(61

)

Effect of exchange rate on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

249

(8

)

Cash and cash equivalents at beginning of period

102

23

Cash and cash equivalents at end of period

$

351

$

15

Reynolds Consumer Products Inc.

Segment Results

($ in millions)

Reynolds

Cooking &

Baking

Hefty

Waste &

Storage

Hefty

Tableware

Presto

Products

Unallocated

Total

Reynolds

Consumer

Products

Revenues

Three months ended September 30, 2020

$

285

$

209

$

192

$

136

$

1

$

823

Three months ended September 30, 2019

256

185

174

129

(3

)

741

Adjusted EBITDA

Three months ended September 30, 2020

$

63

$

65

$

43

$

28

$

(7

)

$

192

Three months ended September 30, 2019

49

51

40

23

(1

)

162

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 unrealized gains and losses on derivatives, factoring discounts (pre-IPO), the allocated related party management fee (pre-IPO) and IPO and separation-related costs. We define Adjusted Net Income and Adjusted Earnings Per Share as Net Income and Earnings Per Share calculated in accordance with GAAP, plus the sum of IPO and separation-related costs, the impact of tax legislation changes under the CARES Act enacted March 27, 2020 and any unrealized gains or losses on derivatives. 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 metrics 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 metrics provides 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 2020, where adjusted, is provided on a non-GAAP basis, which the Company will continue to identify as it reports its future financial results. The Company cannot reconcile its expected Adjusted EBITDA to expected Net Income under “Fourth Quarter and Fiscal Year Outlook” without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results. In addition, the Company cannot reconcile its expected Net Debt to expected total debt without reasonable effort because certain items that impact total debt and other reconciling metrics are out of the Company’s control and/or cannot be reasonable predicted at this time, 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 fourth quarter and fiscal 2020 Adjusted EBITDA outlook and Net Debt outlook, as described above) to the most directly comparable GAAP measures, on the following page.

Reynolds Consumer Products Inc.
Reconciliation of Net Income to Adjusted EBITDA
(amounts in millions)
Three months ended
September 30,
Nine months ended
September 30,

2020

2019

2020

2019

Net income – GAAP

$

113

$

63

$

251

$

135

Income tax expense

37

20

112

44

Interest expense, net

13

39

57

174

Depreciation and amortization

24

21

72

63

Factoring discount

5

15

Allocated related party management fee

3

7

IPO and separation-related costs

5

11

26

12

Unrealized gains (losses) on derivatives

(1

)

1

(9

)

Other

1

Adjusted EBITDA (Non-GAAP)

$

192

$

162

$

519

$

441

Reynolds Consumer Products Inc.
Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS
(amounts in millions except per share data)
Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
Net Income Diluted
Shares
Diluted EPS Net Income Diluted
Shares
Diluted EPS
As Reported – GAAP

$

113

210

$

0.54

$

251

203

$

1.24

Assume full period impact of IPO shares (1)

7

Total

$

113

210

$

0.54

$

251

210

$

1.20

Adjustments:
Impact of tax legislation change from the CARES Act

23

210

0.11

IPO and separation-related costs (2)

4

210

0.02

19

210

0.09

Unrealized losses on derivatives (2)

210

1

210

0.00

Adjusted (Non-GAAP)

$

117

210

$

0.56

$

294

210

$

1.40

Reynolds Consumer Products Inc.
Reconciliation of 2020 Net Income and EPS guidance to Adjusted Net Income and Adjusted EPS guidance
(amounts in millions except per share data)
Net Income

Diluted shares

outstanding (1)

Diluted Earnings Per Share
low high low high
Fiscal Year 2020 – Guidance

$

362

$

365

205

$

1.77

$

1.78

Assumed full year impact of IPO shares

5

Fiscal Year 2020 – Guidance with adjusted shares

$

362

$

365

210

$

1.72

$

1.74

Adjustments:
IPO and separation-related costs (2)

25

25

210

0.12

0.12

Impact of tax legislation change from the CARES Act

23

23

210

0.11

0.11

Fiscal Year 2020 – Adjusted Guidance

$

410

$

413

210

$

1.95

$

1.97

(1)

The Company has assumed the actual shares outstanding at September 30, 2020 to be outstanding for the full year period rather than the weighted average shares outstanding over the course of the period as it is a more meaningful calculation that provides consistency in comparability.

(2)

Amounts are after tax calculated using a tax rate of 25%, which is the Company's effective tax rate for the three and nine months ended September 30, 2020.

1 Adjusted Net Income, Adjusted Earnings Per Share and Adjusted EBITDA are non-GAAP measures. Refer to the discussion on non-GAAP financial measures and reconciliations included in this release.

2 Adjusted Net Income, Adjusted Earnings Per Share and Adjusted EBITDA are non-GAAP measures. Refer to the discussion on non-GAAP financial measures and reconciliations included in this release. In addition, as further described in Note 1 to the non-GAAP reconciliation included within this release, the share count utilized for Adjusted Earnings Per Share has been adjusted to reflect the additional shares issued as a result of the IPO as though they were outstanding for the entire period.

3 Adjusted Net Income, Adjusted Earnings Per Share, Adjusted EBITDA and Net Debt are non-GAAP measures. Refer to the discussion on non-GAAP financial measures and reconciliations included in this release. In addition, as further described in Note 1 to the non-GAAP reconciliation included within this release, the share count utilized for Adjusted Earnings Per Share has been adjusted to reflect the additional shares issued as a result of the IPO as though they were outstanding for the entire period.

Contacts

Investors
Mark Swartzberg

[email protected]
(847) 482 – 4081

Media
Kate Ottavio Kent

[email protected]
(203) 682 – 8276

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