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Reynolds Consumer Products Inc. (REYN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered net revenues of $0.818B and Adjusted EPS of $0.23, essentially in line with internal expectations but modestly below Wall Street consensus; management cited retailer destocking, later Easter timing, and foam declines as key headwinds .
  • Guidance was tempered: FY25 Adjusted EBITDA lowered to $650–$670M (from $670–$690M) and Adjusted EPS to $1.54–$1.61 (from $1.61–$1.68), reflecting pricing to offset tariff-driven cost headwinds and softer retail volumes .
  • Management signaled more dynamic macro conditions from tariff announcements ($100–$200M annualized direct/indirect cost headwinds) but reiterated pricing power and productivity actions to neutralize impacts; Q2 2025 guide calls for net revenues down 2–5%, Adjusted EBITDA $155–$165M, and Adjusted EPS $0.35–$0.39 .
  • Strategic initiatives continue: automation and network optimization, revenue growth management (RGM), and targeted innovation/distribution wins (e.g., Hefty Fabuloso scents, Hefty Compostable cutlery leveraging Atacama technology), with benefits expected to begin late 2025 .

What Went Well and What Went Wrong

What Went Well

  • Share gains and category outperformance: “outperformed our categories by two points” at retail, with gains in foil, waste bags, food bags, and non-foam tableware; promo spend flat YoY, highlighting innovation and distribution gains .
  • Innovation momentum: Hefty Fabuloso waste bags extended with new scents; Hefty Compostable cutlery is first commercialization of Atacama technology; Reynolds Kitchens Air Fryer cups noted among new cooking/baking products .
  • Balance sheet actions: refinanced remaining $1.645B term loan to 2032, SOFR +175 bps, improving flexibility; leverage at 2.3x TTM Adjusted EBITDA .

What Went Wrong

  • Retail destocking and Easter shift reduced retail volumes 4% and retail net revenues 3%; non-retail gains only partially offset .
  • Hefty Tableware suffered: net revenues -$29M to $179M, Adjusted EBITDA -$13M to $17M, driven by foam declines and destocking; non-foam tableware still grew and outperformed .
  • Tariffs and commodity impacts raised cost outlook ($100–$200M annualized); FY25 EBITDA and EPS guidance lowered, with pricing and productivity required to offset .

Financial Results

Consolidated Results vs Prior Quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$910 $1,021 $818
GAAP EPS ($)$0.41 $0.58 $0.15
Adjusted EPS ($)N/A$0.58 $0.23
Adjusted EBITDA ($USD Millions)$171 $213 $117
Gross Profit ($USD Millions)N/A$280 $189
Gross Margin (%)N/A27.4% 23.1%

Segment Breakdown (Q1 2025 vs Q1 2024)

SegmentQ1 2024 Revenue ($MM)Q1 2025 Revenue ($MM)Q1 2024 Adj. EBITDA ($MM)Q1 2025 Adj. EBITDA ($MM)
Reynolds Cooking & Baking$256 $259 $32 $38
Hefty Waste & Storage$234 $240 $67 $59
Hefty Tableware$208 $179 $30 $17
Presto Products$143 $143 $29 $26
Unallocated($8) ($3) ($36) ($23)
Total$833 $818 $122 $117

KPIs and Mix

KPIQ1 2025Notes
Retail Net Revenues ($MM)$767 -3% YoY; retail volume -4% (Easter shift, destocking)
Non-Retail Revenues ($MM)$51 +$12MM YoY; aluminum to food service/industrial
Net Debt ($MM)$1,579 Cash $58MM; Debt $1,637MM
Net Debt / TTM Adj. EBITDA (x)2.3x Within target range
Price / Volume Mix – Total RCPPrice +2%; Volume/Mix Retail -4%; Non-Retail 0%; Total -2% Company-level decomposition

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenuesFY 2025Down low single digits vs $3,695MM (2024) Down low single digits vs 2024 Maintained
Adjusted EBITDA ($MM)FY 2025$670–$690 $650–$670 Lowered
Adjusted EPS ($)FY 2025$1.61–$1.68 $1.54–$1.61 Lowered
PricingFY 2025Modest actions for aluminum +2–4 pts pricing to offset tariffs Raised pricing assumption
D&A ($MM)FY 2025~$130 ~$130 Maintained
Exclusions (Adj. Metrics)FY 2025CEO transition + strategic initiatives $25–$35MM pre-tax Same exclusions + $13MM pre-tax refinancing costs Added refinancing costs
Net RevenuesQ2 2025N/ADown 2–5% vs $930MM (Q2’24) New
Adjusted EBITDA ($MM)Q2 2025N/A$155–$165 New
Adjusted EPS ($)Q2 2025N/A$0.35–$0.39 (laps $0.05 tax benefit YoY) New
Dividend ($/share)Ongoing$0.23 (Feb 2025) $0.23 (May 30, 2025 pay date) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Tariffs/CommoditiesMonitoring; de minimis direct impact in Canada; hedging, supplier pricing windows; productivity focus Commodity headwinds; pricing and productivity offsets; tariffs not in guide yet $100–$200MM annualized direct/indirect headwinds; pricing +2–4 pts to offset Headwinds intensifying; active mitigation
Retail DestockingNot highlightedSequentially improving retail volumes Seen in Q1; assumed to persist through full year Ongoing headwind
Innovation/DistributionHefty Fabuloso >$200MM annual sales; Presto Close rollout; Air Fryer Liners growth Strong pipeline; ROI-based trade spending New scents (Fabuloso), compostable cutlery via Atacama; spring resets and price increases Expanding
Promotion EnvironmentIncreased vs 2023 but back to pre-pandemic baseline Promotions broadly as expected Q1 outperformance not promo-driven; Q2 promos to support distribution wins; 2025 similar to 2024 Stable/normalized
Channel Mix (Online/Club)Club and omnichannel gaining share N/AOnline/omnichannel high-teens share at retailers; company consistent with that Gradual shift continues
Segment ReportingN/AN/AInternational reassigned across segments vs prior concentration in Cooking & Baking Better alignment
Automation/Network OptimizationOngoing Reyvolution cost savings Step-up in capex; automation attractive; robust pipeline Early wins and favorable ROI pipeline; increased capex $20–$40MM YoY in 2025 Execution underway

Management Commentary

  • “We outperformed our categories by two points at retail, capturing share… and did so without an increase in promotional spend,” highlighting innovation and distribution gains .
  • “We delivered our earnings guide in spite of unanticipated retailer destocking” and are “investing in high-return work streams to drive future performance” .
  • “Adjusted EBITDA… at the midpoint of our guide… Adjusted EPS was unchanged at $0.23 vs the first quarter of 2024,” despite destocking and foam declines .
  • “We currently estimate $100 million to $200 million in cost headwinds… considering both the direct and indirect impact from tariffs,” to be offset via pricing, productivity, and cost reductions .
  • “Effective Jan 1, 2025, we have updated our segment reporting” to align international by category, with prior periods recast .

Q&A Highlights

  • Destocking permanence: Management assumes Q1 destocking effect “flows through the balance of the year,” with no reversal assumed in guidance .
  • Cost headwinds phasing: Pricing ranges tied to headwind ranges; cost flow-through timing 2–6 months depending on business; expect mitigation to show through year .
  • Tariff impact composition: Roughly half of the mid-range headwind from commodities (e.g., aluminum), balance direct tariff impacts on imports; direct tariff exposure is single-digit percentage of COGS .
  • Promotions and elasticity: Expect modest increase in Q2 promos to support distribution wins; 2025 promo levels similar to 2024; pricing designed around thresholds to manage elasticity .
  • Channel mix: Retailers’ online/omnichannel in high-teens percent; company consistent; club and online gaining share; investments calibrated accordingly .
  • Pantry loading ahead of tariffs seen in Q1; expected partial unwind in Q2 .

Estimates Context

  • Q1 2025 vs Consensus: Revenue $818.0M vs $821.34M*, Primary EPS $0.23 vs $0.2313*, EBITDA $117.0M vs $119.74M* — a slight miss across all three, consistent with destocking and timing headwinds .
  • FY 2025 Consensus vs Company Guide: EBITDA $662.85M* vs company $650–$670M; EPS $1.6307* vs company $1.54–$1.61 — consensus slightly above guidance midpoints, implying potential downward estimate revisions given tariff and elasticity commentary .
    Values retrieved from S&P Global.*

Q1 2025 Consensus vs Actuals

MetricConsensus*Actual
Revenue ($USD Millions)821.34*818.0
Primary EPS ($)0.2313*0.23
EBITDA ($USD Millions)119.74*117.0

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term headwinds from retailer destocking, foam declines, and tariff-driven costs temper FY25 trajectory; management is proactively deploying pricing and productivity to neutralize cost inflation .
  • Innovation/distribution wins remain a core growth driver (Fabuloso expansion, Presto Close rollout, compostable cutlery), with benefits expected to build through 2025 and into 2026 .
  • Pricing power intact; management expects 2–4 points of pricing in FY25 to offset tariffs while carefully managing elasticities and price gaps to protect share .
  • Balance sheet flexibility improved via refinancing (2032 maturity, SOFR+175), supporting stepped-up capex ($20–$40MM YoY) in automation and network optimization with attractive ROIs .
  • Q2 2025 outlook embeds pantry-load unwind and limited pricing recognition timing; expect sequential improvement as pricing actions and resets flow through .
  • Consensus appears modestly ahead of company midpoints for FY25; watch for estimate revisions and tariff developments as catalysts for the stock narrative .
  • Dividend maintained at $0.23/share, underpinned by strong free cash flow and disciplined capital allocation .