Greetings, and welcome to the Reynolds Consumer Products, Inc. third quarter, 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Schwartzberg, Vice President of Investor Relations. Thank you, sir. You may begin.

Thank you, Operator. Good morning, and thank you for joining us for Reynolds Consumer Products' third quarter earnings conference call. Please note that this call is being webcast on the Investor Relations section of our corporate site at ReynoldsConsumerProducts.com. Our earnings press release and investor decks are also available. With me on the call today are Scott Huckins, our President and Chief Executive Officer, and Nathan Lowe, our Chief Financial Officer. Following prepared remarks, we will open the call for a brief question and answer session. Before we begin, I would like to remind you that this morning's discussion will contain forward-looking statements which are subject to risks, uncertainties, and changes in circumstances that could cause actual results and outcomes to differ materially from those described today. Please refer to the risk factors section in our SEC filings. The company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after the call. During today's call, we will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these GAAP to non-GAAP financial measures are available in our earnings press release, investor presentation deck, and Form 10-Q, which can be found on the investor relations section of our site. Now I'd like to

turn the call over to Scott. Thank you, Mark, and good morning, everyone. I am pleased with our latest results, and how we are performing in what continues to be a challenging environment. As we review the third quarter, we achieved strong retail performance, gaining market share overall and in the vast majority of our categories. We demonstrated increased agility and effectiveness in managing profitability. Additionally, we successfully advanced long-term initiatives that enhance our value, including our strength as a U.S.-centric business. I will review our performance and these initiatives before turning the call over to Nathan for more on the quarter and our guide. Our retail share increases were driven by multiple business units and product lines. These include hefty waste bags, hefty party cups, Reynolds wrap, Reynolds kitchen parchment products, and store brand food bags. We are pleased by the breadth and depth of the share gains, demonstrating that both our products and our execution are winning in the marketplace. In terms of pricing, the increases in aluminum foil that we talked about on the Q2 call were implemented according to plan. Reynolds Wrap Volume outperformed the category in the third quarter and reflected our position as the U.S.'s only vertically integrated foil manufacturer. This performance was driven by several factors, including the brand's strong equity and reduced price gaps compared to store-brand foil, offering consumers a compelling value proposition. The combination of share gains and pricing actions across the portfolio, together with continued cost discipline, delivered improved results in all four business units in a quarter. In terms of cost discipline, we are making progress managing manufacturing, supply chain, and SG&A costs, while continuing to drive our categories and gain market share. Turning to the environment. The operating environment remains challenging, with low- and middle-income consumers under continued pressure and retailers facing cost inflation, especially from overseas suppliers subject to tariffs. This backdrop presents both opportunities and risks. In terms of risks, this environment can lead to more transactional relationships between suppliers and retailers. For example, our leadership in store brands could result in a customer shifting part of their business to another supplier. However, this also presents a huge opportunity. We can leverage our category leadership while working to become an even more valued supplier by reducing product costs and inefficiencies in our supply chain. Our strong U.S.-centric manufacturing footprint and supply chain remain a source of advantage, especially in this climate of economic and trade uncertainty. Our new Chief Commercial Officer, Karlyn Hooker, has hit the ground running and is leading growth programs to further drive share, category by category, at each of our major customers. There are multiple components of her team's work, including the improvements in revenue growth management processes and tools that I mentioned last quarter. These improvements benefited performance in multiple channels in the quarter, and we are continuing the shift to higher return programs this holiday season and beyond. Household foil is an important category for us and an example of where the implementation of these tools contributed to solid category performance in the quarter. Reynolds Wrap retail sales were up 7%, similar to the category, with volumes a point better than the category's minus 1%. As I mentioned, price gaps to store brands also narrowed in the quarter, creating a constructive backdrop, further benefiting volume performance. As you would expect, we are monitoring aluminum costs and foil dynamics very closely, and will continue adjusting our pricing and promotional plans to advance the category in our business. Our innovation is another competitive advantage, and we are strengthening our ability to convert consumer insights into products that drive their categories. Reynolds Wrap Fun Foil is expanding distribution for the holidays and performing strongly online. creating new usage occasions by responding to consumers' appetite for customization and variety. The Reynolds brand also continues to drive transformation in the rapidly growing parchment segment. Circona recently recognized Reynolds Kitchen's air fryer liners as a 2025 new product pace setter for our record of growth and strong alignment with consumer trends. Further, our newest parchment innovations, Reynolds Kitchen's air fryer cups and parchment cooking bags, recently earned additional e-com and mass distribution gains. Our other flagship brand, Hefty, is a nearly $2 billion brand that might be best known for its waste bag momentum. However, Hefty's growth potential extends far beyond waste, consistent with its positioning as a brand that is both strong and dependable. Our 80-count Halloween Party Cups were recently introduced en masse and are doing well. Velocities for new Hefty EcoSave compostable cutlery introduced in club and mass earlier this year continue to be very encouraging. And Hefty remains very strong in waste bags, leading the scented waste bag segment, which is driving the more than $4 billion waste bag category. The hefty, fabuloso combination of brands immediately resonated with consumers when it began four years ago, including the opportunity to build on the two brands' strong shopper loyalty. Today, the hefty, fabuloso portfolio continues to drive the waste bag category as more and more consumers find scents they love in a waste bag associated with strength that they can trust. Our newest line, Hefty Fabuloso Watermelon, has achieved ACV of over 50 less than a year after launch and is especially popular with Gen Z consumers who love it not only for its scent, but also for its fun hot pink color. Our innovation is not limited to Reynolds and Hefty either. We are winning in multiple other categories as well. Notably, our store brand food bag business is gaining significant market share, driven by the increased distribution of new products in the club channel. In fact, all of the growth in the food bag category was driven by RCP-supplied products in the quarter. These new products are performing well because they offer consumers strength, reliability, and product features at a retail price that represents strong consumer value. Turning to profitability, as I touched on earlier, I am pleased to report that we are driving out manufacturing and supply chain costs. We have been making progress on manufacturing productivity since the start of the year and are now moving to the next leg of that journey. That involves leaning more heavily on technology, the expansion of lean principles, and additional automation throughout our operations. To lead us in that work, we recently hired Scott Vail as Chief Operations Officer. Scott is responsible for the implementation of our manufacturing initiatives across our entire organization in partnership with our business unit teams. He comes to us from Anheuser-Busch InBev and Ball Corporation, where he led similar operational initiatives. In closing, we are operating with increased agility, outperforming our categories, and driving improved financial results. We are also making RCP even stronger by driving out manufacturing and supply chain costs, positioning us as an even more important supplier to our customers and source of value for our shareholders. Nathan, over to you.

Thank you, Scott, and good morning, everyone. I am pleased to review our third quarter performance, which demonstrates our effectiveness driving results as revenue exceeded our expectations and earnings was at the upper end of our guide. Third quarter net revenues were $931 million, an increase of more than 2% from $910 million in the year-ago period. Retail revenue of $864 million increased 1% by comparison to retail revenue in the third quarter of 2024, and our retail volume grew 1% excluding phone products. As Scott mentioned, we increased share in multiple categories and our pricing actions have been executed as planned. Our non-retail revenues also increased $13 million to $67 million in the quarter. In terms of profit, each of our business units grew EBITDA in the quarter, and consolidated adjusted EBITDA was $168 million compared to $171 million in the year-ago period, reflecting improved results in all operating segments and the timing of corporate expenses in the prior year. Adjusted EPS was $0.42 versus $0.41 in the year-ago period, reflecting lower interest costs and tax initiatives. Third quarter 2025 adjusted EPS excludes $0.04 of strategic investments in revenue growth and operational cost savings initiatives, as well as CEO transition costs. Before turning to the guide, there are a few points I want to highlight regarding gross profit, SG&A, and performance in our tableware business. Gross profit was down $6 million versus the year-ago period, but to a much lesser extent than in the second quarter, with increased alignment between pricing and input costs, driving sequential improvement. As a reminder, implemented and in-flight pricing is designed to fully recover commodity and tariff impacts. SG&A was similar to the second quarter levels and down $29 million year-to-date, reflecting changes we have implemented to lower our cost base and create a more agile organisation. And our tableware business grew EBITDA in the quarter in contrast to tableware sales volumes, which were down 13%, demonstrating increasing success, driving profitability in this business as we tailor strategies for managing the various parts of the portfolio differently. Looking ahead, we are pleased to increase our revenue and adjusted EPS guides for the year, reflecting confidence in our retail trends and the programs we are implementing to drive near and longer term results. As a result, for the full year, we now expect net revenues to be flat to down 1% by comparison to 2024 net revenues of $3.7 billion, adjusted EBITDA of $655 million to $665 million, and adjusted EPS of $1.60 to $1.64. Key features of our expectations include the following, retail volume performance in line with or better than our categories, pricing representing full recovery of increased commodity and tariff costs, non-retail revenue contributing one point of growth for the year, early flow through of productivity gains from the various strategic initiatives we have been working on, and continued discipline in all areas of controllable costs, including SG&A. Our full-year expectations for adjusted EBITDA and adjusted EPS exclude debt refinancing costs recognised in the first quarter and approximately $40 million of pre-tax costs to execute strategic initiatives and CEO transition costs. In the fourth quarter, we expect net revenues to be down 1% to 5% by comparison to the fourth quarter 2024 net revenues of $1,021,000,000, including an assumption of flat non-retail revenues. We expect adjusted EBITDA to be between $208,000,000 and $218,000,000 by comparison to fourth quarter 2024 adjusted EBITDA of $213,000,000. And we expect Q4 adjusted EPS in a range of $0.56 to $0.60 versus $0.58 in the year-ago period. Turning to cash flow and capital allocation. Subsequent to quarter end, we made a voluntary principal payment of $50 million on our term loan facility. The elimination of relatively high-cost interest expense generates an attractive return in addition to the other attractive capital allocation options for us. We continue to be inside our target leverage range of 2 to 2.5 times EBITDA, positioning us well to continue investing against our pipeline of attractive capital investment opportunities. We still anticipate an approximately $30 to $40 million increase in capital spending for the year as we invest in high-return projects to support growth, drive margin, and deliver a more robust earnings model. Much of this investment is in support of growth, the manufacturing initiative Scott mentioned, and accelerated on-shoring of production, reducing the already small portion of our business not self-manufactured. and we have multiple in-flight programs across our business that are driving productivity and cost improvements that require no additional capital for implementation. In closing, we head into the holiday season driving our categories and pulling all levers to drive earnings in a dynamic operating environment. In addition, we are investing in the business and remain on track implementing programs that unlock even more of RCP's long-term growth and earnings potential. With that, let's open the floor for your questions. Operator?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that analysts limit themselves to one question and a follow-up so that others have an opportunity to ask questions as well. One moment, please, while we poll for questions. Our first question comes from Kamil Gajrawa with Jeffries. Please

proceed with your question. Kamil, are you there? Maria, maybe we go to Robert and come back.

Perfect. Camille's having a problem with his mind.

Okay, perfect.

Camille, are you there now?

Okay. We will move over to Rob Otstein with Evercore ISI. Please proceed with your question.

Thank you very much. So I was wondering if you can kind of give us, you know, a sense of, you know, how you see the setup for the, you know, important holiday season, you know, Both in terms of promo intensity, we're seeing increase in promos in many categories. And I think your promos is starting to take up a little bit in a couple of areas. So do you see that continuing? So I'd love to get the sense of the promo intensity. Will that continue? And then on the other hand, how do you see the consumer developing into the holidays? Affordability is an issue. You mentioned stress on middle and lower income areas, sections of the population. How are you playing into that, and do you think that that can drive growth over last year? So that's my first question. And then as a follow-up, I also wanted to ask, you mentioned in the call that you saw a risk that retailers could shift store brands to other suppliers. Just wanted to understand, you know, why you flagged that. Is there something that, you know, looks like it's in the works? And how are you dealing with that?

Good morning, Robert. Scott, thanks for, I guess, the series of questions. I'll try to take them, I think, in the order that you asked. So I think on the topic of promo intensity, there's really two categories in our portfolio that we see away from us a degree of increased promotional activity. And those two categories would be waste bags and food bags. When we think about, though, our level of promotional intensity in each of those categories, they're really in line. meaning they look a lot like our overall level of promotion, which in turn looks a lot like the level of promotion we've seen pre-pandemic. And I think results are important, which is as we look at waste bags, you look at hefty branded waste bags year-to-date, retail takeaways are plus nine, outperforming the category in the quarter by 10 points. If you look at food bag performance, you can see on the Presto segment, volume growth of 9%. So I would say we feel pretty good about our ability to navigate the promotional environment. Second question, I think, is around the state of the consumer. And I go back to just to remind, I think when we initiated the 2025 guide, we talked about we felt a consumer that was challenged and under pressure. That remains to be the case. You know, a couple of bullet points there, I think, that'll help put some dimension to that. You know, as we think about elements of the economy, we still see inflation, you know, in that sort of 3% zone above the Fed's target of two. So generally, not number two. We also see the labor market cooling a bit, unemployment levels in the low fours. But I think the most important one, as we see it, would be year-to-date, you know, value-oriented, if you alike. Both the question was about flagging what activity there. The reason for bringing that up is in a climate where you've got, you know, general challenges in the economy, uncertainty in supply chains from all of the tariff activity, that environment, but I'd say having said all of that is a... Thank you very much. Our next question comes from Kamil

with Jeffries. Please proceed with your question. Sorry about that earlier, guys. So I guess that

You're doing some hiring. You're making some changes in terms of operational capabilities. Can you maybe just talk about what the sort of grand plan is related to? Does that maybe take up what the long-term algorithm should be? Is it more about share gain? Is it more about category growth? Just some of the things that you, you know, talked about very specifically in your prepared remarks. Can you maybe just talk about where it should, you know, what impact that should have on the business going forward?

Sure. Good morning, Camille. So a couple of thoughts. We've certainly added some key executives that the team really, if you think of it from a P&L landscape perspective, You know, a new chief commercial officer, Carlin Hooker, who comes to us with an extensive background of building growth programs. And I mentioned in prepared remarks the addition of Scott Vail as chief operations officer. So I'll just stay with those two. Back to the beginning of the year, we talked about initiatives across the business. One, to drive growth. What we're after there is three third remarks. And then three, our opportunity to drive additional share at the customer. I've talked about driving manufacturing and supply chain costs out of the business. And so what we see in Scott is additional veteran leadership who has experience being added to the organization, MAPS specifically.

Our next question comes from Lauren Lieberman with Barclays. Please proceed with your question.

Great. I wanted to, I guess, first just ask about tableware. So, you know, down probably more than we expected, but more importantly, just line of sight to stabilization. You know, where are we now on how large or how small foam is? And how should we maybe think about it, look more broadly, say, over the next 12 months? Do we get to a point where it has less of a weight on the overall company performance?

Yeah, you bet. Good morning, Laura. Let me start. So, you know, tableware definitely down in the quarter. maybe put some dimension to it, about 80% of the decline would have been a function of the foam headwinds, which we'll come back to in a moment, 20% a function of non-foam declines. And on that second point, in the non-foam part of the portfolio, more a reminder that nearly two-thirds of the use occasions in disposable tableware are really convenient and probably more discretionary, certainly than the portfolio taken as a whole. Having said all of that, we're very pleased, frankly, with how Ryan and that team have managed the business. Because if you look at the profit metric, despite the volumes being down low double digits, profits actually increased about 10%. So I think we're managing that quite effectively. In terms of foresight, not a ton to add. This year certainly stands to be greater headwinds than one would reasonably think about in foam for next year, more a function of the state of California. As an example, we're comping all year long this year, not selling foam or managing the business from a...

Our next question comes from Andrea Teixeira with JPMorgan Cheese. Please proceed with your question.

Thank you, operator, and good morning, everyone. My question is more on the hefty waste and storage. I mean, definitely impressive numbers on the volume side. And I guess year-to-date, you're pretty much profitability, and it's impressive also because that's the highest profitability you have among all the four divisions. It's slightly down, but I was hoping to see if, I mean, obviously it's a function of your RGM and promo most likely, and correct me if I'm wrong, but also the fact that you've been gaining distribution. So I was hoping to see if you can give us a little bit more of a detail on the promo impact and also how to think about, like, when you're going to lap those distribution gains or if you are hoping to see more of those as you go into 2026. Thank you.

You bet. Good morning, Andrea. Thanks for the question. So, you know, I think from a promo environment standpoint, we certainly have seen competitors in that category step up, you know, a level of promo intensity. We feel as though ours are very much in line. I was mentioning a moment ago that our level of promotional activity really looks a lot like the rest of the company and in turn what we've seen pre-pandemic. So what that tells us is, you know, ultimately, products and execution are really driving that business. You commented on the plus nine year to date. I think that'd be pretty good evidence of both the products resonating from insights with consumers. And our supply chain team has done an outstanding job keeping those products in stock. We are consistently running in high 90s in terms of case fill rates for our customers. So I think those are really, you know, the ingredients for success. You know, not a lot to offer for next year other than, you know, we continue, as I've said before, we're going to continue to invest our financial and human resources against innovation that has some size and durability. And that's super helpful.

If I can just follow up to that, ask, obviously, your private label is huge in that segment. Can you comment on how, and you spoke before, the barbell, and it's pretty much a good representation of what the consumer is right now. But if you talk about how you're positioning yourself into that consumer that needs a higher value product, especially your largest client, if you can kind of give us as a state of the union how that consumer has been behaving and if you're taking any pricing to offset anything. I'm assuming you did not on the entry level, but just curious how you're balancing that part of the portfolio, both the high-end, obviously, with the fragrance-led fabuloso on the bags, on the higher-end bags, but also on how to protect the value for the entry level.

Sure. What's interesting, and this is probably a good comment for the company taken as a whole, we operate in very, very stable categories. And so we generally do not see much movement in the mix between brands and store brands taken as a whole, Meaning in any given period, you might see a one or two point, you know, change in either direction. Interestingly enough, the sales mix in waste bags is really quite static. Said differently, there's not a pronounced change in the brand store brand mix. So I think, you know, what that at least tells us is, you know, the brand loyalists continue to an increasing degree, you know, by the hefty items. And by definition, looking at the plus five of volume growth in the segment overall, that must also mean that we're doing a pretty good job, you know, satisfying the tribe.

Thank you so much, Professor.

Thank you.

Our next question comes from Peter Grom with UBS. Please proceed with your question.

Thanks, Operator, and good morning, everyone. So two for me. First, just a follow-up on the promotional commentary. Your response to Andrea's and Robert's questions was helpful. But we're starting to hear or heard from some larger food companies, including one last night, that the return on kind of these promotions are not in line with what we've seen or what they've seen historically. So I know you feel good about your performance, but I'm curious if you're seeing a similar dynamic in the categories where you compete.

you? I guess not a ton to offer, but all I can really say to that is we have certainly spent a lot of this year, as I think you're aware, really investing in building out a more robust RGM or revenue growth management capability, which by design really is about migrating trade or investment promotional dollars to their highest valued use. I wouldn't really call out anything positive or negative in terms of kind of structural characteristics about trade effectiveness, for example, I would more say our focus remains on ensuring that those dollars are optimally deployed at both the product level. That's helpful. And then a follow-up,

just on gross margin and maybe just some perspective on what you're seeing from a cost tariff standpoint. I think back in the summer, we contemplated a two- to four-point headwind from, you know, commodities and tariffs. So is that still the case as we sit here today? And then just, you know, the commentary on the gradual recovery as we move through the year, as pricing begins to flow through. So, you know, how should we be thinking about fourth quarter gross margin? And maybe specifically, you know, how does that exit rate inform our view of looking out to 20 cents?

A few questions there. Good morning. So let's start with the pricing. So I'd say two to four points is still a good estimate, both of the cost headwinds from commodities and tariffs. So both the cost and the price side, two to four points is a good estimate. That was a full year estimate. As you look at the third quarter, there's roughly four points of pricing. So that would tell you that we're, and year to date, two points. So we're right inside that range as expected. and with all of the pricing intended to fully offset those costs. We don't get into specifics around gross profit or EBITDA from a guidance perspective, but certainly we're pleased with the progression of gross profit from quarter to quarter this year and would expect some continuation of that with how our earnings is starting to inflict as the EBITDA performance.

Great. Thank you so much. I'll pass it on. As a reminder, if you'd like to ask a question,

please press star zero on your telephone keypad our next question comes from brian mcnera with canaccord genuity please proceed with your question good morning guys thanks for taking

the questions um so my first one is kind of a three for one but it all ties into the same theme here as it relates to consumer behavior so fd waste and storage continues to do well i know innovation is helping there but how much is the typical lower price point and you know some of the categories there relative to your primary branded competitor help in this environment. Second, Presto had its best quarter for volume growth, I think, since 2020. I know you mentioned share gains across store branded bags, but does that also reflect store branded share gains from branded bags as a whole as consumers trade down? And then finally, restaurants continue to see traffic decline. So why wouldn't we be seeing better volume growth in Reynolds Cooking and acknowledging you're outperforming there. Thanks. Yeah, good morning, Brian. Thank you for the

questions. I guess the first one is really around the waste bag category and what I think the question is really around what's driving the success there. And I think it's two constructs. The first, certainly innovation has been a large part of that business for many years, And we are enjoying that today, as I think I mentioned in prepared remarks. And I think certainly the second would be really we represent the performance brand. So certainly a performance brand, I think, in this climate especially is probably a solid place to be in that part of the marketplace. In terms of Presto, thank you. The team will enjoy those comments. There's significant growth in the quarter, nine points of volume. No question there were some sheer wins in the food bag category from both other store brand players as well as brands. And I think the why is around that team has had a very, very efficient, I mean, really premium quality bags. The last question you asked about is consumer behavior with respect to dining out versus at home and how that might interact with.

That's helpful. Scott, you laid out a new strategy in February with new work streams, with dedicated leaders, processes, resources to go after incremental growth and ROI. You've also operated in a very difficult environment, to say the least, this year. So I'm curious, where is the company today relative to where you thought it would be on those initiatives and what should give investors confidence that these will bear fruit as we finish 2025 and go into 2026?

i very much appreciate the the question we we are feeling really good about the progress that we're we're making you know obviously as we we started the year you know a lot has changed in the year from a macro climate as everybody on this call is is is well aware so you know we've we've been put to the test i think to to execute in a pretty in a pretty challenging environment but i think the direct answer is we're we're really seeing you know carlin in uh in our commercial part of the business or the front end of the business really hitting stride. It's been off to a very fast start, you know, both in leading the RGM initiatives, but also what we refer to as share gap selling again, where we may have share of X percent in a category, but that's not necessarily true of every retailer. And so putting programs in place to drive against those, you know, very pleased with that progress. And then, you know, the second on cost, I think whether you look at COGS or SG&A, again, I feel like we're right on schedule with the progress that we're making. And as you heard a few minutes ago, also investing, importantly, in talent against those to drive those forward. So I'd say we're about where we had hoped to be, and we're certainly seeing the effects starting to flow through the P&L. Great. Thanks very much. I'll pass it on.

Thank you. We've reached the end of our question and answer session. I would now like to turn the floor back over to Scott for closing comments.

Thank you, Operator, and certainly thank you to our analysts and investors for your interest in our business. I'd also like to pass on our appreciation for our 6,400 teammates as we continue to do the work to unlock additional value for the company. And with that, I wish everybody a great day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.