Reynolds Consumer Products Inc 10-Q for FY2023 Q2

Reynolds Consumer Products Inc. (REYN)

10-Q 2023-08-09 For: 2023-06-30

Added on April 07, 2026

About this 10-Q

Reynolds Consumer Products Inc filed this 10-Q on August 9, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $940M; up 2.5% from $917M a year earlier
Net income: $66M; up 26.9% from net income of $52M a year earlier
Diluted EPS: $0.32; up 28.0% from $0.25 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware			45-3464426
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification Number)


		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2023 and 2022	2
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022	3
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	4
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
	Signatures	31


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net revenues	$	922	$	896	$	1,774	$	1,714
Related party net revenues	18		21		40		48
Total net revenues	940		917		1,814		1,762
Cost of sales	(712)		(733)		(1,430)		(1,410)
Gross profit	228		184		384		352
Selling, general and administrative expenses	(107)		(91)		(212)		(174)
Other expense, net	(1)		(7)		(1)		(12)
Income from operations	120		86		171		166
Interest expense, net	(31)		(16)		(60)		(28)
Income before income taxes	89		70		111		138
Income tax expense	(23)		(18)		(28)		(34)
Net income	$	66	$	52	$	83	$	104

Earnings per share:
Basic	$	0.32	$	0.25	$	0.40	$	0.50
Diluted	$	0.32	$	0.25	$	0.40	$	0.50

Weighted average shares outstanding:
Basic	210.0		209.9		210.0		209.8
Effect of dilutive securities	—		—		—		0.1
Diluted	210.0		209.9		210.0		209.9


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	66	$	52	$	83	$	104
Other comprehensive (loss) income, net of income taxes:
Employee benefit plans	(1)		(1)		(2)		(1)
Interest rate derivatives	14		4		2		11
Other comprehensive income, net of income taxes	13		3		—		10
Comprehensive income	$	79	$	55	$	83	$	114


	(Unaudited) As of June 30, 2023		As of December 31, 2022
Assets
Cash and cash equivalents	$	83	$	38
Accounts receivable (net of allowance for doubtful accounts of $1 and $1)	386		348
Other receivables	4		15
Related party receivables	7		7
Inventories	614		722
Other current assets	52		41
Total current assets	1,146		1,171
Property, plant and equipment (net of accumulated depreciation of $859 and $821)	716		722
Operating lease right-of-use assets, net	59		65
Goodwill	1,879		1,879
Intangible assets, net	1,016		1,031
Other assets	66		61
Total assets	$	4,882	$	4,929
Liabilities
Accounts payable	$	225	$	252
Related party payables	34		46
Current portion of long-term debt	25		25
Current operating lease liabilities	15		14
Income taxes payable	2		14
Accrued and other current liabilities	164		145
Total current liabilities	465		496
Long-term debt	2,056		2,066
Long-term operating lease liabilities	46		53
Deferred income taxes	368		365
Long-term postretirement benefit obligation	34		34
Other liabilities	54		47
Total liabilities	$	3,023	$	3,061
Commitments and contingencies (Note 7)
Stockholders’ equity
Common stock, $0.001 par value; 2,000 shares authorized; 210 shares issued and outstanding	—		—
Additional paid-in capital	1,389		1,385
Accumulated other comprehensive income	52		52
Retained earnings	418		431
Total stockholders’ equity	1,859		1,868
Total liabilities and stockholders’ equity	$	4,882	$	4,929


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Equity
Balance as of December 31, 2021	$	—	$	1,381	$	365	$	10	$	1,756
Net income	—		—		52		—		52
Other comprehensive income, net of income taxes	—		—		—		7		7
Dividends ($0.23 per share declared and paid)	—		—		(48)		—		(48)
Balance as of March 31, 2022	$	—	$	1,381	$	369	$	17	$	1,767
Net income	—		—		52		—		52
Other comprehensive income, net of income taxes	—		—		—		3		3
Dividends ($0.23 per share declared and paid)	—		—		(48)		—		(48)
Other	—		2		—		—		2
Balance as of June 30, 2022	$	—	$	1,383	$	373	$	20	$	1,776

Balance as of December 31, 2022	$	—	$	1,385	$	431	$	52	$	1,868
Net income	—		—		17		—		17
Other comprehensive loss, net of income taxes	—		—		—		(13)		(13)
Dividends ($0.23 per share declared and paid)	—		—		(48)		—		(48)
Other	—		1		—		—		1
Balance as of March 31, 2023	$	—	$	1,386	$	400	$	39	$	1,825
Net income	—		—		66		—		66
Other comprehensive income, net of income taxes	—		—		—		13		13
Dividends ($0.23 per share declared and paid)	—		—		(48)		—		(48)
Other	—		3		—		—		3
Balance as of June 30, 2023	$	—	$	1,389	$	418	$	52	$	1,859


	Six Months Ended June 30,
	2023		2022
Cash provided by operating activities
Net income	$	83	$	104
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization	61		57
Deferred income taxes	2		(3)
Stock compensation expense	6		4
Change in assets and liabilities:
Accounts receivable, net	(38)		57
Other receivables	11		4
Related party receivables	—		3
Inventories	108		(151)
Accounts payable	(15)		22
Related party payables	(12)		8
Income taxes payable / receivable	(11)		(2)
Accrued and other current liabilities	19		12
Other assets and liabilities	(7)		(14)
Net cash provided by operating activities	207		101
Cash used in investing activities
Acquisition of property, plant and equipment	(51)		(56)
Net cash used in investing activities	(51)		(56)
Cash used in financing activities
Repayment of long-term debt	(12)		(12)
Dividends paid	(96)		(96)
Other financing activities	(3)		—
Net cash used in financing activities	(111)		(108)
Net increase (decrease) in cash and cash equivalents	45		(63)
Cash and cash equivalents at beginning of period	38		164
Cash and cash equivalents at end of period	$	83	$	101

Cash paid:
Interest	58		24
Income taxes	36		37


	June 30, 2023		December 31, 2022
	(in millions)
Raw materials	$	180	$	215
Work in progress	65		81
Finished goods	321		383
Spare parts	48		43
Inventories	$	614	$	722


(In millions)	Notional Amount		Annual Rate	Weighted Average Annual Effective Rate		Fair Value - Other Current Assets		Fair Value - Other Assets
As of June 30, 2023	$	1,150	2.15% to 5.15%	4.38	%	$	30	$	21
As of December 31, 2022⁽¹⁾	$	1,150	2.19% to 5.19%	4.42	%	$	25	$	23


(In millions)	Currency Translation Adjustments		Employee Benefit Plans		Interest Rate Derivatives		Accumulated Other Comprehensive Income
Balance as of December 31, 2021	$	(6)	$	12	$	4	$	10
Gain arising during the period	—		—		9		9
Reclassification to earnings	—		—		—		—
Effect of deferred taxes	—		—		(2)		(2)
Balance as of March 31, 2022	$	(6)	$	12	$	11	$	17
Gain arising during the period	—		—		5		5
Reclassification to earnings	—		(1)		—		(1)
Effect of deferred taxes	—		—		(1)		(1)
Balance as of June 30, 2022	$	(6)	$	11	$	15	$	20

Balance as of December 31, 2022	$	(7)	$	23	$	36	$	52
Loss arising during the period	—		—		(10)		(10)
Reclassification to earnings	—		(1)		(6)		(7)
Effect of deferred taxes	—		—		4		4
Balance as of March 31, 2023	$	(7)	$	22	$	24	$	39
Gain arising during the period	—		—		25		25
Reclassification to earnings	—		(1)		(7)		(8)
Effect of deferred taxes	—		—		(4)		(4)
Balance as of June 30, 2023	$	(7)	$	21	$	38	$	52


	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated(1)		Total
Three Months Ended June 30, 2023	(in millions)
Net revenues	$	321	$	227	$	251	$	144	$	943	$	(3)	$	940
Intersegment revenues	—		2		—		1		3		(3)		—
Total segment net revenues	$	321	$	229	$	251	$	145	$	946	$	(6)	$	940
Adjusted EBITDA	40		62		45		28		175
Depreciation and amortization	7		5		4		5		21		9		30

	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated(1)		Total
Three Months Ended June 30, 2022	(in millions)
Net revenues	$	294	$	236	$	240	$	149	$	919	$	(2)	$	917
Intersegment revenues	—		2		—		1		3		(3)		—
Total segment net revenues	$	294	$	238	$	240	$	150	$	922	$	(5)	$	917
Adjusted EBITDA	36		46		25		25		132
Depreciation and amortization	6		5		4		5		20		9		29


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(in millions)				(in millions)
Segment Adjusted EBITDA	$	175	$	132	$	283	$	247
Corporate / unallocated expenses	(25)		(14)		(51)		(17)
	150		118		232		230
Adjustments to reconcile to GAAP income before income taxes
Depreciation and amortization	(30)		(29)		(61)		(57)
Interest expense, net	(31)		(16)		(60)		(28)
IPO and separation-related costs	—		(3)		—		(7)
Consolidated GAAP income before income taxes	$	89	$	70	$	111	$	138


	Three Months Ended June 30, 2023					Three Months Ended June 30, 2022
(in millions, except for per share data)	Net Income		Diluted Shares	Diluted EPS		Net Income		Diluted Shares	Diluted EPS
As Reported - GAAP	$	66	210	$	0.32	$	52	210	$	0.25
Adjustments:
IPO and separation-related costs ⁽¹⁾	—		210	—		2		210	0.01
Adjusted (Non-GAAP)	$	66	210	$	0.32	$	54	210	$	0.26


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
(in millions, except for per share data)	Net Income		Diluted Shares		Diluted EPS		Net Income		Diluted Shares	Diluted EPS
As Reported - GAAP	$	83	$	210	$	0.40	$	104	210	$	0.50
Adjustments:
IPO and separation-related costs ⁽¹⁾	—		210		—		5		210	0.02
Adjusted (Non-GAAP)	$	83	$	210	$	0.40	$	109	210	$	0.52


(in millions)	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Unallocated⁽1⁾		Total Reynolds Consumer Products
Net revenues for the three months ended June 30:
2023	$	321	$	229	$	251	$	145	$	(6)	$	940
2022	294		238		240		150		(5)		917
Adjusted EBITDA⁽²⁾ for the three months ended June 30:
2023	$	40	$	62	$	45	$	28	$	(25)	$	150
2022	36		46		25		25		(14)		118


	For the Three Months Ended June 30,
(in millions, except for %)	2023		% of Revenue		2022		% of Revenue		Change		% Change
Net revenues	$	922	98	%	$	896	98	%	$	26	3	%
Related party net revenues	18		2	%	21		2	%	(3)		(14)	%
Total net revenues	940		100	%	917		100	%	23		3	%
Cost of sales	(712)		(76)	%	(733)		(80)	%	21		3	%
Gross profit	228		24	%	184		20	%	44		24	%
Selling, general and administrative expenses	(107)		(11)	%	(91)		(10)	%	(16)		(18)	%
Other expense, net	(1)		—	%	(7)		(1)	%	6		NM
Income from operations	120		13	%	86		9	%	34		40	%
Interest expense, net	(31)		(3)	%	(16)		(2)	%	(15)		(94)	%
Income before income taxes	89		9	%	70		8	%	19		27	%
Income tax expense	(23)		(2)	%	(18)		(2)	%	(5)		(28)	%
Net income	$	66	7	%	$	52	6	%	$	14	27	%
Adjusted EBITDA ⁽¹⁾	$	150	16	%	$	118	13	%	$	32	27	%


	Price		Volume/Mix		Total
Reynolds Cooking & Baking	(3)	%	12	%	9	%
Hefty Waste & Storage	4	%	(8)	%	(4)	%
Hefty Tableware	12	%	(7)	%	5	%
Presto Products	—	%	(3)	%	(3)	%
Total RCP	3	%	—	%	3	%


	For the Six Months Ended June 30,
(in millions, except for %)	2023		% of Revenue		2022		% of Revenue		Change		% Change
Net revenues	$	1,774	98	%	$	1,714	97	%	$	60	4	%
Related party net revenues	40		2	%	48		3	%	(8)		(17)	%
Total net revenues	1,814		100	%	1,762		100	%	52		3	%
Cost of sales	(1,430)		(79)	%	(1,410)		(80)	%	(20)		(1)	%
Gross profit	384		21	%	352		20	%	32		9	%
Selling, general and administrative expenses	(212)		(12)	%	(174)		(10)	%	(38)		(22)	%
Other expense, net	(1)		—	%	(12)		(1)	%	11		92	%
Income from operations	171		9	%	166		9	%	5		3	%
Interest expense, net	(60)		(3)	%	(28)		(2)	%	(32)		(114)	%
Income before income taxes	111		6	%	138		8	%	(27)		(20)	%
Income tax expense	(28)		(2)	%	(34)		(2)	%	6		18	%
Net income	$	83	5	%	$	104	6	%	$	(21)	(20)	%
Adjusted EBITDA ⁽¹⁾	$	232	13	%	$	230	13	%	$	2	1	%


Exhibit Number						Description

3.1						Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 4, 2020)
3.2						Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 4, 2020)
31.1*						Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*						Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*						Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


REYNOLDS CONSUMER PRODUCTS INC.
(Registrant)

By:			/s/ Chris Mayrhofer
			Chris Mayrhofer
			Senior Vice President and Controller (Principal Accounting Officer)
			August 9, 2023


Date: August 9, 2023	By:	/s/ Lance Mitchell
		Lance Mitchell
		President and Chief Executive Officer


Date: August 9, 2023	By:	/s/ Michael Graham
		Michael Graham
		Chief Financial Officer