Reynolds projects flat to down 1% full-year revenue in 2025 while accelerating cost discipline and innovation

Earnings Call Insights: Reynolds Consumer Products Inc. (REYN) Q3 2025

MANAGEMENT VIEW

* Scott Huckins, President and CEO, stated that Reynolds achieved strong retail performance and gained market share in most categories, emphasizing "increased agility and effectiveness in managing profitability" and successful advancement of long-term initiatives. He reported broad share gains in Hefty Waste Bags, Hefty Party Cups, Reynolds Wrap, Reynolds Kitchen Parchment products, and store brand food bags.
* Huckins highlighted that pricing increases in aluminum foil were implemented as planned, and Reynolds Wrap volume "outperformed the category in the third quarter," reflecting the company's unique vertically integrated position. He noted, "the combination of share gains and pricing actions across the portfolio, together with continued cost discipline delivered improved results in all 4 business units."
* The CEO discussed the challenging operating environment, with "low and middle-income consumers under continued pressure" and retailers facing inflation and tariffs, but pointed to opportunities: "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."
* Huckins also introduced new senior hires: Chief Commercial Officer Carlen Hooker, leading growth programs and revenue management process improvements, and Chief Operations Officer Scott Vail, tasked with advancing manufacturing initiatives and automation.
* Product innovation was spotlighted, including Reynolds Wrap Fun Foil, Reynolds Kitchens Air Fryer Liners, Hefty ECOSAVE compostable cutlery, and the Hefty Fabuloso line, as well as private label food bag share gains driven by new club channel products.
* Nathan Lowe, VP, CFO, stated, "third quarter net revenues were $931 million, an increase of more than 2% from $910 million in the year ago period... adjusted EPS was $0.42 versus $0.41 in the year ago period reflecting lower interest costs and tax initiatives."

OUTLOOK

* Lowe announced increased full-year guidance: "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."
* For Q4, Lowe stated, "we expect net revenues to be down 1% to 5% by comparison to the fourth quarter 2024 net revenues of $1.021 billion including an assumption of flat non-retail revenues." Q4 adjusted EBITDA guidance is $208 million to $218 million and adjusted EPS is $0.56 to $0.60.
* Key expectations include retail volume in line with or better than categories, full recovery of commodity and tariff costs through pricing, and continued cost discipline.

FINANCIAL RESULTS

* Third quarter net revenues were $931 million, up from $910 million a year ago. Retail revenue reached $864 million, with retail volume up 1% (excluding foam products). Non-retail revenues increased by $13 million to $67 million for the quarter.
* Consolidated adjusted EBITDA was $168 million compared to $171 million last year. Adjusted EPS was $0.42, up from $0.41, excluding $0.04 of strategic investment and CEO transition costs.
* Gross profit declined by $6 million year-over-year, but with better alignment between pricing and input costs. SG&A was similar to the prior quarter and down $29 million year-to-date. Tableware EBITDA grew, despite a 13% decline in sales volumes.
* After quarter-end, a $50 million principal payment was made on the term loan facility. Capital spending is expected to increase by $30 million to $40 million for the year, supporting growth, margin, and onshoring production.

Q&A

* Robert Ottenstein, Evercore ISI, asked about holiday season promo intensity and consumer sentiment. Huckins responded, "there's really 2 categories... waste bags and food bags" showing increased promotions, but levels are "in line... like the level of promotion, we've seen pre-pandemic." He added, "consumer is under pressure," citing weaker sentiment and a "barbell" approach to targeting both premium and value shoppers. On risks of retailers shifting to other private label suppliers, Huckins explained, "we would certainly expect to see a step up in retailers bid activity... but we would certainly expect to win more than we lose."
* Kaumil Gajrawala, Jefferies, asked about new hires and long-term impact. Huckins described the additions of Hooker and Vail as "key talent being added to the organization" supporting growth and cost initiatives.
* Lauren Lieberman, Barclays, questioned tableware trends and foam headwinds. Huckins specified, "about 80% of the decline would have been a function of the foam headwinds," but said tableware profits grew about 10% despite volume declines and anticipated foam will be a "lesser degree of a headwind next year."
* Andrea Teixeira, JPMorgan, inquired about Hefty waste and storage promotions, profitability, and private label positioning. Huckins emphasized, "our level of promotional activity really looks a lot like the rest of the company," with high case fill rates and stability in the brand/store brand mix.
* Peter Grom, UBS, followed up on promotion ROI and gross margin outlook. Huckins said Reynolds is "investing in building out a more robust RGM," with focus on optimal promo deployment. On cost headwinds, "2 to 4 points is still a good estimate," and pricing is expected to fully offset costs.
* Brian McNamara, Canaccord, asked about consumer behavior and category drivers. Huckins cited innovation and value as key, noting Presto's "9 points of volume" growth and said, "we are seeing the effects starting to flow through the P&L."

SENTIMENT ANALYSIS

* Analysts raised concerns about promo intensity, consumer affordability, tableware declines, margin recovery, and private label risks. The tone was neutral to slightly cautious, with multiple clarifications sought on cost headwinds, promotional effectiveness, and guidance durability.
* Management maintained a confident and measured tone in prepared remarks, emphasizing improved execution and cost controls. During Q&A, responses remained fact-focused, occasionally reiterating prior points and using phrases like "as I've said before" and "we feel pretty good about our ability."
* Compared to the previous quarter, the analyst sentiment shifted from neutral to slightly more cautious, pressing on promo ROI and headwinds. Management’s tone remained steady and confident both quarters, but leaned more on operational discipline and new leadership this quarter.

QUARTER-OVER-QUARTER COMPARISON

* Management increased full-year guidance for adjusted EPS and EBITDA, compared to reiteration last quarter. Retail revenue and volumes showed modest improvement, while sequential gross profit alignment improved versus Q2.
* Strategic focus shifted more toward operational cost discipline, automation, and leveraging U.S.-centric supply advantages, building on themes introduced last quarter.
* Analysts’ questions shifted from destocking and elasticity in Q2 to promo effectiveness, private label risks, and the impact of new leadership in Q3.
* Management’s confidence in innovation and execution was reinforced by new executive hires and evidence of share gains across key categories.

RISKS AND CONCERNS

* Management flagged continued pressure on low and middle-income consumers and the potential for more transactional retailer-supplier relationships due to inflation and tariffs.
* The risk of retailers shifting some private label business to other suppliers was highlighted. Huckins stated, "we would certainly expect to see a step up in retailers bid activity for private brands business."
* Analysts continued to raise questions about promo intensity, gross margin headwinds, and tableware volume declines.
* Management’s mitigation strategies include cost discipline, innovation, pricing actions to offset commodity/tariff costs, and leveraging the company’s U.S.-centric supply chain.

FINAL TAKEAWAY

Reynolds Consumer Products Inc. reported strong retail performance and broad-based market share gains in the third quarter, while navigating a challenging consumer environment and inflationary pressures. The company increased its full-year guidance for 2025, citing robust category execution, effective cost control, and the benefits of new senior leadership in commercial and operations roles. With innovation and operational initiatives underway, management projects steady financial performance and continued resilience heading into the holiday season and beyond.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/reyn/earnings/transcripts]

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