Reynolds Consumer Products Inc. (REYN) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presented mixed results: slight declines in revenue and EBITDA, but improved EPS and strong cost management. The Q&A revealed some concerns over foam volume declines and competitive pressures on the Hefty brand. However, there were positive aspects like market share gains and strategic restructuring. The overall guidance was not overly optimistic, with expected revenue decline and moderate growth projections, leading to a neutral sentiment.
Key Financial Performance
Net Revenues (Q4 2025) $1.03 billion, representing 1% growth compared to $1.02 billion in Q4 2024. Growth attributed to retail volume exceeding category trends and increase in low-margin nonretail net revenues.
Adjusted EBITDA (Q4 2025) $220 million, a 3% increase compared to Q4 2024. Growth driven by manufacturing efficiencies and cost improvements offsetting retail sales volume declines.
Net Revenues (Full Year 2025) $3.7 billion, representing 1% year-over-year growth. Growth driven by strong nonretail revenue growth offsetting slight retail revenue decline.
Adjusted EBITDA (Full Year 2025) $667 million, compared to $678 million in 2024. Decline due to lower retail volume and higher tariffs and commodity costs, partially offset by cost reductions.
Adjusted EPS (Q4 2025) $0.59, compared to $0.58 in Q4 2024. Growth attributed to improved profitability and cost management.
Adjusted EPS (Full Year 2025) $1.64, compared to $1.67 in 2024. Decline due to lower retail volume and higher costs, partially offset by cost reductions.
Free Cash Flow (Full Year 2025) $316 million, driven by tight working capital management and offsetting higher commodity costs.
SG&A (Q4 2025) Down 19% compared to Q4 2024, due to organizational delayering, optimized advertising ROIs, and tight cost management.
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Operating Highlights
New Product Launches: Expanded Hefty waste bag lineup with new scents and colors, including watermelon scent. Introduced Reynolds KITCHENS parchment cooking bags and air fryer cups, ECOSAVE compostable cutlery, and seasonal offerings like Reynolds Wrap Holiday Fun Foil and festive printed Hefty Party Cups.
Innovation Focus: Focused on fewer ideas with bigger ambition and better consumer outcomes, leading to category outperformance.
Market Share Gains: Achieved share gains in 6 largest core categories, including Hefty waste bags, Hefty food bags, Reynolds Wrap, Reynolds Parchment, Reynolds Bakeware, and Hefty Party Cups.
Revenue Growth Management: Migrated trade dollars to higher return programs, optimized pricing and price pack architecture, and expanded distribution in core categories.
Manufacturing and Supply Chain Improvements: Improved productivity through automation, lean principles, and advanced technology deployment. U.S.-centric supply chain enabled high service levels and agility.
Cost Management: Reduced SG&A by 19% in Q4 2025 and implemented cost-saving initiatives across manufacturing and supply chain.
Strategic Realignment: Realigned category organization to consolidate waste bags and food bags into separate businesses for increased efficiency and growth opportunities.
Talent Acquisition: Added experienced leaders across sales, operations, supply chain, and Hefty Tableware segment to support strategic priorities.
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Risk or Challenges
Escalating Commodity Costs: The company faces significant challenges due to rising aluminum prices and other commodity costs, which have necessitated price increases to offset these pressures. This could impact consumer demand and profitability.
Competitive Pressures: Intensified promotional and pricing activities by competitors in the waste bag and food bag categories are creating added pressure, potentially leading to near-term volume headwinds.
Retailer Dynamics: Transactional dynamics with retailers, including dual sourcing for private label programs, are creating near-term pressure and risks to the company's private label business.
Economic Environment: Sustained headwinds in the consumer environment, including retailer focus on inventory management and consumer value, could impact sales and operational flexibility.
Foam and Discretionary Categories: Declines in foam and the discretionary nature of the Hefty Tableware category continue to weigh on the segment's top-line results, posing a challenge to stabilize and grow this business.
Supply Chain and Manufacturing Efficiency: While improvements have been made, the company still faces challenges in fully optimizing manufacturing and supply chain efficiencies to reduce costs and improve throughput.
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Guidance & Outlook
Revenue Expectations: For 2026, net revenues are expected to range from -3% to +1% compared to 2025 net revenues of $3.7 billion. Retail branded sales are anticipated to perform at or above category performance of down 2%, with non-retail revenue expected to remain flat.
Margin Projections: Adjusted EBITDA for 2026 is projected to be between $660 million and $675 million. The company plans to implement additional pricing actions to mitigate higher input costs and maintain profitability.
Capital Expenditures: Capital expenditures for 2026 are expected to remain elevated, in the low $200 million range, as the company continues to invest in automation and other high ROI projects.
Market Trends and Competitive Landscape: The company anticipates sustained headwinds in 2026, including increased promotional and pricing activity in waste bag and food bag categories, as well as transactional dynamics with retailers focusing on dual sourcing for private label programs. Despite these challenges, the company expects to leverage its strong brand equity and innovation to compete effectively.
Business Segment Performance: The Hefty Waste & Storage and Presto segments are expected to continue delivering strong volume growth and share gains. However, the Hefty Tableware segment is likely to face pressure due to declines in foam and the discretionary nature of the category. Efforts will focus on stabilizing the core business and advancing sustainable solutions.
Strategic Plans and Innovation: The company plans to focus on innovation and differentiation, building on the momentum established in 2025. This includes prioritizing high-impact opportunities, enhancing the total portfolio value proposition, and advancing sustainable solutions in the Hefty Tableware portfolio.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide more details about the restructuring with Presto and Hefty?
A:The restructuring aims to provide clarity and focus by having each business unit focus on a core category. This includes end-to-end management from consumer insights to supply chain, efficiency gains, and sharper growth opportunities. There is no significant people movement or design changes.
Q:Are we near a stabilization point for foam, or will the pressure continue to build?
A:In 2025, foam volumes declined by about 14%. For 2026, the decline is expected to be about half that rate. The situation is more consumer-driven, with factors like the cost of alternatives playing a role. Regulatory changes in 2025 had a bigger impact than expected changes in 2026.
Q:Can you provide more color on the competitive dynamics around the Hefty business and the decision to maintain price points?
A:The Hefty brand saw increased promotional and pricing activities from competitors in late 2025. Despite this, the company is committed to maintaining brand equity and consumer value. Hefty outperformed the category by 7 points in 2025 and 3 points in Q4. The guidance for 2026 includes continued success but at a lower level.
Q:How are you thinking about elasticities with the January price increase and future increases?
A:The company has been taking measured quarterly price increases, which have muted elasticity effects. However, with each subsequent increase, there is more elasticity risk. The pricing gap to private labels has contracted, and consumer insights suggest that recent purchase cycles influence price perception.
Q:Are you seeing downtrading impacting Hefty and branded Tableware, and how is Presto performing?
A:The categories have been stable in terms of brand and store brand mix. Presto has seen pronounced growth, especially in food bags, primarily in club channels. The company expects more branded mix in 2026 due to offsets in private label.
Q:Is there an opportunity to gain more private label share, and how does this impact the mix?
A:The company sees opportunities to gain share in both branded and store brand formats. While there are near-term headwinds, wins in the store brand business are expected to offset these as the year progresses.
Q:Can you clarify the SG&A dynamics and the impact of variable compensation?
A:SG&A reductions in 2025 focused on optimizing ROI. In 2026, SG&A will increase to support innovation launches. Variable compensation contributed to lower SG&A in Q4 2025.
Q:What is the expected impact of commodity cost inflation on gross margin in 2026?
A:Commodity cost inflation is expected to be 2-3 points, with pricing actions offsetting this. Half of the cost headwinds are carryovers from 2025. Margins are expected to improve despite pricing actions diluting margin percentages.
Q:Is the combination of Hefty and Presto more strategic and efficiency-related rather than cost-driven?
A:Yes, the combination is focused on execution and growth rather than cost reduction. It aims to provide better returns with the same resources.
Q:What drove the market share gains in Q4, and will this continue in 2026?
A:Market share gains were broad across the portfolio, driven by innovation, value focus, and high service levels. Continuation of these gains is expected in 2026, supported by increased distribution points and strong retail partnerships.
Q:How does elasticity for aluminum foil compare to 2022, and has the $5 price point goalpost moved?
A:Elasticity has been more muted compared to 2022 due to tighter price gaps to private labels, inflation-adjusted consumer expectations, and gradual quarterly price increases. The $5 price point may have shifted due to overall price inflation in consumer goods.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the question about the impact of mix within the guidance when discussing private label and branded products. The response lacked specific details on how the mix would affect overall performance.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Conference Today
Cups store
Hefty Party
Party Cups
Reynolds Wrap
agility
bag food
business
capability
category share
consumer need
convenience
core category
demand
dynamic
efficiency
elasticity
foundation
function
insight
investor presentation
leader
manufacturing supply
momentum
offering
pack architecture
partner
price increase
price pack
retailer focus
return program
scent
service level
share gap
strength
talent success
trade
REYN Transcript
Reynolds Consumer Products Inc. (REYN) Q4 2025 Earnings Call Transcript
Unknown2-4
The earnings call presented mixed results: slight declines in revenue and EBITDA, but improved EPS and strong cost management. The Q&A revealed some concerns over foam volume declines and competitive pressures on the Hefty brand. However, there were positive aspects like market share gains and strategic restructuring. The overall guidance was not overly optimistic, with expected revenue decline and moderate growth projections, leading to a neutral sentiment.
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The earnings call reflects mixed signals. Basic financial performance is stable with slight EPS improvement, but gross profit declined. Product development and market strategy show promise, especially in innovation and cost management. However, concerns over tableware sales and potential retailer shifts to other suppliers pose risks. Expenses are managed well, but the outlook for revenue is flat. The Q&A revealed cautious optimism but highlighted economic challenges and uncertainties. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
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Reynolds Consumer Products Inc. (REYN) Q2 2025 Earnings Call Transcript
Unknown7-30
The earnings call reveals mixed results: slight revenue growth, but declines in EBITDA and EPS. The Q&A highlights ongoing challenges with gross margins and tariff headwinds, though management expects recovery by Q4. Innovations and strategic initiatives are promising, but their costs and SG&A adjustments could limit flexibility. The market strategy remains intact, yet consumer confidence is weak. The company's guidance and financial outlook suggest caution, leading to a neutral sentiment for the stock price over the next two weeks.
REYN Slides
REYN Report
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