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    REYN
    Earnings call· Mar 2026(Q1 FY26)

    Reynolds Consumer Products Q1 FY26 earnings call REYN

    May 6, 2026 Source

    Executive summary

    Reynolds Consumer Products Q1 FY26 — Strong Start Exceeds Expectations Amidst Macro Headwinds

    Reynolds Consumer Products delivered a strong first quarter, exceeding expectations with robust revenue growth and significant profitability improvements, driven by effective revenue growth management and operational efficiencies. The company successfully navigated competitive promotional pressures and private label bid losses, while also addressing emerging commodity cost headwinds through planned pricing actions. Despite a cautious consumer outlook and geopolitical volatility, management remains confident in its full-year guidance, leveraging its resilient business model and strategic priorities.

    Highlights

    5

    • Achieved 7% revenue growth, outperforming categories by 2 points and gaining share across the majority of the portfolio.

    • Delivered profitability improvement across 3 of 4 business units, with core profitability increasing approximately 200 basis points.

    • Adjusted EBITDA of $131 million exceeded expectations and was well above $117 million in the prior year period.

    • Adjusted EPS increased more than 20% year-over-year.

    • Maintained strong service levels with case fill in the high 80% range, supporting retail partners and capturing demand.

    Concerns

    5

    • Experienced a 3-point headwind in Q1 from private label bid losses, as expected.

    • Navigated intense promotional and aggressive pricing strategies from competitors, particularly in the Waste Bag category, which escalated in April.

    • Anticipates incremental annualized headwinds of approximately $200 million from aluminum and resin due to global commodity price increases.

    • Noted increased gas prices are expected to reduce U.S. household spending power by approximately $165 billion annually.

    • Consumer outlook has softened since early February, with increased macro volatility and cautious spending behavior.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 Net Revenue
    minus 3% to plus 1%
    high materiality
    High
    Full-year 2026 Net Income
    $331 million to $343 million
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $660 million to $675 million
    high materiality
    High
    Full-year 2026 EPS and Adjusted EPS
    $1.57 to $1.63
    high materiality
    High
    Q2 2026 Net Revenues
    minus 2% to plus 1%
    medium materiality
    High
    Q2 2026 Net Income and Adjusted Net Income
    $83 million to $91 million
    medium materiality
    High
    Q2 2026 Adjusted EBITDA
    $165 million to $175 million
    medium materiality
    High
    Q2 2026 EPS and Adjusted EPS
    $0.39 to $0.43
    medium materiality
    High
    Full-year 2026 Non-retail Revenue
    flat
    low materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Reynolds Cooking & Kitchen Essentials
    Continued to gain share in both Parchment and Foil. Foil remains resilient with consumers absorbing price increases. Innovation, including Reynolds countertop prep paper, is a key growth driver. Parchment Bags named a 2026 product of the year.
    Parchment volumes outperforming category: 10 pointsFoil volumes outperformed category: 4 pointsFoil category net elasticity: below 1
    		————
    Hefty Waste & Cleanup
    Performance was in line with expectations despite intense promotional and price actions by competitors. Maintained price architecture of performance brand. Innovations included exclusive retailer scents and national expansion of Hefty Fabuloso Color series. Expanded Hefty Essentials for affordability.
    Dollar share growth: positiveSales volume at retail: positive
    		—flat—flat
    Hefty Storage & Organization
    Gained share despite a highly promotional environment, with revenue and volume growth offsetting last year's private label losses. Strength seen in both Hefty branded and store brand Food Bag offerings due to increased distribution and consumer acceptance.
    Share gained: yesHefty Food Bag volumes outperformed category: >10 points (Press to Close and premium slider)
    		—positive——
    Hefty Home & Tableware
    Strong results from operational and supply chain efficiencies and revenue growth management. Hefty Party Cups saw significant volume growth due to expanded distribution and strong supply chain execution. Foam was a headwind, but the rest of the business grew volume. Marketing reinforced brand strength and value.
    Hefty Party Cups volume growth: 15 pointsFoam headwind: 8 points (masked 5 points volume growth in balance of business)
    		—modest growth—meaningful improvement

    Operational metrics

    13
    Net Revenues
    $877 million7% growth YoY
    Q1 FY26

    Compared to $818 million in Q1 FY25, led by Reynolds Cooking & Kitchen Essentials and broad-based growth.

    Retail Revenues
    $804 million$37 million above Q1 FY25
    Q1 FY26

    Reflecting strong volume growth and outperforming categories.

    Retail Volume Growth
    2%
    Q1 FY26

    Outperforming categories.

    Non-retail Revenues
    increasedyear-over-year
    Q1 FY26

    Providing additional contribution to top line growth.

    Gross Margin Expansion
    60
    Q1 FY26

    Overcame cost inflation and expanded gross margin.

    Adjusted EBITDA
    $131 millionabove $117 million in prior year
    Q1 FY26

    Exceeded expectations, driven by higher retail volumes and manufacturing efficiency gains.

    Adjusted EPS Growth
    >20%YoY
    Q1 FY26

    Increased more than 20%.

    Net Leverage
    2.1x
    as of March 31

    Well within target range, providing financial flexibility.

    Private Label Bid Losses Impact
    3-pointheadwind
    Q1 FY26

    Impacted Q1 results as expected, but more than offset by strength in other areas.

    Foam Headwind
    8 points
    Q1 FY26

    Masked 5 points of volume growth in the balance of the business.

    Hefty Party Cups Volume Growth
    15 points
    Q1 FY26

    Driven by expanded points of distribution, broader product offering, and strong supply chain execution.

    Reynolds Countertop Prep Paper Impressions
    1 billion
    Q1 FY26

    Earned from early marketing launch.

    US Household Spending Power Reduction (due to gas prices)
    $165 billion
    annually

    Expected impact from increased gas prices.

    Industry KPIs

    9
    MetricValueDetails
    Sg a rate—
    Organic sales growth7%%
    Regional emerging market growth—
    Advertising marketing investment—
    Commodity input cost sensitivity$200MUSD
    Category level organic sales growth—
    Innovation new product contributionmultiple
    Category growth benchmark market sharegained share
    Core underlying EPS and operating margin200bps

    Product announcements

    3
    ProductTypeDetails
    Reynolds Countertop Prep Paperlaunch
    Hefty Fabuloso Color seriesexpansion
    Parchment Bagsmilestone

    Risks & headwinds

    6
    Geopolitical landscape and macroeconomic uncertaintyOngoing

    Increased gas prices expected to reduce U.S. household spending power by approximately $165 billion annually.

    Mitigation: Built significant supply chain resiliency, leaner and more agile organization, largely domestic presence provides insulation.

    Commodity price increasesAnnualized from Q1 FY26

    Incremental headwinds of approximately $200 million on an annualized basis, primarily from aluminum and resin.

    Mitigation: Actively working to offset through productivity initiatives, pricing actions, and incremental cost reductions.

    Intense promotional and pricing strategies by competitorsQ1 FY26, escalating into April

    Observed in Waste Bag category, escalated in April.

    Mitigation: Maintaining price architecture of performance brand, monitoring business daily, flexibility to invest differently if conditions warrant.

    Private label bid lossesQ1 FY26

    3-point headwind in Q1 FY26.

    Mitigation: Offset by strength in other areas; confident incremental opportunities from retailer dual sourcing will offset near-term headwinds over time.

    Consumer caution and evolving elasticity dynamicsH2 FY26 (expected impact of pricing)

    Consumer outlook softened, adapting shopping behavior, nuanced elasticity dynamics across categories.

    Mitigation: Well-positioned with essential, high-repeat-use portfolio; balancing cost recovery with volume, share, and category health.

    Foam headwindQ1 FY26

    8 points headwind in Q1 FY26 for Hefty Home & Tableware.

    Mitigation: Masked 5 points of volume growth in the balance of the business; marketing initiatives reinforce product strength and value.

    What to watch in Q2 FY26

    5

    Commodity Cost Mitigation

    Q2 FY26 and beyond
    Current$200M annualized headwind from aluminum and resin
    TargetOffset by pricing and productivity

    Why it matters

    Critical for maintaining full-year guidance and profitability amidst rising input costs.

    Based on increases in rates thus far, we expect incremental headwinds of approximately $200 million on an annualized basis coming primarily from aluminum and resin. We are actively working to offset these headwinds through a combination of productivity initiatives, pricing and incremental cost reductions.

    Q&A highlights

    6

    Asked for clarification on the $200 million incremental inflation (spot vs. futures) and how the company plans to offset it to maintain guidance.

    Management confirmed the $200 million annualized headwind is based on settled rates for aluminum, polyethylene, and other resins, with each contributing roughly equally. They plan to offset this through productivity initiatives, pricing, and incremental cost reductions, with pricing actions expected to be relevant for Q3.

    “Based on increases in rates thus far, we expect incremental headwinds of approximately $200 million on an annualized basis coming primarily from aluminum and resin. We are actively working to offset these headwinds through a combination of productivity initiatives, pricing and incremental cost reductions.”

    asked by Peter Grom · answered by Nathan Lowe

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Segment Realignment

    Effective January 1, Reynolds Consumer Products realigned its operating segments to enhance operational and commercial efficiencies, sharpen innovation focus, and support adjacent category expansion. The Waste Bag business was consolidated into the new Hefty Waste & Cleanup segment, and the Food Bag business into the new Hefty Storage & Organization segment. This restructuring aims to provide clear end-to-end ownership across R&D, innovation, commercialization, operations, and supply chain, with early benefits already observed in streamlining businesses. The company also renamed Reynolds Cooking & Baking to Reynolds Cooking & Kitchen Essentials and Hefty Tableware to Hefty Home & Tableware to reflect broader category scope and future growth opportunities.

    02

    Consumer Behavior and Macroeconomic Environment

    The company observes heightened macroeconomic uncertainty🌐 and geopolitical volatility🌐 impacting consumer confidence, leading to higher household costs, particularly for gas and utilities. Increased gas prices are projected to reduce U.S. household spending power by approximately $165 billion annually. Consumers are responding by adapting shopping behaviors, prioritizing reliability, functionality, and trusted brands, which benefits Reynolds' essential, high-repeat-use portfolio. Early signs suggest consumers are cutting back on eating away from home, potentially boosting demand for at-home cooking products.

    03

    Commodity Headwinds and Mitigation

    Reynolds anticipates incremental annualized headwinds of approximately $200 million from aluminum and resin, based on settled rates from the start of the year to the end of Q1. These cost increases are roughly equally distributed across aluminum, polyethylene, and other resins. The company is actively working to offset these headwinds through a combination of productivity initiatives, pricing actions, and incremental cost reductions, aiming to balance cost recovery with volume, share, and category health. Pricing activities are expected to become relevant for the start of the third quarter.

    04

    Innovation and Brand Engagement

    Innovation remains a key growth driver, highlighted by the launch of Reynolds Countertop Prep Paper in Q1, designed for higher frequency use occasions and addressing cleanup time concerns. This product has already garnered over 1 billion impressions from early marketing. The company also expanded its Reynolds parchment portfolio with new design-led innovations like hearts in Boston funds Foil. Hefty Waste Bag innovations included exclusive retailer scents and the national expansion of the Hefty Fabuloso Color series, while Hefty Essentials expanded to offer high affordability. Parchment Bags were recognized as a 2026 Product of the Year, validating consumer convenience and value.

    05

    Competitive Dynamics and Private Label

    The company faced intense promotional and aggressive pricing strategies from competitors, including private label, particularly in the Waste Bag category, which escalated in April. Private label bid losses resulted in a 3-point headwind in Q1, though this was offset by strength in other areas. Reynolds maintains its strategy of preserving price-pack architecture for performance brands, while also expanding its Hefty Essentials offering to cater to value-conscious consumers. The company notes some retailers adopting dual sourcing strategies for risk management, which presents near-term headwind📎s but is expected to create incremental opportunities over time⏳.

    AI-generated summary of the company’s earnings call. Not investment advice.