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Reynolds Consumer Products (REYN) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Staples· Jul 29, 2026

Source: earnings call transcript

Executive summary

Reynolds Consumer Products Q2 FY26 — Solid Execution and Margin Expansion Amidst Commodity Headwinds

Reynolds Consumer Products delivered a solid second quarter, marked by strong execution of pricing actions and significant productivity gains, leading to expanded gross margins and earnings growth. Despite increased commodity headwinds and a highly promotional environment, the company maintained its full-year EBITDA and EPS guidance, reflecting confidence in its strategy and resilient consumer demand for its value-oriented products. The company continues to invest in digital capabilities and automation to drive future growth and efficiency.

Highlights

5

  • Gross margin improved by 200 basis points in Q2 and 120 basis points in the first half, driven by productivity initiatives.

  • Adjusted EBITDA increased by 5% to $171 million in Q2 and 8% to $302 million in the first half.

  • Adjusted EPS increased by 7% to $0.42 in Q2.

  • Outperformed categories by 1 point on volume year-to-date, overcoming a 2-point private label distribution loss headwind.

  • Hefty food bags grew e-commerce sales approximately 30% year-over-year, significantly outpacing the category.

Concerns

4

  • Expected annualized commodity headwinds increased to $400 million, up from $200 million previously.

  • Continued volume pressure in foam products within the Hefty Home & Tableware segment.

  • The market remains highly promotional and competitive, requiring agile responses.

  • Previously communicated private label distribution losses continue to impact certain segments.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Net Revenues
low single-digit growth
high materiality
High
Full-year 2026 Non-Retail Revenue
flat
medium materiality
High
Full-year 2026 Net Income and Adjusted Net Income
$331 million to $343 million
high materiality
High
Full-year 2026 EPS and Adjusted EPS
$1.57 to $1.63
high materiality
High
Full-year 2026 Adjusted EBITDA
$660 million to $675 million
high materiality
High
Third Quarter 2026 Net Revenues
approximately flat
medium materiality
High
Third Quarter 2026 Net Income and Adjusted Net Income
$79 million to $83 million
medium materiality
High
Third Quarter 2026 Adjusted EBITDA
$160 million to $165 million
medium materiality
High
Third Quarter 2026 EPS and Adjusted EPS
$0.37 to $0.39
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Reynolds Cooking & Kitchen Essentials
Executing pricing strategy to recover higher commodity costs. Reynolds Wrap performance remained broadly in line with the category on a year-to-date basis, with share performance variability between Q1 and Q2 largely a function of shifts in promotional timing. Reynolds Parchment Paper and several other products across the Reynolds Kitchens portfolio delivered share gains.
Reynolds Wrap performance: broadly in line with category YTDReynolds Parchment Paper share: gainedReynolds Kitchens portfolio share: gained
————
Hefty Waste & Clean-Up
Sales performance remained resilient despite ongoing competitive pressure. Hefty branded growth and distribution gains offset the impact of previously communicated private label distribution losses, resulting in stable retail volume performance. The Hefty brand maintained share in a highly promotional environment.
Hefty branded distribution: low-double-digit increasesHefty branded volume growth: 2 pointsHefty branded sales growth: 2 pointsHefty brand share: maintainedVelocities (dollars and units): up
————
Hefty Home & Tableware
Delivered strong profitability with adjusted EBITDA increasing despite continued volume pressure in foam. Ongoing manufacturing productivity and disciplined execution of RGM capabilities drove meaningful margin expansion and top-line growth in other areas. Enjoyed strong performance of the Hefty brand with solid market share gains in party cups.
Adjusted EBITDA: increasedParty cups market share: solid gainsZoo Pals consumer response (Amazon Prime Day): strong
———increased adjusted EBITDA
Hefty Storage & Organization
Continued to build on its momentum, delivering record second quarter revenues and strong volume growth. Retail volumes increased 8%, driven by the strength of both Hefty and store brand food bag businesses, with Hefty food bags gaining share. Expanded distribution across key customers more than offset previously communicated private label distribution losses.
Retail volumes: increased 8%Hefty food bags share: gained
record second quarter revenues———

REYN operating KPIs by quarter

REYN operating KPIs stated on its earnings calls, by fiscal quarter
KPI Mar 2026 Q1 FY26This call Jun 2026 Q2 FY26Change vs prior quarter
Employees
6,000 On behalf of our 6,000 teammates at Reynolds Consumer Products, we appreciate your interest in the company, and we certainly wish everybody a great day. Source: earnings call transcript
6,000 And on behalf of our 6,000 teammates, we wish everybody a great day. Source: earnings call transcript
0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
America 250 limited edition productslaunch
Reynolds Kitchens countertop prep paper in-store demo campaignslaunch
Fun Foilupdate
Color and scent platforms in Wasteupdate

Capital programs

Automation pipeline underway
Spent to date: over 12 months into execution
Start: Q2 FY25

Benefit:improved profitability

The company is over 12 months into executing against its automation pipeline, which is contributing to improved profitability.

Productivity initiatives underway

Benefit:expanded margins, funding reinvestment

Productivity gains from lean deployment and automation are expanding margins and the savings they generate help fund reinvestment back into the business.

Risks & headwinds

Commodity markets volatility FY26

Expected $400 million of commodity headwinds on an annualized basis, up from $200 million previously.

Mitigation:Pricing actions, productivity initiatives across the supply chain.

Highly promotional environment H2 FY26

Elevated promotional intensity.

Mitigation:Deployment of revenue growth management (RGM) capabilities, strong brands, value proposition.

Consumer spending pressure H2 FY26

Higher borrowing costs, rising credit card delinquencies, meaningful trade-offs across household budgets.

Mitigation:Portfolio of value-oriented products, RGM capabilities to preserve strong value propositions.

Private label distribution losses YTD FY26

2-point headwind on volume year-to-date.

Mitigation:Hefty branded growth and distribution gains offsetting the impact.

Volume pressure in foam products Q2 FY26

Continued volume pressure.

Mitigation:Ongoing manufacturing productivity and disciplined execution of RGM capabilities driving margin expansion and top-line growth in other areas.

What to watch in Q3 FY26

Commodity cost trajectory

next quarter
Current $400M annualized headwind
Target Stabilization or reduction of headwinds

Why it matters

Commodity costs significantly impact gross margin and profitability, influencing pricing actions and consumer elasticity.

We now expect approximately $400 million of commodity headwinds on an annualized basis, up from $200 million when we reported in April, reflecting changes in commodity rates from the end of March to where markets settled at the end of June.

Find out whether REYN delivers this. Inve re-checks your case every morning.

Q&A highlights

What is the strategy for the waste bag category in the back half, and how will gross margin evolve given increased commodity headwinds?

Scott highlighted holding share, low-double-digit distribution gains, 2 points of volume/sales growth in branded waste bags, and increased velocities, validating their performance brand philosophy. Nathan explained that while productivity drives profitability, incremental pricing in July will be a numerical headwind to margin rate.

“we've held share in the category. Second, we've actually enjoyed low-double-digit increases in distribution in our Hefty branded waste bag business, which we're very pleased with.”

asked by Peter Grom · answered by Scott Huckins

2 min read 6 chapters

Detailed narrative

Q2 Performance & Productivity

Reynolds Consumer Products delivered a solid Q2, executing planned pricing actions and driving significant productivity across its supply chain, particularly in manufacturing. This led to a 200 basis point gross margin improvement in Q2 and 120 basis points in H1, funding investments in R&D, innovation, and growth. Adjusted EBITDA increased 5% to $171 million in Q2 and 8% to $302 million in H1, with adjusted EPS up 7% to $0.42. The company is over 12 months into executing its automation pipeline, contributing to improved profitability.

Market Environment & Consumer Behavior

The consumer backdrop remains pressured with high borrowing costs and rising credit card delinquencies, leading to deliberate, value-oriented purchasing behavior. Even consumers willing to spend are concentrating purchases on products offering functionality, convenience, and affordability. The market is highly promotional, but the company's revenue growth management (RGM) capabilities help navigate this while supporting retail partners and driving traffic. The company believes its portfolio is well-positioned for this environment.

E-commerce & Digital Growth

The company saw strong e-commerce performance, with Hefty Ultra Strong trash bags ranking in the top 5 products sold across all categories on Amazon Prime Day. Hefty food bags grew e-commerce sales by approximately 30% year-over-year, meaningfully outpacing the category. These results validate the company's digital positioning and reflect growing brand visibility across digital channels, stemming from expanded investment in digital capabilities.

Commodity Headwinds & Pricing Strategy

Commodity markets remain volatile, with expected annualized commodity headwinds increasing to $400 million from $200 million. The company has implemented pricing actions, including smaller, more frequent increases in foil over the past two years (approximately 20 points in Q1 and Q2), and first-time cost recovery initiatives for resin-based products in July. Management emphasizes agility and close monitoring of price gaps to private label, which remain constructive (less than $1 difference).

Share Performance & Distribution Gains

The company held share in foil and waste bags, while growing share in food bags, party cups, parchment paper, and Reynolds Kitchens products. Hefty branded waste bags saw low-double-digit increases in distribution. Overall, year-to-date volume outperformance of 1 point against categories, despite a 2-point headwind from private label distribution losses, highlights the strength of their brands and execution in a challenging environment.

Capital Allocation & Future Outlook

Leverage sits at 2.1x net debt to EBITDA, at the lower end of the target range. The company continues to invest in the business, including a 25% increase in capital expenditures year-to-date for growth, automation, and cost reduction projects. They remain focused on profitable growth, long-term value creation, and returning capital to shareholders through quarterly dividends, maintaining a disciplined capital allocation approach.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.