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    REYN
    Earnings call· Jun 2026(Q2 FY26)

    Reynolds Consumer Products Q2 FY26 earnings call REYN

    Jul 29, 2026 Source

    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

    9
    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

    4
    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———

    Operational metrics

    19
    Gross margin improvement
    200
    Q2 FY26

    Driven by supply chain initiatives and automation.

    Gross margin improvement
    120
    H1 FY26

    Despite dilutive effects of pricing to recover commodity costs, reflecting compounding benefit of productivity initiatives.

    Adjusted EBITDA
    $171up 5%
    Q2 FY26

    Increased $8 million versus prior year, marking 3 consecutive quarters of EBITDA growth.

    Adjusted EBITDA
    $302up 8%
    H1 FY26

    Represents 8% growth versus the prior year period.

    Adjusted EPS
    $0.42up 7%
    Q2 FY26

    Reflecting flow-through of improved profitability.

    Revenue
    $944up 1%
    Q2 FY26

    Reflecting price increases and retail sales volumes in line with category performance or 1 point better, excluding foam.

    Revenue
    $1.8up 4%
    H1 FY26

    First half sales performance is a better indicator than Q2 in isolation due to calendar shifts.

    Retail volume outperformance vs categories
    1
    YTD

    More than overcoming a 2-point headwind from private label distribution losses.

    Private label distribution losses headwind
    2
    YTD

    Took effect in January.

    Capital expenditures
    25increased
    YTD

    Reflecting continued investment in growth, automation, and cost reduction projects.

    Net debt to EBITDA
    2.1
    Q2 FY26

    Sits at the lower end of the target range.

    Commodity headwinds
    $400up from $200M
    annualized

    Reflecting changes in commodity rates from the end of March to the end of June.

    Foil pricing
    20
    Q1 FY26

    In round numbers, as seen in the price volume mix table.

    Foil pricing
    20
    Q2 FY26

    In round numbers, as seen in the price volume mix table.

    Total company pricing (implied)
    low double-digit
    FY26

    Suggested by $400 million of incremental commodity exposure divided by retail revenue.

    Hefty food bags e-commerce sales growth
    30
    YoY

    Meaningfully outpacing the category.

    Foil category volume
    down 4-5
    last 4 weeks

    After expiry of promo comp timing differences.

    Foil category retail takeaway dollars
    up low-double-digits
    last 4 weeks

    After expiry of promo comp timing differences, showing resilience.

    Price gap to private label
    less than $1expanded a bit
    Q2 FY26

    Described as constructive, meaning the difference between Reynolds Wrap and private brand is less than $1.

    Industry KPIs

    6
    MetricValueDetails
    Organic sales growth1point
    Advertising marketing investment—
    Commodity input cost sensitivity$400M
    Innovation new product contribution—
    Category growth benchmark market share—
    Core underlying EPS and operating margin$0.42USD

    Product announcements

    4
    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

    2
    Automation pipelineunderway
    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 initiativesunderway

    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

    5
    Commodity markets volatilityFY26

    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 environmentH2 FY26

    Elevated promotional intensity.

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

    Consumer spending pressureH2 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 lossesYTD FY26

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

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

    Volume pressure in foam productsQ2 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

    5

    Commodity cost trajectory

    next quarter
    Current$400M annualized headwind
    TargetStabilization 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.

    Q&A highlights

    5

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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).

    05

    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.

    06

    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.

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