Reynolds Consumer Products Inc. (NASDAQ:REYN) Q3 2023 Earnings Call Transcript

Lauren Lieberman: Okay. And then if I shift to the Hefty food bag launch, and I apologize, I don’t know if you covered this to a great extent in the prepared remarks. I’m sorry if you did because I was on another call. But I was just curious about just early reads from retailers on shelf space there, if it’s incremental, if this is a replace slider bags with press to close, but just how that kind of fits into the product lineup and the decision to add this to the portfolio?

Lance Mitchell: It is to add another brand to the Presto close category. At this point in time, there’s only 1 brand in the category and much length we’ve successfully been in the food bag category with both brands and store brands. There’s 3 brands in the slider category. So we saw an opportunity through our category management teams, insights and development to add a brand to the Presto close category. We just launched it recently, and it’s too early to get a read on the revenue success that we project. We’ll have that when we put our 2024 plan together.

Lauren Lieberman: And then final thing, sorry, I was just at our conference, you had spoken to 2024 volumes kind of flattish as a good starting point for expectations. Now that we know about the pressure from — in tableware and I guess, continued on the non-retail side of things. Just curious how much of that’s driving that thought process on flattish volumes? Like should we think about Hefty and Reynolds Cooking & Baking is having like a sort of some growth and then they’re began offset from tableware and non-retail?

Lance Mitchell: Well, we are in the middle of our planning process for next year, and we’ll have more share in our volume expectations when that’s complete. We are — certainly, we’re operating in a very dynamic macroeconomic environment. And I’m pleased with our performance in our largest categories. As you heard in my prepared remarks, our retail volume is stable and growing in household foil, waste bags, and food bags. And that’s better than many CPGs in their largest categories, driven by many factors, including our innovation, our leverage of our brand and store brand business model and successful category management with our retail partners. As commodities have and costs have stabilized, our tableware business has achieved levels of profitability, as I mentioned a moment ago on key items that gives us the flexibility to adjust retail prices and price packs together with our retail partners.

And those actions will require time to drive improvement, and I’m confident they will, and that will be factored into our 2024 planning.

Operator: [Operator Instructions] Our next question comes from Jason English with Goldman Sachs. Please proceed with your question.

Jason English: And I have to apologies in advance like Lauren, I’m stretching multiple directions. So I may ask questions that you’ve already addressed, if that’s the case. Well, my apologies. It’s great to see the robust margin recovery on Reynolds Cooking & Baking, You, however, still well below kind of the 20% level EBITDA level that you were hovering at plus/minus for quite a few years there. Is that a reasonable number to get back to or just because of the numerator denominator effect of how much price you put in the system, should we be looking to level off at a lower margin than that? And if so, what is that right margin? And when do you think you’d be able to get there?

Michael Graham: Yes, Jason, it’s a great question. We’re still in the midst of working through our plan. I mean, so I think we’re going to pause and give you an answer on that in a lot more detail in January.

Mark Swartzberg: Jason, Mark here. And what I would add to what Michael said is that as you’ve seen, and really it’s been a story all year in 2023, you’ve seen margin expansion in each of our businesses. And as Lance just mentioned, we’re pleased with what we’ve achieved. As you know, our earnings expectations for the year have come up as we move through the year. So we think we’re going into the planning cycle in a very good place to be starting that exercise.