Continued Pricing Significantly Offsetting Cost Increases

Market Share Remains Strong

Stepping Up Advertising & Promotion

Expanding Reyvolution Cost Savings

Reynolds Consumer Products Inc. (“Reynolds,” “RCP” or the “Company”) (Nasdaq: REYN) today reported results for the second quarter ended June 30, 2022.

Second Quarter 2022 Highlights

• Net Revenues of $917 million, up 5% over Q2 prior year net revenues
• Net Income of $52 million; Adjusted Net Income of $54 million
• Adjusted EBITDA of $118 million
• Earnings Per Share of $0.25; Adjusted Earnings Per Share of $0.26

Net revenues increased 5% over second quarter 2021 net revenues, driven by price increases, partially offset by a decline in volume. Net income was $52 million, down 35% versus last year’s second quarter net income, and Adjusted EBITDA was $118 million, down 20% versus last year’s second quarter Adjusted EBITDA. The decline in Adjusted EBITDA was driven by lower volume primarily due to declines in foil consumption as well as higher material, manufacturing, logistics and advertising costs, which were significantly offset by price increases across our entire portfolio.

“We narrowed the gap between pricing and cost increases in the second quarter and delivered earnings in line with our expectations in spite of slowing demand for foil,” said Lance Mitchell, President and Chief Executive Officer. “The Reynolds Cooking & Baking business unit’s second quarter earnings were down due to lower foil consumption and higher aluminum costs in inventory. We are taking corrective promotional price actions to improve foil trends and have seen consumption declines moderate since late June. We also expect a substantial improvement in Reynolds Cooking & Baking margins during the fourth quarter as we ship foil reflecting lowering aluminum costs. Our cumulative pricing actions and easing commodity costs position us for increasing investment in our categories which we expect will deliver margin improvement in the fourth quarter and full recovery of pre-pandemic profitability in 2023.”

Reynolds Cooking & Baking

• Net revenues decreased $9 million, or 3%
• Adjusted EBITDA decreased $23 million, or 39%

Net revenues decreased 3% as price increases were more than offset by lower foil consumption and reroll volume. Lower volume drove the majority of the Adjusted EBITDA decrease. Material, manufacturing and logistics cost increases in excess of price increases also contributed to the Adjusted EBITDA decrease.

Volume decreased 19% driven primarily by lower foil consumption and reroll volume. Timing of retailer replenishment also impacted shipments early in the quarter.

Category volume in key categories including parchment, bakeware, foil and cooking bags remains above pre-pandemic levels. Reynolds Wrap volume declines have begun moderating since late June with increased promotions. Reynolds Cooking & Baking also continues to see benefits from product introductions, including Reynolds Wrap Everyday Non-stick Foil, Reynolds Kitchens Unbleached Parchment and Reynolds Kitchens Butcher Paper.

Hefty Waste & Storage

• Net revenues increased $18 million, or 8%
• Adjusted EBITDA increased $1 million, or 2%

Net revenues increased 8% as price increases more than offset a volume decline. Adjusted EBITDA increased 2% as price increases offset higher material, manufacturing, and logistics costs as well as higher advertising costs.

Volume decreased 3% driven by lower waste and food bag usage as consumers spend less time at home.

The Hefty brand was recognized by Ad Age as one of 20 brands gaining Gen Z love in 2022 and was the only major waste bag brand that grew both retail dollar sales and volume in the first half, driven by innovation and base trends, according to IRI. Hefty Fabuloso® was a major driver, extending into high count large black bag packs and new 4 and 8 gallon items and growing to nearly $100 million in annual retail sales in the quarter.

Hefty Energy Bag remains the official residential collection program of hard-to-recycle plastics in the U.S. and is expanding to Chattanooga, Tennessee this month.

Hefty Tableware

• Net revenues increased $23 million, or 11%
• Adjusted EBITDA decreased $20 million, or 44%

Net revenues increased 11% driven by price increases. Adjusted EBITDA decreased 44% as pricing lagged increases in material, manufacturing and logistics costs as well as higher advertising costs.

Volume was flat as gains for Hefty disposable plates and private label party cups were offset by declines in other disposable tableware.

Hefty Compostable Printed Paper Plates were introduced, and Hefty ECOSAVE™ was a major source of growth again in the quarter.

Presto Products

• Net revenues increased $8 million, or 6%
• Adjusted EBITDA increased $4 million, or 19%

Net revenues increased 6% as price increases were partially offset by lower volume. Adjusted EBITDA increased 19% driven by timing of pricing actions to recover higher material, manufacturing, and logistics costs, partially offset by lower volume.

Volume decreased 7% driven by lower waste and food bag usage.

Presto maintained strong share of private label food bags, and new products remained a major source of growth.

Year to Date 2022 Highlights

• Net Revenues of $1,762 million, up 8% over prior year net revenues
• Net Income of $104 million; Adjusted Net Income of $109 million
• Adjusted EBITDA of $230 million
• Earnings Per Share of $0.50; Adjusted Earnings Per Share of $0.52

Net revenues increased 8%, driven by price increases, partially offset by lower volume. Net income decreased 32%, and Adjusted EBITDA decreased 20%, reflecting lower volume and the impact of price increases lagging increases in material, manufacturing and logistics costs as well as higher advertising costs.

Balance Sheet and Cash Flow Highlights

• At June 30, 2022, our cash and cash equivalents were $101 million, and our outstanding debt was $2,101 million, resulting in net debt of $2,000 million.
• Capital expenditures were $56 million for the six months ended June 30, 2022 compared to $73 million in the prior year period.

Fiscal Year, Third Quarter and Fourth Quarter Outlook

The Company now expects the following results for its fiscal year ending December 31, 2022:

• Net revenues to be in the range of 8% to 11% growth on $3,556 million in the prior year driven by price increases and volume down mid single digits
• Net Income to be in the range of $269 million to $292 million; Adjusted Net Income to be in the range of $278 million to $301 million
• Adjusted EBITDA to be in the range of $560 million to $590 million
• Earnings Per Share to be in the range of $1.28 to $1.39 per share; Adjusted Earnings Per Share to be in the range of $1.32 to $1.43 per share

The Company also expects Net Debt to be $1.9 billion to $2.0 billion at December 31, 2022.

The Company assumes additional elasticity to its expectations from May 2022 and that it effectively manages staffing, third-party manufacturing and logistics related disruptions.

The Company estimates 2022 cost pressures of approximately $525 million (previously approximately $450 million). Commodity rates are assumed stable-to-easing versus end of July levels.

The Company also expects the following results for its third quarter ending September 30, 2022:

• Net revenues to grow 8% to 12% on $905 million in the prior year driven by price increases and an estimated low to mid single digit volume decline
• Net Income to be in the range of $43 million to $51 million; Adjusted Net Income to be in the range of $45 million to $53 million
• Adjusted EBITDA to be in the range of $110 million to $120 million
• Earnings Per Share to be in the range of $0.20 to $0.24 per share; Adjusted Earnings Per Share to be in the range of $0.21 to $0.25 per share

The Company also expects the following results for its fourth quarter ending December 31, 2022:

• Net revenues to grow 9% to 17% on $1,021 million in the prior year driven by price increases and flat to slightly down volume
• Net Income to be in the range of $122 million to $137 million; Adjusted Net Income to be in the range of $124 million to $139 million
• Adjusted EBITDA to be in the range of $220 million to $240 million
• Earnings Per Share to be in the range of $0.58 to $0.65 per share; Adjusted Earnings Per Share to be in the range of $0.59 to $0.66 per share

“Our pricing actions have significantly offset cost increases in the second quarter, and we have announced additional price increases to enable full recovery of material, manufacturing and logistics cost increases,” said Michael Graham, Chief Financial Officer. “The combination of these price increases and easing commodity costs represents increasing flexibility to invest in our categories, substantial expected margin expansion in the fourth quarter and a strong foundation for additional margin expansion and full recovery of pre-pandemic profitability in 2023. We are also expanding Reyvolution cost savings objectives and have identified multiple opportunities for further gains in efficiencies and profitability.”

Quarterly Dividend

The Company’s Board of Directors has approved a quarterly dividend of $0.23 per common share. The Company expects to pay this dividend on August 31, 2022, to shareholders of record as of August 17, 2022.

Conference Call and Webcast Presentation

The Company will host a conference call to discuss these results at 7:00 a.m. Central Time (8:00 a.m. Eastern Time) on Tuesday, August 9, 2022. Investors interested in participating in the live call can dial 877-423-9813 from the U.S. and 201-689-8573 internationally. A telephone replay will be available approximately two hours after the call concludes through Tuesday, August 23, 2022, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 13726944.

There will also be a simultaneous, live webcast available on the Investors section of the Company’s website at www.reynoldsconsumerproducts.com. The webcast will be archived for 30 days.

About Reynolds Consumer Products Inc.

RCP’s mission is to simplify daily life so consumers can enjoy what matters most. RCP is a market-leading consumer products company with a presence in 95% of households across the United States. RCP produces and sells products across three broad categories: cooking products, waste and storage products and tableware; that are sold under iconic brands such as Reynolds and Hefty, as well as under store brands that are strategically important to RCP’s customers. Overall, across both branded and store brand offerings, RCP holds the #1 or #2 U.S. market share position in the majority of product categories in which it participates.

Note to Investors Regarding Forward Looking Statements

This press release contains statements reflecting our views about our future performance that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including our third quarter, fourth quarter and fiscal year 2022 guidance. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “intends,” “outlook,” “forecast”, “committed,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “model”, “assumes,” “confident,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth, management of costs and other disruptions and other strategies, and anticipated trends in our business, including expected levels of commodity costs and volume. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K.

For additional information on these and other factors that could cause our actual results to materially differ from those set forth herein, please see our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and subsequent filings. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

REYN-F

Use of Non-GAAP Financial Measures

We use non-GAAP financial measures “Adjusted EBITDA,” “Adjusted Net Income,” “Adjusted Earnings Per Share,” and “Net Debt” in evaluating our past results and future prospects. We define Adjusted EBITDA as net income calculated in accordance with GAAP, plus the sum of income tax expense, net interest expense, depreciation and amortization and further adjusted to exclude IPO and separation-related costs. We define Adjusted Net Income and Adjusted Earnings Per Share as Net Income and Earnings Per Share calculated in accordance with GAAP, plus the sum of IPO and separation-related costs. We define Net Debt as the current portion of long-term debt plus long-term debt less cash and cash equivalents.

We present Adjusted EBITDA because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans and make strategic decisions. In addition, our chief operating decision maker uses Adjusted EBITDA of each reportable segment to evaluate the operating performance of such segments. We use Adjusted Net Income and Adjusted Earnings Per Share as supplemental metrics to evaluate our business’ performance in a way that also considers our ability to generate profit without the impact of certain items. We use Net Debt as we believe it is a more representative measure of our liquidity. Accordingly, we believe presenting these metrics provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors.

Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP financial measures presented by other companies.

Guidance for fiscal year, third quarter and fourth quarter 2022, where adjusted, is provided on a non-GAAP basis. The Company cannot reconcile its expected Adjusted EBITDA to expected Net Income under “Fiscal Year, Third Quarter and Fourth Quarter Outlook” without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results. In addition, the Company cannot reconcile its expected Net Debt to expected total debt without reasonable effort because certain items that impact total debt and other reconciling metrics are out of the Company’s control and/or cannot be reasonable predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results.

Please see reconciliations of Non-GAAP measures used in this release (with the exception of our third quarter, fourth quarter, and full year 2022 Adjusted EBITDA outlook and our 2022 Net Debt outlook, as described above) to the most directly comparable GAAP measures, beginning on the following page.

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