Earnings call transcript: Reynolds Q2 2025 beats earnings expectations

Reynolds Consumer Products Inc (REYN), with a market capitalization of $4.65 billion, reported better-than-expected earnings for the second quarter of 2025, with an adjusted EPS of $0.39, slightly surpassing the forecast of $0.38. The company’s revenue reached $938 million, exceeding projections of $898.95 million. Following the announcement, Reynolds’ stock rose 0.56% in pre-market trading, reflecting investor optimism. According to InvestingPro analysis, the company maintains a strong financial health score, with two analysts recently revising their earnings estimates upward for the upcoming period.

Key Takeaways

• Reynolds’ Q2 2025 EPS of $0.39 beat the forecast by 2.63%.
• Revenue of $938 million exceeded expectations by 4.34%.
• Stock price increased by 0.56% in pre-market trading.
• Innovations in product lines, such as Hefty EcoSave cutlery, are gaining traction.
• Company faces challenges from reduced consumer confidence and rising input costs.

Company Performance

Reynolds Consumer Products demonstrated resilience in Q2 2025, achieving higher-than-expected earnings despite a challenging market environment. The company’s revenue grew to $938 million, up from $930 million in the same quarter last year, driven by strategic pricing and new product innovations. With a conservative beta of 0.55 and a healthy dividend yield of 4.27%, Reynolds offers defensive characteristics in volatile markets. The company’s current ratio of 1.8 indicates strong liquidity, though challenges such as lower retail volume and increased input costs impacted overall performance.

Financial Highlights

• Revenue: $938 million, up from $930 million year-over-year.
• Adjusted EPS: $0.39, compared to $0.41 in the previous year.
• Adjusted EBITDA: $100 million, down from $172 million last year.

Earnings vs. Forecast

Reynolds exceeded earnings expectations with an EPS surprise of 2.63%, reporting $0.39 against a forecast of $0.38. The revenue surprise was 4.34%, with actual revenue at $938 million versus the expected $898.95 million. This positive performance is in line with the company’s strategic focus on innovation and cost management.

Market Reaction

Reynolds’ stock rose by 0.56% in pre-market trading to $21.68, reflecting positive investor sentiment following the earnings beat. Trading at a P/E ratio of 13.52x, the stock appears attractively valued according to InvestingPro metrics. The stock’s movement aligns with the company’s performance exceeding market expectations, despite broader economic challenges. For deeper insights into Reynolds’ valuation and growth potential, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.

Outlook & Guidance

Looking ahead, Reynolds projects 2025 net revenues to decline in the low single digits, with adjusted EPS expected between $1.54 and $1.61. Analyst consensus gathered by InvestingPro shows price targets ranging from $21 to $30, with expectations of continued profitability this year. The company remains focused on value and affordability, anticipating 2-4 points of cost headwinds with corresponding pricing recovery. Discover more detailed forecasts and 6 additional exclusive ProTips with an InvestingPro subscription.

Executive Commentary

CEO Scott Huckins remarked, "We are executing well in a challenging operating environment," highlighting the company’s strategic initiatives to offset input costs and drive innovation. CFO Nathan Lowe added, "We see significant opportunities to create value in our business and are focused on unlocking more of that value."

Risks and Challenges

• Lower retail volume and timing of pricing actions could impact future revenues.
• Rising input costs pose a challenge to profitability.
• Reduced consumer confidence and SNAP benefit cuts may affect consumer spending.
• Increased competition in the retail cutlery segment could pressure market share.

Q&A

During the earnings call, analysts inquired about the impact of retail destocking, to which executives responded that no significant destocking occurred in Q2. Questions also focused on the promotional environment and the company’s confidence in its pricing power and brand strength.

Full transcript - Reynolds Consumer Products Inc (REYN) Q2 2025:

Conference Operator: Greetings. Welcome to the Reynolds Consumer Products Incorporated Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. Reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mark Swartzberg, Vice President of Investor Relations. Thank you, sir. You may now begin.

Mark Swartzberg, Vice President of Investor Relations, Reynolds Consumer Products: Thank you, operator. Good morning, and thank you for joining us for Reynolds Consumer Products second quarter earnings conference call. Please note that this call is being webcast on the Investor Relations section of our corporate site at reynoldsconsumerproducts.com. Our earnings press release and investor deck are also available. With me on the call today are Scott Huckins, our President and Chief Executive Officer and Nathan Lowe, our Chief Financial Officer.

Following prepared remarks, we will open the call for a brief question and answer session. Before we begin, I would like to remind you that this morning’s discussion will contain forward looking statements, which are subject to risks, uncertainties and changes in circumstances that could cause actual results and outcomes to differ materially from those described today. Please refer to the Risk Factors section in our SEC filings. The company does not intend to update or alter these forward looking statements to reflect events or circumstances arising after the call. During today’s call, we will refer to certain non GAAP or adjusted financial measures.

Reconciliations of these GAAP to non GAAP financial measures are available in our earnings press release, investor presentation deck and Form 10 Q, which can be found on the Investor Relations section of our site. Now I’d like to turn the call over to Scott.

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Thank you, Mark, and good morning, everyone. I will review performance and how we were driving our business before passing the call to Nathan to review the financials, our guide, and our plans for capital allocation. We delivered another solid quarter in line with our expectations in a challenging consumer and operating environment. Commercially, we delivered volume growth across the overwhelming majority of our categories, while categories like foam performed as expected. We gained share in multiple areas, including hefty waste bags, private label food bags, and hefty party cups.

Product innovation remained a major contributor to volume and share gains, as we scaled recent innovation and launched new products. We continue to prioritize investment in products such as Hefty Fabuloso scented waste bags, Hefty Eco Save compostable cutlery, Reynolds Kitchens air fryer cups, and many other new products. Financially, we delivered results consistent with our expectations, while starting to implement pricing to offset higher input costs. Nathan will speak more to our results and cost efforts, where we are making progress in building a more nimble and responsive business. And strategically, we remained on task advancing multiple work streams to drive long term growth and structural margin expansion, building on our competitive advantages as a US centric business.

A part of this work is adding some key new members to the team, which I will speak to in a few minutes. In terms of the operating environment, two data points offer perspective on the consumer climate that RCP and others are operating. First, U. S. Consumer confidence is down 15 points in the 2025 and even more so on the expectations index.

Second, SNAP benefits are used by approximately 15% of US households, which is similar in any given RCP category. And as you know, those benefits are being reduced. In this context, we continue to lead our categories by meeting the consumers’ need for affordability, value, and convenience. Our response is wide ranging, including new opening price points, varied pack sizes, and both premium and non premium offerings. Examples include parchment in 25 square foot packages, and revised counts of hefty waste bags and hefty party cups.

We have also expanded distribution of Hefty press to close food bags, advancing the Hefty brand at a competitive price point in a large and important consumer segment. Much of this demonstrates that our emphasis on Hefty as the brand providing strong consumer value is working, evidenced by our share gains across many segments of our business. The need for convenient ways to cook and enjoy food at home is also growing, driven by demographic changes in food away from home’s continued outpacing of food at home costs. In response, RCP is gaining and expanding distribution on items prioritizing cooking and convenience, while also infusing a little fun. Reynolds Kitchen parchment is demonstrating strong growth and gaining momentum, driven by increased demand for unbleached parchment in air fryer liners.

Reynolds Kitchen parchment cooking bags are showing strong early adoption and sell through at major retailers. Reynolds Wrap limited edition Fun Foil performed well during the July 4, and will be part of a broader ongoing seasonal offering. Hefty extra deep paper dishes are off to a solid start. We are also spending even more time in the field with our retail partners to align even more closely on consumer trends and shared objectives. This means price pack shifts and product innovations, such as those I mentioned, as well as more forward looking conversations about our categories and shelf sets.

These conversations are also contributing to our success adapting to broader shifts in shopping behavior, including strong outperformance online, as an example. Turning to the long term. In February, I outlined the work we are doing to drive incremental growth and margin beyond 2025. Those programs are proceeding well and are on track to begin delivering benefits late this year. Two growth related initiatives and one of our supply chain projects are worth highlighting.

In the area of revenue growth management, we have a big opportunity to implement trade programs, generating higher returns for our retail partners in RCP alike. We have begun using new tools and processes to unlock this potential and are encouraged by early wins trialing replanned promotions. We see a lot of opportunity in this area to migrate trade dollars from lower returning programs to higher returning programs for the mutual benefit of RCP and our retail partners. Stronger product innovation across our portfolio is a priority and includes upping our game in sustainable product offerings. The Atacama acquisition gives us proprietary technology that we are now commercializing.

Hefty EcoSave cutlery is entirely compostable and was recently introduced at two of The US’s largest retailers. Early results are very encouraging and the potential could be significant. Hefty Ecosieve cutlery is as durable as traditional disposable tableware, competitively priced, and has the potential to transform the approximately $1,000,000,000 retail cutlery segment by offering consumers biodegradability without sacrificing the functionality that they expect. In the area of supply chain, we are doing many things, including responding to the changes coming out of Washington. One noteworthy highlight is the onshoring of production of smaller product offerings that are winning with consumers and benefit from a shift to U.

S. Manufacturing by RCP. Our team is doing an excellent job executing against our strategic initiatives, and I am confident that our newest members will help us drive even better commercial, operational and financial performance. Our new Chief Commercial Officer, Carlin Hooker, joins us from Church and Dwight and is leading us in unlocking more of the distribution, growth, and revenue growth management opportunities available to our strong brands and product portfolio. Our new Head of Hefty Tableware, Ryan Clark, comes to us from Post Holdings and is leveraging his experience implementing plans to improve revenue and profit trends for this important business.

In closing, we are executing well in a challenging operating environment. We are meeting consumers and retailers needs with Reynolds, hefty and store brand products in packages that are affordable, functional and provide a little fun too. We are offsetting near term cost pressures through pricing and productivity. And we are making our U. S.-centric business even stronger, investing in clearly defined programs to drive incremental growth in margin beyond 2025.

Nathan, over to you.

Nathan Lowe, Chief Financial Officer, Reynolds Consumer Products: Thank you, Scott, and good morning, everyone. I am pleased to report our second quarter financial results, which were in line with the expectations we provided in April and delivered in a challenging operating environment. In the second quarter, net revenues were nine thirty eight million dollars an increase from $930,000,000 in the year ago period. Retail revenue of $887,000,000 was flat with retail revenue in the 2024 and better than our initial projections as retail volume grew modestly excluding a more than one point headwind from foam products. As Scott mentioned, we grew share in multiple categories.

And our non retail revenues increased to $51,000,000 Second quarter adjusted EBITDA of 100,000,000 was at the high end of our range and compares to AUD172 million of adjusted EBITDA in the year ago period. Lower retail volume and the timing of pricing actions relative to input cost increases were partially offset by reductions in SG and A. Adjusted earnings per share was $0.39 versus $0.41 in the year ago period when excluding a discrete tax benefit of $05 per share. It is also worth noting that second quarter ’twenty five adjusted EPS excludes $05 of strategic investments in revenue growth and operational cost savings initiatives, as well as CEO transition costs. Before turning to the guide, it’s important to elaborate on our gross profit and SG and A performance.

The gross profit decline is not representative of ongoing profitability given our implemented and in flight pricing, which is designed to fully recover commodity and tariff impacts. In terms of SG and A, a high year ago comparison contributed to the reduction this quarter. That said, we have also adjusted SG and A to current operating conditions with the intent of lowering our cost base and creating a more agile structure. Looking ahead, we continue to execute in a challenging operating environment, and yet we remain confident in the 2025 earnings expectations that we provided to you when reporting the first quarter results. We are reiterating our outlook for net revenues to be down low single digits by comparison to 24 net revenues, adjusted EBITDA in a range of $650,000,000 to $670,000,000 and adjusted EPS of $1.54 to $1.61 for the year.

As a reminder, our full year expectations for adjusted EBITDA and adjusted EPS continue to exclude debt refinancing costs recognized in the first quarter and approximately $25,000,000 to $35,000,000 of pretax costs to execute strategic initiatives and CEO transition costs. Key features of our expectations include the following: pricing, representing full recovery of increased commodity and tariff costs continued retail volume performance in line with or better than our categories, nonretail revenues are expected to be flat for the year and the third quarter, implying a low single digit decrease in the fourth quarter, and continued discipline in all areas of controllable costs, including SG and A. In the third quarter, we expect net revenues to be down low single digits by comparison to third quarter ’twenty four net revenues of $910,000,000 including sequentially accelerating price growth to offset higher input costs. We expect adjusted EBITDA in a range between $160,000,000 and $170,000,000 by comparison to third quarter ’twenty four adjusted EBITDA of $171,000,000 We expect adjusted EPS in a range of $0.37 to $0.41 versus $0.41 in the year ago period. Now turning to cash flow and capital allocation.

Net leverage was 2.4 times EBITDA at the end of Q2 and inside our target range of two to 2.5 times, positioning us well to continue investing against our pipeline of attractive investment opportunities. We are pleased to report a $30,000,000 increase in capital spending by comparison to the 2024 and now expect a 30,000,000 to $40,000,000 increase for the year. This increase in capital reflects investment in high return projects to support growth, drive margin expansion and deliver a more robust earnings model beyond 2025. A key focus of these investments is automation and other high return initiatives. I am also pleased with the progress we are making in operational productivity without capital, driven by a range of continuous improvement initiatives and advancements in predictive maintenance.

In closing, we remain confident in our earnings expectations for 2025, and we are executing programs to increase RCP’s long term growth, earnings and cash flow potential. We see significant opportunities to create value in our business and are focused on unlocking more of that value. With that, let’s open the floor for your questions. Operator?

Conference Operator: Thank you. We’ll now be conducting a question and answer session. You may press star two if you’d like to remove your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

Thank you. And our first question today comes from the line of Kamil Gajwala with Jefferies. Please proceed with your questions.

Kamil Gajwala, Analyst, Jefferies: Hey, everybody. Good morning. A couple of questions. I guess the first one on investment areas, Nathan, as you had mentioned, if you can maybe just prioritize a bit more specificity and obviously your leverage is where you like it to be, you’re looking to deploy capital. What are some of the areas that you see as new and incremental opportunities that you can pursue that maybe you weren’t able to a couple of years ago?

Nathan Lowe, Chief Financial Officer, Reynolds Consumer Products: Yeah, thanks for the question Camille. Similar to what we’ve been talking about really since the start of the year is we’ve spent a lot of time building out an automation capital pipeline in particular for multiple years of high return investments there. So that’s a major priority I would say within deployment of capital. The other, which is more recent, is just looking at opportunities to reassure any manufacturing that may be overseas on some of the smaller product categories that we previously were importing. So that’s a new source of return, but another good spot to deploy capital.

Kamil Gajwala, Analyst, Jefferies: Got it. And then how about from the maybe the innovation or branding side? Is it being, you know, are new categories or maybe more innovation that’s perhaps even further from the core something that’s on your mind or something that’s being pursued already?

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Good morning, Camille. Scott. I think two thoughts. I mean, one, we continue to invest behind hefty scented waste bags in the Fabuloso, Mark, I think that continues to deliver really solid performance. And so investing behind that we think is wise.

We’re talking about a quarter where retail takeaways were on the order of plus 10. So we feel like continuing to feed that is smart. And I’ll go back to one of the comments I made in terms of more recent innovation, which would be hefty EcoSafe cutlery. We’re focused on those sorts of items in the sustainability part of the business, because generally we see some deficiencies either in the value proposition, meaning those items are super premium priced or the quality frankly is inferior. So we think this concept of affordable sustainability is also appropriate to invest behind.

But that would be a larger one and a smaller one as examples.

Kamil Gajwala, Analyst, Jefferies: Makes sense. Thank you, guys.

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Thanks, Kamil.

Conference Operator: The next question is from the line of Andrea Teixeira with JPMorgan. Please proceed with your question.

Andrea Teixeira, Analyst, JPMorgan: Thank you, operator, and good morning, everyone. I was hoping if you can explain a little bit more, and Nathan, on the gross margin. And of course, we understand the pressures and the issues with aluminum and the tariffs. Of course, everything has been moving around, but embedded in your guide, what are you looking ahead and how to think about the pricing and the cadence of pricing to offset that? And what are you embedding in terms of elasticity for the price increases?

Thank you.

Nathan Lowe, Chief Financial Officer, Reynolds Consumer Products: Yeah, maybe I’ll cover sort of the cost headwinds, the pricing and the development of that through the year. And I’d imagine Scott would want to talk a little bit about elasticities. So, as we said on the April call, we’re expecting roughly two to four points of cost headwinds from commodities and tariffs through the year. That remains true. And similarly, as the guide contemplates full recovery of that, we’re similarly anticipating two to four points of pricing.

The guide also that we have maintained our revenue guide but would expect an interplay between volume and price. So there is some quantum of elasticity baked into the guide. I know you want to elaborate on that.

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Yes, thank you and good morning. All I’d add to I think Nathan’s comments are correct. All I’d add is just maybe a couple of comments around aluminum. Obviously, we’ve watched it. Those who track the business in the category see aluminum costs up quite a bit from April.

What may or may not be obvious though is, as we’ve been watching the category, we’ve started to see fairly sharp price increases in store brand aluminum foil. And that’s important because not only are the absolute price points relevant, so are the gaps. And so we’re looking at price gaps that are well inside a dollar, meaning that’s constructive. Some are even approaching parity to flagship brands. So the point would be that we consider that in the guide as Nathan shared, but it’s important to understand that the relationship of price and cost at the consumer level between our branded offerings and store brands.

So, I’d want to add that to just the narrative around elasticities.

Nathan Lowe, Chief Financial Officer, Reynolds Consumer Products: Yeah, and I should circle back to the specific question you started with around Q2 as well. That was the timing of recovery of those increases in costs versus when the pricing is coming through is the majority of the year over year decline in gross profit.

Andrea Teixeira, Analyst, JPMorgan: So just to understand, and then I have a follow-up on the top line. The to understand like the cadence of it, so we should be seeing now in the third quarter kind of like a better balance between the pricing and the gross margin and to recover, but fully recover probably only is going to happen in the fourth quarter. And then my question on the top line, I also wanted to kind of dig in into the trash bag commentary. I think you mentioned that it implies that as if you gained share in the branded. I just want to make sure that we all in this call understand.

And then conversely on the food bags, gained share in the private label, the store brand that you produce. Is that fair to infer?

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Yes. On the share questions, Andrea, we picked up roughly a point of share in Hefei branded waste in the quarter. We also picked up share in store brand food bags in the quarter, so that would be accurate.

Nathan Lowe, Chief Financial Officer, Reynolds Consumer Products: Yeah. And back to the additional questions on gross profit, I’ll point back to the two to four points, right? So we’re talking about two to four points of headwinds and two to four points of pricing recovery for the year guide. So I’d say that would contemplate a recovery throughout the year, all else being equal. As for Q3, important to look at the timing of SG and A last year as well as you’re thinking about what is underlying the EBITDA guidance for Q3.

So a Q3 guided EBITDA this year that looks a lot like our Q2 performance would imply a better gross profit outcomes in the third quarter.

Andrea Teixeira, Analyst, JPMorgan: Great. Thank you so much. Appreciate all the answers. I’ll pass it on.

Speaker 7: Thank you. Our next question

Conference Operator: comes from the line of Rob Ottenstein with Evercore ISI. Please proceed with your questions.

Rob Ottenstein, Analyst, Evercore ISI: Great. Thank you very much. You guys started the call off talking about weak consumer confidence citing third party sources. I’d love you to talk a little bit more about what you’re actually seeing in terms of consumer purchase patterns, value seeking behavior. And then in that context, what gives you the confidence that you will actually be able to successfully execute on your price increases, perhaps touching on the competitive behavior that you’re seeing.

We yesterday from Proctor that they’re seeing increased promotions in a number of their categories. We’ve heard from others about stepped up couponing. So love to get a sense of what gives you the confidence that you’ll be able to execute effectively your price increases? Thank you.

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Yes. Good morning, Robert. I’ll start, Nathan may add. I’ll see if I can go in order. So, price increases, we’ve generally executed those that have been nominated to the marketplace consistent with expectations.

There will be incremental pricing that takes place in the third quarter. Again, remain confident. And I think it’s pricing power of the brands, particularly that gives us confidence I think to directly answer that question. Interestingly, think you’re getting at, call it promotional depth or levels of promotion. And as we look at the business, it’s actually quite consistent with a year ago’s quarter.

We don’t see, you know, taking as a whole any major inflection across promotion in the business. And then maybe just for completeness, we also see consistent stability in brand store brand mix. A lot of folks have asked about if we see evidences of trade down, etcetera. And I go back to the categories remain quite stable on that basis. In terms of consumer, I think it’d be fair to say consumer remains under pressure.

That had been our view. As we started the year, as I think you point out, we cited the statistics just to put context around, you know, the evolution of consumer confidence, which I think we all understand, you know, has softened through the year. So therefore consumers certainly would be seeking value. Two trends that I think are interesting would be you continue to see club gain share at retail. What’s interesting is that the most pronounced gain in that is actually the lower income demographic.

That may not be intuitive, but again I think it speaks to value seeking. Similarly, if you look at online, and we’re pleased with our developments there as well, you see all demographics picking up online activity. But again, I’d go back to you also see a fair amount of growth in that behavior among lower income demographics. So, hopefully that’s responsive to the collective set of questions, but we’re feeling like our original outlook, I think the bottom line is on the state of the consumer

Rob Ottenstein, Analyst, Evercore ISI: Thank you very much.

Conference Operator: Thank you. Our next question is from the line of Peter Grom with UBS. Please proceed with your questions.

Peter Grom, Analyst, UBS: Thanks, operator, and good morning, guys. I just had a question on category growth. Last quarter, you kind of cited that you anticipating a more challenging year ahead. I mean, just given what we’re kind of seeing from a category perspective, your performance, has that thinking evolved at all as you look out to the balance of the year?

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: I’ll start, Nathan may add. But I’d say our view remains intact. You know, at any given quarter you may see slight differences versus a full year expectation. But I think that full year expectation remains kind of following the discussion to the previous question. I think our view of the consumer has held up quite well.

Performance of the categories taken as a whole are about what we thought. So we therefore, we stuck to our overall outlook in terms of the top line and category performance.

Nathan Lowe, Chief Financial Officer, Reynolds Consumer Products: I think just to add to that, I think that was a revenue comment. As we talked about, as more pricing comes into the categories, we could see a trade off between price and volume, but our outlook for retail revenues remain intact to Scott’s point.

Peter Grom, Analyst, UBS: Okay, that’s really helpful. And then I just had a question on retail inventory destocking. You’re hearing it from a wide range of consumer goods companies across a number of different categories. So was there any impact as it relates to retail inventory destocking in the quarter? And Scott, you kind of touched on some of the faster growing channels being club, which tend to be more efficient from an inventory perspective.

So I wasn’t sure if you’re starting to see kind of a more natural headwind that’s kind of occurring as that channel shift plays out.

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Good question. I would say in the quarter taken as a whole destocking was a neutral impact on the company. Certainly that doesn’t mean that literally every single item or category is unaffected. But materially, it was not a large event in the quarter or any material event in the quarter. But my observation of how to think about it is when we think about what happened in Q1 in rough math, sort of feels like retailers took about a week’s worth of supply out of the channel and that’s just persisted.

And so perhaps that speaks to foot traffic or variables like that. But we did not see anything substantive in terms of destocking in Q2.

Peter Grom, Analyst, UBS: Great. Thanks so much. I’ll pass it on.

Speaker 7: Thank you. Our next question is from the line

Conference Operator: of Brian McNamara with Canaccord Genuity. Please proceed with your questions.

Mark Swartzberg, Vice President of Investor Relations, Reynolds Consumer Products0: Hey, good morning, guys. Thanks for taking the question. So in Q1, you mentioned retailer destocking as a headwind. I was hoping you can give us an update on destocking overall, whether retailer level or consumers kind of pantry deloading and how that’s impacting your view on volumes for the back half?

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Sure. As I mentioned in the to the last question, I’d say Q2, we just did not see taken as a whole any material impact from destocking. So our kind of working assumption is that the destocking that we did see in Q1 is flows through the balance of the year. It didn’t get better. It didn’t get worse.

And I was trying to explain to previous caller was that the math looks to me like retailers taken as a whole on average took on the order of a week stock out of the chain. And so our operating assumption is that that sticks and flows through the year. We don’t see anything in the business, again, materially that tells us that the destocking is getting better or worse. As I said, in Q2, taken as a whole, it was completely neutral.

Speaker 7: Thank you. Our next question is from

Conference Operator: the line of Jim Abbott with Barclays. Please proceed with your questions.

Mark Swartzberg, Vice President of Investor Relations, Reynolds Consumer Products1: Good morning, everyone. So I just wanted to get some color on the promotional environment in trash. We see solid volume performance there, solid share gain that you were speaking about. But we do see, at least in Nielsen, an uptick in promotions and we also see pricing down in the price volume mix table in your release. I know you spoke that overall promotional environment has kind of held steady, But I guess how do you disaggregate what’s driving those share gains and trash between higher promotions or the innovation that you’ve spoken to?

Thanks.

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: I think you’re getting at promotional environment and trash. So when we look at our level of promotion in this second quarter versus the prior year second quarter, they’re within a point. So when I referred to we don’t see a step change in that. That was the basis you correctly called out in the price volume mix table. In hefty waste and storage, we had a net effect of one point of price.

But to be fair, in part that’s informed by some distribution gains investing behind both waste and frankly storage. So, I just go back to the macro point, which is nothing significant certainly year over year in our business in that category.

Mark Swartzberg, Vice President of Investor Relations, Reynolds Consumer Products1: Got it. Thank you. And then just on the tariff headwind that you were speaking to last quarter, I think it was $100,000,000 to $200,000,000 Obviously, that changes by the day, I would think, but how are you thinking about that headwind now versus back in a few months ago when the tariff rate on at least China was a lot higher? Thanks.

Nathan Lowe, Chief Financial Officer, Reynolds Consumer Products: Yeah, no, good question. It’s back

Nathan Lowe, Chief Financial Officer, Reynolds Consumer Products: to the two to four points really, as we said in April, roughly a two to four point headwind. If you said what made that up back when we spoke in April versus what it is now, it would have changed a little bit. I’d say that aluminium makes up a bigger part of the headwind. And as the tariff rates have settled out, in many cases to a lower absolute rate, more recently, they’ve probably come down a little bit. But net net, it’s about the same headwind as we thought it would have been when we spoke in April.

Conference Operator: Thank you. Our next question is a follow-up from the line of Brian McNamara with Canaccord Genuity. Please proceed with your questions.

Mark Swartzberg, Vice President of Investor Relations, Reynolds Consumer Products0: Yes. Thanks for taking the follow-up. I’m just gross margin is a pretty tough one to model for your company’s overall, just given the various puts and takes. And I know gross margin was asked earlier in the call. I’m just curious, like a skeptic would say, you missed on gross margin or gross profit by $10,000,000 You made it up on kind of cost cuts in the SG and A line.

How should we think about that in the back half of the year?

Nathan Lowe, Chief Financial Officer, Reynolds Consumer Products: Yeah, I mean, the guide contemplates a similar amount of pricing recovery in the year as we have cost increases. So I mean, two to four points of cost headwinds and two to four points of pricing recovery. Of course, that’s not how it wasn’t a one to one relationship in Q2, just as, yeah, really the phasing of the development of pricing coming into the market versus the timing of when those higher costs started flowing through to the P and L. Of course, with the higher revenue performance in Q2 as well, we were pulling through some of that higher cost inventory before we had the pricing in market. Hopefully that explains it.

Mark Swartzberg, Vice President of Investor Relations, Reynolds Consumer Products0: Great. And then just finally on the innovation front, I think you mentioned that the parchment cooking bags are off to a good start. I’m curious how the air fryer cups are doing. Think both those innovations made a lot of sense to us. I think you launched them about a month ago.

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Yeah, thank you. Our cooking and baking colleagues will be pleased with that question. We’re happy, you know, not across that portfolio. You know, a lot of folks are well aware of the prominence of the Reynolds Wrap brand and probably less across some of those other offerings. But we’re very pleased with how that innovation has taken, performed.

As I think I mentioned a bit in prepared remarks, we’re specifically investing behind that. Because again, we certainly, as all of you know, we see a greater degree of inflationary costs in eating away from home than in home. And so we think that being nimble and innovative in cooking at home is value created. And so we continue to be pleased with that.

Mark Swartzberg, Vice President of Investor Relations, Reynolds Consumer Products1: Great. Thank you.

Conference Operator: Thank you. At this time, this concludes our question and answer session. I’d now like to turn the floor back over to management for closing or comments.

Scott Huckins, President and Chief Executive Officer, Reynolds Consumer Products: Yes. Thank you, operator, and thank you to our analysts and investors for your time and your interest in our business. We’d also like to thank our 6,400 colleagues at Reynolds Consumer Products for executing well in this environment and doing the work to unlock even more of our potential. So with that, we wish everybody a great day.

Conference Operator: This will conclude today’s conference. Thank you for your participation. You may now disconnect your lines, and have a wonderful day.

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