Greetings. Welcome to Reynolds Consumer Products Inc. Fourth Quarter and Full Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is now my pleasure to introduce your host, Jill Coval, Director of Investor Relations. Thank you, Jill. You may begin.

Thank you, operator, and good morning, everyone. Thank you for joining us for Reynolds Consumer Products Inc. fourth quarter earnings conference call. Today's call is being webcast, and a replay will be available on the Investor Relations section of our corporate site at reynoldsconsumerproducts.com. Our earnings press release and investor presentation are also available. Joining me on the call today are Scott Huckins, our President and Chief Executive Officer, and Nathan Lowe, our Chief Financial Officer. Following their 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 include forward-looking statements which are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those described today. Please refer to the Risk Factors section of our SEC filings for more information. The company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after the call. In addition, we will reference certain non-GAAP or adjusted financial measures during today's call. Reconciliations of these GAAP to non-GAAP financial measures are available in our earnings press release, investor presentation deck, and Form 10-Ks, which can be found on the Investor Relations section of our website. With that, I'd like to turn the call over to Scott.

Thank you, Jill, and thank you to everyone joining us this morning. We closed 2025 with solid fourth quarter execution in what remains a challenging operating environment. Our team stayed focused on the fundamentals, evolving our portfolio to meet consumer needs, serving our retail partners well with case fill rates in the high 90s, protecting profitability, and advancing the strategic growth and profit-generating priorities that underpin our long-term value creation. We delivered sequential quarterly improvement throughout the year, mitigating escalating commodity, tariff, and consumer headwinds. Driven by our solid execution, along with successful innovation in our expanding revenue growth management capabilities, our strong fourth quarter performance was underpinned by share gains across the overwhelming majority of our categories, including our six largest core categories. These year gains included hefty waste bags, hefty food bags, Reynolds Wrap, Reynolds parchment, Reynolds Bakeware, hefty party cups, as well as the strong performance across our store brand offerings. These gains reflect the consumer's affinity for innovative and differentiated solutions in waste bags and food bags, sustained preference for branded quality and foil, and growing interest in convenience across cooking and baking products. All of this reinforces that our innovation priorities are on target and help shape our go-to-market execution. As a point of reference, we outperformed our categories by over one point in 2025, and by two points in the fourth quarter. I'm also very pleased that we were able to deliver these share gains while increasing profitability in the quarter versus a year ago. On our fourth quarter call last year, we noted that 2025 would be a transition year as we aligned our team and began executing against and investing behind a number of strategic priorities. These priorities span growth and innovation, productivity initiatives across manufacturing and supply chain, and other cost…

Thank you, Scott, and good morning, everyone. 2025 was a year of taking decisive action in response to macro headwinds and building both resilience and momentum as we position the company for future success. Across the business, we delivered results that reflect meaningful advancement against our strategic objectives. We accelerated growth through expanded distribution and innovation. We delivered cost savings through productivity initiatives, strategic sourcing, and disciplined cost management. And we invested in a number of high ROI initiatives across our business, including capital to support growth in our fastest-growing segments, as well as making solid progress against our automation pipeline. We are encouraged by the progress we made against these initiatives through 2025, with early returns beginning to materialize in the fourth quarter. For the quarter, we are very pleased with how we closed out 2025, outperforming all guided metrics and delivering a strong performance that underscores the effectiveness of our strategy and disciplined execution. Net revenues of $1.03 billion represented 1% growth compared to $1.02 billion in 2024. Our retail volumes exceeded overall category trends, outperforming our categories by two points, while low-margin non-retail net revenues increased $24 million versus the prior year period. In the foil category, the underlying dynamics remain constructive despite multiple price increases in the last twelve months. Having executed multiple price increases in 2025, we are encouraged that fourth-quarter volume takeaways were down only two points, demonstrating the pricing power of our brands. Our hefty waste and storage and Presto segments each delivered strong volume growth and share gains in the quarter. And Hefty Tableware delivered a slight sequential volume improvement and improved profitability in the business to deliver a flat EBITDA result. However, declines in foam and the discretionary nature of the category continued to weigh heavily on the segment's top-line results.…

Thank you. We will now be conducting a question and answer session. You may press 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Kaumil Gajrawala with Jefferies. Please proceed.

Hey, everybody. Good morning. I guess a couple of questions. I maybe want to understand more around the restructuring with Presto and Hefty. And so I see at a very high level some of your comments on what you're hoping to do. But if you could provide some more details or are people moving around? What does success look like in terms of what you'll be able to accomplish that you can't do already? And then maybe some of the logic path on making this decision. Is there something that you see in the market from a demand perspective? Is it something that you see in the market from a competitive dynamic that you think is likely to be ongoing? Because making a change like this usually means there's a bit of a different view on either the top line or the profitability of the categories in general.

First of all, good morning, Kaumil. Thanks for the question. I think there's a couple of factors at work. If I walk through them, I think the first is clarity and focus. So rather than having two different business units have participation in shared categories, what we're after is having clarity of focus. Each of those business units has a core focus on a category, just to keep it simple. There are a couple of benefits we see with that. The first is end-to-end management, all the way from consumer insights to innovation to operations to supply chain, end-to-end across each of those businesses. So we think there's an efficiency gain to be had. The second is we think it adds clarity for growth. And that clarity for growth comes in two dimensions. One, we've got one dedicated team focused on category innovation in one business, another dedicated team focused on innovation in another business. And then finally, the opportunities to assess and execute against potential growth outside of those categories are even sharper. So that's the substance. I think you've also asked, is there a bunch of people movement? The answer is really no. No real change in org design of any substance. Again, more reorganizing so that these teams are dedicated to their categories.

Okay. Got it. And then if I can ask about foam, I believe we're lapping, you know, sort of the beginning of when foam really started to turn and at least at that time, it felt like it was not a one-and-done, but that there were some, you know, maybe some states or some markets that were going to be particularly impacted, others that were a lot less. So it sounds like the situation continues to be challenging. So I'm just curious. Are we anywhere near sort of a stabilization point? I know you're offsetting factors with sustainable goods and such, but are we hitting a stabilization point, or is this a sort of thing where the pressure just continues to build?

Thanks for that one. So maybe a little dimension. So if you look at the performance of that category in 2025, volumes were down about 14%, plus or minus for the category. So to your point, we expect to see about half that for memorability, being half that rate of decline in 2026. So certainly, the bigger shock to the system would have been '25 versus '26. I think what's happening is more consumer-driven, including things like the considerations of the cost of alternatives. Yes, you'll see if you study pulp and paper, you know, those costs have generally come down over the most recent years. So I think that's more what we're seeing in 2026 compared with a real structural change in the regulatory landscape in 2025.

Okay. Got it. Thank you.

Our next question is from Peter Grom with UBS. Please proceed.

Great. Thank you. Good morning, everybody. I was hoping to get some more color on the competitive dynamics that you alluded to around the hefty business. Maybe just more color in terms of what you're seeing and ultimately, the decision around maintaining price points in the current promotion strategy? You mentioned that volumes will potentially be impacted. So curious what's embedded in the guidance. And I guess whether you'll be willing to shift your strategy should the volume declines be worse than expected.

Good morning, Peter. I'll start, Nathan may add, in terms of guide effects. So I think what we're seeing is two different dynamics. As we exited 2025, at least the waste category, we saw a pronounced increase in the promotion and pricing activities from another competitor in that space. And for context, we actually would have seen our hefty branded promotion actually looked a lot like our total company, and, importantly, even down in the fourth quarter versus last year. Just to sort of set the stage on what are we seeing. The comments about staying the course are really a fundamental and long-term view of maintaining the brand equity in the hefty brand. And the business has been built around that very principle in offering consumer value. So our view is the right long-term strategy for the business is to see the course, and I think we certainly take some comfort in performance. You know, as we think back about the year, by seven points, the hefty brand on retail track channel data outperformed the category, outperformed the category in the fourth quarter by three points. So we feel like we've got the winning approach to the marketplace, and we think staying the course is the right strategy. Nathan, anything on the guide we want to share?

I think you kind of hinted at this, Scott, because we saw seven points of growth in the hefty waste bag business in 2025 on a category that was roughly up one. So whilst we wouldn't expect that level of success in the category in 2026, we've certainly factored in some continued success, just not to that degree.

Great. And then maybe related on foil, elasticities have been favorable thus far. But as you think about the January price increase, more increases to come. How are you thinking about elasticity from here and maybe managing around that $5 price clip as we move forward?

Yes. Again, thanks. Another good question. So I think I'd start with we are really pleased with our commercial team and what we've seen thus far because it has certainly been a dynamic raw material climate, and it's not as simple as just quote, executing price increases. I think as we've assessed the situation throughout the year, we've been taking measured, generally quarterly, price increases. A good example of our developing our GM capability because while we've been taking those price increases, we've actually seen the pricing gap to private label contract throughout the balance of the year, and I think that's a very, very important observation. Another piece is on consumer insights. So when we study consumer research, what we find is the consumer will tend to look at their most recent one or two purchase cycles in considering the effective price. So going back to my comment about taking measured quarterly increases, we think that's had a bit of a muting effect on elasticities. And then in closing, having said all of that, we certainly enjoyed some share gains in the year and the quarter, but we also want to be realistic about the fact that with each subsequent increase, of course, there's more elasticity risk. So that's how we're thinking about it. You know, so far so good, but we also want to be, you know, foreshadowing there, you know, with each increase, there's more elasticity risk.

Thank you so much. I'll pass it on.

Our next question is from Andrea Teixeira with JPMorgan. Please proceed.

Hi, everyone. Good morning. Thank you for the question. I was hoping to see, like, a good segue into Peter's question on promotional activity. You also alluded to private label, and that's something obviously that you are very active on the bag side. So I was curious to see if you are, number one, obviously seeing the down trade, and that impacting your hefty and your branded tableware, and how Presto and other private label brands that you have been commissioned to have been getting market share. So can you comment on that and how we should be thinking about the impact of mix within your guide?

Sure. So as a general statement, I'd say we continue to see stability in the categories in terms of brand in-store brand mix. The categories have actually been remarkably stable. In terms of I think you specifically asked about Presto. We have seen pronounced growth in that business, particularly around food bags, probably more prominent in club than other channels. So I think that would be the commentary on this generally. Have we seen material trade down? We haven't been pretty stable. We've certainly seen some wins in the Presto business in food bags. In terms of brand store brand mix, my expectation would be we'd probably see more branded mix in 2026 in light of some of the offsets in private label that Nathan spoke about in the outlook.

And then, but more specifically, so how can we think about, like, the, I mean, go looking ahead if there is any opportunity for you to actually gain more, you know, more private label share or like, how you see you just discussed Presto, but also, like, good value for your bags. Like, how is that performing relative to your brand? I mean, obviously, you want to continue to gain share, but if that's not the case, how should we be thinking of that mix impact?

Sure. So we definitely see opportunities from a share standpoint, what we call share gap selling that was referenced in prepared remarks, to both gain business in branded and store brand formats. What I was trying to reference in the prepared comments was that we're seeing just a lot of bid activity commensurate with the state of the economy, which is not surprising. And so we have near-term headwinds, we also have wins that you'll start to see flow through the business, particularly in the back half of the year. So we definitely think that there's opportunities in both the branded and store brand part of the business. We'll start with some headwinds, and we'll start to offset those in the store brand business as we work our way through the year.

Okay. Thank you, Scott. Appreciate it.

Our next question is from Lauren Lieberman with Barclays. Please proceed.

Great. Thanks. Good morning. Curious on the SG&A. So you mentioned some delayering, but then also the shorter-term dynamics on advertising. And you're going to kind of true up in '26. I just wanted to get a sense for that. I would have thought that the run rate of the first three quarters was kind of a sustainable level given the delayering work, and it's really about that April maybe had some more short-term adjustments on the SG&A spend just as we think about into '26. Is that reasonable?

Yeah. Look. I would say when we talk about the actions that we took on SG&A in 2025, there's the when we talk about advertising, let's start there, is that we really focused on getting to the point of optimizing ROIs on a marginal ROI basis. So it's not that we took too much SG&A out. It's that we got it to the right point where we're optimizing that. When we think about bringing some of the SG&A back in 2026, we're really talking about investing behind particular launches of innovation. And the delayering, as you pointed out, is more structural. So there's not a lot more to talk about on SG&A other than that. Those variable compensation, the other swing factor.

Okay. And so was the variable compensation a big factor in the fourth quarter? Could $80 million just it's a, you know, $20 million lower than the kind of quarterly run rate. It's a big number.

In terms of Yes. It certainly contributed to the fourth quarter SG&A.

Okay. And then as I look into this year, just curious for any perspective you can offer on commodity cost inflation and kind of what type of headwind do you think that's going to be to gross margin, not you know? And then on top of that, obviously, we'll think about how to flow through pricing.

Yes. Sure. So I think the way to think about it, as we talked about it all last year, it was two to four points of cost and a similar quantum of pricing to offset that. Say, that this year, we'll talk about it in two to three points of cost headwinds and a similar amount in terms of pricing to offset that through the year. Roughly half of that is carryover of costs that ramped in 2025. And similarly, the pricing that we took in 2025 wrapping around. In terms of margins, probably worth starting with a couple of the comments I made in my prepared remarks. Just to put some color to that. First, we are talking about retail sales volumes down, so that's the reason Scott talked about. At the same time, SG&A is expected to be up, which you mentioned, and then EBITDA flat. So that certainly implies that we're expecting some improvement in profitability. At the same time, when we're in a period of taking pricing to cover commodity cost increases, expect that to have a dilutive impact on margin percentages as was the case in 2025.

Okay. Great. Alright. Thank you so much.

Our next question is from Robert Ottenstein with Evercore ISI. Please proceed.

Great. Thank you very much. Good morning. A couple of follow-up questions. So first, on the combination of Hefty and Presto, from what I can gather, that's more sort of strategic and efficiency-related rather than pure cost takeout? Is that the right way to look at it?

Yeah. Good morning, Robert. That is accurate. It is not a cost-driven motive. It's an execution-driven motive or focus. And, again, just to restate part of my comment to the prior question, we think that unlocks and provides additional clarity for growth. So not a cost motive. It's execution and growth.

I like Perfet. It's better outcomes with the same resources. Okay. Great. Great. Great. Second, can you talk a little bit about the market share gains that you got in Q4? You had been running at roughly 100 basis points. That went to 200. Maybe some of the drivers around that and was there any kind of one-offs or anything that makes it unusual? And would that kind of continue, driving share gains, you know, in the first three quarters of this year at least and how that ties into the spring shelf set. So you're getting, you know, increased shelf space due to those gains.

Thanks for the follow-up. So I think what's interesting is that the share gains were really across the portfolio. So if you think about our six largest categories, we actually enjoyed share gain performance in each of those six. The only outlier candidly was foam. So the point of that is it was fairly broad. Certainly, I think there's two drivers of that. One would be innovation. Newer items are certainly winning in the marketplace. I also think it goes back to our performance brand-oriented philosophy. I think more and more as the retail consumer has even a more prominent focus on value, I think that's probably an assist complementing those first two pieces. And then, frankly, last for me would be service. You think about it's a pretty challenging dynamic year. Global tariffs shift and evolve. And we ran a high 90 case fill rate for the full year. I'm very proud of our supply chain team for that. But I think those would be the three drivers that allowed that performance. You asked about looks into '26. We certainly are seeing continuation of that generally in our January results in terms of our performance against the categories against those same dimensions. So I think as we see it, we see some continuation.

And is it also reflected in increased shelf space in the March, April resets?

I guess two things. So part of it is we picked up about five points of distribution total distribution points here in the fourth quarter. So by definition, that provides distribution growth. We'll see as we get into the May, June time frame, the final outcomes of distribution. But as we're going into it, we're fairly optimistic. Because, of course, that very shared performance certainly is a useful marketing discussion topic with our retail partners.

Terrific. Thank you very much.

Thank you.

Our next question is from Brian McNamara with Canaccord Genuity. Please proceed.

Hey. Good morning, guys. Thanks for taking the question. I wanted to drill down on elasticity as it relates to aluminum foil, which appears well-behaved thus far. I'm curious how you would compare the current environment to 2022, where 75 square foot foil at retail breached the $5 price point for a time, and then you lost a few points of branded share, then you gained it back once you promoted below that kind of $5 price point. We've recently observed that 75 foot the price is kind of across the country, kind of well north of that $5 price point, close to $6 in some places. So I'm curious, has that $5 price point goalpost moved? I'm curious how you should how we should think about that the elasticity threshold.

Good morning, Brian. Another really good question. So I think there's a couple of factors at work, probably three. What's different about now versus 2022 that you referenced would be specifically price gaps to private label. Back in that era, those gaps were over a dollar between the brand and store brand. We are seeing significantly tighter gaps as we exited the year in 2025 and early days in 2026. That's the first point. I think the second point, and this factors into our thinking, is over those last several years, if you look at the average cost of an item in a consumer item, excuse me, in a store, it's up about 25, 30%. So it's not as though we have a proof statement, but we certainly observe that on a comparable basis, what was the $5 price point you referenced is conceptually, if you inflated that against the balance of the store, we certainly think that might be providing some insulation. And then third and finally, is our team has been taking pricing actions. We believe that the quarterly more gradual increases are more effective with the consumer than, say, a semiannual much larger increase back to the comment I think I shared earlier about consumer insights where the consumer will tend to look at the most one or two most recent purchases assessing price. So I think those are the dynamics. But, you know, we study the category you would guess. Every single day, and I think are going to benefit from RGM capabilities where we've got continued capability development in how we think about how, where, and when to promote against those key cells us. So I think those are the variables, but we certainly would expect to see elasticities. But we think that we've got the data would suggest they've been certainly more muted than they would have been in 2022.

That's helpful. Thank you.

You're welcome.

This will conclude our question and answer session. I would like to turn the conference back over to Scott for closing remarks.

Thank you, operator, and thank you to everyone who joined us today. Our analysts, our investors, and certainly our 6,000 teammates who make RCP the great company that it is. We're energized about the opportunities ahead of us, and we look forward to sharing our progress with you in the quarters to come. Wish everybody a great morning and a great day.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.