Q4 2019 Earnings Call

March 10, 2020

Lance Mitchell: Hello, everyone. I'm happy to introduce Reynolds Consumer Products during our first call as a public company after our successful IPO and debt offering in January. First, I'd like to take a moment to address coronavirus, which is at the forefront of our minds and a primary concern globally. Our deepest condolences and prayers go out to those affected by the coronavirus, and our top priority at Reynolds is keeping our employees, customers, suppliers, and their families safe during this time. The situation continues to evolve on a local and global level, and we're taking guidance from relevant authorities and stand ready to act accordingly. At Reynolds, we believe that our focus on durable long-term demand and expectation of stable growth and extremely high brand awareness positions us well to deliver growth in 2020 and beyond.

Lance Mitchell: Our deepest condolences and prayers go out to those affected by the coronavirus, and our top priority at Reynolds is keeping our employees, customers, suppliers, and their families safe during this time. The situation continues to evolve on a local and global level, and we're taking guidance from relevant authorities and stand ready to act accordingly. At Reynolds, we believe that our focus on durable long-term demand and expectation of stable growth and extremely high brand awareness positions us well to deliver growth in 2020 and beyond.

Ladies and gentlemen, thank you for standing by welcome to the Reynolds consumer products fourth quarter and fiscal year 2019 earnings.

Lance Mitchell: Since the inception of Reynolds Consumer Products almost a decade ago, the teamwork of our organization and our alignment to the RCP Focus, which is essentially our vision, mission, and values, is how we have achieved the growth that has enabled us to move to the next chapter for our company. My sincere appreciation and congratulations to all the employees at our company for this achievement. On behalf of our employees, I'd like to welcome all of our new investors. You can rest assured that we'll continue to work hard to build our business sustainably and responsibly for all of our stakeholders over the long term, as we've always done. I am pleased that our Q4 and our Fiscal Year 2019 financial results were in line with the estimates we provided during the IPO roadshow.

At this time all participants are in listen only mode. After the speakers presentation, there will be a question and answer session.

To ask a question. During this session you will need to press star one on your telephone.

Please be advised to today's conference is being recorded if you require any further assistance. Please press star Zero I'd now like turn the conference over to your Speaker today Ms. Katie Turner for opening remarks. Please go ahead ma'am.

Lance Mitchell: On behalf of our employees, I'd like to welcome all of our new investors. You can rest assured that we'll continue to work hard to build our business sustainably and responsibly for all of our stakeholders over the long term, as we've always done. I am pleased that our Q4 and our Fiscal Year 2019 financial results were in line with the estimates we provided during the IPO roadshow.

Thank you Catherine good morning, and thank you for joining us on rental consumer products fourth quarter and fiscal year 2019 earnings conference call on the call today are Lance Mitchell, President and Chief Executive Officer, and Michael Graham Chief Financial Officer, Nathan Low Senior Finance director and Chris May on offer Vice President.

In corporate controller will also be available for Q1 day.

Lance Mitchell: We continue to champion our categories and grow with our customers as consumer products preferences evolve. By remaining focused on durable long-term demand, we continue to expect stable growth and extremely high brand awareness as we aim to drive future growth in 2020 and beyond. I'll spend some time providing an overview of Reynolds to help you get acquainted with our story and discuss the key reasons we believe we're well-positioned in the long term. Michael will discuss our Q4 and 2019 financial results in detail, as well as guidance for 2020. After that, we'll open up the call for questions. We formed Reynolds Consumer Products in 2011 by combining legacy consumer businesses from both Alcoa, which includes the Reynolds and Presto Products, and Pactiv, which included the Hefty and Tableware businesses.

And of course of this call management may make forward looking statements within the meaning of the federal Securities laws. These statements are based on management's current expectation and involve risks and uncertainties that could differ materially from actual events and no describe any forward looking statements. Please refer to rental consumer product interim report on form 10-K, and other reports filed from time to time.

The Securities Exchange Commission and press release issued this morning are detailed discussion of risks that could cause actual results could differ materially.

Lance Mitchell: Michael will discuss our Q4 and 2019 financial results in detail, as well as guidance for 2020. After that, we'll open up the call for questions. We formed Reynolds Consumer Products in 2011 by combining legacy consumer businesses from both Alcoa, which includes the Reynolds and Presto Products, and Pactiv, which included the Hefty and Tableware businesses.

My second part and any forward looking statements made today. Please note management's remarks today will focus on non-GAAP or adjusted financial measures. A reconciliation of GAAP results to Nongaap financial measures is available on the earnings release.

Companies also prepared a few presentation slides, which are posted on <unk> website under the Investor Relations heading this call is being webcast and archive will it have it will also be available on the website and now I'd like to turn the call over its Atlanta Metro.

Lance Mitchell: Building a new company on the foundation of these established consumer products companies has given us the platform to create a successful brand that fosters an environment of consumer loyalty. Our mission since day one has been to simplify daily life by providing convenient products so that users can spend time focused on things that matter. Reynolds is a leader in the stable household products market across 3 broad categories: cooking products, waste and storage, and tableware. Across these categories, we've achieved the number 1 or number 2 product sales position in a majority of categories that we participate in. We have a unique competitive advantage in that we provide both Reynolds brands and store brands. I'll now review the 4 segments in which we operate. The first is Reynolds Cooking & Baking, which includes our flagship Reynolds Wrap and numerous cooking products like parchment paper and slow cooker liners.

Hello, everyone I'm happy to introduce Reynolds consumer products during our first call the public company after successful IPO and debt offerings in January.

First I'd like to take a moment to address Corona virus.

Which is at the forefront tomorrow morning, and a primary concern globally.

Our deepest condolences and careers go after those affected by the Corona virus and our top priority at Reynolds is keeping our employees customers suppliers and their families safe during this time.

Lance Mitchell: Across these categories, we've achieved the number 1 or number 2 product sales position in a majority of categories that we participate in. We have a unique competitive advantage in that we provide both Reynolds brands and store brands. I'll now review the 4 segments in which we operate. The first is Reynolds Cooking & Baking, which includes our flagship Reynolds Wrap and numerous cooking products like parchment paper and slow cooker liners.

The situation continues to evolve on a local and global level, we're taking guidance and relevant authorities as stand ready to act accordingly.

Why don't we believe that our focus on durable long term demand an expectation stable growth at extremely high brand awareness positions us well could order growth and 2020 and beyond.

Lance Mitchell: Hefty Waste and Storage includes our food bags using slider closures and both Hefty branded and store brand waste bags. Hefty Tableware includes our disposable tableware products like dishes, bowls, plates, and cups. The Presto Products segment includes our store brand food bags using a press-to-close closure and shorter-run store brand waste bags. At Reynolds, our focus is growth and continuous cost improvement. In order to accelerate these improvements, we formalized our plan, known as Revolution, in 2017. The goal of Revolution is to continually reinvent and optimize the business to drive revenue growth, market share gains, and margin expansion. Our innovation-driven culture is focused on solving consumer pain points, increasing usage occasions, sustainability, and the needs of the consumer.

Since the inception, <unk> Reynolds consumer products, almost a decade ago.

He worked at Warner organization, and our alignment to the RCP focus which is essentially our vision mission and values is how we have achieved the growth that has enabled us to move to the next chapter for our company.

My sincere appreciation congratulations to all the employees at our company you for this achievement.

Lance Mitchell: At Reynolds, our focus is growth and continuous cost improvement. In order to accelerate these improvements, we formalized our plan, known as Revolution, in 2017. The goal of Revolution is to continually reinvent and optimize the business to drive revenue growth, market share gains, and margin expansion. Our innovation-driven culture is focused on solving consumer pain points, increasing usage occasions, sustainability, and the needs of the consumer.

And on behalf of our employees I'd like to welcome all of our new investors.

You can rest assured that we'll continue to work hard to build our business sustainably and responsibly for all of our share stakeholders over the long term as we've always done.

I am pleased that our fourth quarter and our fiscal year 2019 financial results were in line with the estimates we provided during the IPO roadshow.

Lance Mitchell: What started 3 years ago as a plan to implement disruptive growth and productivity initiatives, has now evolved into a disciplined process that continues to achieve quantifiable results. Through meticulous project management, we have approximately 85 projects that are resourced and on track to achieve their respective goals. We hold weekly calls and reviews led by Michael Graham and myself to assess the progress of Revolution, and the objectives set in place are bottom-up throughout the organization. For the 2 years ended 31 December 2019, Revolution contributed $195 million to adjusted EBITDA. Our culture of innovation is the epicenter of how we run our business. As consumer preferences evolve, our position as a category leader continues to enable our success.

We continue to champion our categories and grow with our customers as consumer products preferences evolve.

By remaining focused on durable long term demand, we continue to expect stable growth and extremely high brand awareness as we aim to drive future growth in 2020 and beyond.

Lance Mitchell: We hold weekly calls and reviews led by Michael Graham and myself to assess the progress of Revolution, and the objectives set in place are bottom-up throughout the organization. For the 2 years ended 31 December 2019, Revolution contributed $195 million to adjusted EBITDA. Our culture of innovation is the epicenter of how we run our business. As consumer preferences evolve, our position as a category leader continues to enable our success.

I'll spend some time, providing an overview of rentals to help you get acquainted with our story and discuss the key reasons, we believe we're well positioned long term.

Michael will then discuss our Q4 in 2019 financial results in detail as well as guidance for 2020 after that we'll open up the call for questions.

We for rentals consumer products in 2011 by combining legacy consumer businesses from both Alcoa, which includes the rentals and pressing products and package, which included the happy and tableware businesses.

Lance Mitchell: The ability to adapt to a changing consumer environment is the lifeblood of a CPG company, and our strategic partnerships with other leaders in the industry facilitate innovation and new product development. While we are based on a foundation of long-standing CPG companies, the "we've always done it this way" mentality has no place at Reynolds. We constantly listen and learn from consumers and our team members in order to evaluate what can be improved. Additionally, adjusted EBITDA growth that we've enjoyed is directly attributable to the consistency with which we keep safety at the forefront of everything that we do at Reynolds. Families buy Reynolds brands because they trust us to deliver dependable, safe products. Our products have been on the shelves of retailers for generations and are integral to the household aisle, as well as the America family kitchens.

[noise] building a new company on the foundation of these established consumer products companies has given us the platform to create a successful brand on the fostered an environment of consumer loyalty.

Our mission since day, one has been to simplify daily life by providing convenient products for the users can spend time focused on things that matter.

Rentals as a leader in the stable household products market across three broad categories cooking products waste and storage and tableware.

Lance Mitchell: Additionally, adjusted EBITDA growth that we've enjoyed is directly attributable to the consistency with which we keep safety at the forefront of everything that we do at Reynolds. Families buy Reynolds brands because they trust us to deliver dependable, safe products. Our products have been on the shelves of retailers for generations and are integral to the household aisle, as well as the America family kitchens.

Across these categories, we've achieved another one or number two product sales position in a majority of categories that we participated.

We have unique competitive advantage in that we provide both rentals brands and store brands.

I'll now review the four segments of which we operate the first is Reynolds cooking and Bacon, which includes our flagship rental trap and numerous cooking products like partial paper and slow cooker liners.

Lance Mitchell: 95% of US households have at least 1 of our products. Not many companies can say this. We have extremely high brand awareness, and third-party ratings of our brands put us best in class across consumer satisfaction, loyalty, and intent to repurchase. While our products are used across all ages and households, families purchase our products the most, and we're focused on growing as new households continue to form. As I mentioned earlier, our competitive advantage is our broad portfolio of branded and store brand products. In comparison to our competitors, who only focus on 1 or 2 products in the category, we are a one-stop shop for Waste & Storage, Cooking & Baking, and Tableware products. By streamlining purchasing for retailers, we've achieved supply chain economics of scale through having a variety of products on a single truckload.

Hefty waste and storage includes our food bags, using slider closures and both Kathy branded and store brand lease bags.

Hefty tableware includes or disposable tableware products like dishes bowls plates that comps and the procedural products segment includes our store brand food bags.

Using a press to close closure and shorter run storebrand ways bags.

At Reynolds, our focus is growth and continuous cost improvement in order to accelerate these improvements we formalized our plan known as revolutions in 2017.

Lance Mitchell: As I mentioned earlier, our competitive advantage is our broad portfolio of branded and store brand products. In comparison to our competitors, who only focus on 1 or 2 products in the category, we are a one-stop shop for Waste & Storage, Cooking & Baking, and Tableware products. By streamlining purchasing for retailers, we've achieved supply chain economics of scale through having a variety of products on a single truckload.

Goal of revolution that to continually reinvent and optimize the business to drive revenue growth market share gains and margin expansion.

Our innovation driven culture is focused on solving consumer pain points, increasing usage occasions sustainability and the needs of the consumer.

Lance Mitchell: For example, we're able to combine Reynolds Wrap, Hefty trash bags, and store-branded products all in the same truckload to a customer. We make it easier for retailers and we align with their strategies, we enjoy trusted long-term partnerships with retail senior leadership for joint business planning. We have deep consumer insights across the aisle and the ability to offer the retailer support if they choose to expand their categories. No one else in the household products aisle approaches the retailer the way that we do. As a result of our efforts, we're pleased to have recently won two major awards at the Walmart Supplier Summit in February. Reynolds received the honors of both the Consumables Supplier of the Year and the Consumables Private Brand Supplier of the Year. It is a privilege to be recognized by Walmart as a top supplier, and we're truly humbled.

What started three years ago as a plan to implement disruptive growth and productivity initiatives has now evolved into a disciplined process. The continues to achieve quantifiable results.

Through the ticket was project management, we have approximately 85 projects that are resourced and on track to achieve their respective goals.

We hold weekly calls and reviews led by microgram and myself to assess the progress of Revolution and the objective set in place our bottom up throughout the organization for the two years ended December 30, Onest 2019 Revolution contributed $195 billion to adjusted EBITDA.

Lance Mitchell: No one else in the household products aisle approaches the retailer the way that we do. As a result of our efforts, we're pleased to have recently won two major awards at the Walmart Supplier Summit in February. Reynolds received the honors of both the Consumables Supplier of the Year and the Consumables Private Brand Supplier of the Year. It is a privilege to be recognized by Walmart as a top supplier, and we're truly humbled.

Our culture of innovation as the epicenter of how we run our business as consumer preferences evolve our position as a category leader continues to enable our success.

Lance Mitchell: The awards are a real testimony to the depth of our relationship with the largest retail company in North America, as well as the strength of both our brands and store brands, as we collaborate with our retail partners to grow the categories we operate in together. At Reynolds, it is an utmost priority to treat people with respect and operate ethically. At town hall meetings, I emphasize that no one should ever make a decision at Reynolds that they would not be proud to share with their family at dinner that night. We maintain a goal-oriented culture across the company, and for all salaried employees, compensation is tied directly to profitability and cash flow metrics. As a consumer staples business, we believe we're well positioned in the categories in which we participate.

The ability to adapt to a changing consumer environment is the lifeblood of the CPG company and our strategic partnerships with other leaders in the industry facilitate innovation and new product development.

While we are based on the foundation of longstanding CPG companies, we've always done. It. This way mentality has no place at rentals, we constantly listen and learn from consumers and our team members in order to evaluate what can be improved.

Lance Mitchell: At town hall meetings, I emphasize that no one should ever make a decision at Reynolds that they would not be proud to share with their family at dinner that night. We maintain a goal-oriented culture across the company, and for all salaried employees, compensation is tied directly to profitability and cash flow metrics. As a consumer staples business, we believe we're well positioned in the categories in which we participate.

Additionally, adjusted EBIT da growth that we've enjoyed is directly attributable to the consistency with which we keep safety at the forefront of everything we do it rentals.

Lance Mitchell: Our historical results have demonstrated over time that the purchasing behavior of Reynolds consumer generally remains consistent throughout the ebb and flow of economic cycles. We hope that the efforts to contain the spread of the coronavirus will gain traction as quickly as possible. We are closely monitoring the impact on the broader economy and on our business. Fortunately for Reynolds, all of our manufacturing facilities are located in North America, 16 in the US and one in Canada. 99% of our net revenues comes from US and Canada, and a significant majority of our tier one suppliers are also North American-based. We are aware that the trajectory of our business in the near term is dependent upon how the virus could cause consumer behaviors to change, which could mean self-quarantining and stockpiling. Recently, we've seen some retailers increasing orders and higher than normal consumer takeaway.

Families by rentals brands, because they trust us to deliver to double say products our products have been on the shelves of retailers for generations and are integral to the household while as well as the America family kitchens, 95% of us households have at least one of our products not money companies can say this.

We have extremely high brand awareness and third party ratings of our brands put us best in class across consumer satisfaction loyalty and it tends to repurchase.

Lance Mitchell: 99% of our net revenues comes from US and Canada, and a significant majority of our tier one suppliers are also North American-based. We are aware that the trajectory of our business in the near term is dependent upon how the virus could cause consumer behaviors to change, which could mean self-quarantining and stockpiling. Recently, we've seen some retailers increasing or

Well our products are used across all ages and household families purchase our products than most and we're focused on growing as new households continue for.

As I mentioned earlier, our competitive advantage is our broad portfolio branded and store brand products in comparison to our competitors, who would focus on one or two products in the category. We are one stop shop for waste and storage cooking and tableware products by streamlining purchasing for retailers, we've achieved supply chain economics of scale.

Lance Mitchell: ders and higher than normal consumer takeaway.

Lance Mitchell: We believe this inventory and pantry load to be temporary, possibly shifting some volume into the near term and then reversing before year-end. Therefore, we don't expect a material impact from the coronavirus at this time. We will continue to monitor the developing situation and are developing plans should it escalate in North America, as the virus could have an impact on our operations and supply chain. As we continue to think about ways to adapt to changing consumer preferences, e-commerce is a primary focus for Reynolds. Our products are shelf-stable and are cost-effective to ship directly to consumers, which makes us well positioned for growth in the e-commerce channel. In our role as a leading CPG company, it is essential that we effect change to establish sustainable business practices.

Through having a variety of products on a single truckload for example, we're able to combine rental drop EFI trash bags and store branded products on the same truckload to a customer.

Because we make it easier for retailers and we aligned with their strategies, we enjoy trusted long term partnerships with retail senior leadership for joint business planning and we have deep consumer insights across the aisle and the ability to offer the retailer support if they choose to expand their categories no one else in household products.

Lance Mitchell: As we continue to think about ways to adapt to changing consumer preferences, e-commerce is a primary focus for Reynolds. Our products are shelf-stable and are cost-effective to ship directly to consumers, which makes us well positioned for growth in the e-commerce channel. In our role as a leading CPG company, it is essential that we effect change to establish sustainable business practices.

While approaches the retailer the way that we do.

As a result of our efforts were pleased to have recently won two major awards at the Walmart supplier summit in February.

Lance Mitchell: For years, we've been focused on sustainability and have created a broad line of eco-friendly products that are better for the Earth. We have a team dedicated to developing products made with recycled, renewable, and compostable materials, including wax paper sandwich bags, compostable paper plates, and food bags made from resin using sugarcane as a feedstock. 43% of the products we sell in the US are recyclable and are made from recyclable material. While we're proud that we've achieved this level, we continue to strive for improvement. Our goal is to reduce 80% of our solid waste in the US operations and design all packaging for recycling by 2025. Furthermore, our commitment to environment goes beyond products. We've been focused on packaging and freight optimization, and as a result, there are fewer trucks on the road.

Rentals receive the honors of both the consumable supplier of the year and the consumables private brand supplier of the year it as a privilege to be recognized by Walmart as a top supplier we're truly helpful.

The words are real testimony to the depth of our relationship with the largest retail company in North America as well as the strength for both our brands of store brands as we collaborate with our retail partners to grow the categories. We operated together.

Lance Mitchell: 43% of the products we sell in the US are recyclable and are made from recyclable material. While we're proud that we've achieved this level, we continue to strive for improvement. Our goal is to reduce 80% of our solid waste in the US operations and design all packaging for recycling by 2025. Furthermore, our commitment to environment goes beyond products. We've been focused on packaging and freight optimization, and as a result, there are fewer trucks on the road.

At rentals. It is an up most priority to treat people with respect.

Operate ethically townhall meetings I emphasize no one should ever make a decision rentals that they would not be proud to share with their family at dinner that night.

We maintain a goal oriented culture across the company and for all salaried employees compensation is tied directly to profitability and cash flow metrics.

Lance Mitchell: Through partnering with Dow on the Hefty Energy Bag program, this creates a way to collect otherwise hard-to-recycle plastics right at curbside, and we're diverting more materials from landfill and converting them into valuable resources like fuel. Going forward, our strategy is to continue doing what we have been doing because we've proven it works. We continue to champion our categories with our customers, drive growth through new and innovative products, and drive shareholder returns through balanced capital allocation. Michael will provide the details regarding our 2020 guidance, and I'd like to highlight that we expect to continue our upward earnings momentum that we've historically achieved, and our 2020 guidance is consistent with what we anticipated during the IPO roadshow.... Because of our resilient economic cycles, loyalty for families across the US, and the suitability for growth in e-commerce, Reynolds is well positioned for continued stable growth.

As a consumer staples business, we believe we're well positioned the categories in which we participate our historical results have demonstrated over time that the purchasing behavior of rentals consumer generally remains consistent throughout the ebb and flow of economic cycles.

We hope that the efforts to contain the spread of the Corona virus will gain traction as quickly as possible.

We're closely monitoring the impact on the broader economy in on our business. Fortunately for rentals all of our manufacturing facilities are located in North America 16 to us and one in Canada, 99% of our net revenues comes from US in Canada, and a significant majority of our tier one suppliers are also north American base.

Lance Mitchell: Michael will provide the details regarding our 2020 guidance, and I'd like to highlight that we expect to continue our upward earnings momentum that we've historically achieved, and our 2020 guidance is consistent with what we anticipated during the IPO roadshow.... Because of our resilient economic cycles, loyalty for families across the US, and the suitability for growth in e-commerce, Reynolds is well positioned for continued stable growth. I'd now like to turn it over to Michael.

We are aware that the trajectory of our business in the near term is dependent upon how the virus could cause consumer behaviors to change, which could mean self quarantining and stockpiling.

Lance Mitchell: I'd now like to turn it over to Michael.

Recently, we've seen some retailers increasing orders and higher than normal consumer take away.

Michael Graham: Thank you, Lance. Good morning, everyone. It's great to be speaking with you on our first earnings call as a public company. We are happy to report that our adjusted EBITDA for fiscal year 2019 was $655 million, compared to $647 million in 2018. This is in line with the expectations we provided during our IPO roadshow. I am proud of how our team has performed over the last three years as we faced difficult headwinds, which were commodity inflation, freight, and other costs. Through our revolution initiatives and pricing power, we demonstrated our ability to offset these headwinds by maintaining adjusted EBITDA. Now that these challenges have mostly subsided, we expect to benefit moving forward. Turning to the quarter.

We believe this inventory and pantry load to be temporary possibly shifting some volume into the near term and then reversing before year end. Therefore, we don't expect the material impact from kroner virus. At this time, we will continue to monitor the developing situation and are developing plans to escalate in North America as a virus could have an impact on our hoppers.

Michael Graham: I am proud of how our team has performed over the last three years as we faced difficult headwinds, which were commodity inflation, freight, and other costs. Through our revolution initiatives and pricing power, we demonstrated our ability to offset these headwinds by maintaining adjusted EBITDA. Now that these challenges have mostly subsided, we expect to benefit moving forward. Turning to the quarter.

Patients in supply chain.

As we continue to think about ways to adapt to changing consumer preferences E. Commerce was a primary focus for rentals, our products are shelf stable and our cost effective the ship directly to consumers, which makes us well positioned for growth in E Commerce channel.

In our role as a leading CPG company. It is essential that we effect change to establish sustainable business practices for years, we've been focused on sustainability and have created a broad line of eco friendly products that are better for the are.

Michael Graham: Total net revenues in Q4 2019 were $835 million, compared to $907 million in Q4 2018. As Lance mentioned, this is in line with the net revenue estimates we provided of $827 to $843 million during our IPO. This decrease was expected after an unusually high demand in Q4 2018, as customers increased inventory levels due to uncertainty regarding the availability of future transportation. Known changes made earlier in fiscal 2019, including the exit of certain low-margin store-branded businesses, also impacted net revenue, along with the impact of lower pricing as we adjusted pricing in response to lower commodity costs.

We have a team dedicated to developing products made with recycled renewable and composable materials, including wax paper sandwich bags compostable paper place and food bags made from resin using sugarcane as a feedstock.

Michael Graham: This decrease was expected after an unusually high demand in Q4 2018, as customers increased inventory levels due to uncertainty regarding the availability of future transportation. Known changes made earlier in fiscal 2019, including the exit of certain low-margin store-branded businesses, also impacted net revenue, along with the impact of lower pricing as we adjusted pricing in response to lower commodity costs.

43% of the products, we sell in the U.S., our recyclable in or made for recycled material and while we're proud that we've achieved this level, we continue to strive for improvement.

Our goal is to reduce 80% of our solid waste in the us operations and design all packaging for recycling by 2025.

Furthermore, our commitment to environment goes beyond products, we've been focused on packaging and freight optimization and as a result, there are fewer trucks on the road.

Michael Graham: Adjusted EBITDA was $214 million in Q4 2019, compared to $224 million in Q4 2018. We are pleased that this was also in line with our estimates for adjusted EBITDA of $209 to $219 million, also noted during our IPO. The decrease in adjusted EBITDA was expected and primarily due to the decline in net revenues for reasons discussed earlier, particularly the customer inventory build in Q4 2018. This was partially offset by lower material and manufacturing costs. Now I will discuss the results of each of our segments.

We're partnering with Dow on that have the energy that program. This creates a way to collect otherwise hard to recycle classics right at curbside and were diverting more materials for landfill and converting them into valuable resources like fuel.

Going forward our strategy is to continue doing what we had been doing because we've proven it works.

We continue to champion our categories with our customers drive growth through new and innovative products and drive shareholder returns through balanced capital allocation.

Michael will provide the details regarding our 2020 guidance and I'd like to highlight that we expect to continue our upward earnings momentum that we've historically achieved in our 2020 guidance is consistent with what we anticipated during the IPO roadshow.

Michael Graham: Reynolds Cooking & Baking net revenues in Q4 were $332 million, compared to $379 million in the same period of last year. This expected decrease was driven by an unusually high demand in Q4 2018 because of the increased inventory levels, lower re-roll sales, and lower pricing as we adjusted prices in response to lower commodity costs. Adjusted EBITDA was $93 million compared to the prior year period of $95 million. This is primarily due to the impact of the volume shift into Q4 2018, discussed earlier, partially offset by lower material and manufacturing costs. For Hefty Waste & Storage, net revenues in Q4 were $176 million, compared to $188 million in the prior year period.

Because of our resilient economic cycles loyalty for families across the us and the suitability for growth E. Commerce rentals is well positioned for continued stable growth I'd now like to turn it over to Michael.

Thank you Lance and good morning, everyone. It's great to be speaking with you on our first earnings call of ever come public company.

Michael Graham: Adjusted EBITDA was $93 million compared to the prior year period of $95 million. This is primarily due to the impact of the volume shift into Q4 2018, discussed earlier, partially offset by lower material and manufacturing costs. For Hefty Waste & Storage, net revenues in Q4 were $176 million, compared to $188 million in the prior year period.

We are happy to report that our adjusted EBITDA for fiscal year, 2019 was 655 million compared to 647 million. In 2018. This is inline with expectations. We provided during our IPO roadshow.

I am proud of how our team has performed over the last three years, as we faced difficult headwinds, which where commodity inflation freight and other costs through our revolution initiatives and pricing power, we demonstrated our ability to offset these headwinds by maintaining adjusted EBITDA.

Michael Graham: Like Reynolds Cooking & Baking, the decrease is expected after an unusually high demand in Q4 of 2018. Adjusted EBITDA in Q4 was $48 million, compared to $59 million in the prior year period due to lower net revenue, in addition to higher advertising and logistics costs. Moving on to Hefty Tableware. Net revenues for the segment were up 1% compared to the prior year period of $206 million. While the exit of low-margin store-branded business led to the decrease in revenue, we enjoyed growth with existing customers and new distribution gains, which offset this impact. EBITDA in Q4 was $52 million, compared to $50 million in the prior year period, primarily driven by lower logistics costs.

Now that these challenges have mostly subsided, we expected benefit moving for.

Turning to the quarter total net revenues and fourth quarter of 2019 were 835 million compared to 907 million in the fourth quarter of 2018 as Lance mentioned this is in line with the net revenue estimates we provided.

Michael Graham: Net revenues for the segment were up 1% compared to the prior year period of $206 million. While the exit of low-margin store-branded business led to the decrease in revenue, we enjoyed growth with existing customers and new distribution gains, which offset this impact. EBITDA in Q4 was $52 million, compared to $50 million in the prior year period, primarily driven by lower logistics costs.

827 to 843 million during our IPO.

This decrease was expected after an unusually high demand in the fourth quarter of 2018 as customers increased inventory levels due to uncertainty regarding the availability of future transportation.

Michael Graham: Finally, the Presto Products segment had net revenues of $124 million, compared to $137 million in the prior year quarter. Like Hefty Tableware, this was driven by the exit of low-margin store-branded businesses. However, this had a minimal impact to adjusted EBITDA, and adjusted EBITDA was flat compared to the prior year period of $24 million. Now moving to our capital structure. Subsequent to the end of Q4 of 30 January 2020, we completed our initial public offering, in which we issued 54.2 million shares of common stock at an IPO price of $26 per share, including the full exercise of the greenshoe. This resulted in net proceeds of $1.3 billion after deducting underwriting discounts, commissions, and other expenses.

No one changes made earlier in fiscal 2019, including the exit of certain low margin store branded businesses also impacted net revenue along with the impact of lower pricing as we adjusted pricing in response and lower commodity costs.

Adjusted EBITDA was 214 million in the fourth quarter of 2019 compared to 224 million in the fourth quarter 2018.

Michael Graham: Now moving to our capital structure. Subsequent to the end of Q4 of 30 January 2020, we completed our initial public offering, in which we issued 54.2 million shares of common stock at an IPO price of $26 per share, including the full exercise of the greenshoe. This resulted in net proceeds of $1.3 billion after deducting underwriting discounts, commissions, and other expenses.

We are pleased that this it was also in line with our estimates for adjusted EBITDA of 290 219 million also noted during our IPO.

The decrease in adjusted EBITDA was expected and primarily due to the decline in net revenues for reasons. The discussed earlier, particularly the customer inventory build in the fourth quarter of 2018.

Michael Graham: Concurrently with the IPO, we entered into a $2.5 billion senior secured term loan facility and a revolver with up to $250 million of borrowing capacity. Subsequent to the full exercise of the greenshoe, we had a cash balance of approximately $200 million and $2.5 billion total debt outstanding. Subsequent to the IPO, there were 209.7 million shares of common stock outstanding, which includes 7.1 million shares exercised as part of the greenshoe. As of 29 February, there was 210.1 million diluted shares outstanding, assuming the impact of unvested RSUs. I would now like to take a moment to discuss our guidance for fiscal year ending 31 December 2020.

This was partially offset by lower lower material and manufacturing costs.

Now I will discuss the results of each of our segments.

Rentals cooking and banking net revenues in fourth quarter were 332 million compared to 379 million in the same period over the last year.

This expected decrease was driven by an unusually high demand in the fourth quarter 2018, because of the increase inventory levels.

Michael Graham: Subsequent to the IPO, there were 209.7 million shares of common stock outstanding, which includes 7.1 million shares exercised as part of the greenshoe. As of 29 February, there was 210.1 million diluted shares outstanding, assuming the impact of unvested RSUs. I would now like to take a moment to discuss our guidance for fiscal year ending 31 December 2020.

Lower reroll sales and lower pricing as we adjusted prices in response to lower commodity costs. Adjusted EBITDA was 93 million compared to the prior year period of 95 million.

This is primarily due to the impact of the volume shift into Q4, 2018 discussed earlier, partially offset by lower material in manufacturing cost.

For hefty waste and storage net revenues in the fourth quarter, where were 176 million compared to $188 million that prior year period.

Michael Graham: We expect our adjusted EBITDA in the range of $675 million to $695 million. Net income in the range of $320 million to $350 million. Our earnings per share in the range of $1.52 to $1.67. Adjusted net income in the range of $350 million to $370 million. Adjusted EPS in the range of $1.67 to $1.76, and net debt to be in the range of $2.0 billion to $2.2 billion. We'll continue to manage the controllable aspects of our business through any fluctuations in commodities, volume, price, and mix from a top-line perspective.

Like rentals grounds cooking bake in the decreases expected after an unusually high demand in the fourth quarter of 2018.

Adjusted EBITDA in the fourth quarter was 48 million compared to 59 million in the prior year period due to lower net revenue in addition to higher advertising on logistics costs.

Now moving onto a hefty tableware net revenues for the segment were up 1% compared to the prior year period of 206 million.

While the exit of low margin store branded business led to the decrease in revenue we enjoyed growth with existing customers in new distribution gains, which offset this impact thus EBITDA in the fourth quarter was $52 million compared to 50 million in the prior year period, primarily driven by lower than just Ics costs.

Michael Graham: It is important to note that we focus on adjusted EBITDA first, with solid visibility into our annual targets, as that drives our robust cash flow and supports our capital allocation goals as we drive future value to our shareholders. Keep in mind, historical CapEx averages around $70 million annually. That said, we are currently in a more CapEx-intensive phase than usual, as we are all focused on expanding capacity and strategic manufacturing capabilities within our existing plant footprint, as well as investing in greater plant automation. We're expected to return to our historical levels for CapEx as we exit 2020. We are also pleased to announce that our board of directors approved the initiation of a quarterly cash dividend. Our initial dividend will be sized at 50% of adjusted net income, paid quarterly, prorated for the period subsequent to our IPO.

Finally, pressel product segment had net revenues of 124 million compared to 137 million in the prior year quarter like happy Tableware. This was driven by the exit of low margin store branded businesses. However, this was had a minimal impact to adjusted EBITDA and adjusted EBITDA was flat compared to the.

Prior year period of 24 million.

Now moving to our capital structure subsequent to the ended the fourth quarter of January Thirtyth 2020, we completed our initial public offering in which we issued 54.2 million shares of common stock at IPO price of $26 per share, including the full exercise of the greenshoe.

Michael Graham: We're expected to return to our historical levels for CapEx as we exit 2020. We are also pleased to announce that our board of directors approved the initiation of a quarterly cash dividend. Our initial dividend will be sized at 50% of adjusted net income, paid quarterly, prorated for the period subsequent to our IPO.

This resulted in net proceeds of 1.3 billion after deducting underwriting discounts commissions and other expenses.

Michael Graham: Our dividend for Q1 2020 will be $0.15 per common share. We expect to pay this dividend on 30 April 2020 to shareholders of record as of 16 March 2020. Going forward, the company expects to pay dividends approximately 60 days after each of the quarter, fiscal quarter ends. As we look ahead, we believe that our business model is well positioned to drive attractive returns in the long term. Our categories are large, stable, and underpinned by growth. We are targeting volume growth in the low single digits. Our continued investment in business will drive margin expansion, and we are targeting adjusted EBITDA growth of low to mid-single digits. As we pay down debt, our goal is to achieve mid-single digit net income growth.

Concurrently with the IPO, we entered into a 2.5 billion senior secured term loan facility and a revolver with up to 250 million of borrowing capacity.

Subsequent to the full exercise of the Greenshoe, we had a cash balance of approximately 200 million and 2.5 billion total debt outstanding.

Michael Graham: As we look ahead, we believe that our business model is well positioned to drive attractive returns in the long term. Our categories are large, stable, and underpinned by growth. We are targeting volume growth in the low single digits. Our continued investment in business will drive margin expansion, and we are targeting adjusted EBITDA growth of low to mid-single digits. As we pay down debt, our goal is to achieve mid-single digit net income growth.

Subsequent to the IPO there were 209.7 million shares of common stock outstanding which includes 7.1 million shares exercise as part of the Greenshoe.

As of February 29, there was 210.1 million diluted shares outstanding assuming the impact of.

Unvested RSU.

Michael Graham: Additionally, we're targeting dividend payout ratio of approximately 50% of net income, which we expect to drive attractive total shareholder returns over the long term. In summary, we've demonstrated our ability to maintain EBITDA levels in a time of extraordinary headwinds and still manage to generate large amounts of cash. We have deployed capital with a vision of attractive returns and the outcomes of strong top line growth and margin expansion. With that, I'll turn it back to Lance.

I would now like to take a moment to discuss our guidance for fiscal year ending December 30, Onest 2020.

We expect our adjusted EBITDA in the range of 675 million to 695 million.

Net income in the range of 320 million to 350 million.

Our earnings per share in the range of $1.50 to $1.67.

Adjusted net income in the range of 350 million to 302 370 million.

Lance Mitchell: Thanks, Michael. We're all excited about those who have taken an equity stake in our company and those who will join us to participate in the upward trajectory of Reynolds Consumer Products. I'd now like to ask the operator to open the call up for questions.

Adjusted EPS in the range of $1.67 to $1.76 and net debt to be in the range of 2.0 billion into 2.2 billion.

We will continue to manage the.

Controllable aspects of our business through any fluctuations in commodities volume price and mix from a topline perspective and is important to note that we focused on adjusted EBITDA first.

Catherine: Thank you. To ask a question, please press the star, then the one key on your touchtone telephone. Please limit yourself to one question and one follow-up. Our first question comes from Jason English with Goldman Sachs. Your line is open.

Operator: Thank you. To ask a question, please press the star, then the one key on your touchtone telephone. Please limit yourself to one question and one follow-up. Our first question comes from Jason English with Goldman Sachs. Your line is open.

Solid visibility into our annual targets that drives our robust cash flow and supports our capital allocation goals as we drive future value to our shareholders.

[Analyst] (Goldman Sachs): Hey, good morning, folks. Thank you for spotting me in and congratulations on your successful IPO. I appreciate the comments on coronavirus and the impact you're seeing. The, the other area where we've seen coronavirus and the, the consternation impacting is, is commodity trends. We have a little less near-term visibility into what your commodity basket is doing, so I was, I was hoping maybe to begin with, you can enlighten us on what you're seeing in terms of input cost.

Jason English: Hey, good morning, folks. Thank you for spotting me in and congratulations on your successful IPO. I appreciate the comments on coronavirus and the impact you're seeing. The, the other area where we've seen coronavirus and the, the consternation impacting is, is commodity trends. We have a little less near-term visibility into what your commodity basket is doing, so I was, I was hoping maybe to begin with, you can enlighten us on what you're seeing in terms of input cost.

Keep in mind historical Capex averages around 70 million annually that said we occur are currently in a more capex intensive phase than usual.

As we are all focused on expanding capacity and strategic manufacturing capabilities within our existing plant footprint as well as investing and greater plant automation.

We are expected to return to our historical levels for Capex as we exit 2020.

Lance Mitchell: Morning, Jason. you know, it's really early days of what we're seeing from commodity costs as a result of coronavirus. Our forward guidance is based on what we've seen to date. you know, we believe that if the current prices that we are seeing remain at this level or decrease, there'll be some modest tailwind for our earnings going forward.

We're also pleased to announce that our board of directors are true the initiation quarterly cash dividends. Our initial dividend will be sized at 50% of adjusted net income paid quarterly.

All right it for the period subsequent to our IPO our dividend for the first quarter 2020 will be 15 cents per common share and we expect to pay this dividend April Thirtyth 2022 shareholders of record as of March 16, two up 2020.

[Analyst] (Goldman Sachs): That's helpful. Thank you. The follow-up relates to the impact on pricing. If you do see deflation going forward, how much of that would you expect, if any, to be passed on in pricing? We don't have a lot of clarity right now on how volume and price finished in Q4. Can you talk about the trends you're already seeing in terms of your volume and price performance?

Jason English: That's helpful. Thank you. The follow-up relates to the impact on pricing. If you do see deflation going forward, how much of that would you expect, if any, to be passed on in pricing? We don't have a lot of clarity right now on how volume and price finished in Q4. Can you talk about the trends you're already seeing in terms of your volume and price performance?

Going forward the company expects to pay dividends approximately 60 days after each of the quarter fiscal quarter ends.

As we look ahead, we believe that our business model is well positioned to drive attractive returns in the long term.

Our categories, our large stable and underpinned by growth.

Lance Mitchell: Well, I'll talk first about what we're, you know, what we're projecting going forward from a pricing standpoint. It's very difficult to do that, but I will tell you, you know, we've managed a lot of commodity cycles over the course of Reynolds Consumer Products' history over the last 10 plus years. Typically, when commodity costs go down, we share that with the retailers and the consumers. Conversely, when commodity costs go up, we pass those on. We will see some pricing changes we would expect across the market if these commodity costs continue to decrease, but to give you an exact percentage, it's very dynamic, and it's a case-by-case basis. Regarding Q4, I'll turn that over to Nathan for some details.

We are targeting volume growth in a low single digits. Our continued investment in business will drive margin expansion and we are targeting adjusted EBITDA growth low to mid single digits as we pay down debt. Our goal is to achieve mid single digit net income growth. Additionally, we're targeting dividend payout ratio of approximately 50%.

Lance Mitchell: Typically, when commodity costs go down, we share that with the retailers and the consumers. Conversely, when commodity costs go up, we pass those on. We will see some pricing changes we would expect across the market if these commodity costs continue to decrease, but to give you an exact percentage, it's very dynamic, and it's a case-by-case basis. Regarding Q4, I'll turn that over to Nathan for some details.

Net income, which we expect to drive attractive total total shareholder returns over the long term.

In summary, we demonstrated our ability to maintain EBIT EBITDA levels in a time events extraordinary headwinds and still managed to generates large amounts of cash and we've deployed capital with the vision of attractive returns and the outcomes of strong topline growth and margin expansion with that I'll turn it back to Lance.

Michael Graham: Yeah, sure. Thanks, Lance. Look, the volume price mix story for Q4 is really consistent with the full year themes. In the 10-K, you'll see full year price volume mix bridges, and we'll continue to disclose these bridges as we release our quarterly results going forward. Firstly, price was relatively flat, with the exception of Reynolds, where we worked to move shelf prices down between below key retail thresholds.

Thanks, Michael we're all excited about those who have taken an equity stake in our company and those who will join us to participate in the upward trajectory of rentals consumer products.

I'd now like to ask the operator to open the call up for questions.

Thank you.

To ask a question. Please press Star then the one key on you touched on telephone.

Please limit yourself to one question and one follow up.

Lance Mitchell: Moving on to volume, price, and mix. For the volume mix, I should say, for the quarter volume was down. There were really three main drivers behind that. The first, which we've talked about at length, is the impact of the Q4 2018 retailer pull forward, as they were concerned about availability of transportation. So we're lapping that tougher comp there. Then we had lower sales in our low-margin re-roll and food service business, and we also exited low-margin private label business through the year.

And our first question comes from Jason English with Goldman Sachs. Your line is open.

Hey, good morning folks. Thank you for sliding man and congratulations on your successful IPO.

I appreciate the comments on krona virus in the impact you're seeing.

The other area, where we've seen current virus in the consternation impacting this is commodity trends.

We have a little less near term visibility into what your commodity basket is doing so I was hoping maybe to begin with you can enlighten us on what you're seeing in terms of input cost.

Good morning, Jason.

[Analyst] (JP Morgan): Very helpful. Thank you.

Jason English: Very helpful. Thank you.

It's really early days of what we're seeing from commodity costs as a result run a virus. Our forward guidance is based on what we've seen to date.

Lance Mitchell: Okay, thank you.

Catherine: Thank you. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

Operator: Thank you. Our next question comes from Lauren Lieberman with Barclays. Your line is open.

And our we believe that if the current prices that we are seeing remain at this level or decrease there'll be some.

[Analyst] (Barclays): Great, thanks. Good morning.

Lauren Lieberman: Great, thanks. Good morning.

Lance Mitchell: Good morning.

[Analyst] (Barclays): One of the things I've been asked a bit about, since the IPO, is just strategically, how you guys think about private label versus branded mix in your business. I just thought as much as the overview that you gave in your prepared remarks was great. One thing we didn't touch on very much there was just from a strategic standpoint, again, how you manage that, you know, whether you're really getting more of your resources behind private label versus branded business at any given point in time, and how you kind of see the mix of your business evolving. I guess if we could just focus on the Hefty and Presto businesses in particular, would be great.

Lauren Lieberman: One of the things I've been asked a bit about, since the IPO, is just strategically, how you guys think about private label versus branded mix in your business. I just thought as much as the overview that you gave in your prepared remarks was great.

Modest tailwind for our earnings going forward.

That's helpful. Thank you and the follow up relates to the impact on pricing.

If you do see deflation going forward, how would you how much of that would you expect if any to be passed on pricing and.

Lauren Lieberman: One thing we didn't touch on very much there was just from a strategic standpoint, again, how you manage that, you know, whether you're really getting more of your resources behind private label versus branded business at any given point in time, and how you kind of see the mix of your business evolving. I guess if we could just focus on the Hefty and Presto businesses in particular, would be great.

We don't have a lot of clarity right now and how volume and price finished in the fourth quarter can you can you talk about the trends you already seen in terms of your your volume and price performance.

Well I'll talk first about what were what we're projecting going forward from a pricing standpoint, and it's very difficult to do that but I will tell you and we've managed a lot of commodity cycles over the course of rentals consumer products history over the last 10 plus years.

Lance Mitchell: Lauren, we manage that on a very balanced basis. As you look at our portfolio, our branded and our store brand business is almost 50/50. From a resourcing standpoint, we are resourcing it accordingly in a very balanced way across the portfolio. We, you know, we are focused on growing the total category, and by doing that, we make sure that we're managing both the store brands and our brands equally to ensure that total growth. As you look at the historical growth rates across these categories and all of them, with the exception of tableware, the last five years, the private label versus brand in these categories has been very stable. There has been modest more growth of store brands in the tableware segment.

And typically when commodity costs go down we share that with the the retailers and the consumers.

Diversity on commodity costs go up we pass those on.

So we will see some pricing changes, we would expect across the market if these.

The cost continue to decrease.

But to give you an exact percentage is very dynamic and as the case by case basis.

Lance Mitchell: As you look at the historical growth rates across these categories and all of them, with the exception of tableware, the last five years, the private label versus brand in these categories has been very stable. There has been modest more growth of store brands in the tableware segment.

Regarding Q4, I'll turn that over to Nathan for some details yes show. Thanks Lance.

Volume price mix story for the quarter is really consistent with the full year things.

The 10-K, you'll see full year Prosper you fix bridges and we'll continue to disguise. These bridges as we released our quarterly results going forward.

Firstly plus was relatively flat with the exception of rentals, where we went to move shelf process down between by key retail thresholds.

[Analyst] (Barclays): Okay, great. I guess in that vein, just what you've seen from a competitive standpoint for Hefty. I know, again, right now, with a lot of the stock-up behavior, kind of all bets are off. Let's say, you know, prior to the last couple of weeks, just there's been a bit of, you know, Hefty pricing moving in one direction, your other, your leading branded competitors sort of moving in the other, converging in the middle. What's the current state of play from a promotional standpoint in the trash category, would you say?

Lauren Lieberman: Okay, great. I guess in that vein, just what you've seen from a competitive standpoint for Hefty. I know, again, right now, with a lot of the stock-up behavior, kind of all bets are off. Let's say, you know, prior to the last couple of weeks, just there's been a bit of, you know, Hefty pricing moving in one direction, your other, your leading branded competitors sort of moving in the other, converging in the middle. What's the current state of play from a promotional standpoint in the trash category, would you say?

Moving on to volume price and mix for the for that for volume mix I should say after the quarter volume was down that were really three main drivers behind that the first which we've talked about at length is the.

Impact of the Q4 2019 retirement pull forward.

We're concerned about availability of transportation.

So we're lapping.

That tougher comp there and then we had lower sales in our low margin re ROE and foodservice business and we also exited.

Lance Mitchell: Well, in our Waste & Storage segment, we've not made any changes to our pricing strategy. Our promotional strategy is also unchanged and in line with historical levels. We have seen some tightening of everyday price points as retailers compete across channels, but those are retailer margin decisions and not a result of any changes in our pricing or promotional strategies. We believe that the Hefty value strategy is very effective, and we're planning to continue to provide high quality, innovative, new products and continue to offer consumers substantial value, as we have been doing for the last several years.

Imagine private label business.

Very helpful. Thank you.

Okay.

Okay. Thank you.

Our next question comes from floor, Lauren Lieberman with Barclays. Your line is open.

Lance Mitchell: We believe that the Hefty value strategy is very effective, and we're planning to continue to provide high quality, innovative, new products and continue to offer consumers substantial value, as we have been doing for the last several years.

Great. Thanks, good morning.

Good morning.

I've been asked a bit about.

Appeal is just strategically how you guys think about.

Private label versus branded mix in your business.

[Analyst] (Barclays): Okay, great. Thanks so much.

Lauren Lieberman: Okay, great. Thanks so much.

I just thought is much of the overview that you gave in your prepared remarks is great. One thing we didn't touch on very much there was.

Catherine: Thank you. Our next question comes from Andrea Teixeira with JP Morgan. Your line is open.

Operator: Thank you. Our next question comes from Andrea Teixeira with JP Morgan. Your line is open.

Just from a strategic depending on how you manage that.

Whether you're really getting more of your resources behind private label versus branded business and I think given point in time.

[Analyst] (JP Morgan): Thank you. Good morning. I was hoping if you can elaborate on the comments from the prepared remarks about the low single-digit sales growth assumptions. I'm assuming that is a long-term sales growth algorithm. If talking about 2020, what is your assumption of category growth, bearing in mind what you discussed about the price declines because of commodities? What are you assuming in terms of share? Are you assuming any share gains for branding related to your total portfolio, or just stable at this point? Another part of the question would be, if you're seeing this benign, which goes back to a question earlier about the competitive environment, or are competitors increasing promotions?

Andrea Teixeira: Thank you. Good morning. I was hoping if you can elaborate on the comments from the prepared remarks about the low single-digit sales growth assumptions. I'm assuming that is a long-term sales growth algorithm. If talking about 2020, what is your assumption of category growth, bearing in mind what you discussed about the price declines because of commodities?

How you kind of see the mix of your business evolving I guess will get us focus on.

The hefty and Preston.

Particular be great.

So what we manage that on a very balanced bases as you look at our portfolio, our branded and our store brand businesses almost 50 50.

Andrea Teixeira: What are you assuming in terms of share? Are you assuming any share gains for branding related to your total portfolio, or just stable at this point? Another part of the question would be, if you're seeing this benign, which goes back to a question earlier about the competitive environment, or are competitors increasing promotions? I mean, I'm assuming the price points are similar right now, but do you foresee them trying to defend value share because Reynolds are down, particularly for trash bags?

So from a resourcing standpoint, we are resourcing, it accordingly, and a very balanced way across the portfolio.

We.

We are focused on growing the total category and by doing that we make sure that we're managing both the store brands and our brands.

[Analyst] (JP Morgan): I mean, I'm assuming the price points are similar right now, but do you foresee them trying to defend value share because Reynolds are down, particularly for trash bags?

Equally to ensure that total growth.

As you look at the historical growth rates across these categories.

All of them with the exception of tableware. The last five years, the private label versus brand in these categories has been very stable there has been modest more growth.

Lance Mitchell: Well, we have seen our categories growing at 2% to 3% over the last several years, and we believe that low single digit volume growth is achievable. In 2019, all of our major categories grew, and we increased the combined branded and private label share in waste bags, food bags, foil, and party cups, to name a few. We have a very clear line of sight for the volume growth in our 2020 outlook, and we believe that low single digit growth is sustainable in the long term as well. We are not planning on providing guidance on revenue going forward. It's not specific to this environment. It's because we focus on year-over-year earnings growth. In fact, as I've mentioned, all of our salaried employees' compensation is tied to year-over-year earnings growth and cash flow.

Store brands in the in the tableware segment.

Okay, great and and I guess in that vein.

Just what you've seen from a competitive standpoint.

Lance Mitchell: We have a very clear line of sight for the volume growth in our 2020 outlook, and we believe that low single digit growth is sustainable in the long term as well. We are not planning on providing guidance on revenue going forward. It's not specific to this environment. It's because we focus on year-over-year earnings growth. In fact, as I've mentioned, all of our salaried employees' compensation is tied to year-over-year earnings growth and cash flow.

Our hefty I know again right now with a lot of stock of behavior credits, all bets are off but let's say prior to the last.

A couple of weeks.

Theres been a bit of.

Hefty pricing moving in one direction your other peer leading brand to competitors are moving in the other.

Emerging in the middle to what's the current state of play from a promotional standpoint, EMEA trash category, which is that.

Well in our waste and storage segment, we've not made any changes to our pricing strategy. Our promotional strategy is also unchanged and in line with historical levels. We have seen some tightening of everyday price points as retailers compete across channels, but those are retailer margin decisions and not a result of any.

Lance Mitchell: you know, commodity costs do go up, and they go down, and that can impact revenue. Our focal point is ensuring that the rev, the earnings growth comes, and we have the volume to ensure that that occurs. As far as overall dynamics in the waste bag category, I think I just commented on that. Perhaps you have a follow-up question that's more specific.

Changes in our pricing or promotional strategies.

We believe that the happy value strategy is very effective and we're planning to continue to provide high quality innovative new products.

Continue to offer consumers substantial value as we have been doing for the last several years.

[Analyst] (JP Morgan): Yeah, Lance. Yeah, I appreciate that. Just some in terms of promotions, I understand that perhaps, you know, there isn't a lot of the promotions you're saying are being funded by the retailers. Are you seeing or you're foreseeing anything because resin prices coming down, that eventually you're gonna see more promotions coming up when you talk to the trade, from a manufacturing standpoint, or you're not embedding that in, in your guide?

Andrea Teixeira: Yeah, Lance. Yeah, I appreciate that. Just some in terms of promotions, I understand that perhaps, you know, there isn't a lot of the promotions you're saying are being funded by the retailers. Are you seeing or you're foreseeing anything because resin prices coming down, that eventually you're gonna see more promotions coming up when you talk to the trade, from a manufacturing standpoint, or you're not embedding that in, in your guide?

Okay, great. Thanks, so much.

Thank you and our next question comes from.

Andrea.

Sarah with JP Morgan Your line is open.

Thank you good morning.

I was hoping if you can elaborate on.

On the comments some of the prepared remarks on the about a low single digit sales growth assumptions on the for me that is a long term.

Lance Mitchell: Well, we haven't seen resin prices come down yet. The recent oil price changes may translate into resin price changes, but they have not yet occurred. Although oil prices have some correlation to resin, they're not a direct correlation. Resin is a supply and demand-driven commodity as much as it is an input cost. In fact, the inputs for resin in the United States are from natural gas, not oil. We'll have to adjust, as we have historically, managed our pricing strategy according to commodity costs. We've done that very successfully over the long term, and if we do see changes in commodity costs, we will adjust accordingly.

Sales of over to them so.

So im talking about joining swine and what is your assumption of category will bear in mind, what do you discuss about the price declines because of commodities.

And what are you assuming in terms of share are you assuming he and his share gains for.

Randomizing related to.

To your total portfolio are they buy this morning.

And another part of the question would be if you're seeing in skin mine, which goes back to a question earlier are the competitive environment, all our competitors, including promotions I mean, I'm, assuming the price points.

Lance Mitchell: In fact, the inputs for resin in the United States are from natural gas, not oil. We'll have to adjust, as we have historically, managed our pricing strategy according to commodity costs. We've done that very successfully over the long term, and if we do see changes in commodity costs, we will adjust accordingly.

Similar right now, but do you foresee them trying to defense that share because resins are down particular for trash bag.

Well, we have seen our category is growing at 2% to 3% over the last several years and we believe that low single digit volume growth is achievable in 2019, all of our major categories grew and we increase the combined.

[Analyst] (JP Morgan): That's helpful. Thank you.

Andrea Teixeira: That's helpful. Thank you.

Catherine: Thank you. Our next question comes from Bill Chappell with Fund Trust. Your line is open.

Operator: Thank you. Our next question comes from Bill Chappell with Fund Trust. Your line is open.

[Analyst] (Fund Trust): Thanks. Thanks. Good morning.

Bill Chappell: Thanks. Thanks. Good morning.

Lance Mitchell: Morning.

[Analyst] (Fund Trust): Just, just, following up on kind of what you're seeing from coronavirus, and, and, I assume at this point, even though you've-- it's early days, you're not baking in any kind of purchases, stockpiling, anything like that at, at, at this point into your, kind of your, your near-term outlook?

Bill Chappell: Just, just, following up on kind of what you're seeing from coronavirus, and, and, I assume at this point, even though you've-- it's early days, you're not baking in any kind of purchases, stockpiling, anything like that at, at, at this point into your, kind of your, your near-term outlook?

Branded and private label share in waste bags food beds oil and and party TBSA name a few so we have a very clear line of sight for the volume growth in our 2020.

Outlook.

And we believe that low single digit growth is sustainable in the long term as well.

Lance Mitchell: You know, it's been in the last two weeks, we've seen some modest increase in retailer purchases and consumer takeaway, but it has not been significant. It's certainly not on the scale of the things that we've been reading about in other products like hand sanitizer and toilet paper. It's been a, a modest type of takeaway increase.

We're not planning on providing guidance on revenue going forward and it's not specific to this environment.

It's because we focus on year over year earnings growth and in fact, as I've mentioned all of our salaried employees compensation is tied to year over year earnings growth and cash flow.

So you know commodity costs do go up and they go down in that can impact revenue.

[Analyst] (Fund Trust): Got it. Then back to the, to the other question on, be it trash bags or, or just in general, have you seen, you know, any changes on the competitive landscape and just how, I guess, your competitors are treating you now that you're a public company and have numbers that we get to look at on a quarterly basis? Do you expect any changes just from, from a pricing standpoint over the next few months?

Bill Chappell: Got it. Then back to the, to the other question on, be it trash bags or, or just in general, have you seen, you know, any changes on the competitive landscape and just how, I guess, your competitors are treating you now that you're a public company and have numbers that we get to look at on a quarterly basis? Do you expect any changes just from, from a pricing standpoint over the next few months?

Now what our focal point is ensuring that the rep. The earnings growth comes and we have the volume to ensure that that occurs.

As far as overall dynamics in the waste bag category I think I just commented on that.

Perhaps you have a follow up questions more specific.

Lance Mitchell: Well, the competitive pricing environment in that category has been rational. The current pricing architecture has been in return now, including promotional to historic price points.

Your last.

Say that just on in terms of promotions I understand that perhaps you know there is on a lot of the promotions or say is being front are being funded by the retailers, but are you seeing or youre seeing anything because resin prices coming down that eventually you're going to see more promotions coming up when you talk to the trade.

[Analyst] (Fund Trust): Got it. In, in general, you're not seeing any real changes kind of across categories?

Bill Chappell: Got it. In, in general, you're not seeing any real changes kind of across categories?

Lance Mitchell: No. There was a change that occurred a couple of months ago, and now the current pricing architecture is back to where it's been historically.

From a manufacturing standpoint, or you're not embedding in your guide.

[Analyst] (Fund Trust): Great. Thank you.

Bill Chappell: Great. Thank you.

But we haven't seen resin prices come down yet.

The recent oil price changes may translate into resin price changes, but they have not yet occurred and although oil prices have some correlation so brazil, they're not a direct correlation.

Catherine: Thank you. Our next question comes from Mark Azerbakh with Stifel. Your line is open.

Operator: Thank you. Our next question comes from Mark Azerbakh with Stifel. Your line is open.

[Analyst] (Stifel): Wow. Hi, good morning, everyone.

Mark Azerbakh: Wow. Hi, good morning, everyone.

Lance Mitchell: Good morning.

[Analyst] (Stifel): I guess I had two, two questions for you. One, on the key price threshold. You, you talked a bit about that earlier. You talked a bit about, a bit about that historically in terms of kind of the, the price-volume dynamics. Are there any key price thresholds that you're above at this point that you think, given some of the potential benefit of commodity costs, you could potentially or are looking to cross or are retailers looking to cross? And just sort of thinking about where you're coming from, meaning the, the price increases given raw materials and input costs over the last year or so, and is this an opportunity perhaps to reduce those, if, if at all? Try to come at the, the stockpiling in, in slightly different way.

Resin is a supply and demand driven commodity as much as input costs.

Mark Azerbakh: I guess I had two, two questions for you. One, on the key price threshold. You, you talked a bit about that earlier. You talked a bit about, a bit about that historically in terms of kind of the, the price-volume dynamics. Are there any key price thresholds that you're above at this point that you think, given some of the potential benefit of commodity costs, you could potentially or are looking to cross or are retailers looking to cross?

In fact, the inputs for resin the United States are from natural gas not oil.

So we'll have to adjust as we have historically managed our pricing strategy. According to commodity costs, we've done that very successfully over the long term and if we do see changes in commodity costs, we will adjust accordingly.

That's helpful. Thank you.

Mark Azerbakh: And just sort of thinking about where you're coming from, meaning the, the price increases given raw materials and input costs over the last year or so, and is this an opportunity perhaps to reduce those, if, if at all? Try to come at the, the stockpiling in, in slightly different way.

Thank you. Our next question comes from Bill Chappell with Suntrust. Your line is open.

Thanks, Thanks, good morning.

Good morning.

Just just following up with kind of what you're seeing from Corona virus and.

[Analyst] (Stifel): If some of what's going on out there from a fear-factoring standpoint, results in people eating at home more, does that potentially increase the actual consumption of your goods? I would imagine it does. Maybe, you know, any sort of parallels you can give historically, obviously, not relating to exactly to what we're going through now, but just in terms of periods where people have eaten at home more, whether it's recession or, or, or whatnot, any sort of learnings you could provide for us, I think that would be helpful. Thank you.

Bill Chappell: If some of what's going on out there from a fear-factoring standpoint, results in people eating at home more, does that potentially increase the actual consumption of your goods? I would imagine it does. Maybe, you know, any sort of parallels you can give historically, obviously, not relating to exactly to what we're going through now, but just in terms of periods where people have eaten at home more, whether it's recession or, or, or whatnot, any sort of learnings you could provide for us, I think that would be helpful. Thank you.

I assume at this point, even though you. It's early days, you're not making any kind of purchases stockpiling anything like that at this point into your kind of your near term outlook.

It's been in the last two weeks, we've seen some modest.

The increase in retailer purchases and consumer take away.

But it has not been significant it's certainly not on the scale of the things that we've been reading about in other products like hand, sanitizer toilet paper, it's been a modest type of a takeaway increase.

Lance Mitchell: Okay, Mark. First on your question on price thresholds, we did correct the, the price thresholds last year. The primary one, as we've talked about previously, was in Reynolds Wrap, where we crossed a, you know, price points, across our flagship products and corrected that throughout the course of 2019. We also had some price points that we crossed in tableware that we've also since corrected. There are no current price points out there that need to be corrected in any of the channels. Regarding use occasions, as consumers potentially stay at home more, absolutely, that would have a positive impact on our consumption. As you know, we're, we're driven by at-home use occasions and convenience, and that would be across all of our product categories, -...

Got it and then back to the to the other question on the via trash bags or just in general have you seen.

Any changes on the competitive landscape and just how.

I guess your competitors are treating you now, but you're a public company and and have numbers that we have to.

We get to look at on a quarterly basis and do you expect any changes to just from a pricing standpoint.

Lance Mitchell: There are no current price points out there that need to be corrected in any of the channels. Regarding use occasions, as consumers potentially stay at home more, absolutely, that would have a positive impact on our consumption. As you know, we're, we're driven by at-home use occasions and convenience, and that would be across all of our product categories, -...

Over the next few months.

While the competitive pricing environment in that category has been rational the current pricing architecture has been a return now including promotional to historic price points.

Got it but in general you're not seeing any real changes it kind of across categories.

No there was a change it occurred a couple of months ago and now it's the current pricing architecture is back to where it's been historically.

Lance Mitchell: from aluminum foil for cooking, food and storage, freezing, food bags for storage, more use of waste bags as consumers are staying at home more, you know, across all of our disposable tableware products. Yeah, we would expect to see some consumption trends move positive as consumers stay at home more often.

Great. Thank you.

Thank you and our next question comes from Mark as our boss.

With Stifel. Your line is open.

Well, Hi, Hi, good morning, everyone.

Good morning.

[Analyst] (Stifel): Just to be clear, that's not embedded or it is embedded in the guidance you've provided?

Mark Azerbakh: Just to be clear, that's not embedded or it is embedded in the guidance you've provided?

So.

I guess I had two two questions for you won on the key price threshold, you talked a bit about that earlier, you talked a bit about a bit about that historically in terms of kind of the price.

Lance Mitchell: No, it's not embedded in the guidance because we haven't seen that significant trend yet. That would be an upward movement opportunity, a tailwind to what we've projected in our guidance.

Volume dynamics so.

Are there any key.

[Analyst] (Stifel): Perfect. Thank you.

Mark Azerbakh: Perfect. Thank you.

Price thresholds that you're above at this point that you think given some of the potential benefit of commodity cost you could.

Catherine: Thank you. Our next question comes from Robert Ostenstein with Evercore. Your line is open.

Operator: Thank you. Our next question comes from Robert Ostenstein with Evercore. Your line is open.

Potentially or are looking to cross where our retailers looking to cross.

[Analyst] (Evercore): Great. Thank you very much. Two questions. One, looking at the guidance range, given, given that it doesn't include, at this point, my understanding is anything from resin, changes in resin prices or the coronavirus, can you just kind of maybe outline a little bit, you know, some of the factors as you thought about the range, that would lead to the low end of the range or to the high end of the range? That's the first question. The second question, are you seeing any, any kind of pickup at all, signs of pickup in e-commerce, and are you prepared for that? Thank you very much.

Robert Ottenstein: Great. Thank you very much. Two questions. One, looking at the guidance range, given, given that it doesn't include, at this point, my understanding is anything from resin, changes in resin prices or the coronavirus, can you just kind of maybe outline a little bit, you know, some of the factors as you thought about the range, that would lead to the low end of the range or to the high end of the range? That's the first question. The second question, are you seeing any, any kind of pickup at all, signs of pickup in e-commerce, and are you prepared for that? Thank you very much.

And just sort of thinking about where you're coming from meaning the price increases given raw.

Materials and input costs over the last year or so and is this an opportunity perhaps too.

Reduce those if at all and then.

Try to come at the.

Stockpiling in slightly different way.

So yes.

Some of what's going on out there from a few are factoring standpoint results in people eating at home more does that potentially increase the actual consumption of your goods.

I imagine it does to maybe any sort of parallel as you can give historically, obviously not related exactly to what we're going through now, but im just in terms of periods, where people have eaten at home more or whether its recession or whatnot any sort of learnings you could provide for us I think that would be helpful. Thank you.

Michael Graham: Yes. As it relates to the range and, you know, to hit the top end of our range, we'll need to see a combination of the following: you know, Revolution. You know, we've seen strong performance in Revolution in the past. In order to hit the higher end of range, we'll need to see cost savings that are in a range of $60 to 70 million or above. You know, other things that can influence that is further decline in commodity rates, or that can benefit us in a way that would benefit to that overall higher end of the range. Obviously, the execution of our growth initiatives that have been outlined in our Revolution strategy to drive top-line growth and through successful launches of new products.

Hey, Mark first on your question on price thresholds, we did correct. The the price thresholds last year. The primary one as we've talked about previously was in Reynolds rap, where we crossed a.

Price points across our flagship products and corrected that throughout the course of 2019. We also had some price points that we crossed in table, where that Weve also sense corrected. So there are no current price points out there that need to be corrected in any of the channels.

Michael Graham: You know, other things that can influence that is further decline in commodity rates, or that can benefit us in a way that would benefit to that overall higher end of the range. Obviously, the execution of our growth initiatives that have been outlined in our Revolution strategy to drive top-line growth and through successful launches of new products.

Regarding use occasions as consumers potentially stay at home more absolutely that would have a positive impact on our consumption.

Michael Graham: All those could be variables that could, you know, go our way and could influence the overall higher end of the range. The inverse of that would be these going in the opposite direction, and that would take us towards the lower end of the range.

As you know were driven by at home use occasions, and convenience and that would be across all of our product categories.

From aluminum foil for cooking food and storage freezing the food bags for storage.

Lance Mitchell: Robert, to your question about e-commerce, you know, we continue to see strong year-over-year growth in that channel. If you're asking if it's recent and driven by coronavirus, we have not seen any substantive change. Again, it's fairly early days. That is a channel that we are well positioned in for growth, and should that channel shift occur, we're, we're well positioned to be able to participate in that.

More use of waste bags as consumers are staying at home more and across all of our disposable tableware products.

Yes, we would expect to see some consumption trends were positive consumer stay at home more often just to be clear that that's not embedded word is embedded in the guidance you provide no. It's not a bad in the guidance because we haven't seen that significant trying out that would be an upward.

[Analyst] (Evercore): Do, do you need any incremental investment if all of a suddenly, you know, the demand really increased in terms of e-commerce?

Robert Ottenstein: Do, do you need any incremental investment if all of a suddenly, you know, the demand really increased in terms of e-commerce?

Movement opportunity, but in a tailwind to what we projected were guidance perfect. Thank you.

Lance Mitchell: No, we don't use third-party sales. Everything's direct, and we're well set up from a logistics standpoint to service Amazon's locations and Walmart.com and the other e-channel participants across all of the warehousing.

Okay.

Thank you our next question comes from.

Robert.

Okay. Thanks.

Macquarie Your line is open.

Great. Thank you very much.

[Analyst] (Evercore): Terrific. Thank you.

Robert Ottenstein: Terrific. Thank you.

Two questions one.

Catherine: Thank you. Our next question comes from Nick Modi with RBC. Your line is open.

Operator: Thank you. Our next question comes from Nick Modi with RBC. Your line is open.

Looking at the guidance range given given that it doesn't include at this point my understanding is anything from.

[Analyst] (RBC): Yeah, thank you. Good morning, everyone. Just a couple questions. Lance, can you just talk about the timeframe in which, you know, you have to make decisions with your retailers regarding pricing? Just given the volatility that we're seeing in the commodities market, just wanted to get an understanding of the actual process. The second question is just on trade spend. How nimble can you be? I mean, if people are stockpiling, my sense is it probably doesn't make sense to promote. You know, how nimble can you be in terms of scaling back your trade spending, kind of reacting to situations like we're seeing right now?

Nick Modi: Yeah, thank you. Good morning, everyone. Just a couple questions. Lance, can you just talk about the timeframe in which, you know, you have to make decisions with your retailers regarding pricing? Just given the volatility that we're seeing in the commodities market, just wanted to get an understanding of the actual process.

Resin for changes in resin prices of the krona virus can you just kind of maybe outline a little bit you know some other factors as you thought about the range that would lead to the low end to the range or to the high end of the range. So that's the first question and then the second question.

Nick Modi: The second question is just on trade spend. How nimble can you be? I mean, if people are stockpiling, my sense is it probably doesn't make sense to promote. You know, how nimble can you be in terms of scaling back your trade spending, kind of reacting to situations like we're seeing right now?

Are you seeing any any kind of pick up at all signs a pick up in E. Commerce and are you prepared for that thank you very much.

Yes.

As it relates to underwriting Jan.

You know to hit the top end of our Ryan tools will need to see a combination of the following.

Lance Mitchell: you know, first, the, the first question, again, was related to what? Just could you repeat that for me, the first question? Was the-

No Revolution.

We see strong performance in revolution in the past on and Wonder if you hit a higher in a range you wanting to see cost savings that are in a range of $60 million to $70 million or above.

[Analyst] (RBC): Yeah.

Nick Modi: Yeah. Price and timing? decision-making process with... Yeah, with your retailers. Yeah. Just 'cause I know it's, it gets more complicated given their dual strategy.

Michael Graham: Price and timing?

[Analyst] (RBC): decision-making process with... Yeah, with your retailers.

Lance Mitchell: Yeah.

[Analyst] (RBC): Just 'cause I know it's, it gets more complicated given their dual strategy.

Lance Mitchell: Right. Typically, we, we have a 60-day notification period with most of our retailers regarding pricing. It can be on a case-by-case basis, a little shorter than that, but that is the typical timeframe from the time that we initiate pricing to when it, it gets implemented and that the retailer will accept the change. The second question?

Other things that can influence that is further decline.

In commodity rates more that can benefit us in a way that would benefit to that overall higher into the range and then obviously the execution of our growth tonnage initiatives that have been outline in a revolution strategy to drive topline growth and through successful launches of new products, all those could be variables that good.

Go our way and could influence the the overall own higher end of the range.

[Analyst] (RBC): On the trade spend.

Nick Modi: On the trade spend. Trade. Just how nimble you can be[crosstalk].

Lance Mitchell: Trade.

[Analyst] (RBC): Just how nimble you can be.

Lance Mitchell: Yeah, trade spending timing. Typically, we lock in the trade spending promotions at six-month increments. Our trade program is pretty locked in for the first six months looking out, and it's not as nimble as beyond that. We're pretty, we're pretty set in our trade.

The inverse of that would be these going the opposite direction.

And that would take us towards the lower end would rank.

And then Rob or to your question about E. Commerce, we continue to see strong year over year growth in that channel.

But if you're asking if its recent and driven by front a virus, we had not seen any substantive change, but again, it's fairly early days that that is a channel that we are well positioned for growth and should that channel shift occur, we're well positioned to be able to participate in that.

[Analyst] (RBC): Excellent. Then just one, one more quick one. On innovation, I mean, you know, during times like this when everyone is kind of in a state of flux, do you see retailers kind of behaving more conservatively on how much inventory they take of new product concepts, or, or is it really not a change?

Nick Modi: Excellent. Then just one, one more quick one. On innovation, I mean, you know, during times like this when everyone is kind of in a state of flux, do you see retailers kind of behaving more conservatively on how much inventory they take of new product concepts, or, or is it really not a change?

Do you need any incremental investment if all of us suddenly the demand really increased in terms of ecommerce.

Lance Mitchell: Really have not seen a significant change in that regard. You know, retailers are always welcoming the opportunity to introduce new products that would increase their sales and improve their retail. I'm, I'm proud to say that for 2019, we once again achieved more than 20% of our revenue from products that were less than three years old. We have a clear line of sight for 2020 to continue that trend.

No. We don't use third party sales everything's direct and we're well set up from a logistics standpoint to service Amazons locations and our other and Walmart Dot com and the other each channel participants across all of the warehousing terrific. Thank you.

Thank you and our next question comes from Nik Modi with RBC. Your line is open.

David Brown: Great. Thanks very much.

Nick Modi: Great. Thanks very much.

Yes. Thank you good morning, everyone. So just a couple of questions. We have can you just talk about the timeframe in which.

Catherine: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone and limit yourself to one question and one follow-up. Our next question comes from Kamil Garawalla with Credit Suisse. Your line is open.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone and limit yourself to one question and one follow-up. Our next question comes from Kamil Garawalla with Credit Suisse. Your line is open.

You have to make decisions with retailers regarding pricing just given the volatility, but we're seeing a commodity commodities market just wanted to get an understanding of the actual process and then the second question is just on plate spend how nimble can you be I mean, a tequilas stockpiling my sense is it probably doesn't make sense to promote.

[Analyst] (Credit Suisse): Hi, good morning. Welcome to the equity markets, everybody.

Kamil Garawalla: Hi, good morning. Welcome to the equity markets, everybody.

Lance Mitchell: Thank you.

[Analyst] (Credit Suisse): A couple of questions. One, if you could maybe, just educate us, given that you have private label and branded, if a recession were to occur, how would it impact your business? You know, perhaps if there is a trade down, then there might be a margin, something on margins we need to look at, or it could be that if looking at last recessions there, there isn't, there isn't that much of that because, private label consumer, you know, doesn't trade, you know, doesn't trade up or down, and the brand, it doesn't trade up or down either. So if you could maybe just walk us through, you know, recession impact. And then the second thing, it's a little hard for us to... Given some of the puts and takes on the year-over-year comp, it's hard to get a, a read on market share.

Kamil Garawalla: A couple of questions. One, if you could maybe, just educate us, given that you have private label and branded, if a recession were to occur, how would it impact your business? You know, perhaps if there is a trade down, then there might be a margin, something on margins we need to look at, or it could be that if looking at last recessions there, there isn't, there isn't that much of that because, private label consumer, you know, doesn't trade, you know, doesn't trade up or down, and the brand, it doesn't trade up or down either.

How nimble can you be in terms of scaling back.

Trade spending kind of it.

React in situations like we're seeing right now.

First the first question again was related to what this could you repeat that for me the first question.

Well, yes, the pricing timing, making process, but yes.

I was just because I know its gets more complicated giving the dual strategy.

Kamil Garawalla: So if you could maybe just walk us through, you know, recession impact. And then the second thing, it's a little hard for us to... Given some of the puts and takes on the year-over-year comp, it's hard to get a, a read on market share. If you could maybe give us just some highlights on how your market share trended in the quarter, that would be, that'd be useful.

Right. So typically we have a 60 day notification period with most of our retailers regarding pricing.

It can be on a case by case basis.

[Analyst] (Credit Suisse): If you could maybe give us just some highlights on how your market share trended in the quarter, that would be, that'd be useful.

A little shorter than that but that is the typical timeframe from the time that we initiate pricing to what does it give us.

Lance Mitchell: Sure. First of all, on the market share, over the last 52 weeks, we've seen some share gains in Hefty Slider bags, Reynolds Wrap, Hefty Waste bags, and Hefty cups. The significant majority of the rest of our products, we maintained our strong share positions, and the same trend has held in the last 12 weeks as well. Regarding recessionary commentary, you know, we're fortunate, and this company was formed about 10 years ago. We've not lived through a recession, but from a historical basis, we do know that these categories have been stable from a brand and store brand standpoint.

Implemented and that the retailer will accept the change.

The second question.

On the great and just yes reinventing timing.

Typically we locked into trade spending promotions at a six month increments.

So the new.

Our trade program was pretty locked in for the first six months looking out and it's not as nimble is.

Lance Mitchell: Regarding recessionary commentary, you know, we're fortunate, and this company was formed about 10 years ago. We've not lived through a recession, but from a historical basis, we do know that these categories have been stable from a brand and store brand standpoint.

Beyond that so we're pretty we're pretty set in our trade.

Excellent and then just one one more quick one on innovation I mean at during times like this when everyone is kind of in a state of flux do you see retailers kind of behaving more conservatively on how much inventory they take of new product concepts or or is it really not a change.

Lance Mitchell: While it's difficult to predict the future, and we don't have a, you know, a solid history to be able to go back and reference, we do believe because these categories are already well penetrated across brand and store brands from a, from a percentage standpoint, that they would remain stable as we go forward.

Really have not seen a significant change in that regard and retailers are always welcoming the opportunity to.

Introduce new products it would have increased their sales and improve.

[Analyst] (Credit Suisse): Okay, got it. Then just a quick one. I think you mentioned run rate CapEx at $80 million. You're obviously higher than that temporarily. It sounds like some of those investments end this year. That means then you're intending to go back to $80 million? Is that correct?

Kamil Garawalla: Okay, got it. Then just a quick one. I think you mentioned run rate CapEx at $80 million. You're obviously higher than that temporarily. It sounds like some of those investments end this year. That means then you're intending to go back to $80 million? Is that correct?

The retail.

I'm not I'm proud to say that for 2019, we once again achieved more than 20% of our revenue from products that were less than three years old. So we and we have a clear line of sight for 2020 to continue that trend.

Lance Mitchell: Yeah.

[Analyst] (Credit Suisse): Fair remark.

Kamil Garawalla: Fair remark.

Lance Mitchell: Yeah, so if you look at our overall history of CapEx, it's really averaged closer to around $70 million annually. This is kind of a good guide for a normalized CapEx spend. As I mentioned earlier, we're in a higher investment phase of capital right now. We expect that, you know, the trend towards that $70 million will happen after we exit 2020.

Great. Thanks very much.

Thank you and as a reminder, if you'd like to ask a question. Please press star one on your telephone and limit yourself to one question and one follow up.

Our next question comes from call Mill.

Hello.

With credit Suisse. Your line is open.

Hi, good morning.

Welcome to the equity markets everybody.

[Analyst] (Credit Suisse): Okay, got it. You'll trend back to 70 as opposed to-

Kamil Garawalla: Okay, got it. You'll trend back to 70 as opposed to-

A couple of questions Wonder if you could maybe.

Lance Mitchell: We'll trend back to 70 after 2020. That's it.

Just educate us given that you have private label in branded.

[Analyst] (Credit Suisse): Okay, got it. Thank you.

Kamil Garawalla: Okay, got it. Thank you.

If a recession were to occur.

How would it impact your business, perhaps if there is a trade down then there might be a margin something on margins, we need to look at or it could be then if looking at last recession scenario. There isn't there isn't that much of that because private label consumer.

Catherine: Thank you. We have a follow-up from Andrea Teixeira with JP Morgan. Your line is open.

Operator: Thank you. We have a follow-up from Andrea Teixeira with JP Morgan. Your line is open.

Doesn't trade doesn't trade up or down in the branded doesn't trade up or down either so you could maybe just walk us through recession impact.

Lance Mitchell: Andrea?

Catherine: Andrea, please, your line is open. Okay, I'm showing no further questions at this time. I'd like to turn the call back to management for any closing remarks.

Operator: Andrea, please, your line is open. Okay, I'm showing no further questions at this time. I'd like to turn the call back to management for any closing remarks.

And then second thing, it's a little hard for us to given some of the puts and takes on the year over year comp, it's hard to get to read on market share. So if you could maybe.

Give us just some highlights on how your market share trends within the quarter.

Lance Mitchell: Well, thank you, everyone. I appreciate your, your time, and we look forward to the next earnings call, which will be soon, because we're pretty late into this one because of the timing of the IPO. We look forward to the next earnings call and your participation.

Useful.

Sure.

So first of all in the market share over the last 52 weeks, we've seen some share gains in Hep B slider bags rentals rap hefty waste bags, and hefty cups and the significant majority of the rest of our products. We maintained our strong share positions in the same trends have held last 12 weeks well.

Catherine: This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

Okay.

Regarding recessionary.

Commentary.

Fortunately. This company is spent was formed about 10 years ago, we've not live through a recession.

But from a historical basis, we do know that.

Are these categories have been stable from a brand in store brand standpoint.

So while it's difficult to predict the future and we don't have a solid history to be able to go back in reference we do believe because these categories are already well penetrated across branded store brands from a from a percentage standpoint that they would remain stable as we go forward.

Okay.

Okay got it and then just a quick one thank you mentioned runrate capex that 80, you're obviously higher than that temporarily it sounds like.

Some of those investments and this year that means then you are intended to go back to 80 that.

Yes, so fared remark.

Yes. So if you look at overall history of Capex, it's really average caution around $70 million annually.

And this is kind of good done a guy for normalized capex spend but as I mentioned earlier, when they're higher investment phase of capital right now.

We expect that you know the trend toward that $70 million will happen after we exit 2020.

Okay got it seal trend back to 70 as opposed to a trend back to seven with after 2020.

[music].

Okay got it.

Thank you.

Okay.

Thank you.

We have a follow up from Andrea Teixeira with Jpmorgan. Your line is open.

Congrats.

Okay. Please your line is open.

Well.

Okay.

Okay Im showing no further questions at this time I'd like to turn the call back to management for any closing remarks.

Well. Thank you everyone I appreciate your time and we look forward to the next earnings call, which will be.

Soon because we're pretty late into this one because of timing. The IPO. So we look forward to does next earnings call and your participation.

Okay.

Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

[music].

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