Q1 2024 Reynolds Consumer Products Inc Earnings Call
Operator: Greetings and welcome to the Reynolds Consumer Products, Inc. first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Swartzberg, Vice President of Investor Relations. Thank you, sir. You may now begin. Thank you.
P DS and will come to their Reynolds consumer products, Inc. First quarter 'twenty 'twenty four earnings call.
This time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation. If anyone should require operator assistance trailing the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being weak pointed.
It is now my pleasure to introduce your host Mark Schwartzberg, Vice President of Investor Relations. Thank you. Sir you may now begin.
Mark David Swartzberg: Thank you, operator. Good morning, and thank you for joining us for Reynolds Consumer Products' first quarter earnings conference call. Please note that this call is being recorded and webcast on the investor relations section of our corporate website at ReynoldsConsumerProducts.com. Our earnings press release and presentation slides are also available. With me on the call today are Lance Mitchell, our President and Chief Executive Officer, and Scott Huckins, our Chief Financial Officer. During our call, Lance will review our business performance and the actions we are taking to continue leading our categories, followed by Scott, who will review our first quarter results and our outlook.
Mark David Swartzberg: Thank you operator, good morning, and thank you for joining us for Reynolds consumer Products' first quarter earnings Conference call.
Mark David Swartzberg: Please note that this call is being recorded and webcast on the Investor Relations section of our corporate website at Reynolds consumer products Dot com.
Mark David Swartzberg: Our earnings press release and presentation slides are also available.
Mark David Swartzberg: With me on the call today are Lance Mitchell, our President and Chief Executive Officer, and Scott Huckins, Our Chief Financial Officer.
Lance Mitchell: For our call and we'll review our business performance and the actions we are taking to continue leading our categories.
Scott E. Huckins: Followed by Scott, who will review, our first quarter results and our outlook.
Speaker Change: Following prepared remarks, we will open the call for your questions.
Mark David Swartzberg: Following prepared remarks, we will open the call for your questions. Before we begin, I would like to provide a couple of reminders. First, this morning's discussion may contain forward-looking statements based on current expectations and beliefs. These statements are subject to risks, uncertainties, and changes in circumstances that could cause actual results and outcomes to differ materially from those described today.
Speaker Change: Before we begin I would like to provide a couple of reminders first this mornings discussion may contain forward looking statements based on current expectations and beliefs. These.
Speaker Change: These statements are subject to risks uncertainties and changes in circumstances that could cause actual results and outcomes to differ materially from those described today.
Mark David Swartzberg: Please refer to the risk factors section in our SEC filings, including in our annual report on Form 10-K and our quarterly report on Form 10-Q. Please note the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after the call. Second, during today's call, we will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these GAAP to non-GAAP financial measures are available in our earnings press release, investor presentation deck, and Form 10-Q, copies of which can be found on the investor relations section of our website. Now, I'd like to turn the call over to Lance.
Speaker Change: Please refer to the risk factors section in our SEC filings, including in our annual report on Form 10-K, and our quarterly report on Form 10-Q.
Speaker Change: Note that the company does not intend to update or alter these forward looking statements to reflect events or circumstances arising after the call.
Speaker Change: Second during today's call, we will refer to certain non-GAAP or adjusted financial measures reconciliations.
Speaker Change: Reconciliations of these GAAP to non-GAAP financial measures are available in our earnings press release Investor presentation deck and Form 10-Q.
Speaker Change: Copies of which can be found on the Investor Relations section of our website.
Speaker Change: Now I would like to turn the call over to Lance. Thank you Mark and good morning, everyone.
Lance Mitchell: Thank you, Mark, and good morning, everyone. We're off to a strong start in 2024. We continued to lead our categories, delivering retail volume at the high end of our guide, which reflects the strength of our integrated brand and store brand business model. We continue to launch a robust line of innovative products, and our focus remains steadfast on offering sustainable alternatives across our product category. We're delivering results from our revolution program and continuing to develop further opportunities.
Lance Mitchell: We're off to a strong start in 2024, we continued to lead our categories delivering retail volumes at the high end of our guidance, which reflects the strength of our integrated brand and store brand business model.
Lance Mitchell: We continue to launch a robust lineup of innovative products and our focus remains steadfast on offering sustainable alternatives across our product categories.
Lance Mitchell: We are delivering results from our Revolution program and continue to develop further opportunities and we outperformed our first quarter guide delivering strong earnings growth.
Lance Mitchell: And we outperformed our first quarter guide, delivering strong earnings growth. We have a high level of confidence in our plans and actions that we're taking to lead our categories, drive earnings growth, and continue to increase our financial flexibility. Before I get into the specifics of each business, I'd like to first comment on the consumer bias.
Lance Mitchell: We have a high level of confidence in our plans and actions that we're taking to lead our categories drive earnings growth and continue to increase our financial flexibility.
Lance Mitchell: Before I get into the specifics of each business I'd like to first comment on the consumer environment.
Lance Mitchell: When we reported results in February, I spoke to volumes being under pressure across the consumer stable sector. During the quarter, demand was modestly better than expected in some of our categories, and share gains also contributed to our retail performance, reflecting the strength of our integrated business model. However, factors including reduced consumer savings, increasing credit card debt, continued inflationary pressure, and elevated interest rates continue to pressure consumption in our categories.
Lance Mitchell: When we reported results in February I spoke to volumes being under pressure across the consumer staples sector.
Lance Mitchell: During the quarter demand was modestly better than expected in some of our categories and share gains also contributed to our retail performance, reflecting the strength of our integrated business model, However, factors, including reduced consumer savings increasing credit card debt continued inflationary pressure and elevated inter.
Lance Mitchell: Rates continue to pressure consumption in our categories.
Lance Mitchell: In this context, we're not complacent. We entered the year expecting ongoing consumer pressure, and we're taking actions that we planned to drive our categories, our profitability, and additional financial flexibility. Our actions are wide-ranging and include the following. As category advisors, we are in ongoing dialogue with our retail partners and constantly evaluating and adjusting our joint plans to meet their needs and the needs of our consumers. We're investing in compelling and impactful omnichannel and multiproduct advertising.
Lance Mitchell: In this context, we're not complacent.
Lance Mitchell: We entered the year expecting ongoing consumer pressure and we're taking actions that we plan to drive our categories, our profitability and additional financial flexibility our actions are wide ranging and include the following.
Lance Mitchell: As category Advisors, we are in ongoing dialogue with our retail partners and constantly evaluating and adjusting our joint plans to meet their needs and the needs of our consumers.
Lance Mitchell: We're investing in compelling and impactful omnichannel and multi product advertising.
Lance Mitchell: And we're actively managing proven price. Tech and Architecture plans to drive volume in our category. Our innovation pipeline has been a key contributor to sourcing incremental volume and is as strong as it's ever been. We have a robust lineup of branded innovation, which recently received top ratings from a third-party review. For our Presto business, we will have more product launches in 2024 than any other year since RCP and Presto came together, and we're on track to offer sustainable solutions in every product line by 2025.
Lance Mitchell: We're actively managing proven price.
Lance Mitchell: Pack and architecture plans to drive volume in our categories.
Our innovation pipeline has been a key contributor to sourcing incremental volume and as strong as it's ever been.
Lance Mitchell: We have a robust lineup of branded innovation, which recently received top ratings from a third party review.
Lance Mitchell: For our prestige business, we will have more product launches in 2024 than any other year since RCP and Presto came together.
Lance Mitchell: And we're on track for offering sustainable solutions and every product line by 2025.
Lance Mitchell: Very excited about the innovations that we're bringing to the market.
Lance Mitchell: We're very excited about the innovations that we're bringing to the market. And we're driving productivity and revolution savings and procurement, manufacturing, supply chain, and other areas of our business as an additional lever for earnings growth and reinvestment back into the business. I'll now review our performance outlook by visit.
Lance Mitchell: And we're driving productivity and revolution savings in procurement manufacturing supply chain and other areas of our business as an additional lever for earnings growth and reinvestment back into the business.
Lance Mitchell: I will now review our performance outlook by business.
Lance Mitchell: The Reynolds cooking and baking business is performing very well, and we're building on the operational, commercial, and financial success that we experienced in the first quarter. Reynolds continued to grow its share in household foil or gain three share points in 2023, and we're driving significant growth in the rapidly expanding parchment paper category, which remains a focus area of innovation. Innovations such as Reynolds Kitchen State Flat Parchment are doing well, and we look forward to unveiling our plans for commercializing a number of new sustainable solutions across the portfolio in the future.
Lance Mitchell: The Reynolds cooking and baking business is performing very well and we're building on the operational commercial and financial success that we drove in the first quarter.
Lance Mitchell: Reynolds continued to grow share in household foil where gained three share points in 2023.
Lance Mitchell: And we're driving significant growth in the rapidly expanding partial pay per category, which remains a focus area of innovation.
Lance Mitchell: Innovations such as Reynolds kitchen statewide parchment are doing well and we look forward to unveiling our plans for commercialization of a number of new sustainable solutions across the portfolio in the future.
Lance Mitchell: We continue to recruit millennial and Gen Z consumers to our products and categories. As a part of our new Chefs Kiss marketing campaign targeting young cooks, we launched a multi-product advertising campaign with influencers, highlighting products in Reynolds' portfolio, which is amplified across digital and social channels.
Lance Mitchell: We continue to recruit millennials and Gen Z consumers to our products and categories.
Lance Mitchell: As a part of our new Chef's kits marketing campaign targeting young clubs, we launched a multi product advertising campaign with Influencers.
Lance Mitchell: Highlighting products in the rental portfolio, which is amplified in digital and social channels.
Lance Mitchell: As we reviewed on investor day, new processes and technologies are in place and proven to be very effective in supporting operational stability. Finally, Reynolds' position as the only vertically integrated aluminum foil manufacturer in the United States is a significant competitive advantage, providing us with a high level of control over quality, continuity of supply, and other attributes of our leading market position. Our hefty and presto waste and storage bag business continued to perform well in the first quarter, and we're executing comprehensive plans to drive further commercial and financial success.
Lance Mitchell: As we reviewed at our Investor day, new processes and technologies are in place and proven to be very effective in supporting operational stability.
Lance Mitchell: Finally.
Lance Mitchell: Reynolds position as the only vertically integrated aluminum foil manufacturer in the United States as a significant competitive advantage, providing us with a high level of control over quality continuity of supply and other attributes of our leading market position.
Lance Mitchell: Our hefty and Presto waste <unk> storage bag business continued to perform well in the first quarter and we are executing a comprehensive plans to drive further commercial and financial success.
Lance Mitchell: The quarter featured a number of commercial highlights, including Hefty's continued outperformance of our branded waste bags, sequential improvement in private label food bags, and continued strength from product innovation. Looking forward, we expect product innovation to remain a major source of volume. FD Fabulosa reached $180 million in annual retail sales over the last 12 months, and we expect further distribution gains for new scents and sizes. We're introducing new sustainable product solutions, including at the ultra strong coast. Coastal just began shipping and is made with 35% recovered materials, including 10% coastal material.
Lance Mitchell: The quarter featured a number of commercial highlights, including <unk> continued outperformance of our branded we expect sequential improvement in private label food bags and continued strength from product innovation.
Lance Mitchell: Looking forward, we expect product innovation to remain a major source of volume growth.
Lance Mitchell: <unk> reached $180 million in annual retail sales over the last 12 months and we expect further distribution gains from <unk> and sizes.
Lance Mitchell: We're introducing new sustainable product solutions, including <unk> Ultra strong coastal coastal just began shipping and meet with 35% recovered materials, including 10% coastal materials.
Lance Mitchell: And healthy.
Lance Mitchell: [inaudible] Press-to-close food bags are off to a strong start, leveraging the mid-to-another category. We're also innovating in store brands, including new composable sandwich bags and reformulated stretch-and-hold waste bags. We recently extended our contract with John Cena, who features in a new omni-channel campaign for hefty, ultra-strong trash bags and highlights strength that is anything but ordinary, with a number of new spots rolling out over the course of the year.
Lance Mitchell: For us to close through bags are off to a strong start.
Lance Mitchell: Leveraging the mid tier and other categories.
Lance Mitchell: We're also innovating in store brands, including new proposal sandwich bags, and reformulated stretch and hold waste bags.
Lance Mitchell: We recently extended our contract with John Cena through features and a new Omnichannel campaign for hefty ultra strong trash bags and highlights strength that is anything but ordinary with a number of new spots rolling out over the course of the year.
Lance Mitchell: Turning now to our disposable tabloid segment, our first quarter results demonstrated a moderation in volume declines from the second half of 2023. It's important to recognize that this entire category is impacted by price elasticity after a period of significant inflation and resulting prices. On the commercial front, we adjusted trade promotions in the quarter, and we've made progress on several initiatives, including lower pack counts at competitive price points, increases in cross-portfolio promotion, and expansion of multiple new products and distribution, including Hefty Ecosave, Hefty Compostable Printer Plates, and Hefty PDT Cups made with post-consumer recycled content, and we continue to migrate the category to more sustainable
Lance Mitchell: Turning now to our disposable February sideline, our first quarter results demonstrated a moderation in volume declines from the second half of 2023, it's important to recognize.
Lance Mitchell: That this entire category is impacted by price elasticity after a period of significant inflation and resulting price actions.
Lance Mitchell: On the commercial front, we adjusted trade promotions in the quarter and we made progress on several initiatives, including lower pack counts at competitive price points.
Lance Mitchell: Increases in cross portfolio promotion and expansion of multiple new products and distribution, including at the Eco say FTE can postal printing plates and Hefting PTT Cups made with post consumer recycled content.
Lance Mitchell: And we continue to migrate the category to more sustainable solutions.
Lance Mitchell: And despite the decline in revenue, profits were unchanged in the quarter. Before turning the call over to Scott, I'd like to reiterate that our business model is a competitive advantage, and we have the right team and plans in place to build on the momentum in the first quarter. The entire RCP organization remains committed to leading our categories and driving our, Scott, over to you. Thank you, Lance. Good morning, everyone.
Lance Mitchell: And despite the decline in revenue.
Lance Mitchell: <unk> were unchanged in the quarter.
Lance Mitchell: Before turning the call over to Scott I'd like to reiterate that our business model is a competitive advantage and we have the right team and plans in place to build on our momentum from the first quarter. The entire RCP organization remains committed to leading our categories and driving earnings growth Scott. Thank.
Scott E. Huckins: Thank you Lance good morning, everyone two.
Scott E. Huckins: 2024 is off to a strong start as our first quarter performance closely aligned with the objectives we outlined when introducing our full year 2024 guide in February. As a reminder, those objectives are driving retail volume at or above category performance and delivering double-digit earnings growth. Investing in our categories and product innovation; driving productivity, Discipline Cost Management, and Additional Revolution Cost Savings; and Generating Strong Free Cash Flow and Reducing Leverage. In totality, we delivered the first quarter we expected and are on track to deliver our guidance for 2020.
Scott E. Huckins: 2024 is off to a strong start as our first quarter performance closely aligned with the objectives, we outlined on introducing our full year 2024 guide in February.
Scott E. Huckins: As a reminder, those objectives are driving retail volume at or above category performance.
Scott E. Huckins: Delivering double digit earnings growth.
Scott E. Huckins: Investing in our categories and product innovation.
Scott E. Huckins: Driving productivity disciplined cost management and additional resolution cost savings.
Scott E. Huckins: And generating strong free cash flow and reducing leverage.
Scott E. Huckins: In totality, we delivered the first quarter, we expected and are on track to deliver our guide for 2024.
Scott E. Huckins: During the first quarter, we generated revenues, adjusted EBITDA, and earnings that surpassed the high end of our guide and continued to increase financial flexibility. First quarter retail revenues were $794 million, at the top end of our expectations, and $23 million below retail revenues in the year-ago period. After giving effect to 150 basis points of product portfolio optimization, our retail revenues outperformed our categories by approximately 50 basis points. Low-margin non-retail revenues declined to $39 million in the quarter, but they outperformed our expectations.
Scott E. Huckins: During the first quarter, we generated revenues adjusted EBITDA and earnings that surpassed the high end of our guide and continue to increase financial flexibility.
Scott E. Huckins: First quarter retail revenues are $794 million at the top end of our expectations and $23 million below retail revenues in the year ago period.
Scott E. Huckins: After giving effect to 150 basis points of product portfolio optimization.
Scott E. Huckins: Our retail revenues outperformed our categories by approximately 50 basis points.
Scott E. Huckins: Low margin non retail revenues declined to $39 million in the quarter.
Scott E. Huckins: Performed our expectations.
Scott E. Huckins: Adjusted EBITDA increased $40 million to $122 million, reflecting high teens or more earnings growth in three of our four businesses, driven by manufacturing output and lower operational costs. Earnings per share were $0.23, up significantly from $0.08 per share in the first quarter of 2023, reflecting even dog growth and lower interest expense from the significant reduction in debt in 2020. Operating cash flow of $99 million was a record for the first quarter, driving a reduction in net debt to 2.5 times trailing 12-month adjusted EBITDA and enabling an additional $50 million voluntary principal payment on our term loan facility subsequent to quarter S. Turning to our 2024 guide, our financial objectives remain simple and clear: Protect and Expand Market Share.
Scott E. Huckins: Adjusted EBITDA increased $40 million to $122 million.
Scott E. Huckins: <unk> high teens are more earnings growth in three of our four businesses driven by manufacturing output and lower operational costs.
Scott E. Huckins: Earnings per share were <unk> 23.
Scott E. Huckins: Up significantly from <unk> <unk> per share in the first quarter of 2023, reflecting EBITDA growth and lower interest expense and a significant reduction in debt in 2023.
Scott E. Huckins: Operating cash flow of $99 million was a record for the first quarter.
Scott E. Huckins: Any reduction of net debt to two five times trailing 12 month adjusted EBITDA.
Scott E. Huckins: And enabled an additional $50 million voluntary principal payment on our term loan facility subsequent to quarter end.
Scott E. Huckins: Turning to our 2024 guide our financial objectives remains simple and clear.
Scott E. Huckins: Protect and expand market share.
Scott E. Huckins: Drive earnings growth and continue to de-lever and increase financial flexibility. We continue to forecast 2024 net revenues in the range of $3,530,000,000 to $3,640,000,000 compared to net revenues of $3,756,000,000 in 2020. The elements of our guide are also unchanged, as follows.
Scott E. Huckins: <unk> earnings growth and continue to Delever and increase financial flexibility.
Scott E. Huckins: We continue to forecast 2024, net revenues in the range of $3 billion $530 million to $3 billion $640 million compared to net revenues of $3.756 billion in 2023.
Scott E. Huckins: The elements of our guide are also unchanged as follows.
Scott E. Huckins: We expect pricing to reduce revenue by approximately 1%, which includes certain contractual past. We expect retail volume to perform at or better than our categories at a rate of minus two to plus one percent. And we expect most of our anticipated decrease in net revenue to be driven by our low-margin, non-retail business and Optimization of our Retail Product Portfolio. We continue to forecast full year adjusted EBITDA within a range of $660,000.
Scott E. Huckins: We expect pricing to reduce revenue by approximately 1%, which included certain contractual pass throughs.
Scott E. Huckins: Expect retail volume to perform at or better than our categories at a rate of minus two to plus 1%.
Scott E. Huckins: And we expect most of our anticipated decrease in net revenues to be driven by our low margin non retail business and optimization of our retail product portfolio.
We continue to forecast full year adjusted EBITDA within a range of 616 $680 million on the basis of our revenue forecasts and margin expansion driven by improvements in product mix, the Reynolds cooking and baking recovery of historical earnings and.
Scott E. Huckins: 680 million on the basis of our revenue forecasts and margin expansion driven by improvements in product, The Reynolds Cooking and Baking Recovery of Historical Learnings, and the Delivery of Additional Revolution Cause Savings in All Four Businesses. And we are increasing our forecast of earnings per share by $0.05 per share, or approximately $10 million in net income, to a range of $1.62 to $1.70 per share, based on updated tax expectations for the second quarter and full year 2025.
Scott E. Huckins: The delivery of additional resolution cost savings and all four businesses.
Scott E. Huckins: And we are increasing our forecast of earnings per share by <unk> <unk> per share or approximately $10 million and net income to a range of $1 62 to $1 78 per share for updated tax expectations for the second quarter and full year 2024.
Scott E. Huckins: Other considerations for the full year forecast consist of commodity rates more stable than in recent years, SG&A unchanged compared to SG&A in 2023, and appreciation and amortization of approximately $120 million for the year. An interest expense is estimated to be $100 million for the year, in terms of each quarter's contribution to full-year earnings. In 2023, with the Reynolds cooking and baking business, executing a recovery plan. Quarterly Contributions of Earnings were not representative of historical faith.
Scott E. Huckins: Other considerations on our full year forecast consist of.
Scott E. Huckins: Commodity rates more stable than in recent years.
Scott E. Huckins: SG&A unchanged compared to SG&A in 2023.
Scott E. Huckins: Depreciation and amortization of approximately $120 million for the year.
Scott E. Huckins: And interest expense is estimated to be $100 million for the year.
Scott E. Huckins: In terms of each quarter's contribution to full year earnings and.
Scott E. Huckins: In 2023, with the Reynolds cooking and baking business executing our recovery plan.
Scott E. Huckins: Quarterly contributions of earnings were not representative of historical phasing.
Scott E. Huckins: In particular, we pointed out on our fourth quarter earnings call that Q4 2023 EBITDA was a record, which was in part driven by the anomaly in earnings contribution stemming from the recovery in cooking and baking last, in 2024. And as we mentioned on our fourth quarter 2023 earnings call, we see the quarterly contribution of earnings looking a lot more like it did prior to 20 for the second quarter. We expect revenues in a range of $875 million to $900 million versus second quarter 2023 revenues of $940 million consisting of an Unchanged Prize.
Scott E. Huckins: In particular, we pointed out on our fourth quarter earnings call that Q4, 2023, EBITDA was a record which was in part driven by the anomaly and earnings contribution stemming from the recovery and cooking and baking last year.
Scott E. Huckins: In 2024, and as we mentioned on our fourth quarter 2023 earnings call. We see the quarterly contribution of earnings looking a lot more like it did in prior to 2023.
Scott E. Huckins: For the second quarter.
Scott E. Huckins: We expect revenues in a range of $875 million to $900 million.
Scott E. Huckins: The second quarter of 2023 revenues of $940 million consisting of <unk>.
Scott E. Huckins: Unchanged pricing.
Scott E. Huckins: A 3.5 point to a 1.5 point reduction from retail volume at or better than category forecast and a three and a half point reduction from lower margin non-retail volume on the optimization of the retail product portfolio. We forecast second quarter adjusted EBITDA in a range of $160 to $170 million, representing a $10 to $20 million increase over second quarter 2023 adjusted EBITDA, and earnings per share in adjusted earnings per share in a range of 42 to 46 cents per share versus 32 cents per share in the year-ago period.
Scott E. Huckins: A <unk> five point to a one five point reduction from retail volume at or better than category forecasts.
Scott E. Huckins: And a three five point reduction from lower margin non retail volume and the optimization of the retail product portfolio.
Scott E. Huckins: We forecast second quarter adjusted EBITDA in a range of $160 million to $170 million, representing a $10 million to $20 million increase over second quarter 2023, adjusted EBITDA and.
Scott E. Huckins: And earnings per share and adjusted earnings per share in a range of 42 to <unk> 46 per share versus 32 per share in the year ago period.
Scott E. Huckins: The adjusted EPS forecast includes the tax benefit that I mentioned earlier. Now, before turning to cash flow and capital allocation, For those of you using Circana data, it is worth noting that in evaluating Circana's expansion of reported channels, we have compared our historical share trends on a Moodle Plus page to those on a Mooloo base and concluded that our share trends in Moolo Plus are similar to what they are on a Moolo beta. In capital allocation, our top priority remains the enhancement of financial flexibility through ongoing debt reduction. We continue to estimate free cash flow of over $300 million this year.
Scott E. Huckins: The adjusted EPS forecast includes the tax benefit that I mentioned earlier.
Scott E. Huckins: Now before turning to cash flow and capital allocation for those of you using sarcone of data and it's worth noting that in evaluating Sarcone is expansion of reported channels, we have compared our historical share trends on a month plus basis.
Scott E. Huckins: Those on a mobile basis and concluded that our share trends in Manila plus are similar to what they are on a molar basis on.
Scott E. Huckins: On capital allocation, our top priority remains the enhancement of financial flexibility through ongoing debt reduction.
Scott E. Huckins: We continue to estimate free cash flow of over $300 million this year.
Scott E. Huckins: As a result, we are tracking very well against our plan for leverage to be within our target range of two to two and a half times adjusted EBITDA at year end. Our other capital allocation priority, to invest in organic growth, automation, and other transformation costs, and to pursue targeted acquisitions consistent with our marketplace position and core competencies, is in place. Finally, on capital structure, I want to make note that we will file an amended shelf registration later today.
Scott E. Huckins: As a result, we are tracking very well against our plan for leverage to be within our target range of two to two five times adjusted EBITDA at year end.
Scott E. Huckins: Our other capital allocation priorities to invest in organic growth.
Scott E. Huckins: Automation and other resolution cost savings and pursue targeted acquisitions consistent with our marketplace position and core competencies are unchanged.
Scott E. Huckins: Finally on capital structure I want to make note that we will file an amended shelf registration later today.
Scott E. Huckins: As you know, these statements facilitate debt and equity offerings without stating the terms. While we do not have any specific plans for an offering, we will certainly update the market if that were to change. In closing, our first quarter results provided us with a strong start to 2024, and I am very pleased with our operational execution and balance sheet. Consumer pressures continue, as Lance noted, but we have the business model, the team, the plans, and the actions in motion to continue delivering on our financial objectives for the year and over the long term. With that, let's turn to your questions. Operator. Thank you.
Scott E. Huckins: As you know these statements facilitate debt and equity offerings without stating an intent.
Scott E. Huckins: While we do not have any specific plans for an offering we will certainly update the market if that were to change.
Scott E. Huckins: In closing our first quarter results provided us with a strong start to 2024 and I am very pleased with our operational execution and balance sheet discipline.
Scott E. Huckins: Consumer pressures continue as Lance noted that we have the business model the team the plans and the actions in motion to continue delivering on our financial objectives for the year and over the long term.
Speaker Change: With that let's turn to your questions operator.
Speaker Change: Okay.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by 1 on your cell phone keypad. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by 2. And if you're using a speakerphone, please lift the handset before pressing any key. Our first question comes from the line of Rob Ottenstein from Evercore. Please go ahead.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your telephone Keypad, you will hear you will hear a pump.
Speaker Change: <unk> has been raised.
Speaker Change: Should you wish to decline from the polling process. Please press star followed by two.
Speaker Change: And if you are using a speaker phone please lift the handset before pressing any keys.
Speaker Change: Our first question comes from the line of Rob <unk> from Evercore. Please go ahead.
Robert Edward Ottenstein: Great, thank you, and a good start to the year. Two questions... You mentioned a weakening consumer environment and some pressures on the business, potentially because of that. Can you talk about that point within the context of also the possibility, and I think we see it in a number of areas, of people going away from restaurants, which have gotten incredibly expensive, to at-home meals? And so that's an opportunity and kind of maybe how you can use that trend to offset the weaker consumer.
Rob: Great. Thank you and good start to the year.
Two questions.
Rob: You mentioned, a weakening consumer environment, and and and some pressures on the business potentially because of that can you talk about that point within the context of also the possibility and I think we see it in a number of areas of our people.
Rob: <unk> away from restaurants, which have gotten incredibly expensive to at home meals and so that's an opportunity and kind of maybe how you can use that trend to offset the weaker consumer. So that's question number one and then question number two.
Robert Edward Ottenstein: So that's question number one. And then question number two, when we met last, there was a lot of excitement about some of your new innovations; can you maybe talk about kind of the initial view of the incrementality of those innovations and whether you're getting incremental shelf space at Target and Walmart, and when does that hit? Is that in the market now, or is that more of kind of a June-July event?
Rob: When we met last a lot of excitement on some of your new innovations.
Rob: Can you maybe talk about kind of the initial view of the instrumentalities of those innovations.
Rob: And whether you're getting incremental shelf space at target and Walmart.
Rob: And when does that hit is that in the market now or is that more of kind of a June July event. Thank you.
Lance Mitchell: Thank you, Robert. Well, the macroeconomic environment, inflation remains a concern, and a number of factors that I outlined in my prepared remarks. The consumer continues to be price sensitive in this environment, and we're continuing to look for ways to provide them with value. You're absolutely right that with restaurant foot traffic, going back to home use, that that's a potential upside to a lot of our categories, particularly Reynolds cooking and baking.
Speaker Change: Thank you Robert.
Speaker Change: The macroeconomic environment and inflation remains a concern.
Speaker Change: Number of factors that I outlined in the prepared remarks the <unk>.
Speaker Change: <unk> continues to be price sensitive in this environment, we're continuing to look for ways to provide them with value.
Speaker Change: Youre, absolutely right that with.
Speaker Change: Restaurant foot traffic the way back to in home use that thats, a potential upside to a lot of our categories, particularly Reynolds cooking and baking.
Lance Mitchell: So, we have factored that in, but there could be some potential upside as we go forward. Of course, we'll stay very close to watching that. Regarding our innovations, we're very pleased with the distribution gains that we've achieved in a number of retailers, including the two that you noted. Those mods have dropped already. They are in stores, and we've got a number of our new innovations.
Speaker Change: So we have factored that in but it could be some potential upside as we go forward. We'll of course, we'll stay very close to watching that.
Speaker Change: Regarding our innovations, we're very pleased with the distribution gains that we've achieved in.
Speaker Change: A number of retailers, including the two that you.
Speaker Change: Noted.
Speaker Change: Those bonds have.
Speaker Change: <unk> already they are in in store.
Speaker Change: And we've we've got a number of our new innovations on the shelf, we will see how those perform and of course, we'll be reporting on that in the quarters ahead.
Speaker Change: Great. Thank you.
Speaker Change: Yeah.
Peter K. Grom: Our next question comes from the line of Peter Grom from UBS. Please go ahead.
Speaker Change: Our next question comes from the line of Peter <unk> from UBS. Please go ahead.
Peter K. Grom: Thanks, Operator. Good morning. I hope you're doing well.
Peter: Thanks, operator, good morning, Hope Youre doing well, maybe just one follow up to Robert's question I was wondering sure I heard that right did you say that.
Unknown Executive: Maybe just one follow-up to Robert's question. I just want to make sure I heard that right. But did you say that, you know, you are including some sort of assumption in terms of the shift from food away from home to food at home in your, in your, kind of, your projections for this year? That's just your first, or my first, question.
Peter: You are including some sort of assumption in terms of the shift in food away from home to food at home in your in your kind of your projections for this year I suppose your first my first.
Unknown Executive: And then I just wanted to, you know, ask about the commodity outlook. I know the guidance embeds an assumption for more stable rates, but we've started seeing an increase in spot rates across certain buckets. So maybe can you just help us understand what you're seeing across your commodity basket? And should inflation begin to move higher here? Can you talk about a plan of action, particularly to your point, to the point that the consumer, you know, appears to be under more pressure? Thanks. Morning, Peter. I'll take the first part of that. We have
Peter: Question, and then I just wanted to ask about the commodity outlook I know the guidance Embeds, an assumption for more stable rate, but we are starting to see an increase in spot rates across certain bucket. So maybe can you just help us understand what you are seeing across your commodity basket.
Showed inflation begin to move higher here can you talk about plan of action, particularly and to your point.
Peter: On the consumer.
Peter: To be more on under more pressure. Thanks.
Unknown Executive: We have factored modestly in our guide some restaurants moving back to in-home use, so that's particularly Reynolds Cooking and Baking is a modest uptick in Matt Consumption. And I'll turn the commodity question over to Scott. Yeah, good morning, and thanks for the question. So, we certainly have seen a modest uptick in a few of the commodity inputs, at least relative to the end of 2023. However, when we built the original guide and our current outlook, we did factor in a modest amount of increase in those costs, and we feel very comfortable that that's reflected in our outlook.
Unknown Executive: Good morning, Peter. I'll take the first part of that.
Speaker Change: Good morning, Peter I'll take the first part of that we have factored modestly in our guide some restaurant moving back to in home use. So that's particularly Reynolds cooking baking is modestly up uptick in AR.
And that consumption and I will turn the commodity question over to Scott.
Scott E. Huckins: Yes, good morning, and thanks for the question. So we certainly have seen a modest uptick in a few of the commodity inputs at least relative to the end of 2023. However, when we built the original guide in our in our current outlook, we did factor in a modest amount of increase.
Scott E. Huckins: And those costs and feel very comfortable that that's reflected in our outlook.
Scott E. Huckins: Okay.
Speaker Change: Great. Thanks, so much.
Mark Stiefel Astrachan: Our next question comes from the line of Mark Astrachan from Spifel. Please go ahead.
Speaker Change: Our next question comes from the line of Mark <unk> from Stifel. Please go ahead.
Unknown Executive: Hey, good morning, everybody. On market sharing category expectations, I want to make sure I understand it. So I think you said you outperformed your categories by 50 bps in the quarter. Your volumes were down three X the amount of retail. So your category is down three and a half, something like that. But I think the expectations for the year are still for the category to be down 2% in total. So could you just reconcile that? And I guess that just means you think it's going to get better through the year. Is that correct?
Mark David Swartzberg: Hey, good morning, everybody.
Mark David Swartzberg: Okay.
Mark David Swartzberg: <unk> market share in category expectations, I wanted to make sure I understand it so alright.
Mark David Swartzberg: Alright. Thank you said you outperform your categories by about 50 bps in the quarter.
Mark David Swartzberg:
Mark David Swartzberg: Your volumes were down three <unk> retail.
Mark David Swartzberg: <unk> is down three and a half something like that but I think the expectations for the year or still herb category to be down 2% in total so could you just reconcile that and I guess, that's it I mean do you think it's going to get better through the year is that correct.
Unknown Executive: I'll start with that and have Scott add on to it. That is correct, 2%. And I reinforce the fact that we aren't expecting an increase in category performance in the second half. Instead, I think the reconciling question you're asking is, retail revenues in the quarter were down three. Of those three, there was about a 150 basis point effect from product portfolio optimization for and called a net result of one and a half points of decline in a category down to that was the math behind the 50 basis point capture.
Speaker Change: I'll start with that and to have Scott add onto it that is correct 2%.
Scott E. Huckins: Reinforce the fact that we arent expecting an increase in category performance in the second half.
Scott E. Huckins: Yes, I think the reconciling the question you're asking is retail revenues in the quarter were down three.
Scott E. Huckins: Of that three that was about 150 basis point effect from product portfolio optimization for a call. It a net result of one five points of decline in a category down to that was the math behind the 50 basis point capture economy.
Unknown Executive: Got it. Okay, so that makes sense. Then it's a category effectively the same through the year, and you're just taking away the optimization piece. Okay, that makes sense. Okay, and maybe if we could drill down a little bit into market share progression by category, you know, just sort of report cards in the early part of the year, particularly given that Cnsmr seems to be a bit volatile sector to sector, that'd be helpful.
Speaker Change: Got it okay.
Speaker Change: That makes sense since the category effectively the same prudent theory here just taking away.
Speaker Change: Optimization piece okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: If we could drill down a little bit of market share progression by category just sort of.
Speaker Change: Report card and the early part of the year, particularly.
Speaker Change: Given the consumer and be a bit volatile sector to sector.
Unknown Executive: And then, just sort of related to that, any updates on Private Label? I know you talked a little bit about how you're thinking about that through the year, but any sort of move there again, sort of related to the category by category question, would be helpful too. Thank you. I'll start with the last question we didn't talk about.
Speaker Change: That'd be helpful and then just.
Speaker Change: Sort of related to that any update on private label I know you talked a little bit about.
Speaker Change: How youre thinking about that through the year, but any sort of move there.
Speaker Change: Again, it's sort of related to that category by category.
Speaker Change: Question would be helpful. Thank you.
Unknown Executive: I'll start with the last question. We can talk a little bit more about the [inaudible]. As far as the share gains go, I think we outlined that in the prepared remarks, particularly in the cooking and baking business, we had some share gains, continued share gains in oil. We continue to gain share in private label food bags. We've held share in the other. Got it. Thank you.
Speaker Change: I'll start with the last question, we can talk a little bit more about the.
Speaker Change: So the categories and the share.
Speaker Change: I believe it was for most part.
Speaker Change: Stable, we haven't seen any significant shift as a private label in our categories. We have seen some movement in some of the categories, but it was also factored into our guide.
Speaker Change: As far as this year share gains go I think we outlined out in the prepared remarks, particularly in.
Speaker Change: The cooking and baking business, we had some share.
Speaker Change: Share gains continued share gains in foil.
Speaker Change: We continued to gain share in private label food bags.
Speaker Change: We've held share in the other categories.
Speaker Change: Okay.
Speaker Change: Got it thank you.
Andrea Faria Teixeira: Again, if you would like to ask a question, please press star, then followed by the number one on your telephone keypad. Our next question comes from the line of Andrea Teixeira from JP Morgan. Please go ahead.
Speaker Change: And then if you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: Our next question comes from the line of Andrea <unk> from J P. Morgan. Please go ahead.
Andrea Faria Teixeira: Thank you, operator, and good morning, everyone. I hope you're all well.
Andrea: Thank you operator, and good morning, everyone I hope you're all well.
Andrea: Sue I wanted to go back to your comments about the last call. Some of the mind perspective of the price pack architecture that you viewed.
Andrea Faria Teixeira: Lance, I wanted to go back to your comments about the U.S. consumer, but more in the perspective of the price pack architecture that you viewed, I think, with more details at the analyst day. And just now, you mentioned FOIL, gaining share. But what has been the dynamic in trash bags?
Andrea: With more details at the analyst day.
Andrea: And just now you mentioned foil gaining share, but what has been the dynamic in trash bags. I think you brought in a lot more kind of a center that you are getting a lot more market share with <unk>.
Unknown Executive: I think you brought in a lot more kind of incentive that you're getting a lot more market share with Fabuloso. I was hoping to see if you could comment a little bit on the price pack architecture, perhaps, you know, diminishing accounts and seeing how you can be positioned for that consumer that might be that don't want to get out of your branded and go to your private label but perhaps, you know, stay in the brand.
Andrea: I was hoping to see if you can comment a little bit on the price pack architecture, perhaps diminishing.
Andrea: Count and see how you can be positioned for that.
Andrea: That goes through my that might be that don't want to get out of your branded and go to your private label, but but perhaps I stay in the brand and then a clarification on Scott's commentary on the shelf registration is that just for to potentially optimize your.
Unknown Executive: And then a clarification on Scott's commentary on the shelf registration. Is that just to potentially optimize your cost of doing that? Or is that any use of capital that you wanted to be prepared for in case you want to make an acquisition? Or is that anything related to your CapEx plans? Thank you.
Andrea: Your cost of that or is that any use of capital that you wanted to be prepared for in case, you want to make an acquisition or is that anything related to your capex plans. Thank you.
Unknown Executive: I'll certainly let Scott answer that second question. The first question on the price pack architecture is that it is primarily focused on the tableware business, as we talked about on investor day and I've talked about even in previous earnings calls. That category overall has really been impacted by inflationary pressures, and we're responding to that with a number of actions, some of which I outlined in our prepared remarks. But one of those is price pack architecture, making sure we get the counts right, and we get the price points correct.
Speaker Change: I'll certainly let Scott answer that second question. The first question on the price pack architectures that is primarily focused on the tableware business as we talked about at Investor Day, I've talked about even in previous earnings calls that category overall has really been impacted by inflationary pressures and we are responding.
Scott E. Huckins: Out of that with a number of actions some of which I outlined in our prepared remarks, but one of those is price pack architecture to make sure we get the accounts right and get the price point is correct and we are seeing.
Unknown Executive: And we are seeing improvement in that category and in our performance in that category. Again, we're both Brandon and store brand in that category and very pleased with the performance that we're seeing on both, from a sequential standpoint, but we're not done yet. We've got more work to do to ensure that we continue to grow that category and ensure our position grows within it as well. The other categories from a price pack architecture standpoint, we've already corrected. We're in a good position across our other categories in that regard, and the price points and the gaps with brand and private label, we're very pleased with.
Scott E. Huckins: The improvement in that category and our performance of the category again, we're both.
Scott E. Huckins: Brandon and store brand in that category and very pleased with the performance we're seeing on both.
Scott E. Huckins: From a sequential standpoint, but we're not done yet we've got more work to do to ensure that we continue to grow that category and ensure our position grows within it as well.
Scott E. Huckins: The other categories from our price pack architecture standpoint, we've got already corrected with we're in good position across our other categories in that regard and the price points and the gaps with brand and private label, we're very pleased with.
Unknown Executive: I'll turn it over to Scott for the question on the shelf. You bet. Good morning, Um, so I think my three points to make on the shelf are that the first is just a reminder that our near-term priority remains to pay down debt. I mean, it's important context for the question, and as we mentioned prepared remarks, the shelf itself is the normal administrative vehicle to facilitate potential debt and equity offerings, and I think the last point is, as you mentioned prepared remarks, we do not have current, Okay, thank you very much.
Scott E. Huckins: I'll turn it over to Scott for the question on the shelf you bet good morning.
Scott E. Huckins: I think by three points to make on the shelf. The first is just a reminder, that our near term priority remains to pay down debt I think thats important context for the question.
Scott E. Huckins: As we mentioned in prepared remarks, the shelf itself is the normal administrative vehicles facilitate potential debt and equity offerings and I think the last point is I think you mentioned in prepared remarks, we do not have current plans.
Speaker Change: Okay. Thank you very much.
Speaker Change: Yes.
Speaker Change: Okay.
Robert Edward Ottenstein: Our next question comes from the line of Rob Ottenstein from Evercore. Please go ahead.
Speaker Change: Our next question comes from the line of Rob <unk> Bernstein from Evercore. Please go ahead.
Robert Edward Ottenstein: Yeah, just two follow-ups. One, I think I know the answer to this, but are your service levels now kind of back to pre-COVID levels, or is there still work to be done on that score? And then second, can you talk a little bit about competitive activity? Is it rational? Are there any things in any particular categories that are worrisome?
Unknown Executive: Yeah, just two follow ups, one I think I know the answer to this but are your service levels now kind of back to pre COVID-19 levels or is there still work to be done on that on that score.
Unknown Executive: And then second can you talk a little bit about competitive activity is it rational or are there any things in any particular categories.
Speaker Change: <unk> that are that are worrisome. Thank you.
Unknown Executive: Thank you.
Speaker Change: Thank you Rob.
Speaker Change: First of all on the <unk>.
Speaker Change: Question of our service levels.
Unknown Executive: Thank you, Reb. First of all, on the question of our service levels... I see a report every day on our service levels, overall, and, of course, by product line, and we are back to the 98.5 that is our 95% case fill that we hold ourselves accountable to for our retail partners. So, yes, to your answer, your question on service, we are back. And the second question: yes, competitive activity is rational.
Speaker Change: Report every day at our service levels by overall and of course by product line and we are back to the 98 five that is our 98, 5% case fill.
Speaker Change: We hold ourselves accountable to for our retail partners. So yes to your answer to your question on service we are back.
Speaker Change: And the second question, yes competitive activity is rational we are seeing more promotions. We had planned for that that we are increasing our promotions as well and as surely as I mentioned, a moment yogurt, our price points correct, but what we had expected from a competitive environment standpoint is playing out to this point to be what we would.
Unknown Executive: We are seeing more promotion. We had planned for that, and we are increasing our promotions as well, and ensuring we, as I mentioned a moment ago, get our price points correct. But what we'd expected from a competitive environment standpoint is playing out to this point to be what we'd expect.
Speaker Change: <unk>.
Speaker Change: Great. Thank you.
Speaker Change: Okay.
Brian Christopher McNamara: Our next question comes from the line of Brian McNamara from Canaccord Genuity. Please go ahead.
Speaker Change: Our next question comes from the line of Brian Macnamara from Canaccord Genuity. Please go ahead.
Madison Callinan: Hi, this is Madison Callinan for Bryan. Thanks for taking our questions. It sounds like you're perhaps a little bit more cautious on the consumer relative to Q4. So what gives you the confidence to reiterate most of your guidance and what would you expect the major delta to be if results deviate materially, either positive or negative, from your current forecast? Thanks.
Speaker Change: Hi, This is Madison County on for Brian Thanks for taking our questions.
Madison County: It sounds like you're perhaps a little bit more cautious.
Madison County: Humor relative to Q4, so what gives me the confidence to reiterate most of your guidance and what would you expect the major delta to be if Brazil deviate materially either positive or negative from your current forecast.
Scott E. Huckins: It's Scott, I'll take it. So I take away on the state of the consumer, I think is largely unchanged, we pointed to those same dynamics about drivers of consumer behavior on the fourth quarter call in February, as we did, you know, here on this call, I think your second part of your question is what what might cause outperformance, what might cause underperformance, I'd say if, if we were to see, for instance, further escalation of inflation that had, you know, the trickle down effect of the consumer reducing demand, that would be, you know, quote, unquote, the downside case.
Madison County: Yes, it's Scott I'll take it so.
Scott E. Huckins: The takeaway on the state of the consumer I think is largely unchanged. We pointed to those same dynamics about drivers of consumer behavior on the fourth quarter call in February as we did here on this call I think your second part of your question is what might cause outperformance what might cause underperformed.
Scott E. Huckins: I would say is if we were to see for instance, further escalation of inflation that had the trickle down effect to the consumer reducing demand that would be quote unquote the downside case.
Scott E. Huckins: And similarly, if the marketplace conditions changed, and we actually had more success taking share, you know, the balance of the year, that would be the case for outperformance. But again, the state of the consumer, the point of view is unchanged.
Scott E. Huckins: Similarly, if the marketplace were unchanged and we are.
Scott E. Huckins: Actually had more success taking share in the balance of the year that would be the case for for outperformance, but again the state of the consumer the point of view is unchanged.
Unknown Executive: And secondly, we're just curious what innovation launches are outperforming or underperforming your internal expectations, and is that relative performance continuing to be contemplated in your updated guide?
Speaker Change: Great and secondly, where does.
Speaker Change: Just curious what innovation launches are outperforming or underperforming your internal expectations.
Speaker Change: And is that relative performance continuing contemplated in your updated guidance.
Unknown Executive: I think it is contemplated in the guide, but I think it's too early for us to declare victory on some of the innovations we've introduced. As I mentioned in a previous question, if we go throughout the year, we'll provide details on how innovation is performing on the ones that we've recently launched.
Speaker Change: I think the it is contemplated in the guide, but I think it's too early for us to declare a victory on some of the innovations we've introduced that as I mentioned in a previous question as we go throughout the year will provide details on how innovation is performing well.
Speaker Change: Ones that we've recently launched.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, guys.
Andrea Faria Teixeira: Our next question comes from the line of Andrea Teixeira from J.P. Morgan. Please go ahead. Thank you.
Speaker Change: Our next question comes from the line of Andrea <unk> from JP Morgan. Please go ahead.
Andrea Faria Teixeira: Thank you for the follow-up. I was just hoping you could comment a little bit more on the distribution gains. You mentioned in the prepared remarks about HEP TIFA Blues and also several of the tableware gains. I'm assuming with your guide you obviously have the adjustment for the contract manufacturing and the price concession there.
Andrea: Thank you for the follow up I was just hoping if you can comment a little bit more on the distribution gains you mentioned.
Andrea: The prepared remarks about half to Pablo and also several of the tableware gangs.
Speaker Change: I'm, assuming with your guide you obviously have.
Speaker Change: The adjustment for <unk>.
Andrea: On the contract manufacturing and the price concession there but.
Unknown Executive: But anything you can say about how we should be thinking into the fall and also for cooking and baking. And I appreciate when Scott you called out that you had a record fourth quarter and that we shouldn't be assuming that's going to be the same. So it's a different seasonality there. But just curious if you're planning to see some distribution gains in that category as well, or it's mostly on trash and on trash bags and on tableware. Thank you.
Andrea: But anything you can say about like how we should be thinking into.
Andrea: Into the fall and also for the cooking and baking and I. Appreciate when you when Scott you called out that you had a record fourth quarter that we shouldnt be assuming thats going to be the same so it's a different seasonality there, but just curious if you're planning to see.
Andrea: Some distribution gains into that category as well, it's mostly on traction on the trash bags on down the tableware. Thank you.
Unknown Executive: Andrea, the distribution gains are in several of our categories; I won't go into the details of those, but we are pleased with the modulars that have been set at our retail partners as we go in, and how those perform is yet to be determined. But the distribution gains are factored into our guide. Okay, great.
Andrea: Andrea.
Andrea: Distribution gains are.
Andrea: Several of our categories I won't go into the details of those but we are pleased with the modular is that had been set at our retail partners as we go in and how those perform are yet to be determined but the distribution gains are factored into our guide.
Unknown Executive: I think you also got at kind of the phasing or pacing of performance, and that was the intent of the prepared remarks that last year, if you just looked at the quarterly results, we had a low teens contribution of EBITDA to full year in the first quarter, and a high 30% contribution to EBITDA in the fourth quarter. In round numbers, those are about five points off. You would normally see high teens, just like we did relative to our full year guide contribution, and the fourth quarter would look like more or more like a low.
Speaker Change: Okay great.
Speaker Change: I think you also got at kind of the phasing or or pacing of performance in that that was the intent of the prepared remarks that.
Speaker Change: Last year, if you just looked at the quarterly results, we had a low teens contribution of EBITDA at a full year in the first quarter, our highest <unk> percent contribution to EBITDA in the fourth quarter in round numbers. Those are about five points off you would normally see a high teens, just just like we did relative to the first quarter to our full year.
Speaker Change: <unk> contribution in the fourth quarter would look like more are more like low thirty's.
Speaker Change: Yeah.
Unknown Executive: Great. I appreciate that. Thank you. I'll pass it on.
Speaker Change: Great I appreciate that thank you and I'll pass it on.
Jim Abbott: Again, if you would like to ask a question, please press star followed by one on your telephone keypad. Our next question comes from the line of Jim Pabbott from Mark.
Speaker Change: Again, if you would like to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: Our next question comes from the line of Jim <unk> from Barclays.
Jim Abbott: Hey, just a quick question on pricing. So it was flat in the first quarter and guided to flat in the second. But then the outlook for the full year calls right down one, so implying some, you know, pressure in the back half despite easier comps in the year-ago period. So any dynamics to be aware of on that or segments to call out with price and pressure? Thanks. Yeah, so no, there is no pricing pressure per se.
Jim: Hey, just a quick question on pricing.
Jim: So it was flat in the first quarter and guided to flat in the second.
Jim: But then the outlook for the full year calls for down one sort of implying some pressure in the back half despite easier comps in the year ago period.
Jim: So any dynamics to be aware of on that our segments to call out with pricing pressure.
Unknown Executive: Yeah, so no, no pricing pressure per se. You're right. So just to kind of reset, no change in price in Q1, no expected change in price in Q2, full year down one remains. It's more a function of pricing activity from last year than pricing pressure this year. That's probably the easiest way to think about it.
Speaker Change: So no no pricing pressure per se youre right, so just to kind of reset.
Speaker Change: No change in price in Q1, no expected change in price in Q2 full year down one remains it's more a function of pricing activity from last year than pricing pressure. This year, that's probably the easiest way to think about it.
Speaker Change: Got it thank you.
Operator: There are no further questions at this time. I would like to turn the call back to Mr. Lance Mitchell. Please go ahead. Well, thank you, operator.
Speaker Change: There are no further question at this time I would like to turn the call back to Mr. Lance Mitchell. Please go ahead.
Lance Mitchell: Well, thank you, operator, and thank you, everyone, for your time today. On behalf of everyone at Reynolds Consumer Products, we appreciate your interest in our business.
Lance Mitchell: Well, thank you operator, and thank you everyone for your time today.
Lance Mitchell: Behalf of everyone at Reynolds consumer products. We appreciate your interest in our business stay safe take care. Thank you.
Lance Mitchell: Stay safe. Take care. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: [noise].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.