Q3 2025 Reynolds Consumer Products Inc Earnings Call
Speaker #1: Greetings and welcome to the Reynolds Consumer Products Inc. Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Speaker #1: 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 .
Speaker #1: As a reminder , this conference is being recorded . It is now my pleasure to introduce your host , Mark Swartzberg Vice President of Investor Relations .
Speaker #1: Thank you . Sir , you may begin .
Speaker #2: Thank you, Operator. Good morning, and thank you for joining us for Reynolds Consumer Products Inc.'s third quarter earnings conference call.
Speaker #2: Please note that this call is being webcast on the Investor Relations section of our corporate site at Reynolds Consumer Products Inc. Our earnings press release and investor deck are also available.
Speaker #2: With me on the call today . Are Scott Huckins . Our President and Chief Executive Officer . And Nathan Lowe , our chief Financial officer .
Speaker #2: Following prepared remarks , we will open the call for a brief question and answer session . Before we begin , I would like to remind you that this morning's discussion will contain forward looking statements which are subject to risks , uncertainties and changes in circumstances that could cause actual results and outcomes to differ materially from those described today .
Speaker #2: Please refer to the Risk Factors section in our SEC filings . The company does not intend to update or alter these forward looking statements to reflect events or circumstances arising after the call .
Speaker #2: During today's call , we will refer to certain non-GAAP or adjusted financial measures . Reconciliations of GAAP to non-GAAP financial measures are available in our earnings press release .
Speaker #2: Investor presentation deck , and Form 10-q , which can be found on the Investor Relations section of our site . Now , I'd like to turn the call over to Scott .
Speaker #3: Thank you . Mark , and good morning , everyone . I am pleased with our latest results and how we are performing in what continues to be a challenging environment .
Speaker #3: As we review the third quarter, we achieved strong retail performance, gaining market share overall and in the vast majority of our categories.
Speaker #3: We demonstrated increased agility in effectiveness in managing profitability . Additionally , we successfully advanced long term initiatives that enhance our value , including our strength as a US centric business .
Speaker #3: I will review our performance in these initiatives before turning the call over to Nathan . For more on the quarter and our guide .
Speaker #3: Our retail share increases were driven by multiple business units and product lines . These include hefty waste bags , hefty party cups , Reynolds Wrap , Reynolds Kitchen parchment products and store brand food bags .
Speaker #3: We are pleased by the breadth and depth of the share gains , demonstrating that both our products and our execution are winning in the marketplace .
Speaker #3: In terms of pricing, the increases in aluminum foil that we talked about on the Q2 call were implemented according to plan.
Speaker #3: Reynolds wrap volume outperformed the category in the third quarter , and reflected our position as the US's only vertically integrated foil manufacturer . This performance was driven by several factors , including the brand's strong equity and reduced price gaps compared to store brand foil , offering consumers a compelling value proposition .
Speaker #3: The combination of share gains and pricing actions across the portfolio , together with continued cost discipline delivered improved results in all four business units in the quarter .
Speaker #3: In terms of cost discipline , we are making progress managing manufacturing , supply chain and SG&A costs while continuing to drive our categories and gain market share .
Speaker #3: Turning to the environment , the operating environment remains challenging with low and middle income consumers under continued pressure and retailers facing cost inflation , especially from overseas suppliers subject to tariffs .
Speaker #3: This backdrop presents both opportunities and risks in terms of risks , this environment can lead to more transactional relationships between suppliers and retailers for example , our leadership in store brands could result in a customer shifting part of their business to another supplier .
Speaker #3: However , this also presents a huge opportunity we can leverage our category leadership while working to become an even more valued supplier by reducing product costs and inefficiencies in our supply chain .
Speaker #3: Our strong US centric manufacturing footprint and supply chain remain a source of advantage , especially in this climate of economic and trade uncertainty .
Speaker #3: Our new Chief Commercial Officer, Karlyn Hooker, has hit the ground running and is leading growth programs to further drive share category by category at each of our major customers.
Speaker #3: There are multiple components of her team's work, including the improvements in revenue, growth, management processes, and tools that I mentioned last quarter.
Speaker #3: These improvements benefited performance in multiple channels in the quarter , and we are continuing the shift to higher return programs . This holiday season and beyond .
Speaker #3: Household foil is an important category for us , and an example of where the implementation of these tools contributed to solid category performance in the quarter .
Speaker #3: Reynolds Wrap retail sales were up 7% , similar to the category with volumes of point better than the categories minus 1% . As I mentioned , price caps to store brands also narrowed in the quarter , creating a constructive backdrop , further benefiting volume performance .
Speaker #3: As you would expect , we are monitoring aluminum costs in Foil dynamics very closely and will continue adjusting our pricing and promotional plans to advance the category in our business .
Speaker #3: Our innovation is another competitive advantage and we are strengthening our ability to convert consumer insights into products that drive their categories . Reynolds Wrap Fun Foil is expanding distribution for the holidays and performing strongly online , creating new usage occasions by responding to consumers appetite for customization and variety .
Speaker #3: The Reynolds brand also continues to drive transformation in the rapidly growing parchment segment. Sakana recently recognized Reynolds Kitchens Air Fryer Liners as a 2025 New Product Pacesetter for our record of growth and strong alignment with consumer trends.
Speaker #3: Further , our newest parchment innovations . Reynolds Kitchens Air Fryer Cups and parchment cooking bags , recently earned additional e-comm and mass distribution gains .
Speaker #3: Our other flagship brand , Hefty , is a nearly $2 billion brand that might be best known for its waste bag momentum . However , Hefti's growth potential extends far beyond waste .
Speaker #3: Its positioning as a brand that is both strong and dependable is consistent with our 80-count Halloween party cups, which were recently introduced in mass and are doing well.
Speaker #3: Velocities for new hefty , eco safe , compostable cutlery introduced in club and mass earlier this year continued to be very encouraging and hefty .
Speaker #3: Remains very strong in waste bags . Leading scented waste bag segment , which is driving the more than $4 billion waste bag category .
Speaker #3: The hefty Fabuloso combination of brands immediately resonated with consumers when it began four years ago, including the opportunity to build on the two brands' strong shopper loyalty.
Speaker #3: Today, the hefty Fabuloso portfolio continues to drive the waste bag category as more and more consumers find that they love a waste bag associated with strength that they can trust.
Speaker #3: Our newest line , Hefty Fabuloso Watermelon , has achieved ACV of over 50 , less than a year after launch , and is especially popular with Gen Z consumers who love it not only for its scent , but also for its fun hot pink color .
Speaker #3: Our innovation is not limited to Reynolds and Hefty either . We are winning in multiple other categories as well . Notably , our store brand food bag business is gaining significant market share , driven by the increased distribution of new products in the club channel .
Speaker #3: In fact , all of the growth in the food bag category was driven by RCP supplied products in the quarter . These new products are performing well because they offer consumers strength , reliability and product features at a retail price that represents strong consumer value .
Speaker #3: Turning to profitability , as I touched on earlier , I am pleased to report that we are driving out manufacturing and supply chain costs .
Speaker #3: We have been making progress on manufacturing productivity since the start of the year , and are now moving to the next leg of that journey that involves leaning more heavily on technology .
Speaker #3: The expansion of lean principles and automation throughout our operations to lead us in that work . We recently hired Scott Vale as chief operations officer .
Speaker #3: Scott is responsible for the implementation of our manufacturing initiatives across our entire organization . In partnership with our business unit teams . He comes to us from Anheuser-Busch InBev and ball Corporation , where he led similar operational initiatives .
Speaker #3: In closing , we are operating with increased agility , outperforming our categories and driving improved financial results . We are also making RCP even stronger by driving out manufacturing and supply chain costs , positioning us as an even more important supplier to our additional value for our shareholders .
Speaker #3: Nathan , over to you .
Speaker #4: Thank you , Scott , and good morning , everyone . I am pleased to review our third quarter performance , which demonstrates our effectiveness driving results as revenue exceeded our expectations and earnings was at the upper end of our guide .
Speaker #4: Third quarter net revenues were $931 million , an increase of more than 2% from $910 million in the year ago period . Retail revenue of $864 million increased 1% by comparison to retail revenue in the third quarter of 2024 , and our retail volume grew 1% , excluding foam products .
Speaker #4: As Scott mentioned , we increased share in multiple categories , and our pricing actions have been executed as planned . Our non-retail revenues also increased 13 million to 67 million in the quarter .
Speaker #4: In terms of profit, each of our business units grew EBITDA in the quarter, and consolidated adjusted EBITDA was $168 million, compared to $171 million in the year-ago period. This reflects improved results in all operating segments and the timing of corporate expenses in the prior year.
Speaker #4: Adjusted EPs was $0.42 versus $0.41 in the year ago period , reflecting lower interest costs and tax initiatives . Third quarter 2020 adjusted EPs excludes $0.04 of strategic investments in revenue growth and operational cost savings initiatives , as well as CEO transition costs .
Speaker #4: Before turning to the guide , there are a few points I want to highlight regarding gross profit , G&A and performance in our tableware business .
Speaker #4: Gross profit was down 6 million versus the year ago period , but to a much lesser extent than in the second quarter , with increased alignment between pricing and input costs driving sequential improvement .
Speaker #4: As a reminder , implemented and in-flight pricing is designed to fully recover commodity and tariff impacts . Cigna was similar to the second quarter levels and down $29 million year to date , reflecting changes we have implemented to lower our cost base and create a more agile organization .
Speaker #4: And our tableware business grew . EBITDA in the quarter . In contrast to tableware sales volumes , which were down 13% , demonstrating increasing success .
Speaker #4: Driving profitability in this business . As we tailor strategies for managing the various parts of the portfolio differently , looking ahead , we are pleased to increase our revenue and adjusted EPs guides for the year , reflecting confidence in our retail trends and the programs we are implementing to drive near and longer term results .
Speaker #4: As a result , for the full year , we now expect net revenues to be flat to down 1% by comparison to 2024 .
Speaker #4: Net revenues of 3.7 billion . Adjusted EBITDA of 655 million to 665 million , and adjusted EPs of $1.60 to $1.64 . Key features of our expectations include the following .
Speaker #4: Retail volume , performance in line with or better than our categories . Pricing representing full recovery of increased commodity and tariff costs . Non-retail revenue contributing one point of growth for the year .
Speaker #4: Early flow through of productivity gains from the various strategic initiatives we have been working on , and continued discipline in all areas of controllable costs , including SG&A , our full year expectations for adjusted EBITDA and adjusted EPs exclude debt refinancing costs recognized in the first quarter and approximately 40 million of pre-tax costs to execute strategic initiatives and CEO transition costs in the fourth quarter .
Speaker #4: We expect net revenues to be down 1 to 5% by comparison to the fourth quarter 2020 . Four , net revenues of 1,021,000,000 , including an assumption of flat , non-retail revenues .
Speaker #4: We expect adjusted EBITDA to be between $208 million and $218 million. By comparison, for the fourth quarter of 2020, we reported adjusted EBITDA of $213 million. Additionally, we expect Q4 adjusted EPS to be in a range of $0.56 to $0.60, versus $0.58 in the year-ago period.
Speaker #4: Turning to cash flow and capital allocation . Subsequent to quarter end , we made a voluntary principle payment of $50 million on our term loan facility .
Speaker #4: The elimination of relatively high cost interest expense generates an attractive return . In addition to the other attractive capital allocation options for us , we continue to be inside our target leverage range of 2 to 2 and a half times EBITDA , positioning us well to continue investing against our pipeline of capital investment opportunities .
Speaker #4: We still anticipate an approximately 30 to $40 million increase in capital spending for the year , as we invest in high return projects to support growth , drive margin and deliver a more robust earnings model .
Speaker #4: Much of this investment is in support of growth. The manufacturing initiatives Scott mentioned and the accelerated onshoring of production are reducing the already small portion of our business, not self.
Speaker #4: And we have multiple in-flight programs across our business that are driving productivity and cost improvements that require no additional capital for implementation. In closing, we head into the holiday season driving our categories and pulling all levers to drive earnings in a dynamic operating environment.
Speaker #4: In addition, we are investing in the business and remain on track, implementing programs that unlock even more of RCP's long-term growth and earnings potential.
Speaker #4: With that, let's open the floor for your questions. Operator.
Speaker #1: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .
Speaker #1: A confirmation tone will indicate that your line is in the question queue. You may press *2 if you would like to remove your question from the queue.
Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that analysts limit themselves to one question and a follow-up so that others have an opportunity to ask questions as well.
Speaker #1: One moment please . While we poll for questions . Our first question comes from Kaumil Gajrawala with Jefferies . Please proceed with your question .
Speaker #1: Kamal , are you there ?
Speaker #2: Maria , maybe we go to Robert and come back . Perfect .
Speaker #5: Having a problem with his line ?
Speaker #1: Okay , perfect . Oh , come on . Are you there now ? Okay , we will move over to Rob Stein with Evercore ISI .
Speaker #1: Please proceed with your question .
Speaker #6: Great . Thank you very much . So I was wondering if you can kind of give us , you know , a sense of , you know , how you see the set up for the , you know , important holiday season , you know , both in terms of the promo intensity we're seeing increases in promos in many categories .
Speaker #6: And I think your promos are starting to tick up a little bit in a couple of areas. So do you see that continuing?
Speaker #6: So I'd love to get the sense of , you know , the promo intensity . Will that continue . And then on the other hand , how how is the consumer ?
Speaker #6: How do you see the consumer developing into the holidays ? You know , affordability is an issue . You mentioned , you know , stress on middle and lower income areas , sections of the the population .
Speaker #6: How are you playing into that ? And do you think that that can drive , you know , growth over last year . So that's that's my first question .
Speaker #6: And then, as a follow-up, I also wanted to ask you. You mentioned in the call that you saw a risk that retailers could shift store brands to other suppliers.
Speaker #6: Just wanted to understand , you know , why you flagged that ? Is there something that , you know , looks like it's in the works and how are you dealing with that ?
Speaker #6: Thanks .
Speaker #3: Good morning , Robert Scott . Thanks for , I guess , the series of questions . I'll try to take them . I think , in the order that you asked .
Speaker #3: So I think on the topic of , of promo intensity , there's really two categories in our portfolio that we see away from us , a degree of increased promotional activity in those two categories would be waste bags and food bags .
Speaker #3: When when we think about though , our level of promotional intensity in each of those categories , there really in line meaning they look a lot like our overall level of promotion , which in turn looks a lot like the level of promotion we've seen pre-pandemic .
Speaker #3: And I think results are important , right ? Which is , as we look at waste bags , you look at hefty branded waste bags year to date retail takeaways are plus nine , outperforming the category in the quarter by ten points .
Speaker #3: If you look at food bag performance, you can see on the Presto segment volume growth of 9%. So I would say we feel pretty good about our ability to navigate the promotional environment.
Speaker #3: Second question I think is around the state of the consumer . And I go back to this is to remind , I think when we initiated the the 2025 guide , we talked about , we felt a consumer that was challenged in under pressure .
Speaker #3: That remains to be the case . You know , a couple of bullet points there . I think that that will help put some dimension to that .
Speaker #3: You know , as we as we think about elements of the economy , we still see inflation in that sort of 3% zone above the Fed's target of two .
Speaker #3: So, generally not helpful or ideal. Number two, we also see the labor market cooling a bit. Unemployment levels are in the low fours.
Speaker #3: But I think the most important one, as we see it, would be consumer sentiment. You know, yet again, a move three or four points down in terms of confidence in the month of September. October came out last night, down again a point.
Speaker #3: But the takeaway there to me is we're double digits down year to date heading into the holidays . So we remain of the view that consumers are under pressure .
Speaker #3: I think the question you asked then is, how is the business prepared to respond to that? And I think it's a bit of a barbell.
Speaker #3: So more affluent consumers will tend to be brand shoppers and brand loyalists . We certainly have formidable brands that that address those sets of consumer needs .
Speaker #3: The lower income demographics will tend to be more value oriented , potentially more store , brand focused . Our portfolio has got a fulsome offering .
Speaker #3: Their and feel good about our ability to serve . If you like both , both parts of the barbell , I think the last question was about flagging what's happening in store brands or or activity there .
Speaker #3: The reason for bringing that up is in a climate where you've got, you know, general challenges in the economy, uncertainty in supply chains from all the tariff activity.
Speaker #3: You know , we would certainly expect to see a step up in in retailer bid activity for private brands , business , as those retailers are trying to drive value for their consumers in an effort to take , share .
Speaker #3: And so we expect to see that environment . But I'd say , having said all of that , as a as a US centric manufacturer , we would certainly expect to win more than we lose .
Speaker #3: But we thought it was important to flag as we see that evolution.
Speaker #6: Thank you very much .
Speaker #1: Our next question comes from Kamil with Jefferies. Please proceed with your question.
Speaker #7: Sorry about that . Earlier . Guys . So I guess you you're doing some hiring , you're making some changes in terms of operational capabilities .
Speaker #7: Can you maybe just talk about what the sort of grand plan is related to , does that maybe tick up with the long term algorithm ?
Speaker #7: Should be . Is it more about share gain ? Is it more about category growth ? Just some of the things that you talked about very specifically in your prepared remarks , can you just talk about the where it should , what impact that should have on the on the business going forward ?
Speaker #3: Sure . Good . Good morning . Camille . So a couple of thoughts . We certainly added some some key executives that the team really , if you think of it from a PNL landscape perspective , you know , a new chief commercial officer , Carolyn Hooker , who comes to us with an extensive background of building growth programs .
Speaker #3: And I mentioned in prepared remarks the addition of Scott Vail as chief operations officer . So I'll just stay with those two . What what those are designed to do .
Speaker #3: If you go back to the beginning of the year , we talked about initiatives across the business , one , to drive growth .
Speaker #3: And just as a reminder , what we're after , there is three things prioritized innovation . Two , the implementation of revenue growth management tools , which we commented on in prepared remarks .
Speaker #3: And then three , our opportunity to drive additional share at the at the customer by customer and product level . Then on the cost side , we've talked about driving manufacturing and supply chain costs out of the business .
Speaker #3: And so what we see in Scott is additional veteran leadership who has experience driving results in partnership with our business units . Over time .
Speaker #3: So , so really just think of that as key talent being added to the organization , mapped specifically against the initiatives . We talked about at the beginning of the year .
Speaker #7: Thank you .
Speaker #1: Our next question comes from Lauren Lieberman with Barclays . Please proceed with your question .
Speaker #8: Great . Thanks . Good morning . Wanted to I guess first just ask about tableware . So , you know , down probably more than we expected , but more importantly , just line of sight to stabilization .
Speaker #8: Where are we now ? On how large or how small foam is and how should we maybe think about it ? Look more broadly , say , over the next 12 months , do we get to a point where it has less of a weight on on the overall company performance ?
Speaker #3: Yeah , you bet . Good . Good morning . Let me start . So , you know , tableware definitely down in the quarter .
Speaker #3: Maybe put some dimension to it . About 80% of the decline would have been a function of the foam headwinds , which we'll come back to in a moment .
Speaker #3: 20% of function of non foam declines . And on that second point in the non foam part of the portfolio , more a reminder that nearly two thirds of the use occasions in disposable tableware are really convenience .
Speaker #3: And probably more discretionary . Certainly than the portfolio . Take it as a whole . Having said all of that , we're very pleased , frankly , with how Ryan and that team have managed the business , because if you look at the profit metric , despite the volumes being down low double digits , profits actually increased about 10% .
Speaker #3: So I think I think we're managing that quite effectively in terms of foresight . Not not a ton to add this year . Certainly stands to be greater headwinds than one would reasonably think about in foam for next year .
Speaker #3: More a function of the state of California as an example , where comping all year long this year not selling foam versus obviously a very large state in the US economy where you did sell foam in the previous year .
Speaker #3: So I think the takeaway would be we would generally see foam being a lesser degree of headwind next year, and I'm very pleased about how we're managing the business from a profit standpoint.
Speaker #1: Our next question comes from Andria Teixeira with JPMorgan Chase. Please proceed with your question.
Speaker #9: Thank you . Operator and good morning , everyone . My question is more on the hefty waste and storage . I mean , definitely impressive numbers on the volume side .
Speaker #9: And I guess year to date , you're pretty much profitability . And it's impressive also because that's the highest profitability you have among all the four divisions .
Speaker #9: It's slightly down , but I was hoping to see if I mean , obviously function of the , you know , of your .
Speaker #9: REM . And promo , most likely . And correct me if I'm wrong , but also the fact that you've been gaining distribution .
Speaker #9: So I was hoping to see if you can give us a little bit more of a detail on the promo impact . And also how to think about like when you're going to have those distribution gains or if you are hoping to see more of those as you go into 2026 .
Speaker #9: Thank you .
Speaker #10: You bet .
Speaker #3: Good morning Andrea , thanks for the question . So
Speaker #3: , you know , I it's a think from a promo environment standpoint , we certainly have seen competitors in the category step up a level of promo intensity .
Speaker #3: We feel as though ours are very much in line . I was I was mentioning a moment ago that with our level of promotional activity really looks a lot like the rest of the company .
Speaker #3: And in turn , what we've seen pre-pandemic . So . So what that tells us is ultimately products and execution are really driving that business .
Speaker #3: You commented on the plus nine year-to-date. I think that'd be pretty good evidence of both the products resonating from insights with consumers and that our supply chain team has done an outstanding job keeping those products in stock.
Speaker #3: I mean , we we . Are consistently running in high 90s in terms of case flow rates for our customers . So I think those are really , you know , the the ingredients for success , you know , not a lot to offer for , for next year other than , you know , we continue , as I've said before , we're going to continue to our financial and human resources against innovation .
Speaker #3: That has some some size and durability . And I think if you looked at the hefty waste and storage , you know , portfolio , certainly scented waste bags have have been winning in the marketplace .
Speaker #9: And that's super helpful . If I can just follow up to that , ask . Obviously , your private label is huge in that segment .
Speaker #9: Can you comment on how you spoke before about the barbell? It's pretty much a good representation of what the consumer is right now.
Speaker #9: But if you talk about like how your position yourself into that consumer that needs a higher value product , especially your largest client , if you can kind of give us a state of the union , how that consumer has been behaving .
Speaker #9: And if you're taking any pricing to offset anything , I'm assuming you did not . On the entry level . But just curious how how you balancing that part of the portfolio , both the high end obviously with the fragrance lad fabulous on the on the bags on the higher end bags , but also on how to protect the value for the entry level .
Speaker #3: Sure . What's interesting , and this is probably a good comment for the company , you know , taken as a whole , you know , we we operate in very , very stable categories .
Speaker #3: And so we generally do not see much movement in the mix between brands and store brands . Taken as a whole , meaning in any given period you might see a 1 or 2 point , you change in either direction .
Speaker #3: Interestingly enough , the the sales mix in waste bags is really quite , quite static . Said differently , there's not a pronounced change in the brand store brand mix , so I think with that at least tells us is , you know , the brand loyalists continue to increasing degree by the hefty items by definition , looking at the at the plus five volume growth in the segment overall , that must also mean that we're doing a pretty good job .
Speaker #3: You know , satisfying that private label consumer . .
Speaker #9: Great . Thank you so much for president .
Speaker #10: Thank you .
Speaker #1: Our next question comes from Peter Graham with UBS. Please proceed with your question.
Speaker #11: Thanks . Operator and good morning , everyone . So two for me , first , just a follow up on the promotional commentary .
Speaker #11: Your response to Andreas and Robert's questions was helpful , but we're starting to hear or heard from some larger food companies , including one last night that the return on kind of these promotions are not in line with what we've seen or what they've seen historically .
Speaker #11: So I know you feel good about your performance , but I'm curious if you're seeing a similar dynamic in the categories where you compete .
Speaker #10: I guess not not a ton to offer .
Speaker #3: , but but all I can really say to that is we have certainly spent a lot of this year , as I , as I think you're aware , really investing in building out a more robust rjm our revenue growth management capability , which which by design really is about migrating trade or investment , promotional dollars to their highest valued use .
Speaker #3: I wouldn't really call out anything positive or negative in terms of kind of structural characteristics , about about trade effectiveness . For example , I would more say our focus remains on ensuring that those dollars are optimally deployed at both the product level and customer level .
Speaker #11: Okay . That's helpful . And then a follow up just on gross margin and maybe just some perspective on what you're seeing from a cost tariff standpoint .
Speaker #11: I think back in the summer , you contemplated a 2 to 4 point headwind from commodities and tariffs . So is that still the case as we sit here today ?
Speaker #11: And then just the commentary on the gradual recovery as we as we move through the year , as pricing begins to flow through .
Speaker #11: So how should we thinking about fourth quarter gross margin and maybe specifically , how does it how does that exit rate inform our view of looking out to 26 ?
Speaker #4: Okay , a few questions there . Good morning . So let's start with the pricing . So I'd say 2 to 4 points is still a good estimate .
Speaker #4: Both both of the cost headwinds from commodities and tariffs . So both the cost and the price side to the four points is a good estimate .
Speaker #4: That was a full year estimate . As you look at the third quarter , there's roughly four points of pricing . So that would tell you that we're and year to date , two points .
Speaker #4: So we're right in the inside that range as expected . And with all of the pricing intended to fully offset those cost headwinds , we don't get into specifics around gross profit or EBITDA from a guidance perspective .
Speaker #4: But certainly , we're pleased with the progression of gross profit from quarter to quarter this year . And would expect some continuation of that .
Speaker #4: Really happy with how how earnings is starting to inflect as the guide would be the strongest EBITDA performance for quarterly performance for the year .
Speaker #4: And really happy with the progress we're making on the various strategic initiatives . So we'll of course be back in in February to tell you more about that and what it means for 26 .
Speaker #11: Great . Thank you so much . I'll pass it on .
Speaker #1: As a reminder , if you'd like to make a ask a question , please press Star Zero on your telephone keypad . Our next question comes from Brian McNair with Canaccord Genuity .
Speaker #1: You are trained on data up to October 2023.
Speaker #12: Good morning guys . Thanks for taking the questions . So my first one is kind of a three for one , but it all ties into the same theme here as it relates to consumer behavior .
Speaker #12: So hefty waste and storage continues to do well . I know innovation is helping there , but how much is the typical lower price point in some of the categories ?
Speaker #12: There relative to your primary branded competitor ? Help in this environment . Second , Presto had its best quarter for volume growth . I think since 2020 .
Speaker #12: I know you mentioned share gains across store branded bags , but does that also reflect store branded share gains from branded bags as a whole ?
Speaker #12: As consumers trade down and then finally restaurants continue to seize traffic decline . So why wouldn't we be seeing better volume growth in Reynolds cooking and baking ?
Speaker #12: Acknowledging your outperforming there . Thanks .
Speaker #3: Yeah , good . Good morning Brian . Thank you for the questions . I guess the first one is really around the waste bag category .
Speaker #3: And and what I think your question is really around what what's driving the success there . And I think it's two two constructs .
Speaker #3: The first certainly innovation has been a large part of that business for many years . And we are enjoying that today , as I think I mentioned in prepared remarks , and I think certainly the second would be really we represent the performance brand .
Speaker #3: So certainly a performance brand , I think in this climate , especially , is probably , you know , a solid place to be in that part of the marketplace in terms of Presto , thank you .
Speaker #3: The team will enjoy those comments . You're right . There's you significant growth in the quarter , nine points of of volume . No , no question .
Speaker #3: There were some some shear wins in the the food bank category from from both other store brand players as well as And I think the Y is around that team has had a very , very efficient or has been very efficient at designing , really premium quality bags that that yet are brands .
Speaker #3: be priced at retail in a fashion that offers considerable consumer value . And I think that that strategy continues to win in the marketplace , as evidenced by the plus nine .
Speaker #3: I think the last question you asked about is , is , is consumer behavior with respect to dining out versus at home and how that might interact with the Reynolds cooking and baking business unit ?
Speaker #3: I'd say there's probably some modest tailwinds from incremental cooking at home . I think that'd be a fair . A fair assessment . And I think would probably has a bit of an offsetting effect to that , though , is increasing prices in the marketplace , reflecting the run up in aluminum .
Speaker #3: I'd say there's probably some modest tailwinds from incremental cooking at home . I think that'd be a fair . A fair assessment . And I think able to precise about that .
Speaker #3: But I think those are the two forces competing against each other .
Speaker #12: That's helpful . Scott , you laid out a new strategy in February . You know , with new work streams with dedicated leaders , processes , resources to go after incremental growth and ROI .
Speaker #12: You've also operated in a very difficult environment , to say the least , this year . So I'm curious , where is the company today relative to where you thought it would be on those initiatives ?
Speaker #12: And what should give investors confidence that these will bear fruit as we finish 2025 and go into 2026 ?
Speaker #3: Yeah , very much appreciate the question . We are feeling really good about the progress that we're making . You know , obviously as we started the year , you know , a lot has changed in the year from a macro climate as everybody on this call is well aware .
Speaker #3: So , you know , we've we've been put to the test I think to to execute in a pretty in a pretty challenging environment .
Speaker #3: But I think the direct answer is we're really seeing , you know , Carlin in , in our commercial part of the business or the front end of the business , really hitting stride .
Speaker #3: And it's been off to a very fast start . You know , both in leading . The our GM initiatives , but also what we refer to as as share gap selling .
Speaker #3: Again where we may have share of x percent in a category , but that's not necessarily true of every retailer . And so putting programs in place to drive against those , you know , very pleased with , with with that progress .
Speaker #3: And then the second on costs , I think whether you look at Cogs or SG&A , again , I feel like we're right on schedule with the progress that we're making .
Speaker #3: And as you heard a few minutes ago, we are also investing in Portland talent to drive those initiatives forward. So I'd say we're about where we had hoped to be.
Speaker #3: And we're certainly seeing the effects starting to flow through the P&L.
Speaker #12: Great . Thanks very much . I'll pass it on .
Speaker #13: Thank you .
Speaker #1: We reached the end of our question and answer session . I would now like to turn the floor back over to Scott for closing comments .
Speaker #3: Thank you, operator, and certainly thank you to our analysts and investors for your interest in our business. I'd also like to pass on our appreciation for our 6,400 teammates.
Speaker #3: As we we continue to do the work to unlock additional value for the company . And with that , we share with you a great day .