Reynolds Consumer Products Inc. (NASDAQ: REYN) reported Q1 EPS of $0.36, in-line with the analyst estimate of $0.36. Revenue for the quarter came in at $757 million versus the consensus estimate of $764.41 million.

First Quarter 2021 Highlights

• Net Revenues of $757 million, up 4% over Q1 prior year net revenues
• Net Income of $74 million; Adjusted Net Income of $76 million
• Earnings Per Share of $0.35; Adjusted Earnings Per Share of $0.36
• Adjusted EBITDA of $140 million, up 4% over Q1 prior year Adjusted EBITDA

“We delivered another quarter of strong top-line and bottom-line growth as the strength of our brands and continued momentum in our business enabled us to navigate the headwinds from February storms and unprecedented commodity cost increases,” said Lance Mitchell, President and Chief Executive Officer. “We are increasing our forecast for even stronger topline growth over the balance of the year, reflecting planned additional price increases, increasing consumption, innovation, and replenishment at retail. Our first quarter results and rest of the year revenue forecast demonstrate RCP’s business model for sustained growth.”

GUIDANCE:

Reynolds Consumer Products Inc. sees Q2 2021 EPS of $0.36-$0.39, versus the consensus of $0.36.

Reynolds Consumer Products Inc. sees FY2021 EPS of $1.83-$1.94, versus the consensus of $2.00.

The Company is updating its previously-disclosed outlook.

Building on strong first quarter net revenue growth and pricing actions, the Company is increasing its full year revenue outlook, expecting high single digit revenue growth underpinned by anticipated continued elevated consumption, innovation, retail replenishment, and pricing.

The Company is facing estimated in-year cost pressures exceeding $300 million from increases in commodity and logistics rates, compounded by global supply chain challenges. Price increases have been implemented and a second round is underway, with planning for a third round to be implemented in the third quarter.

On an annualized basis, aggregated pricing actions are expected to cover the increases in input costs, but the Company is lowering expected full year earnings to reflect the short-term implications of pricing in an environment when costs are still increasing. As we anticipate pricing to catch up to increased input costs through the rest of the year, margins are expected to expand sequentially in the third and fourth quarters.

The Company now expects the following results for its fiscal year ending December 31, 2021:

• Net revenues to grow high single digits on $3,263 million in the prior year
• Net Income to be in the range of $372 million to $395 million; Adjusted Net Income to be in the range of $384 million to $407 million
• Earnings Per Share to be in the range of $1.77 to $1.88 per share; Adjusted Earnings Per Share to be in the range of $1.83 to $1.94 per share
• Adjusted EBITDA to be in the range of $670 million to $700 million
• Net Debt to be approximately $1.8 billion at December 31, 2021

With additional price increases going into effect during the second quarter, the Company is expecting high single digit revenue growth in its second quarter.

Despite the expected revenue growth over the prior year quarter, the Company expects short-term earnings pressure in the second quarter, reflecting increases in commodity and logistics costs that precede price increases as well as continuing impacts from February’s storms.

The Company expects the following results for its second quarter ending June 30, 2021:

• Net revenues to grow high single digits on $822 million in the prior year
• Net Income to be in the range of $73 million to $80 million; Adjusted Net Income to be in the range of $76 million to $83 million
• Earnings Per Share to be in the range of $0.35 to $0.38 per share; Adjusted Earnings Per Share to be in the range of $0.36 to $0.39 per share
• Adjusted EBITDA to be in the range of $140 million to $150 million

“We expect 2021 to be another year of record net revenues and volume and are using all available tools, including additional pricing and expanded Reyvolution cost savings, in our plans to offset increased commodity, logistics and related costs,” said Michael Graham, Chief Financial Officer. “Our first round of price increases went into effect as planned, and a second round is underway with plans for a third round in the third quarter. However, there is a difference between the impact of recent cost increases and the timing of related price increases. We therefore expect considerable margin pressure in the second quarter, followed by sequential margin improvement in the third and fourth quarters as higher prices go into effect.”

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