Reynolds Consumer Products Inc. (REYN) Bundle
Understanding Reynolds Consumer Products Inc. (REYN) Revenue Streams
Understanding Reynolds Consumer Products Inc.’s Revenue Streams
Reynolds Consumer Products Inc. generates revenue through various product segments. The primary revenue sources include:
- Reynolds Cooking & Baking: $873 million (2024) vs. $916 million (2023), a decrease of 5%.
- Hefty Waste & Storage: $715 million (2024) vs. $705 million (2023), an increase of 1%.
- Hefty Tableware: $667 million (2024) vs. $708 million (2023), a decrease of 6%.
- Presto Products: $443 million (2024) vs. $441 million (2023), an increase of 0.5%.
| Segment | 2024 Revenue (in millions) | 2023 Revenue (in millions) | Change (in millions) | Percentage Change |
|---|---|---|---|---|
| Reynolds Cooking & Baking | $873 | $916 | $(43) | (5%) |
| Hefty Waste & Storage | $715 | $705 | $10 | 1% |
| Hefty Tableware | $667 | $708 | $(41) | (6%) |
| Presto Products | $443 | $441 | $2 | 0.5% |
| Total Revenue | $2,675 | $2,750 | $(75) | (3%) |
The overall revenue for the nine months ended September 30, 2024, was $2,675 million, a decrease of 3% from $2,750 million in 2023. This decline was primarily attributed to lower volumes across the retail and non-retail businesses.
Additionally, the year-over-year revenue growth rate shows:
- 2024: Total net revenues decreased by $75 million or 3%.
- 2023: Total net revenues were $2,750 million.
Each segment's contribution to overall revenue is as follows:
- Cooking & Baking: 32.6%
- Waste & Storage: 26.7%
- Tableware: 24.9%
- Presto Products: 16.5%
Significant changes in revenue streams include:
- Hefty Tableware: Experienced a 6% decline due to lower volume and pricing pressures.
- Hefty Waste & Storage: Saw a 1% increase driven by higher pricing.
Overall, the company faced challenges in maintaining revenue levels, primarily due to volume declines in key segments, offset by some pricing power in others. The performance of each segment illustrates a mixed revenue environment as of 2024.
A Deep Dive into Reynolds Consumer Products Inc. (REYN) Profitability
Profitability Metrics
Analyzing the profitability metrics of Reynolds Consumer Products Inc. sheds light on its financial health as of 2024. The key figures include gross profit, operating profit, and net profit margins, which are crucial for investors assessing the company's performance.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the company reported:
| Metric | 2024 | 2023 | Change | % Change |
|---|---|---|---|---|
| Net Revenues | $910 million | $935 million | $(25) million | (3%) |
| Cost of Sales | $(671) million | $(686) million | $15 million | 2% |
| Gross Profit | $239 million | $249 million | $(10) million | (4%) |
| Gross Margin | 26% | 27% | (1%) | (3.7%) |
| Income from Operations | $138 million | $134 million | $4 million | 3% |
| Net Income | $86 million | $78 million | $8 million | 10% |
| Net Profit Margin | 9% | 8% | 1% | 12.5% |
In the nine months ended September 30, 2024, the company reported:
| Metric | 2024 | 2023 | Change | % Change |
|---|---|---|---|---|
| Net Revenues | $2,675 million | $2,750 million | $(75) million | (3%) |
| Cost of Sales | $(1,977) million | $(2,117) million | $140 million | 7% |
| Gross Profit | $698 million | $633 million | $65 million | 10% |
| Gross Margin | 26% | 23% | 3% | 13% |
| Income from Operations | $369 million | $306 million | $63 million | 21% |
| Net Income | $231 million | $161 million | $70 million | 43% |
| Net Profit Margin | 9% | 6% | 3% | 50% |
Trends in Profitability Over Time
Over the past year, the company has shown a positive trend in profitability metrics. The gross profit margin has improved from 23% to 26% in the nine months ended September 30, 2024, indicating better cost management and operational efficiency. Furthermore, net income has increased by 43%, signaling strong financial performance despite a slight decrease in net revenues.
Comparison of Profitability Ratios with Industry Averages
The profitability ratios of Reynolds Consumer Products Inc. are competitive within the consumer goods industry. The net profit margin of 9% is in line with the industry average, which typically ranges from 8% to 10% for similar companies. The gross margin of 26% also compares favorably against the industry average of 25%.
Analysis of Operational Efficiency
Operational efficiency remains a focal point for the company. The reduction in cost of sales by 7% in the nine months ended September 30, 2024, has significantly contributed to higher gross profit. Selling, general, and administrative expenses increased marginally by 1%, indicating effective cost management strategies. The adjusted EBITDA for the nine months increased by 17% to $465 million, exemplifying the company's ability to manage costs effectively while maintaining revenue generation.
Debt vs. Equity: How Reynolds Consumer Products Inc. (REYN) Finances Its Growth
Debt vs. Equity: How Reynolds Consumer Products Inc. Finances Its Growth
Long-term Debt: As of September 30, 2024, the company reported long-term debt of $1,735 million.
Short-term Debt: The short-term debt is included in current liabilities, with total current liabilities amounting to $543 million.
Debt-to-Equity Ratio: The debt-to-equity ratio stands at approximately 0.84, calculated by dividing total liabilities of $2,778 million by total stockholders' equity of $2,065 million.
Industry Comparison: The average debt-to-equity ratio in the consumer products industry is typically around 0.75, indicating that Reynolds Consumer Products maintains a slightly higher leverage than its peers.
Recent Debt Issuances: The company amended its debt facilities, replacing an undrawn $250 million revolving facility with a $700 million facility maturing in October 2029.
Credit Ratings: As of the latest reports, the company maintains a credit rating of B1 from Moody's, reflecting stable financial health but also highlighting some level of risk.
Refinancing Activity: The company engaged in refinancing activities that included a voluntary principal payment of $50 million on its Term Loan Facility.
Balance of Debt Financing and Equity Funding: The company has effectively balanced its financing structure, utilizing both debt and equity. The equity raised through stock-based compensation has amounted to approximately $1,409 million in additional paid-in capital as of September 30, 2024.
| Financial Metrics | Amount (in millions) |
|---|---|
| Long-term Debt | $1,735 |
| Short-term Debt | Included in current liabilities |
| Total Current Liabilities | $543 |
| Total Liabilities | $2,778 |
| Total Stockholders' Equity | $2,065 |
| Debt-to-Equity Ratio | 0.84 |
| Revolving Facility Amount | $700 |
| Credit Rating | B1 |
| Additional Paid-in Capital | $1,409 |
Assessing Reynolds Consumer Products Inc. (REYN) Liquidity
Assessing Reynolds Consumer Products Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.80, calculated from current assets of $1,034 million and current liabilities of $574 million.
Quick Ratio: The quick ratio was 1.10, derived from quick assets totaling $740 million and current liabilities of $574 million.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was $460 million, reflecting a decrease from $492 million at the end of 2023. This trend highlights a tightening of liquidity, primarily due to increased investment in inventory.
Cash Flow Statements Overview
The following table summarizes the cash flows for the nine months ended September 30, 2024, and 2023:
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net cash provided by operating activities | $307 | $423 |
| Net cash used in investing activities | ($79) | ($77) |
| Net cash used in financing activities | ($247) | ($260) |
| Decrease in cash and cash equivalents | ($19) | $86 |
Cash provided by operating activities decreased by $116 million in 2024 compared to 2023, primarily due to higher net investment in inventory and increased income tax payments.
Potential Liquidity Concerns or Strengths
Despite a strong current ratio, the notable decrease in cash provided by operating activities raises potential liquidity concerns. The decrease in cash flow from operations suggests challenges in maintaining sufficient liquid assets to cover short-term obligations. Additionally, the company has $1,745 million in outstanding long-term debt as of September 30, 2024, which may constrain future liquidity if cash flow trends do not improve.
The company maintains a revolving credit facility of $700 million, with no outstanding borrowings as of September 30, 2024, providing a buffer against liquidity pressures. However, the reliance on external financing could become a concern if operational cash flows continue to decline.
Is Reynolds Consumer Products Inc. (REYN) Overvalued or Undervalued?
Valuation Analysis
To assess whether Reynolds Consumer Products Inc. is overvalued or undervalued, we will examine key financial ratios and metrics including the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 16.5, which is below the industry average of 19.2, indicating that the company may be undervalued compared to its peers.
Price-to-Book (P/B) Ratio
The P/B ratio is currently at 2.1, slightly above the industry average of 1.9. This suggests that the stock is trading at a premium relative to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 10.3, compared to the industry average of 11.5, indicating a potentially favorable valuation.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $22.10 and a high of $28.75. As of the latest closing price, it is at $24.50, representing a 10% decline from its peak.
Dividend Yield and Payout Ratios
The current dividend yield is 3.8%, with a payout ratio of 40%. This reflects a stable dividend policy while retaining sufficient earnings for growth.
Analyst Consensus on Stock Valuation
Analyst consensus is currently a Hold, with 40% of analysts recommending a Buy, 50% a Hold, and 10% a Sell rating.
| Metric | Value | Industry Average |
|---|---|---|
| P/E Ratio | 16.5 | 19.2 |
| P/B Ratio | 2.1 | 1.9 |
| EV/EBITDA Ratio | 10.3 | 11.5 |
| 12-Month Low | $22.10 | |
| 12-Month High | $28.75 | |
| Current Stock Price | $24.50 | |
| Dividend Yield | 3.8% | |
| Payout Ratio | 40% | |
| Analyst Consensus | Hold |
Key Risks Facing Reynolds Consumer Products Inc. (REYN)
Key Risks Facing Reynolds Consumer Products Inc.
Overview of Internal and External Risks:
Reynolds Consumer Products Inc. faces several risks that can impact its financial health, including:
- Industry Competition: The consumer products market is highly competitive, with numerous players vying for market share, which can lead to price wars and reduced margins.
- Regulatory Changes: Changes in regulations related to packaging, waste management, and consumer safety could result in increased operational costs and compliance burdens.
- Market Conditions: Economic downturns or shifts in consumer preferences can adversely affect demand for the company’s products.
Operational, Financial, or Strategic Risks:
Recent earnings reports have highlighted specific operational and financial risks:
- Revenue Decrease: Total net revenues decreased by $75 million, or 3%, to $2,675 million for the nine months ended September 30, 2024.
- Cost of Sales: Cost of sales decreased by $140 million, or 7%, to $1,977 million, driven by lower material and manufacturing costs.
- Interest Expense: Interest expense, net decreased by $15 million, or 16%, to $76 million, due to a lower outstanding principal balance on external debt.
Mitigation Strategies:
The company has implemented various strategies to mitigate risks, including:
- Cost Management: Focus on reducing material and manufacturing costs to enhance margins.
- Diverse Product Portfolio: Maintaining a mix of branded and store-brand products to cater to different market segments and reduce dependency on any single category.
- Debt Management: Voluntary principal payments on the Term Loan Facility to manage debt levels effectively.
| Risk Factor | Description | Impact (2024) |
|---|---|---|
| Revenue Decrease | Total net revenues decreased by $75 million, or 3%. | $2,675 million |
| Cost of Sales | Cost of sales decreased by $140 million, or 7%. | $1,977 million |
| Interest Expense | Interest expense, net decreased by $15 million, or 16%. | $76 million |
| Net Cash from Operating Activities | Net cash provided by operating activities decreased by $116 million. | $307 million |
Future Growth Prospects for Reynolds Consumer Products Inc. (REYN)
Growth Opportunities
Future growth prospects for Reynolds Consumer Products Inc. are driven by several key factors including product innovations, market expansions, strategic partnerships, and competitive advantages.
Key Growth Drivers
- Product Innovations: The company has a strong focus on innovation, particularly in its Presto Products segment, which offers store brand products in food storage, trash bags, and reusable containers. In 2024, the segment's net revenues reached $443 million, reflecting a slight increase from $441 million in 2023.
- Market Expansions: The company maintains a presence in 95% of U.S. households, positioning it well for market penetration. Its Hefty Waste & Storage division reported net revenues of $715 million, a 1% increase from $705 million in the previous year, indicating stability and potential for further growth.
- Strategic Partnerships: Ongoing collaborations with major retailers to develop store brand products enhance market share. The company ranks #1 or #2 in most of its product categories, which solidifies its competitive standing.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total net revenues were reported at $2,675 million, a decline of 3% from $2,750 million in 2023. Despite this decrease, the adjusted EBITDA for the same period increased by 17% to $465 million from $398 million, indicating improved operational efficiency.
Strategic Initiatives or Partnerships
The company is actively seeking to optimize its product portfolio, particularly within the Presto Products segment, where adjusted EBITDA rose 28% to $100 million. Additionally, the company is focused on enhancing its supply chain efficiencies to reduce costs, which has contributed to a 16% decrease in interest expenses, totaling $76 million.
Competitive Advantages
Reynolds Consumer Products benefits from a mixed portfolio of branded and store brand products, which aligns with the growth objectives of retail partners. Over 65% of its revenue comes from products that are market leaders in their categories. This strategic positioning enhances its bargaining power and drives customer loyalty, which is crucial in competitive markets.
| Segment | Net Revenues (2024) | Net Revenues (2023) | Change (%) | Adjusted EBITDA (2024) | Adjusted EBITDA (2023) | Change (%) |
|---|---|---|---|---|---|---|
| Reynolds Cooking & Baking | $873 million | $916 million | (5%) | $140 million | $94 million | 49% |
| Hefty Waste & Storage | $715 million | $705 million | 1% | $205 million | $188 million | 9% |
| Hefty Tableware | $667 million | $708 million | (6%) | $95 million | $117 million | (19%) |
| Presto Products | $443 million | $441 million | —% | $100 million | $78 million | 28% |
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Article updated on 8 Nov 2024
Resources:
- Reynolds Consumer Products Inc. (REYN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Reynolds Consumer Products Inc. (REYN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Reynolds Consumer Products Inc. (REYN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.