Reynolds Consumer Products Inc.

Greetings and welcome to the Reynolds Consumer Products fourth quarter and full year 2020 earnings conference 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, Mark. You may begin.

Thank you. Good afternoon, and thank you for joining us on Reynolds Consumer Products' fourth quarter and fiscal year 2020 earnings conference call. On the call today are Lance Mitchell, President and Chief Executive Officer, and Michael Graham, Chief Financial Officer. During the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and involve risks and uncertainties that could cause actual results and outcomes to differ materially from those described in these forward-looking statements. Please refer to Reynolds Consumer Products Annual Report on Form 10-K and other reports filed from time to time with the Securities and Exchange Commission and its press release issue this afternoon for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note management's remarks today will focus on non-GAAP or adjusted financial measures, The reconciliation of GAAP measures to non-GAAP financial measures is available in the earnings release posted under the investor relations heading on our website at ReynoldsConsumerProducts.com. The company has also prepared a few presentation slides and additional supplemental financial information, which are posted on Reynolds' website under the investor relations heading. This call is being webcast, and an archive of it will also be available on the website. I'd also like to note that we are conducting our call today from our respective remote locations. As such, there may be brief delays, crosstalk, or other minor technical issues during this call. We thank you in advance for your patience and understanding. While we would like to answer all of your questions during the question and answer session, in the interest of time, we ask that you ask one question and a follow-up and rejoin the queue if you have additional questions. And now I'd like to turn the call over to Lance Mitchell. Thanks, Mark. Thank you for joining us today.

First off, I'd like to thank our employees for continuing to follow prevention measures and putting safety first always, both for the ongoing COVID-19 pandemic and for overall injury prevention. For our agenda today, Michael will review our quarter and outlook. I will cover our first year as a public company, our business performance, and 2021 priorities. Together, our remarks will be approximately 20 minutes, and then we'll open it up for questions. We reported record performance in 2020, our first year as a public company, delivering strong results because of the hard work, dedication, and commitment of our more than 5,000 employees in a very difficult environment. Revenue was up 8% driven by growth of our categories, new products, and marketplace wins. We increased brand support double digits and developed a strong new product pipeline. Dividend and cash flow grew significantly, even with the increase in standalone costs. We paid down more debt than expected at the start of this year, and we responded to the sustained and favorable shift in demand for our products by expanding capacity without adding roofs. This sets us up for more growth in a year that will be every bit as dynamic as 2020. Michael will speak to what that means for quarterly phasing. First, I'll set the stage by reviewing the consumer landscape and our business performance. Consumer demand for our categories remains elevated, higher than we anticipated at the time of the IPO. We're seeing a sustained and favorable shift in demand for our products, supported by the data. 80% of families are cooking more meals at home. 60% of families say that cooking has become a social activity in their household. And 60% of families are storing more leftovers and freezing more food. This goes hand in hand with trends in small kitchen appliances, where purchases are up double digits since the start of the pandemic. And among active users of our categories, over 88% say that they intend to maintain or increase elevated consumption of foil, waste bags, food bags, and disposable tableware beyond 2021. Turning now to our business performance in cooking and baking, the Reynolds brand family became a billion-dollar brand at retail in 2020, driven by growth across its portfolio. We see more strong growth ahead for Reynolds products and have expanded capacity accordingly. This will allow us to improve in-stock performance and execute against a substantial pipeline of innovation. It is also worth noting that service for this unit was impacted by staffing challenges in the fourth quarter, and service has been improving since year F. Hefty Waste and Storage also has momentum. The waste bag and food bag categories are large and growing, and the Hefty brand continues to do very well. Innovation will pick up here, too, including the introduction of hefty waste bags scented with Fabuloso, licensed from Colgate-Palmolive. Hefty tableware showed resilience last year, growing low single digits in spite of fewer and smaller holiday-related gatherings and a falloff in demand for business and restaurant items. The hefty Ecosave rollout continues to go well. and we expect innovation to be an even larger contributor to the tableware growth this year. Presto also enters 2021 with a substantial increase in capacity and produced solid growth despite the exit of low-margin business in the fall of 2019. We posted excellent e-commerce growth for the year and again in the quarter, continuing our robust performance in this channel. Our analysis indicates our e-commerce shares are equal to or better than brick-and-mortar shares, depending on the category. As I said, 2021 offers no lack of challenges, and we expect comparisons to contribute to uneven quarterly performance. We're confident we're entering the year stronger because of our commitment to our retail partners, our unrelenting focus on safety, and the diversity and can-do spirit of our people. Our 2021 priorities are safety, service, profitability, and business transformation. We put safety first always and improved upon our impressive record in 2020. We could get even better when we intend to do so. This means a lower reportable injury rate and more emphasis on wellness amid the pandemic. All of us are members of families, and our products are integral to family life. Safety will always come first. Service improved for all but Reynolds Wrapping Key 4, and we're committed to further improvements. Staffing continues to present challenges, especially given our commitment to safety. But we're managing through that and enter 2021 with more capacity. We're seeing further in-stock improvements and expect our capacity increases to also support our growth. Commodity, packaging, and logistics costs are rising. and we're committed to minimizing the gross margin impact. We are doing this through a combination of price, trade spend management, procurement initiatives, SKU rationalization, and innovation. We're monitoring cost trends daily and pivoting to protect margins and grow our business. Revolution is our business transformation program. We're doing more here too, improving the way we do business, our manufacturing cost structure, and our potential for growth. As I said in my opening remarks, we accomplished a lot in our first year as a public company, and we have more to do. Our value proposition includes both branded and store brand products, and we continue to provide valuable expertise to our retail partners. I'm confident our people, culture, and priorities will allow us to continue simplifying daily life for consumers while also delivering another year of impressive financial performance. I'll now turn over to Michael to discuss our results and our outlook.