Reynolds Consumer Products Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Reynolds Consumer Products first quarter 2022 earnings call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that today's call is being recorded. I will now hand the conference over to your speaker today, Mark Swartzberg. Thank you. Please go ahead.

Good morning, and thank you for joining us for Reynolds Consumer Products' first quarter 2022 earnings conference call. On the call today are Lance Mitchell, President and Chief Executive Officer, and Michael Graham, Chief Financial Officer. For our agenda today, Lance will focus on market conditions and our fundamentals, and Michael will review our quarter and outlook. Together, our remarks will be approximately 15 minutes. Then we will open it up for your questions. 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 issued this morning for a detailed discussion of the risks that could cause action 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 site. While we would like to answer all your questions during the Q&A 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. We started the year with another solid quarter in a very dynamic environment marked by inflation on top of the levels anticipated in our guide of early February. We delivered another quarter in line with our expectations. Some of the highlights are a record first quarter of net revenues, strong volume growth in our hefty waste and storage and hefty tableware businesses, additional share gains in multiple cooking and baking categories, waste bags, disposable tableware, and private label food bags, additional pricing and cost savings in our plan to restore pre-pandemic profitability, and improve staffing, service, and retailer in-stocks. Turning to our main drivers of growth, pricing, consumer demand, innovation, and manufacturing supply chain capabilities, it's worth remembering that our portfolio is well-positioned not only for shifts in household mix of brands and store brands, but also for increasing activity outside of the home. In the area of pricing, inflation has increased since our last earnings call. Our response has been disciplined and quick with additional pricing implemented across our categories. Hand in hand with those increases, we've seen an increase in elasticity in some of our categories, particularly for foil. but the degree varies and remains below pre-pandemic levels. Michael will review our guide, and our guide builds in this increase in our elasticity assumptions. Turning to consumer demand. In FOIL, the combination of elasticity and reopening is a headwind, and one we are addressing through a series of measures, including higher trade and advertising. It's important to also note that we estimate that more than half of the Reynolds cooking and baking volume decline in the quarter was due to timing of retailer inventory replenishment. In many of our other categories, including parchment paper, waste bags, plastic party cups, consumption continues growing at faster than average annual rates than it did prior to the pandemic. Those are trends you'll see in the syndicated data, and it's evident in our research. According to a late April report from Kantar, consumers are eating out less often to compensate for inflation. And in our latest Harris survey, which was also completed in late April, we found what we expected for FOIL and the usage of many of our categories remains well above pre-pandemic rates. As for our performance in track channels, RCP branded dollar share and volume share in waste bags, disposable tableware, Flow cooker liners, oven bags, plastic wrap, and bakeware is up versus year-ago levels. And we're seeing RCP share increase in multiple e-commerce categories, too. The third driver of our growth is innovation. Reynolds Wrap everyday nonstick foil, hefty Fabuloso waste bags, hefty EcoSave disposable tableware remain standouts, recruiting new users and gaining distribution. Reynolds Kitchen's air fryer liners, a new Hefty Fabuloso scent and waste bags, and private label stand and fill press to close food bags are off to strong starts. And our new product pipeline is robust with upcoming introductions including Reynolds Kitchen's compostable wax paper and a number of new branded products from Hefty Waste and Storage and Hefty Tableware. And finally, Hefty Energy Bag is growing. strongly in existing geographies, and we plan expansion of the program to additional municipalities later this year. Our fourth growth driver is manufacturing and supply chain capabilities. As I said in my opening remarks, retailer in-stocks of our products have improved across our categories, demonstrating our commitment to restoring service to our customers' pre-pandemic standards. Before I pass the call over to Michael, I'd like to leave you with the following. We began the year with stabilizing commodity costs, but also knew the environment would be dynamic. Inflation has accelerated since early February, and navigating through these times remains challenging. We're leading our categories and executing with excellence in our mission of simplifying daily life so consumers can enjoy what matters most. I have enormous confidence in our people and see tremendous potential for Reynolds consumer products. With that, over to you, Michael.