Reynolds Consumer Products Inc.

Fourth quarter, 2023 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's now my pleasure to introduce your host, Mark Schwartzberg, Vice President of Investor Relations. Thank you, sir. You may begin.

Thank you, Operator. Good morning, everyone, and thank you for joining us on Reynolds Consumer Products' fourth quarter and fiscal year 2023 earnings conference call. Please note that this call is being recorded and webcast on the investor relations section of our corporate website at ReynoldsConsumerProducts.com. Our earnings press release and accompanying presentation slides are also available. With me on the call today are Lance Mitchell, our President and Chief Executive Officer, and Scott Huckins, our Chief Financial Officer. Lance will review our accomplishments in 2023, our priorities for 2024, and our commercial performance by business, followed by Scott, who will review our results, our guide, and our capital allocation priorities. Following prepared remarks, we will open the call for your questions. Before we begin, I would like to provide a couple of reminders. First, this morning's discussion may contain forward-looking statements based on current expectations and beliefs. These statements are subject to risks, uncertainties, and changes in circumstances that could cause actual results and outcomes to differ materially from those described today. Please refer to our risk factors section in our SEC filings, including in our annual report on Form 10-K and our quarterly reports on Form 10-Q. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after the call. Second, during today's call, we will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these GAAP to non-GAAP financial measures are available in our earnings press release, investor presentation deck, and form 10-K, copies of which can be found on the investor relations section of our website. Now, I'd like to turn the call over to Lance.

Thank you, Mark, and good morning, everyone. I'm extremely proud of all that our team accomplished in 2023. We finished very strong in our most important quarter, record profit, significant margin expansion, and record cash flow in Q4. Throughout 2023, we grew share in our largest categories, including household oil and waste bags. We exceeded our target of 20% of sales from products launched in the past three years. We restored operational stability, and returned the Reynolds cooking business to historical earnings. Our execution across the company was strong, each of our businesses delivering double-digit profit growth. We outperformed our earnings guide, growing adjusted EBITDA and EPS double digits. And we increased financial flexibility, reducing leverage to less than three times adjusted EBITDA at year end. As strong as our company is, Volume is under pressure across consumer staples. Unemployment rates are relatively low and inflation is moderating. However, household savings are down, credit card debt is at record highs, and wages have not kept pace with food and energy inflation. Consumers continue to contend with challenging economic pressures. As a result, our categories volumes were down 4% in 2023. household formation, and other drivers of long-term growth that drive category consumption are being more than offset by reduced consumer spending. What does that mean for RCP? First, this means our integrated natural brand and store brand business model remains a competitive advantage. Secondly, that our entire organization is focused on driving volume at or above the category growth, expanding margins, and maintaining discipline on costs. In 2024, we will invest in impactful advertising and actively manage price, tax sizes, and promotions to meet our retailer, partner, and consumers' needs for the right combination of value and performance. We will continue to innovate with new sustainable solutions and other new products to further differentiate our offerings in our categories to protect and grow our share. We will continue to optimize our retail product portfolio to drive improved profitability, and we will drive productivity and other revolution cost savings across our business, providing additional margin growth. I'll now review our performance and outlook by business. The Reynolds cooking and baking team has executed consistently on the recovery plan we introduced to you a year ago. I'm pleased to report that operational stability has been restored, we've achieved historical levels of earnings, Reynolds Wrap gained three points of share in 2023, and new product innovations are expanding distribution and driving growth. I'm very proud of the Reynolds cooking and baking team and how the broader organization rallied behind the recovery plan. And I'm equally pleased with our plans to continue investing in our categories to drive volume and margin in 2024. Reynolds recently surpassed the $1 billion mark at retail. We plan to build on that momentum by adapting and executing proven features, displays, and promotions to meet consumers' needs for value, making additional modifications to price and pack combination across channels, in continuing to monitor and make refinements to pricing, evaluating price gaps, and thresholds by channel. We plan to drive additional volume from expanded distribution of new products in addition to increasing distribution of more established high-velocity products. We'll continue to recruit millennials and Gen Z consumers to our products and categories. We recently launched the Reynolds Chef's Kiss advertising campaign nationally across digital and traditional media outlets. Chef's Kiss targets young adults who want to cook more but lack the experience in the kitchen, demonstrating how Reynolds products make meal prep, cooking, and cleanup easier and better. And we plan to drive additional margin through ongoing work to optimize our retail product portfolio and the implementation of new revolution cost savings programs. Our HEPTI and Presto waste bag and storage businesses both achieved strong recovery of earnings in 2023. HEPTI gained share of waste bags at an increasing rate as the year progressed, delivering nearly a point of share growth in the third and fourth quarter. We expanded and launched high-impact product innovations, including HEPTI Fabuloso, which continues to grow and eclipsed $160 million in annual retail sales for the year. and numerous other products, including Hefty Ultra Strong, made with 50% post-consumer recycled materials, and Hefty Press-to-Close food bags. We continue to lead the store brand food segment with strong product innovation, including bio-based sandwich bags made with 20% plant and ocean materials. And in store brand waste bags, we partnered with our retail partners to launch new sizes and new scents. We increased profitability through ongoing work to optimize our retail product portfolio in both businesses. And we invested in advertising and trade support for our retail product portfolio. Our plans for driving volume and expanding waste and storage margins in 2024 include continued investment in advertising and trade to protect and drive brand share. Further distribution gains for Hefty Fabuloso as existing scents acquire additional shelf space and new scents are added. Launch and expansion of other new products, including Hefty Press-to-Close Food Bags, Hefty Compostable Press-to-Close Food Bags, and Hefty Recovered Bags made with coastal collected plastics. New and expanded distribution of store-brand stretch-and-hold waste bags, slider, and half-gallon food bags. and compostable sandwich bags, continued optimization of our hefty and store-bought product portfolios, and additional revolution in cost savings in both businesses. Turning now to our disposable tableware segment. We've been very effective restoring tableware profitability. During our Q3 earnings release, I provided an update on the volume softness we were experiencing in certain tableware categories. And while we had a plan, I said it would take multiple quarters to see sustained improvement. I'm encouraged by the moderation of declines in the fourth quarter, and I'm confident that the plans we're implementing will drive further improvements in 2024 and over the long term. As we noted in our earnings release, improved holiday-related features, displays, and promotions were effective in offsetting continued elasticity pressure in the fourth quarter. And we increased the advertising at healthy party cups and disposable dishes, reminding consumers we'll do the dishes. And we're modifying trade plans to manage price points to key thresholds on certain packs and select channels. We're introducing new multi-packs of cups and plates at lower opening price points. We are expanding distribution of select high-velocity products, and we are introducing and expanding distribution of sustainable solutions and other new products, including hefty Zupals, hefty EcoSave bolted fiber plates and cutlery, hefty compostable printed paper plates, and new cups and plates with designs and colors to help celebrate and entertain during important holiday periods. I will close by reiterating that we've been very effective supporting our categories and driving share growth, while increasing earnings and financial flexibility in a challenging macroeconomic environment. Our team is implementing proven and comprehensive programs to deliver an even stronger 2024 and sustained growth into the future. Before I turn the call over to Scott, I'd like to close by highlighting that we've been very successful completing our well-planned CFO transition. Scott has come up to speed quickly, and our finance team has clear priorities to support our plans for 2024 and beyond. Scott, over to you.