Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~July 31, 2020,~~April 30, 2021, the registrant had ~~209,700,500~~209,758,602 shares of common stock, $0.001 par value per share, outstanding.

This Quarterly Report on Form 10-Q contains certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those risks and uncertainties discussed in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 and as updated in our Quarterly Reports on Form 10-Q. You should specifically consider the numerous risks outlined in ~~Item 1A.~~those “Risk ~~Factors.”~~Factors” sections. These risks and uncertainties include factors related to:

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. We are under no duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform our prior statements to actual results or revised expectations.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements is included ~~within~~in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 which was filed on ~~March 10, 2020,~~February 12, 2021, under Part I, Item 1A. “Risk Factors” and as updated in our Quarterly Reports on Form 10-Q.

	For the Three Months Ended						For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,						March 31,
	2020			2019			2020			2019			2021			2020
Net revenues	$	798		$	753		$	1,489		$	1,378		$	732		$	691
Related party net revenues		24			38			63			78			25			39
Total net revenues		822			791			1,552			1,456			757			730
Cost of sales		(570	)		(564	)		(1,111	)		(1,056	)		(565	)		(541	)
Gross profit		252			227			441			400			192			189
Selling, general and administrative expenses		(81	)		(77	)		(163	)		(155	)		(78	)		(82	)
Other expense, net		(6	)		(9	)		(21	)		(14	)		(3	)		(15	)
Income from operations		165			141			257			231			111			92
Interest expense, net		(17	)		(67	)		(44	)		(135	)		(12	)		(27	)
Income before income taxes		148			74			213			96			99			65
Income tax expense		(36	)		(19	)		(75	)		(24	)		(25	)		(39	)
Net income	$	112		$	55		$	138		$	72		$	74		$	26

Earnings per share:
Basic	$	0.53		$	0.35		$	0.69		$	0.46		$	0.35		$	0.14
Diluted	$	0.53		$	0.35		$	0.69		$	0.46		$	0.35		$	0.14

Weighted average shares outstanding:
Basic		209.7			155.5			199.2			155.5			209.7			188.8
Effect of dilutive securities		0.1			—			—			—			0.1			0.2
Diluted		209.8			155.5			199.2			155.5			209.8			189.0

	For the Three Months Ended				For the Six Months Ended						For the Three Months Ended
	June 30,				June 30,						March 31,
	2020		2019		2020			2019			2021		2020
Net income	$	112	$	55	$	138		$	72		$	74	$	26
Other comprehensive income (loss), net of income taxes:
Currency translation adjustment		1		—		(1	)		—			—		(2	)
Employee benefit plans		—		—		—			(1	)
Interest rate derivatives												3		—
Other comprehensive income (loss), net of income taxes		1		—		(1	)		(1	)		3		(2	)
Comprehensive income	$	113	$	55	$	137		$	71		$	77	$	24

	(Unaudited) As of June 30, 2020		As of December 31, 2019			(Unaudited) As of March 31, 2021		As of December 31, 2020
Assets
Cash and cash equivalents	$	392	$	102		$	144	$	312
Accounts receivable (net of allowance for doubtful accounts of $1 and $0)		281		13
Accounts receivable (net of allowance for doubtful accounts of $1 and $1)							283		292
Other receivables		10		7			5		9
Related party receivables		9		14			10		8
Inventories		385		418			507		419
Other current assets		17		16			22		13
Total current assets		1,094		570			971		1,053
Property, plant and equipment (net of accumulated depreciation of $672 and $642)		558		537
Property, plant and equipment (net of accumulated depreciation of $710 and $692)							611		612
Operating lease right-of-use assets, net		61		42			62		61
Goodwill		1,879		1,879			1,879		1,879
Intangible assets, net		1,107		1,123			1,084		1,092
Other assets		17		9			32		25
Total assets	$	4,716	$	4,160		$	4,639	$	4,722
Liabilities
Accounts payable	$	144	$	135		$	203	$	185
Related party payables		49		72			36		41
Related party accrued interest payable		—		18
Current portion of long-term debt		25		21			25		25
Income taxes payable		28		—			34		6
Accrued and other current liabilities		143		132			126		175
Total current liabilities		389		378			424		432
Long-term debt		2,418		1,990			2,102		2,208
Long-term related party borrowings		—		2,214
Long-term operating lease liabilities		52		35			52		51
Deferred income taxes		300		294			322		326
Long-term postretirement benefit obligation		48		48			54		53
Other liabilities		25		19			42		37
Total liabilities	$	3,232	$	4,978		$	2,996	$	3,107
Commitments and contingencies (Note 8)
Commitments and contingencies (Note 6)
Stockholders’ equity
Common stock, $0.001 par value; 2,000 shares authorized; 209.7 shares issued and outstanding		—		—
Common stock, $0.001 par value; 2,000 shares authorized; 210 shares issued and outstanding							—		—
Additional paid-in capital		1,379		—			1,380		1,381
Net parent deficit		—		(823	)
Accumulated other comprehensive income		4		5			4		1
Retained earnings		101		—			259		233
Total stockholders' equity		1,484		(818	)		1,643		1,615
Total liabilities and stockholders' equity	$	4,716	$	4,160		$	4,639	$	4,722

	Common Stock		Additional Paid-in Capital		Retained Earnings			Net Parent (Deficit)			Accumulated Other Comprehensive Income			Total Equity (Deficit)
Balance as of December 31, 2018	$	—	$	—	$	—		$	(1,034	)	$	7		$	(1,027	)
Adoption of new accounting principle		—		—		—			(3	)		3			—
Net income		—		—		—			17			—			17
Other comprehensive loss, net of income taxes		—		—		—			—			(1	)		(1	)
Net transfers (to) from Parent		—		—		—			12			—			12
Balance as of March 31, 2019	$	—	$	—	$	—		$	(1,008	)	$	9		$	(999	)
Adoption of new accounting principle		—		—		—			—			—			—
Net income		—		—		—			55			—			55
Other comprehensive loss, net of income taxes		—		—		—			—			—			—
Net transfers (to) from Parent		—		—		—			34			—			34
Balance as of June 30, 2019	$	—	$	—	$	—		$	(919	)	$	9		$	(910	)
																	Common Stock		Additional Paid-in Capital			Retained Earnings (Accumulated Deficit)			Net Parent (Deficit)			Accumulated Other Comprehensive Income			Total Equity (Deficit)
Balance as of December 31, 2019	$	—	$	—	$	—		$	(823	)	$	5		$	(818	)	$	—	$	—		$	—		$	(823	)	$	5		$	(818	)
Net income		—		—		20			6			—			26			—		—			20			6			—			26
Other comprehensive loss, net of income taxes		—		—		—			—			(2	)		(2	)		—		—			—			—			(2	)		(2	)
Net transfers (to) from Parent		—		—		—			855			—			855
Net transfers from Parent																		—		—			—			855			—			855
Reclassification of net parent (deficit) in RCP		—		38		—			(38	)		—			—			—		38			—			(38	)		—			—
Issuance of common stock, net of costs		—		1,339		—			—			—			1,339			—		1,339			—			—			—			1,339
Dividends ($0.15 per share declared)		—		—		(31	)		—			—			(31	)		—		—			(31	)		—			—			(31	)
Other		—		1		—			—			—			1			—		1			—			—			—			1
Balance as of March 31, 2020	$	—	$	1,378	$	(11	)	$	—		$	3		$	1,370		$	—	$	1,378		$	(11	)	$	—		$	3		$	1,370

Balance as of December 31, 2020																	$	—	$	1,381		$	233		$	—		$	1		$	1,615
Net income		—		—		112			—			—			112			—		—			74			—			—			74
Other comprehensive income, net of income taxes		—		—		—			—			1			1			—		—			—			—			3			3
Dividends ($0.23 per share declared and paid)																		—		—			(48	)		—			—			(48	)
Other		—		1		—			—			—			1			—		(1	)		—			—			—			(1	)
Balance as of June 30, 2020	$	—	$	1,379	$	101		$	—		$	4		$	1,484
Balance as of March 31, 2021																	$	—	$	1,380		$	259		$	—		$	4		$	1,643

	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2020			2019			2021			2020
Cash provided by (used in) operating activities
Net income	$	138		$	72		$	74		$	26
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization		48			42			26			24
Deferred income taxes		41			(2	)		(6	)		28
Unrealized losses (gains) on derivatives		1			(8	)
Unrealized losses on derivatives								—			4
Stock compensation expense		3			—			2			1
Change in assets and liabilities:
Accounts receivable, net		(268	)		2			9			(303	)
Other receivables		(3	)		11			4			(1	)
Related party receivables		4			(50	)		(2	)		9
Inventories		33			(52	)		(88	)		(16	)
Accounts payable		8			1			23			10
Related party payables		(20	)		(63	)		(4	)		(20	)
Related party accrued interest payable		(18	)		109			—			(18	)
Income taxes payable		31			24			29			11
Accrued and other current liabilities		10			(6	)		(50	)		(7	)
Other assets and liabilities		(5	)		(2	)		(8	)		(3	)
Net cash provided by operating activities		3			78
Cash provided by (used in) investing activities
Net cash provided by (used in) operating activities								9			(255	)
Cash used in investing activities
Acquisition of property, plant and equipment		(52	)		(41	)		(23	)		(23	)
Advances to related parties		—			(170	)
Repayments from related parties		—			151
Net cash used in investing activities		(52	)		(60	)		(23	)		(23	)
Cash provided by (used in) financing activities
Cash (used in) provided by financing activities
Repayment of long-term debt								(106	)		—
Dividends paid								(48	)		—
Proceeds from long-term debt, net of discounts		2,472			—			—			2,472
Repayment of long-term debt		(6	)		—
Repayments of RGHL Group Credit Agreement		(8	)		(10	)
Repayments of PEI Group Credit Agreement								—			(8	)
Advances from related parties		240			17			—			240
Repayments to related parties		(3,627	)		(46	)		—			(3,627	)
Deferred debt transaction costs		(28	)		—			—			(28	)
Proceeds from IPO settlement facility		1,168			—			—			1,168
Repayment of IPO settlement facility		(1,168	)		—			—			(1,168	)
Issuance of common stock		1,410			—			—			1,410
Equity issuance costs		(69	)		—			—			(69	)
Dividends paid		(31	)		—
Net transfers (to) from Parent		(14	)		12
Net cash provided by (used in) financing activities		339			(27	)
Net transfers to Parent								—			(14	)
Net cash (used in) provided by financing activities								(154	)		376
Effect of exchange rate on cash and cash equivalents		—			—			—			—
Net increase (decrease) in cash and cash equivalents		290			(9	)
Net (decrease) increase in cash and cash equivalents								(168	)		98
Cash and cash equivalents at beginning of period		102			23			312			102
Cash and cash equivalents at end of period	$	392		$	14		$	144		$	200

~~New leases resulted in the recognition of right-of-use assets and corresponding lease liabilities of~~ ~~$24 million and $4 million~~ ~~for the six months ended June 30, 2020 and 2019, respectively~~. Refer to Note 1 – Summary of Significant Accounting Policies and Note 1110 – Related Party Transactions for details of significant non-cash investing and financing activities.

Reynolds Consumer Products Inc. and its subsidiaries (“we”, “us” or “our”) produce and sell products across three broad categories: cooking products, waste & storage products and tableware. We sell our products under brands such as Reynolds and Hefty, and also under store brands. Our product portfolio includes aluminum foil, wraps, disposable bakeware, trash bags, food storage bags and disposable tableware. We report four business segments: Reynolds Cooking & Baking; Hefty Waste & Storage; Hefty Tableware; and Presto Products.

Prior to the completion of our Corporate Reorganization, as defined in our registration statement on Form S-1 (File No. 333-234731), and initial public offering (“IPO”) on February 4, 2020, we operated as part of Reynolds Group Holdings Limited (“RGHL”) and not as a stand-alone entity. We represented the business that was reported as the Reynolds Consumer Products segment in the consolidated financial statements of RGHL and its subsidiaries (collectively, “RGHL Group” or the “Parent”). As part of our Corporate Reorganization, we reorganized the legal structure of our entities so they are all under a single parent entity, Reynolds Consumer Products Inc. In conjunction with our Corporate Reorganization and IPO, we separated from RGHL Group on February 4, 2020. We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with United States generally accepted accounting principles ("GAAP") for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X issued by the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by GAAP for comprehensive annual financial statements.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting policies described in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, and should be read in conjunction with the disclosures therein. In our opinion, these interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to state fairly the financial condition, results of operations and cash flows for the periods presented. Operating results for interim periods are not necessarily indicative of annual operating results.

~~Our~~Prior to the completion of our Corporate Reorganization, as defined in our Registration Statement on Form S-1 (File No. 333-234731), and initial public offering (“IPO”) on February 4, 2020, we operated as part of Pactiv Evergreen Inc. (“PEI”) and not as a stand-alone entity. We represented the business that was previously reported as the Reynolds Consumer Products segment in the consolidated financial statements of PEI and its subsidiaries (collectively, “PEI Group” or the “Parent”). As part of our Corporate Reorganization, we reorganized the legal structure of our entities so they are all under a single parent entity, Reynolds Consumer Products Inc. In conjunction with our Corporate Reorganization and IPO, we separated from PEI Group on February 4, 2020.

Net Parent deficit represented the former Parent’s interest in our net assets. As a direct ownership relationship did not exist between the various entities of our previously combined group, a Net Parent deficit account was shown in our previously combined financial statements. The majority of transactions between us and PEI Group have a history of settlement or were settled for cash in conjunction with our separation from PEI Group and IPO. These transactions have been reflected in our condensed consolidated statements of income include allocations of certain expenses for services provided by RGHL Group prior to our separation, including, but not limited to, general corporate expenses related to group wide functions including executive management, finance, legal, tax, information technology and a portion of abalance sheets as related party ~~management fee incurred by RGHL Group. For the three~~receivables and ~~six months ended June 30, 2020, total costs allocated to us for these functions~~payables. Transactions that did not have a history of settlement were ~~zero~~reflected in equity (deficit) in our previously combined balance sheets as Net Parent deficit and, ~~$2 million, respectively, compared to~~ ~~$11 million and $20 million in the comparable prior year periods. These costs were primarily included in selling, general and administrative expenses~~when cash was utilized (contributed), in our condensed consolidated statements of ~~income. For the three and six months ended June 30, 2020, these amounts included costs of~~ ~~zero and $1 million, respectively, compared to~~ ~~$6 million and $10 million~~cash flows as a financing activity in the comparable prior year periods, that were not historically allocated to us as part of RGHL Group's normal monthly reporting process. Additionally, for the three and six months ended June 30, 2020 costs of ~~zero~~ and $2 million, respectively, compared to $1 million in both of the comparable prior year periods, were allocated to us related to the IPO process that cannot be deferred and offset against the IPO proceeds, which are included in other expense, net in our condensed consolidated statements of income. All of these expenses have been allocated on a basis considered reasonable by management, using either specific identification, such as direct usage or headcount when identifiable, or proportional allocations determined with reference to time incurred, relative to revenues, or other reasonable methods of allocation. Amounts allocated on a proportional basis relate to certain corporate functions and are reflective of the time and effort expended in the provision of these corporate functions to us.transfers from (to) Parent.

On February 4, 2020, we completed our separation from ~~RGHL~~PEI Group and the IPO of our common stock pursuant to a Registration Statement on Form S-1. In the IPO, we sold an aggregate of 54,245,500 shares of common stock, including 7,075,500 shares of common stock purchased by the underwriters on February 7, 2020 pursuant to their option to purchase additional shares, under the Registration Statement at a public offering price of $26.00 per share.

In conjunction with our separation from ~~RGHL~~PEI Group and IPO, we reclassified ~~RGHL~~PEI Group’s historical net investment in us to additional paid-in capital. Each share of our outstanding common stock, immediately prior to our IPO, was exchanged into 155,455 shares of common stock. In addition, certain related party borrowings owed to ~~RGHL~~PEI Group were contributed as additional paid-in capital without the issuance of any additional shares.

In ~~June 2016,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.~~ This ASU and subsequent amendments to the initial guidance modify the impairment model to use an expected loss methodology in place of the previously used incurred loss methodology, which may result in earlier recognition of losses related to financial instruments. This change is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, and requires a cumulative effect adjustment to the balance sheet upon adoption. We adopted these requirements as of January 1, 2020 with no material impact on our condensed consolidated financial statements.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract,~~ which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs for internal-use software. This ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. We adopted the standard as of January 1, 2020 with no material impact on our condensed consolidated financial statements.

~~In August 2018, the FASB issued ASU~~ 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure - Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. ~~The~~This ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. ~~The~~This ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We ~~are currently evaluating~~adopted the ~~requirements~~standard as of ~~this guidance, which is expected to~~January 1, 2021 with no material impact on our ~~disclosures but is not expected to impact the measurement and recognition of amounts in our~~condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. This ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We adopted the standard as of January 1, 2021 with no material impact on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions to applying the guidance on contract modifications, hedge accounting, and other transactions, to simplify the accounting for transitioning from the London Interbank Offered Rate, and other interbank offered rates expected to be discontinued, to alternative reference rates. This ASU was effective upon its issuance and can be applied prospectively through December 31, 2022. We are currently assessing the impact of this standard on our consolidated financial statements.

	June 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
	(in millions)				(in millions)
Raw materials	$	126	$	125	$	152	$	138
Work in progress		48		47		51		54
Finished goods		181		217		270		194
Spare parts		30		29		34		33
Inventories	$	385	$	418	$	507	$	419

	June 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
	(in millions)						(in millions)
Term loan facility	$	2,469		$	—		$	2,150		$	2,257
RGHL Group U.S. Term Loan		—			2,017
Deferred financing transaction costs		(23	)		(4	)		(20	)		(21	)
Original issue discounts		(3	)		(2	)		(3	)		(3	)
		2,443			2,011			2,127			2,233
Less: current portion		(25	)		(21	)		(25	)		(25	)
Long-term debt	$	2,418		$	1,990		$	2,102		$	2,208

In February 2020, we entered into new external debt facilities (“External Debt Facilities”), which consist of (i) a $2,475 million senior secured term loan facility (“Term Loan Facility”); and (ii) a $250 million senior secured revolving credit facility (“Revolving Facility”). In addition, on February 4, 2020 we entered into, and extinguished, a $1,168 million facility (“IPO Settlement Facility”). The proceeds from the Term Loan Facility and IPO Settlement Facility, net of transaction costs and original issue discounts, together with available cash, were used to repay accrued related party interest and a portion of the related party loans payable.

Borrowings under the External Debt Facilities bear interest at a rate per annum equal to, at our option, either a base rate or a LIBO rate plus an applicable margin of 1.75%. During September 2020, we entered into a series of interest rate swaps to hedge a portion of the interest rate exposure resulting from these borrowings.

The External Debt Facilities contain a springing financial covenant requiring compliance with a ratio of first lien net indebtedness to consolidated EBITDA, applicable solely to the Revolving Facility. The financial covenant is tested on the last day of any fiscal quarter only if the aggregate principal amount of borrowings under the Revolving Facility and drawn but unreimbursed letters of credit exceed 35% of the total amount of commitments under the Revolving Facility on such day.

We are currently in compliance with the covenants contained in our External Debt Facilities.

If an event of default occurs, the lenders under the External Debt Facilities are entitled to take various actions, including the acceleration of amounts due under the External Debt Facilities and all actions permitted to be taken by secured creditors.

The Term Loan Facility matures in February 2027. The Term Loan Facility amortizes in equal quarterly installments of $6 million, which commenced in June 2020, with the balance ~~being~~ payable on maturity. During the first quarter of 2021, we made a voluntary principal payment of $100 million related to our Term Loan Facility.

The Revolving Facility matures in February 2025 and includes a sub-facility for letters of credit. As of ~~June 30, 2020,~~March 31, 2021, we had no outstanding borrowings under the Revolving Facility, and we had $7 million of letters of credit outstanding, which reduces the borrowing capacity under the Revolving Facility.

Amounts outstanding under the RGHL Group Credit Agreement were reallocated to an entity within RGHL Group and on February 4, 2020, we were fully and unconditionally released from the security and guarantee arrangements relating to RGHL Group’s borrowings.

The fair value of our long-term debt as of ~~June 30, 2020,~~March 31, 2021, which is a Level 2 fair value measurement, approximates the carrying value due to the variable market interest rate and the stability of our credit profile.

Prior to our separation from RGHL Group and IPO, our U.S. operations were included in the U.S. federal consolidated and certain state and local tax returns filed by RGHL Group. We also file certain separate U.S. state and local and foreign income tax returns. For the periods prior to separation, income tax (expense) benefit and deferred tax balances are presented in these condensed consolidated statements of income as if we filed tax returns on a stand-alone basis. Income tax payable balances as of December 31, 2019, were classified within “net parent deficit” on the condensed consolidated balance sheet since RGHL Group is legally liable for the tax. Upon separation from RGHL Group, becoming a separate taxable entity and the change from carve-out financial statements to consolidated financial statements, we have remeasured certain deferred taxes. These adjustments have been recognized directly in equity.

Our income tax expense for the three and six months ended June 30, 2020 incorporates an expected annualized effective tax rate of approximately 24% excluding the impact of discrete items, compared to 26% and 25% in the comparable prior year periods. Our income tax expense for the six months ended June 30, 2020 includes an incremental discrete expense of $23 million due to the remeasurement of our deferred tax asset associated with the deductibility of interest expense as a result of the enactment, subsequent to our separation from RGHL Group, of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act on March 27, 2020. The retroactive components of the CARES Act are expected to change RGHL Group’s U.S. federal consolidated tax return for the year ended December 31, 2019, which will reduce the benefits of future tax deductions that we received at the time of separation from RGHL Group.

~~Derivative instruments, consisting of commodity contracts, were recorded at fair value in our condensed consolidated balance sheets and consisted of a liability of~~ ~~$1 million, recorded in accrued and other current liabilities, and~~ ~~an asset of~~ ~~$1 million, recorded in~~ ~~other current assets, as of June 30, 2020 and December 31, 2019, respectively.~~

Our commodity contracts are primarily commodity swaps and are all Level 2 financial assets and liabilities. Commodity derivatives are valued using an income approach based on the observable market commodity index prices less the contract rate multiplied by the notional amount or based on pricing models that rely on market observable inputs such as commodity prices. Our calculation of the fair value of these financial instruments takes into consideration the risk of non-performance, including counterparty credit risk. The majority of our derivative contracts do not have a legal right of set-off. We manage the credit risk in connection with our derivatives by limiting the amount of exposure with each counterparty and monitoring the financial condition of our counterparties.

~~For the three and six months ended June 30, 2020, we recognized an unrealized~~ ~~gain~~ of ~~$3 million and~~ ~~an unrealized~~ ~~loss of $1 million, respectively, compared to unrealized gains of $1 million and $8 million in the comparable prior year periods, in cost of sales in the condensed consolidated statements of income.~~

~~The following table provides the detail of outstanding commodity derivative contracts as of June 30, 2020:~~

We granted restricted stock units (“RSUs”) in July 2019 to certain members of management, pursuant to retention agreements entered into with these employees (the “IPO Grants”). These RSUs vest upon satisfaction of both a performance-based vesting condition (the “IPO Condition”) and a service-based vesting condition (the “Service Condition”). The IPO Condition was satisfied when we completed our IPO on February 4, 2020. The Service Condition will be satisfied with respect to one-third of an employee’s RSUs on each anniversary from the date of our IPO for three consecutive years, subject to the employee’s continued employment through the applicable vesting date.

In addition, in conjunction with our Corporate Reorganization and IPO, we ~~have~~ established ~~a 2020~~an equity incentive ~~award~~ plan for purposes of granting stock-based compensation awards to certain of our senior management, our non-executive directors and to certain employees, to incentivize their performance and align their interests with ours. We have granted RSUs to certain employees and non-employee directors that have a service-based vesting condition. In addition, we granted performance stock units (“PSUs”) to certain members of management that have a performance-based vesting condition. We account for forfeitures of outstanding but unvested grants in the period they occur. A maximum of 10.5 million shares of common stock ~~are~~were initially available for issuance under equity incentive awards granted pursuant to the plan. In the three ~~and six~~ months ended ~~June 30, 2020, 0.1~~March 31, 2021, 0.2 million RSUs and ~~0.3~~0.2 million ~~shares~~PSUs were ~~granted, respectively.~~granted.

~~At June 30, 2020,~~As of March 31, 2021, there were stock-based compensation awards representing approximately ~~0.5~~0.6 million shares ~~outstanding.~~outstanding compared to 0.4 million shares outstanding as of December 31, 2020. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020, stock-based compensation expense was $2 million and $3$1 million, ~~respectively, and zero in the comparable prior year periods.~~respectively.

We are from time to time party to litigation, legal proceedings and tax examinations arising from our operations. Most of these matters involve allegations of damages against us relating to employment matters, personal injury and commercial or contractual disputes. We record estimates for claims and proceedings that constitute a present obligation when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of such obligation can be made. While it is not possible to predict the outcome of any of these matters, based on our assessment of the facts and circumstances, we do not believe any of these matters, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows. However, actual outcomes may differ from those expected and could have a material effect on our financial position, results of operations or cash flows in a future period.

As of ~~June 30, 2020,~~March 31, 2021, there were no legal proceedings pending other than those for which we have determined that the possibility of a material outflow is remote.

The following table summarizes the changes in our balances of each component of accumulated other comprehensive income.

Prior to our separation from PEI Group and IPO, our U.S. operations were included in the U.S. federal consolidated and certain state and local tax returns filed by PEI Group. We also file certain separate U.S. state and local and foreign income tax returns. For the periods prior to separation, income tax (expense) benefit and deferred tax balances are presented in these condensed consolidated financial statements as if we filed tax returns on a stand-alone basis. Upon separation from PEI Group, becoming a separate taxable entity and the change from carve-out financial statements to consolidated financial statements, we have remeasured certain deferred taxes. These adjustments have been recognized directly in equity.

Our income tax expense for the three months ended March 31, 2021 incorporated an expected annualized effective tax rate of approximately 24.5%, excluding the impact of discrete items, compared to 24.7% in the comparable prior year period. Our income tax expense for the three months ended March 31, 2020 included an incremental discrete expense of $23 million due to the remeasurement of our deferred tax asset associated with the deductibility of interest expense as a result of the enactment, subsequent to our separation from PEI Group, of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act on March 27, 2020. As a result of our inclusion in PEI Group’s U.S. federal consolidated and certain state and local tax returns prior to our IPO, the completion of PEI Group’s tax returns for the year ended December 31, 2020 may result in changes to deferred taxes we recognized as of February 4, 2020. Any future changes in these deferred taxes may impact our reported tax expense in a future period.

WeOur Chief Executive Officer, who has been identified as our Chief Operating Decision Maker ("CODM"), has evaluated how he views and measures our performance. In applying the criteria set forth in the standards for reporting information about segments in financial statements, we have determined that we have four reportable segments - Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware and Presto Products. The key factors used to identify these reportable segments are the organization and alignment of our internal operations and the nature of our products. This reflects how our ~~Chief Operating Decision Maker (“CODM”)~~CODM monitors performance, allocates capital and makes strategic and operational decisions. Our segments are described as follows:

Our Reynolds Cooking & Baking segment produces branded and store brand foil, disposable aluminum pans, parchment paper, freezer paper, wax paper, plastic wrap, baking cups, oven bags and slow cooker liners. Our branded products are sold under the Reynolds Wrap, Reynolds KITCHENS and E-Z Foil brands in the United States and selected international markets, under the ALCAN brand in Canada and under the Diamond brand outside of North America.

Our Hefty Waste & Storage segment produces both branded and store brand trash and food storage bags. Our branded products are sold under the Hefty Ultra Strong, Hefty Strong Trash Bags, Hefty Renew and Hefty Slider Bags brands.

Our Hefty Tableware segment sells both branded and store brand disposable and compostable plates, bowls, platters, cups and cutlery. Our Hefty branded products include dishes and party cups.

Our Presto Products segment primarily sells store brand products in four main categories: food storage bags, trash bags, reusable storage containers and plastic wrap. Our Presto Products segment also includes our specialty business, which serves other consumer products companies by providing Fresh-Lock and Slide-Rite resealable closure systems.

We present segment adjusted EBITDA ("Adjusted EBITDA") as this is the financial measure by which management and our CODM allocate resources and analyze the performance of our reportable segments.

Adjusted EBITDA represents each segment's earnings before interest, tax, depreciation and amortization and is further adjusted to ~~exclude~~exclude unrealized gains and losses on commodity derivatives ~~costs associated with rationalizing operations and administrative functions, factoring discounts (pre-IPO), amortization of actuarial gains, the allocated related party management fee (pre-IPO)~~ and IPO and separation-related costs.

Total assets by segment are those assets directly associated with the respective operating activities, comprising inventory, property, plant and equipment and operating lease right-of-use assets. Other assets, such as cash, accounts receivable and intangible assets, are monitored on an entity-wide basis and not included in segment information that is regularly reviewed by our CODM.

	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated⁽¹⁾			Total		Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated⁽¹⁾			Total
Three Months Ended June 30, 2020	(in millions)
Three Months Ended March 31, 2021																(in millions)
Net revenues	$	295	$	201	$	186	$	137	$	819	$	3		$	822	$	272	$	192	$	170	$	126	$	760	$	(3	)	$	757
Intersegment revenues		—		2		—		1		3		(3	)		—		—		2		—		—		2		(2	)		—
Total segment net revenues		295		203		186		138		822		—			822		272		194		170		126		762		(5	)		757
Adjusted EBITDA		66		63		43		28		200							53		44		34		18		149
Depreciation and amortization		4		3		4		5		16		8			24		5		4		4		5		18		8			26

	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated⁽¹⁾			Total		Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated⁽¹⁾			Total
Three Months Ended June 30, 2019	(in millions)
Three Months Ended March 31, 2020																(in millions)
Net revenues	$	275	$	178	$	207	$	131	$	791		—		$	791	$	243	$	189	$	178	$	127	$	737	$	(7	)	$	730
Intersegment revenues		—		5		—		—		5		(5	)		—		—		3		—		—		3		(3	)		—
Total segment net revenues		275		183		207		131		796		(5	)		791		243		192		178		127		740		(10	)		730
Adjusted EBITDA		49		52		51		24		176							40		55		35		23		153
Depreciation and amortization		4		3		1		4		12		9			21		6		4		3		4		17		7			24

Reynolds
Cooking
& Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Segment
Total

Unallocated⁽¹⁾

Total

Six Months Ended June 30, 2020

(in millions)

Net revenues

$
538

$
390

$
364

$
264

$
1,556

(4
)

$
1,552

Intersegment revenues

—

5

—

1

6

(6
)

—

Total segment net revenues

538

395

364

265

1,562

(10
)

1,552

Adjusted EBITDA

106

118

78

51

353

Depreciation and amortization

10

7

7

9

33

15

48

Reynolds
Cooking
& Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Segment
Total

Unallocated⁽¹⁾

Total

Six Months Ended June 30, 2019

(in millions)

Net revenues

$
488

$
339

$
371

$
258

$
1,456

—

$
1,456

Intersegment revenues

—

9

—

—

9

(9
)

—

Total segment net revenues

488

348

371

258

1,465

(9
)

1,456

Adjusted EBITDA

67

91

86

44

288

Depreciation and amortization

8

6

4

10

28

14

42

The following table presents a reconciliation of segment Adjusted EBITDA to GAAP income before income taxes:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2020			2019			2020			2019			2021			2020
	(in millions)						(in millions)						(in millions)
Segment Adjusted EBITDA	$	200		$	176		$	353		$	288		$	149		$	153
Corporate / unallocated expenses		(7	)		(7	)		(25	)		(9	)		(9	)		(18	)
		193			169			328			279			140			135
Adjustments to reconcile to GAAP income before income taxes
Depreciation and amortization		(24	)		(21	)		(48	)		(42	)		(26	)		(24	)
Interest expense, net		(17	)		(67	)		(44	)		(135	)		(12	)		(27	)
Factoring discount		—			(5	)		—			(10	)
Allocated related party management fee		—			(2	)		—			(4	)
IPO and separation-related costs		(7	)		(1	)		(21	)		(1	)		(3	)		(14	)
Unrealized gains (losses) on derivatives		3			1			(1	)		8
Unrealized losses on derivatives														—			(4	)
Other		—			—			(1	)		1			—			(1	)
Consolidated GAAP income before income taxes	$	148		$	74		$	213		$	96		$	99		$	65

	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
	2020		2019		2020			2019		2021			2020
	(in millions)				(in millions)					(in millions)
Waste and storage products ⁽¹⁾	$	338	$	309	$	654		$	597	$	318		$	316
Cooking products		295		275		538			488		272			243
Tableware		186		207		364			371		170			178
Unallocated		3		—		(4	)		—		(3	)		(7	)
Net revenues	$	822	$	791	$	1,552		$	1,456	$	757		$	730

Our different product lines are generally sold to a common group of customers. For all product lines, there is a relatively short time period between the receipt of the order and the transfer of control over the goods to the customer.

~~The following table summarizes the changes in our balances of each component of accumulated other comprehensive income.~~

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

(in millions)

(in millions)

Currency translation adjustments:

Balance as of beginning of period

$
(8
)
$
(7
)

$
(6
)
$
(7
)
Currency translation adjustments

1

—

(1
)

—

Other comprehensive income (loss)

1

—

(1
)

—

Balance as of end of period

$
(7
)
$
(7
)

$
(7
)
$
(7
)
Employee benefit plans:

Balance as of beginning of period

$
11

$
16

$
11

$
14

Adoption of new accounting principle

—

—

—

3

Amortization of actuarial gain

—

—

—

(1
)
Other comprehensive income (loss)

—

—

—

(1
)
Balance as of end of period

$
11

$
16

$
11

$
16

Accumulated other comprehensive income

Balance as of beginning of period

$
3

$
9

$
5

$
7

Adoption of new accounting principle

—

—

—

3

Other comprehensive income (loss)

1

—

(1
)

(1
)
Balance as of end of period

$
4

$
9

$
4

$
9

We historically operated as part of ~~RGHL~~PEI Group. In preparation for our IPO, ~~RGHL~~PEI Group transferred its interest in us to Packaging Finance Limited (“PFL”). PFL owns the majority of our outstanding common stock and isowns the ~~sole shareholder~~majority of ~~RGHL~~the outstanding common stock of PEI Group. In addition to the allocation of expenses for certain services related to group wide functions provided by RGHL Group discussed in Note 1 – Summary of Significant Accounting Policies, other transactionsTransactions between us and ~~RGHL~~PEI Group are described below.

For the three months ended March 31, 2021, revenues from products sold to PEI Group were $25 million, compared to $39 million in the comparable prior year period. For the three months ended March 31, 2021, products purchased from PEI Group were $74 million, compared to $83 million in the comparable prior year period. For the three months ended March 31, 2021, PEI Group charged us freight and warehousing costs of $14 million, compared to $26 million in the comparable prior year period, which were included in cost of sales. The resulting related party receivables and payables are settled regularly with PEI Group in the normal course of business.

Furthermore, $36 million of the dividends paid during the three months ended March 31, 2021, were paid to PFL.

On January 30, 2020, we repurchased all of the U.S. accounts receivable that we previously sold through ~~RGHL~~PEI Group’s securitization facility for $264 million, $240 million of which was settled in cash and the remaining amount used to settle certain current related party receivables. The cash to purchase these receivables was provided by an increase in related party borrowings, which was subsequently settled as discussed below.

On January 30, 2020, our outstanding borrowings, net of deferred financing transaction costs and original issue discounts plus accrued interest incurred under the ~~RGHL~~PEI Group Credit Agreement were reallocated to an entity within ~~RGHL~~PEI Group and on February 4, 2020, we were fully and unconditionally released from the security and guarantee arrangements relating to ~~RGHL~~PEI Group’s borrowings. This reallocation resulted in a payment to ~~RGHL~~PEI Group of $8 million for accrued interest and an increase of $2,001 million in related party borrowings, which was subsequently settled as discussed below.

On February 4, 2020, we repaid $3,627 million of related party borrowings and $22 million of related party accrued interest owed to ~~RGHL~~PEI Group and capitalized, as additional paid-in capital without the issuance of any additional shares, the remaining $831 million balance of the related party borrowings owed to ~~RGHL~~PEI Group.

On February 4, 2020, we entered into a transition services agreement with ~~Reynolds~~a subsidiary of PEI Group, ~~Holdings Inc.~~ whereby ~~RGHL~~PEI Group will continue to provide certain administrative services to us, including information technology services; accounting, treasury, financial reporting and transaction support; human resources; procurement; tax, legal and compliance related services; and other corporate services for up to 24 months. In addition, we entered into a transition services agreement with Rank Group Limited (an affiliate of PEI Group) whereby, upon our request, Rank Group Limited will provide certain administrative services to us, including financial reporting, consulting and compliance services, insurance procurement and human resources support, legal and corporate secretarial support, and related services for up to 24 months. For the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, we incurred $2 million ~~and $5 million, respectively,~~ related to transition services which were included in selling, general and administrative expenses in our condensed consolidated statements of ~~income.~~

~~For the three and six months ended June 30, 2020, revenues from product sold to RGHL Group were $24 million and $63 million, respectively,~~income compared to ~~$38~~$3 million and $78 million in the comparable prior year periods. For the three and six months ended June 30, 2020, products purchased from RGHL Group were $78 million and $161 million, respectively, compared to $110 million and $234 million in the comparable prior year periods. For the three and six months ended June 30, 2020, RGHL Group charged us $20 million and $46 million, respectively, compared to $37 million and $71 million in the comparable prior year periods, of their freight and warehousing costs, which were included in cost of sales. The resulting related party receivables and payables are settled regularly with RGHL Group in the normal course of business. Furthermore, $23 million of the dividends paid duringfor the three months ended ~~June 30, 2020 was paid to PFL.~~March 31, 2020.

On ~~July 30, 2020,~~April 29, 2021, our Board of Directors approved a cash dividend of ~~$0.22~~$0.23 per common share to be paid on ~~August 31, 2020~~May 27, 2021 to shareholders of record on ~~August 16, 2020.~~ May 13, 2021.

~~Subsequent to June 30, 2020~~,On April 28, 2021, we ~~made~~purchased a ~~voluntary principal payment~~building that was previously accounted for as a leased asset for $24 million. The termination of ~~$100 million related to~~the lease did not have a material impact on our ~~Term Loan Facility.~~consolidated balance sheet.

Except as described above, there have been no events subsequent to ~~June 30, 2020~~March 31, 2021 which would require accrual or disclosure in these condensed consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our management’s discussion and analysis is intended to help the reader understand our results of operations and financial condition and is provided as an addition to, and should be read in connection with, our ~~combined~~condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and the accompanying notes contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Tabular dollars are presented in millions.

We are a market-leading consumer products company with a presence in 95% of households across the United States. We produce and sell products across three broad categories: cooking products, waste & storage products and tableware. We sell our products under iconic brands such as Reynolds and Hefty and also under store brands that are strategically important to our customers. Overall, across both our branded and store brand offerings, we hold the #1 or #2 U.S. market share position in the majority of product categories in which we participate. We have developed our market-leading position by investing in our product categories and consistently developing innovative products that meet the evolving needs and preferences of the modern consumer.

Our mix of branded and store brand products is a key competitive advantage that aligns our goal of growing the overall product categories with our customers’ goals and positions us as a trusted strategic partner to our retailers. Our Reynolds and Hefty brands have preeminent positions in their categories and carry strong brand recognition in household aisles.

We manage our operations in four operating and reportable segments: Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware and Presto ~~Products.~~Products:

~~Prior to our Corporate Reorganization and IPO completed on~~On February 4, 2020 we ~~operated as part of RGHL Group’s broader corporate organization rather than~~separated from PEI Group and completed our IPO as a stand-alone public company. RGHL Group performed or supported various corporate services for us, including executive management, supply chain, information technology, legal, finance and accounting, human resources, risk management, tax, treasury and other services. In addition, we have sold products to, and purchased products from, RGHL Group. Historically, these transactions involving RGHL Group may not have always been consummated on terms equivalent to those in an arm’s-length transaction. Sales to RGHL Group of products that we manufacture have been reflected as related party net revenues in our condensed consolidated financial statements. Certain related party transactions are reflected as related party receivables and payables in our condensed consolidated balance sheets and are settled in cash. Prior to our Corporate Reorganization and IPO, certain related party transactions with RGHL Group were settled by either non-cash capital contributions from RGHL Group to us or non-cash capital distributions from us and were included as part of RGHL Group’s net investment in our condensed consolidated balance sheets. We also utilize manufacturing and warehousing facilities and resources managed by RGHL Group to conduct our business. The expenses associated with these transactions are included in cost of sales in our condensed consolidated statements of income. We believe that the assumptions and methodologies underlying the allocation of these expenses from RGHL Group are reasonable. However, such allocations do not necessarily reflect what the results of operations and financial position would have been had we operated as a stand-alone public company during the periods presented.

entity. In conjunction with our separation from ~~RGHL~~PEI Group, we entered into a transition services agreement with ~~Reynolds~~a subsidiary of PEI Group ~~Holdings Inc.~~ whereby ~~RGHL~~PEI Group will continue to provide certain administrative services to us, including information technology services; accounting, treasury, financial reporting and transaction support; human resources; procurement; tax, legal and compliance related services; and other corporate services for up to 24 ~~months.~~months beginning on February 4, 2020. In addition, we entered into a transition services agreement with Rank Group Limited whereby, upon our request, Rank Group Limited will provide certain administrative services to us, including financial reporting, consulting and compliance services, insurance procurement and human resources support, legal and corporate secretarial support, and related services for up to 24 months. At the conclusion of these transitional arrangements, we will have to perform these services with internal resources or contract with third party providers. The previous arrangements we had with ~~RGHL~~PEI Group may be materially different from the arrangements that we have entered into as part of our separation from ~~RGHL~~PEI Group.

On February 4, 2020, in conjunction with our Corporate Reorganization and IPO, we entered into ~~the~~ new external debt facilities (“External Debt Faciliti~~es,~~es”), consisting of ~~the~~a $2,475 million senior secured term loan facility (“Term Loan ~~Facility~~Facility”) and ~~the~~ a $250 million senior secured revolving credit facility (“Revolving ~~Facility,~~Facility”), and repaid portions of the related party borrowings owed to ~~RGHL~~PEI Group that were reflected on our ~~condensed consolidated~~ balance ~~sheet. RGHL~~sheet prior to that date. PEI Group contributed the remaining balance of related party borrowings owed by us to ~~RGHL~~PEI Group as additional paid-in capital without the issuance of any additional shares prior to the closing of our IPO. In addition, all indebtedness that we had borrowed under ~~RGHL~~PEI Group’s Credit Agreement was reallocated and we were released as a borrower and guarantor from such facilities and released as a guarantor of ~~RGHL~~PEI Group’s outstanding senior notes.

As ~~we manufacture and sell products that are essential to the daily lives of consumers, we have been classified as an “essential business” and our operations have remained open throughout~~previously discussed, in connection with the COVID-19 ~~pandemic. We have~~pandemic, we implemented policies and procedures designed to protect our employees and our customers, including implementing recommendations from the Centers for Disease Control and Prevention for social distancing in our plants, screening employees for increased temperature at certain locations, providing masks and/or face coverings, engagement of third-party vendors to clean and sanitize facilities, implementing a work from home policy for all employees who can do so, and enhanced leave policies to ensure employees experiencing symptoms of COVID-19 stay at home.Prevention. As the pandemic ~~progresses,~~evolves, we remain committed to adapting our policies and procedures to ensure the safety of our employees and compliance with federal, state and local regulations.

While ~~not significant to our overall results of operations,~~ we have experienced increased costs ~~in the second quarter of 2020~~ as a result of ~~COVID-19.~~COVID-19, including in the three months ended March 31, 2021, such increased costs were not material to our results of operations. However, these costs may not be representative of what we ~~expect to~~may incur moving forward. Further, although we have not to date experienced notable supply chain or customer base disruptions related to COVID-19, those and other negative impacts remain potential risks as the ongoing and future effects of the pandemic are difficult to predict. See the “Risk Factors” section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for a further discussion of risks related to the COVID-19 pandemic.

We continue to ~~experience an increase in demand due~~see a fundamental shift to more at-home use of our products driven by the consumer response to the COVID-19 pandemic. ~~We have experienced~~The duration and magnitude of the increased demand across three of our segments: Reynolds Cooking & Baking, Hefty Waste & Storage and Presto Products; while our Hefty Tableware segment has been negatively impacted by the pandemic due to fewer large gatherings,remains unknown, particularly ~~around summer holidays and end of school events,~~ as ~~well as lower demand from the foodservice businesses, which are serviced by certain of our retail partners. The duration of the COVID-19 pandemic remains unknown,~~vaccine rollouts continue, and its ongoing impact on our operations may not be consistent with our experiences to date. At this time, we are unable to predict with any certainty the nature, timing or magnitude of any changes in future sales and/or earnings attributable to the ~~spread~~impact of COVID-19 and efforts to reduce its spread. In addition, since the COVID-19 pandemic has been ongoing for over a year, quarterly results in ~~North America.~~ 2021 will have comparisons against results in 2020 that benefited significantly from the shift to more at-home use of our products and related increases in demand, which may not be sustained in 2021.

We do not currently anticipate that the COVID-19 pandemic will materially impact our liquidity over the next 12 months.

In the three months ended March 31, 2021, net revenues increased 4% compared to the three months ended March 31, 2020, primarily driven by higher pricing through a combination of fewer trade promotions and price increases in response to increased commodity costs. In addition, the severe winter storms affecting certain parts of the United States in February 2021 negatively impacted volume in the first quarter of 2021, particularly in our Hefty Waste & Storage and Presto Products segments. We estimate that February's storms negatively impacted net revenues by approximately two percentage points and expect there will be some level of continuing impacts from February's storms over the short term.

We have experienced significant cost pressures in the first quarter of 2021 and cost increases are expected to continue. Price increases have been implemented and a second round is underway, with plans for a third round to be implemented in the third quarter of 2021. On an annualized basis, aggregated pricing actions are expected to cover the increases in input costs, but we expect to see some near term margin pressure as the pricing actions get implemented before expanding sequentially in the third and fourth quarters of 2021.

In this Quarterly Report on Form 10-Q we use the non-GAAP financial measures “Adjusted EBITDA”, “Adjusted Net Income” and “Adjusted EPS”, which are measures adjusted for the impact of specified items and are not in accordance with GAAP.

We define Adjusted EBITDA as net income calculated in accordance with GAAP, plus the sum of income tax expense, net interest expense, depreciation and amortization and further adjusted to exclude, as applicable, unrealized gains and losses on commodity derivatives ~~factoring discounts (pre-IPO), the allocated related party management fee (pre-IPO)~~ and IPO and separation-related costs. We define Adjusted Net Income and Adjusted EPS as Net Income and Earnings Per Share calculated in accordance with GAAP, plus, as applicable, the sum of unrealized gains and losses on commodity derivatives, IPO and separation-related costs and the impact of a tax legislation ~~changes~~change under the CARES Act enacted on March 27, ~~2020 and any unrealized gains or losses on derivatives.~~2020.

We present Adjusted EBITDA because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans and make strategic decisions. In addition, our chief operating decision maker uses Adjusted EBITDA of each reportable segment to evaluate the operating performance of such segments. We use Adjusted Net Income and Adjusted EPS as supplemental ~~metrics~~measures to evaluate our business’ performance in a way that also considers our ability to generate profit without the impact of certain items. Accordingly, we believe presenting these ~~metrics~~measures provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors.

Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP financial measures presented by other companies.

The following istable presents a reconciliation of our net income, the most directly comparable GAAP financial measure, to Adjusted ~~EBITDA for each of the periods indicated:~~EBITDA:

	Three Months Ended June 30,						Six Months Ended June 30,					Three Months Ended March 31,
	2020			2019			2020		2019			2021		2020
	(in millions)						(in millions)					(in millions)
Net income – GAAP	$	112		$	55		$	138	$	72		$	74	$	26
Income tax expense		36			19			75		24			25		39
Interest expense, net		17			67			44		135			12		27
Depreciation and amortization		24			21			48		42			26		24
Factoring discount ⁽¹⁾		—			5			—		10
Allocated related party management fee⁽²⁾		—			2			—		4
IPO and separation-related costs ⁽³⁾		7			1			21		1
Unrealized (gains) losses on derivatives ⁽⁴⁾		(3	)		(1	)		1		(8	)
IPO and separation-related costs ⁽¹⁾													3		14
Unrealized losses on derivatives ⁽²⁾													—		4
Other		—			—			1		(1	)		—		1
Adjusted EBITDA (Non-GAAP)	$	193		$	169		$	328	$	279		$	140	$	135

The following istable presents a reconciliation of our net income and diluted EPS, the most directly comparable GAAP financial ~~measure,~~measures, to Adjusted Net Income and Adjusted ~~EPS for each of the periods indicated:~~Diluted EPS:

	Three Months Ended June 30, 2020								Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
(In millions, except for per share data)	Net Income			Diluted Shares		Diluted EPS			Net Income		Diluted Shares		Diluted EPS		Net Income		Diluted Shares		Diluted EPS
As Reported - GAAP	$	112			210	$	0.53		$	74		210	$	0.35	$	26		189	$	0.14
Adjustments:
IPO and separation-related costs ⁽¹⁾		5			210		0.03
Unrealized gains on derivatives ⁽¹⁾		(2	)		210		(0.01	)
Adjusted (Non-GAAP)	$	115			210	$	0.55

	Six Months Ended June 30, 2020
(In millions, except for per share data)	Net Income			Diluted Shares		Diluted EPS
As Reported - GAAP	$	138			199	$	0.69
Assume full period impact of IPO shares ⁽²⁾	—				11	—
Assume full period impact of IPO shares ⁽¹⁾									—			—	—		—			21	—
Total		138			210		0.66			74		210		0.35		26		210		0.12
Adjustments:
IPO and separation-related costs ⁽²⁾										2		210		0.01		11		210		0.05
Impact of tax legislation change from the CARES Act		23			210		0.11			—		—		—		23		210		0.11
IPO and separation-related costs ⁽¹⁾		16			210		0.08
Unrealized losses on derivatives ⁽¹⁾		1			210	—
Unrealized losses on derivatives ⁽²⁾										—		—		—		3		210		0.02
Adjusted (Non-GAAP)	$	178			210	$	0.85		$	76		210	$	0.36	$	63		210	$	0.30

The following discussion should be read in conjunction with our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Detailed comparisons of revenue and results are presented in the discussions of the operating segments, which follow our consolidated results discussion.

(In millions)

Reynolds
Cooking &
Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Unallocated(2)

Total
Reynolds
Consumer
Products

Net revenues for the three months ended June 30:

2020

$
295

$
203

$
186

$
138

$
—

$
822

2019

275

183

207

131

(5
)

791

Adjusted EBITDA for the three months ended
June 30: ⁽¹⁾

2020

$
66

$
63

$
43

$
28

$
(7
)

$
193

2019

49

52

51

24

(7
)

169

(In millions)	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Unallocated⁽²⁾			Total Reynolds Consumer Products
Net revenues for the three months ended March 31:
2021	$	272	$	194	$	170	$	126	$	(5	)	$	757
2020		243		192		178		127		(10	)		730
Adjusted EBITDA for the three months ended March 31: ⁽¹⁾
2021	$	53	$	44	$	34	$	18	$	(9	)	$	140
2020		40		55		35		23		(18	)		135

Three Months Ended ~~June 30, 2020~~March 31, 2021 Compared with the Three Months Ended ~~June 30, 2019~~March 31, 2020

	For the Three Months Ended June 30,																		For the Three Months Ended March 31,
(In millions, except for %)	2020			% of Revenue			2019			% of Revenue			Change			% Change			2021			% of Revenue			2020			% of Revenue			Change			% Change
Net revenues	$	798			97	%	$	753			95	%	$	45			6	%	$	732			97	%	$	691			95	%	$	41			6	%
Related party net revenues		24			3	%		38			5	%		(14	)		(37	)%		25			3	%		39			5	%		(14	)		(36	)%
Total net revenues		822			100	%		791			100	%		31			4	%		757			100	%		730			100	%		27			4	%
Cost of sales		(570	)		(69	)%		(564	)		(71	)%		(6	)		1	%	��	(565	)		(75	)%		(541	)		(74	)%		(24	)		(4	)%
Gross profit		252			31	%		227			29	%		25			11	%		192			25	%		189			26	%		3			2	%
Selling, general and administrative expenses		(81	)		(10	)%		(77	)		(10	)%		(4	)		5	%		(78	)		(10	)%		(82	)		(11	)%		4			5	%
Other expense, net		(6	)		(1	)%		(9	)		(1	)%		3			(33	)%		(3	)		(0	)%		(15	)		(2	)%		12			80	%
Income from operations		165			20	%		141			18	%		24			17	%		111			15	%		92			13	%		19			21	%
Interest expense, net		(17	)		(2	)%		(67	)		(9	)%		50			(75	)%		(12	)		(2	)%		(27	)		(4	)%		15			56	%
Income before income taxes		148			18	%		74			9	%		74			100	%		99			13	%		65			9	%		34			52	%
Income tax expense		(36	)		(4	)%		(19	)		(2	)%		(17	)		89	%		(25	)		(3	)%		(39	)		(5	)%		14			36	%
Net income	$	112			14	%	$	55			7	%	$	57			104	%	$	74			10	%	$	26			4	%	$	48			185	%
Adjusted EBITDA ⁽¹⁾	$	193			23	%	$	169			21	%	$	24			14	%	$	140			18	%	$	135			18	%	$	5			4	%

Components of Change in Net Revenues for the Three Months Ended ~~June 30, 2020~~March 31, 2021 vs. the Three Months Ended ~~June 30, 2019~~March 31, 2020

	Price			Volume/Mix			Total			Price			Volume/Mix			Total
Reynolds Cooking & Baking		(2	)%		9	%		7	%		6	%		6	%		12	%
Hefty Waste & Storage		—	%		11	%		11	%		4	%		(3	)%		1	%
Hefty Tableware		3	%		(13	)%		(10	%)		5	%		(9	)%		(4	)%
Presto Products		(1	)%		6	%		5	%		3	%		(4	)%		(1	)%
Total RCP		(1	)%		5	%		4	%		5	%		(1	)%		4	%

Total Net Revenues. Total net revenues increased by ~~$31~~$27 million, or 4%, to ~~$822~~$757 million.The increase was primarily driven by ~~increased demand due to~~higher pricing as a result of fewer trade promotions in the ~~consumer~~current year period and pricing increases in response to ~~the COVID-19 pandemic, partially offset by a $16 million decline~~increased commodity costs. Higher volume in ~~revenue due to the exit of certain low margin store branded business in the prior year and a $14 million decline in related party revenue. We have experienced increased demand across three of~~ our ~~segments:~~ Reynolds Cooking & Baking segment as a result of increased at-home usage was more than offset by lower volume in our Hefty Tableware segment as well as the impact of severe winter storms affecting certain parts of the United States during the 2021 period primarily impacting our Hefty Waste & Storage and Presto Products; while our Hefty Tableware segment has been negatively impacted by the pandemic due to fewer large gatherings, particularly around summer holidays and end of school events, as well as lower demand from the foodservice businesses, which are serviced by certain of our retail partners.Products segments.

Cost of Sales. Cost of sales increased by $6$24 million, or 1%4%, to ~~$570~~$565 million. The increase was driven by increased material costs and increases in manufacturing and logistics costs primarily ~~due to increased revenue,~~ as ~~noted above, partially offset~~a result of supply chain disruption caused by ~~lower material and manufacturing costs.~~the winter storms.

Selling, General and Administrative Expenses. Selling, general and administrative expenses ~~increased~~decreased by $4 million, or 5%, to ~~$81~~$78 million primarily due to lower discretionary spending, including advertising and other controllable costs, partially offset by higher personnel costs.

Other Expense, Net. Other expense, net decreased by $3$12 million, or ~~33%~~80%, to $6$3 million. The decrease was primarily attributable to ~~the factoring discount on the sale of~~separation-related costs associated with our ~~U.S. trade receivables through RGHL Group’s securitization facility and the allocated related party management fee~~IPO incurred in the ~~comparable~~ prior ~~period partially offset by IPO and separation-related costs during the current~~year period.

Interest Expense, Net. Interest expense, net decreased by ~~$50~~$15 million, or ~~75%~~56%, to ~~$17~~$12 million. The decrease was primarily due to lower interest expense as a result of principal payments under our Term Loan Facility and the change in our debt structure as a result of our IPO in the first quarter of 2020. Prior to the IPO we had related party debt and associated interest expense that was replaced with our External Debt Facilities in conjunction with the IPO.

Income Tax ~~(Expense) Benefit.~~Expense. We recognized income tax expense of ~~$36~~$25 million on income before income taxes of ~~$148~~$99 million (an effective tax rate of ~~24%~~25.0%) for the three months ended ~~June 30, 2020~~March 31, 2021 compared to income tax expense of ~~$19~~$39 million on income before income taxes of ~~$74~~$65 million (an effective tax rate of ~~26%~~60.0%) for the three months ended ~~June 30, 2019.~~March 31, 2020. The decrease ~~in the effective tax rate was due to a reduction in permanently non-deductible items.~~

~~Adjusted EBITDA.~~ ~~Adjusted EBITDA increased by $24 million, or 14% to $193 million. The increase in Adjusted EBITDA~~ ~~was primarily due to the increased revenue, as noted above.~~

~~Total Segment Net Revenues~~. Reynolds Cooking & Baking total segment net revenues increased by $20 million, or 7%, to $295 million. The increase in net revenues was primarily driven by the increased consumer demand associated with the changes in consumer behavior driven by the COVID-19 pandemic. The increased volume was partially offset by a decline in related party revenue and lower pricing driven by price reductions in support of certain of our customers achieving key price points and as a result of lower material costs.

~~Adjusted EBITDA~~. Reynolds Cooking & Baking Adjusted EBITDA increased by $17 million, or 35%, to $66 million. The increase in Adjusted EBITDA was primarily driven by the increased revenue, as noted above, and lower material and manufacturing costs, partially offset by the impact of lower pricing as noted above.

~~Total Segment Net Revenues~~. Hefty Waste & Storage total segment net revenues increased by $20 million, or 11%, to $203 million. The increase in net revenues was primarily driven by increased consumer demand associated with the changes in consumer behavior driven by the COVID-19 pandemic.

~~Adjusted EBITDA.~~ ~~Hefty Waste & Storage Adjusted EBITDA increased by $11 million, or 21%, to $63 million. The increase in Adjusted EBITDA was primarily driven by the increased revenue, as noted above.~~

~~Total Segment Net Revenues.~~ Hefty Tableware total segment net revenues decreased by $21 million, or 10%, to $186 million. The decrease in net revenues was primarily due to changes in consumer behavior driven by the COVID-19 pandemic. As a result of COVID-19-related restrictions, there have been fewer large gatherings, particularly around summer holidays and end of school events, as well as lower demand from the foodservice businesses, which are serviced by certain of our retail partners. Lower trade promotion spend partially offset these volume declines.

~~Adjusted EBITDA.~~ Hefty Tableware Adjusted EBITDA decreased by $8 million, or 16%, to $43 million. The decrease in Adjusted EBITDA was primarily driven by lower revenue, as noted above, and increased material and manufacturing costs which were primarily driven by our transition to a stand-alone entity.

~~Total Segment Net Revenues.~~ Presto Products total segment net revenues increased by $7 million, or 5%, to $138 million. The increase in net revenues was primarily driven by changes in consumer behavior driven by the COVID-19 pandemic, partially offset by the exit of certain low margin store branded business in the prior year.

~~Adjusted EBITDA. Presto Products Adjusted EBITDA increased by $4 million, or 17%, to $28 million. The increase in Adjusted EBITDA was primarily driven by the increased revenue, as noted above.~~

~~Six Months Ended June 30, 2020 Compared with the Six Months Ended June 30, 2019~~

For the Six Months Ended June 30,

(In millions, except for %)

2020

% of Revenue

2019

% of Revenue

Change

% Change

Net revenues

$
1,489

96
%

$
1,378

95
%

$
111

8
%
Related party net revenues

63

4
%

78

5
%

(15
)

(19
)%
Total net revenues

1,552

100
%

1,456

100
%

96

7
%
Cost of sales

(1,111
)

(72
)%

(1,056
)

(73
)%

(55
)

5
%
Gross profit

441

28
%

400

27
%

41

10
%
Selling, general and administrative expenses

(163
)

(11
)%

(155
)

(11
)%

(8
)

5
%
Other expense, net

(21
)

(1
)%

(14
)

(1
)%

(7
)

50
%
Income from operations

257

17
%

231

16
%

26

11
%
Interest expense, net

(44
)

(3
)%

(135
)

(9
)%

91

(67
)%
Income before income taxes

213

14
%

96

7
%

117

122
%
Income tax expense

(75
)

(5
)%

(24
)

(2
)%

(51
)

213
%
Net income

$
138

9
%

$
72

5
%

$
66

92
%
Adjusted EBITDA ⁽¹⁾

$
328

21
%

$
279

19
%

$
49

18
%

~~Components of Change in Net Revenues for the Six Months Ended June 30, 2020 vs. the Six Months Ended June 30, 2019~~

~~Total Net Revenues. Total net revenues increased by $96 million, or 7%, to $1,552 million.~~The increase in net revenues was largely due to increased demand due to the consumer response to the COVID-19 pandemic, partially offset by a decline in revenue due to the exit of certain low margin store branded business in the prior year, a decline in related party revenue and lower pricing driven by price reductions in support of certain of our customers achieving key price points and as a result of lower material costs.

~~Cost of Sales. Cost of sales increased by $55 million, or 5%, to $1,111 million. The increase was primarily due to increased revenue, as noted above, partially offset by lower material and manufacturing costs.~~

~~Selling, General and Administrative Expenses.~~ ~~Selling, general and administrative expenses increased by $8 million, or 5%, to $163 million due to higher personnel costs.~~

~~Other Expense, Net.~~ Other expense, net increased by $7 million, or 50%, to $21 million. The increase was primarily attributable to IPO and separation-related costs in the current period, partially offset by a reduction in costs related to the factoring discount on the sale of our U.S. trade receivables through RGHL Group’s securitization facility and the allocated related party management fee in the comparable prior period.

~~Interest Expense~~, ~~Net~~. Interest expense, net decreased by $91 million, or 67%, to $44 million. The decrease was primarily due to the change in our debt structure as a result of our IPO in the first quarter of 2020. Prior to the IPO we had related party debt and associated interest expense that was replaced with our External Debt Facilities in conjunction with the IPO.

~~Income Tax (Expense) Benefit.~~ We recognized income tax expense of $75 million on income before income taxes of $213 million (an effective tax rate of 35%) for the six months ended June 30, 2020 compared to income tax expense of $24 million on income before income taxes of $96 million (an effective tax rate of 25%) for the six months ended June 30, 2019. The increase in the effective tax rate was due to the recognition of a $23 million discrete tax expense associated with the remeasurement of our deferred taxes as a result of the legislation change from the CARES ~~Act.~~Act in the prior year period. Excluding the impact of this, our effective tax rate was ~~24%~~24.7% for the ~~six~~three months ended ~~June 30,~~March 31, 2020.

Adjusted EBITDA. Adjusted EBITDA increased by ~~$49~~$5 million, or ~~18%~~4%, to ~~$328~~$140 million. The increase in Adjusted EBITDA was primarily due to the increased ~~revenue,~~pricing, as noted above, partially offset by higher material, manufacturing and ~~lower material and manufacturing~~logistics costs.

	For the Six Months Ended June 30,											For the Three Months Ended March 31,
(In millions, except for %)	2020			2019			Change		% Change			2021			2020			Change		% Change
Total segment net revenues	$	538		$	488		$	50		10	%	$	272		$	243		$	29		12	%
Segment Adjusted EBITDA		106			67			39		58	%		53			40			13		33	%
Segment Adjusted EBITDA Margin		20	%		14	%							19	%		16	%

Total Segment Net Revenues. Reynolds Cooking & Baking total segment net revenues increased by ~~$50~~$29 million, or ~~10%~~12%, to ~~$538~~$272 million. The increase in net revenues was primarily driven by increased consumer demand associated with the changes in consumer behavior driven by the COVID-19 pandemic, partially offset by a decline in related party revenue and lower pricing driven by price reductions in support of certain of our customers achieving key price points andhigher volume as a result of ~~lower material costs.~~continued heightened demand driven by increased at-home usage and higher pricing, mostly driven by fewer promotional programs in the current year period.

Adjusted EBITDA. Reynolds Cooking & Baking Adjusted EBITDA increased by ~~$39~~$13 million, or ~~58%~~33%, to ~~$106~~$53 million. The increase in Adjusted EBITDA was primarily driven by the increased revenue, as noted above, ~~and lower material and manufacturing costs,~~ partially offset by ~~lower pricing, as noted above.~~higher material, manufacturing and logistics costs.

	For the Six Months Ended June 30,											For the Three Months Ended March 31,
(In millions, except for %)	2020			2019			Change		% Change			2021			2020			Change			% Change
Total segment net revenues	$	395		$	348		$	47		14	%	$	194		$	192		$	2			1	%
Segment Adjusted EBITDA		118			91			27		30	%		44			55			(11	)		(20	)%
Segment Adjusted EBITDA Margin		30	%		26	%							23	%		29	%

Total Segment Net Revenues. Hefty Waste & Storage total segment net revenues increased by ~~$47~~$2 million, or ~~14%~~1%, to ~~$395~~$194 million. The increase in net revenues was primarily driven by higher pricing in response to increased ~~consumer demand associated with~~commodity costs and fewer trade promotions, mostly offset by lower volume as a result of severe winter storms impacting certain parts of the ~~changes in consumer behavior driven by~~United States during the ~~COVID-19 pandemic.~~2021 period.

Adjusted EBITDA. Hefty Waste & Storage Adjusted EBITDA ~~increased~~decreased by ~~$27~~$11 million, or ~~30%~~20%, to ~~$118~~$44 million. The ~~increase~~decrease in Adjusted EBITDA was primarily driven by ~~increased revenue, as noted above.~~higher material, manufacturing and logistics costs partially offset by lower discretionary spend.

	For the Six Months Ended June 30,												For the Three Months Ended March 31,
(In millions, except for %)	2020			2019			Change			% Change			2021			2020			Change			% Change
Total segment net revenues	$	364		$	371		$	(7	)		(2	)%	$	170		$	178		$	(8	)		(4	)%
Segment Adjusted EBITDA		78			86			(8	)		(9	)%		34			35			(1	)		(3	)%
Segment Adjusted EBITDA Margin		21	%		23	%								20	%		20	%

Total Segment Net Revenues. Hefty Tableware total segment net revenues decreased by $7$8 million, or 2%4%, to ~~$364~~$170 million. The decrease in net revenues was ~~largely due to changes in consumer behavior~~primarily driven by lower volume which was partially offset by higher pricing in the ~~COVID-19 pandemic. While there was~~current year period as a ~~temporary increase in revenue at the onset~~result of ~~the pandemic, largely driven by pantry loading, the pandemic-related restrictions have resulted in~~ fewer ~~large gatherings, particularly around summer holidays and end of school events, as well as lower demand from the foodservice businesses, which are serviced by certain of our retail partners.~~trade promotions.

Adjusted EBITDA. Hefty Tableware Adjusted EBITDA decreased by $8$1 million, or 9%3%, to ~~$78~~$34 million. The decrease in Adjusted EBITDA was primarily driven by ~~the decline in revenue, as noted above, and increased~~higher material and manufacturing costs, ~~which were primarily driven~~partially offset by ~~our transition to a stand-alone entity.~~higher pricing, as noted above.

	For the Six Months Ended June 30,											For the Three Months Ended March 31,
(In millions, except for %)	2020			2019			Change		% Change			2021			2020			Change			% Change
Total segment net revenues	$	265		$	258		$	7		3	%	$	126		$	127		$	(1	)		(1	)%
Segment Adjusted EBITDA		51			44			7		16	%		18			23			(5	)		(22	)%
Segment Adjusted EBITDA Margin		19	%		17	%							14	%		18	%

Total Segment Net Revenues. Presto Products total segment net revenues ~~increased~~decreased by $7$1 million, or 3%1%, to ~~$265~~$126 million. The ~~increase~~decrease in net revenues was primarily driven by ~~changes in consumer behavior driven by~~lower volume as a result of severe winter storms impacting certain parts of the ~~COVID-19 pandemic, partially~~United States during the 2021 period mostly offset by ~~the exit of certain low margin store branded business~~increased pricing in ~~the prior year.~~response to increased commodity costs.

Adjusted EBITDA. Presto Products Adjusted EBITDA ~~increased~~decreased by $7$5 million, or ~~16%~~22%, to ~~$51~~$18 million. The ~~increase~~decrease in Adjusted EBITDA was primarily driven by increased ~~revenue, as noted above, and lower~~ material and manufacturing costs.

Net cash ~~provided by~~from operating activities ~~decreased~~changed by ~~$75~~$264 million, ~~to $3~~from an outflow of $255 million infor the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2020 to an inflow of $9 million for the three months ended March 31, 2021. The change was primarily driven by a ~~$268~~$312 million increase in accounts receivable, $240 million of which was related to accounts receivables previously sold through ~~RGHL~~PEI Group’s securitization facility prior to our separation from ~~RGHL~~PEI Group, ~~partially offset by~~and an increase in net income, a ~~lower net investment in~~partially offset by higher inventory ~~and changes in related party receivables~~ during the current ~~period.~~period due to inventory replenishment, the impact of higher commodity prices and a decrease in accrued and other current liabilities.

Net cash used in investing activities ~~decreased by $8~~was flat at $23 million ~~to $52 million~~and consisted of the acquisition of property, plant and equipment in the six months ended June 30, 2020. The net decrease was primarily attributable to net changes in cash advanced to RGHL Group as part of wider RGHL Group cash management activities in the prior period. In addition to these related party items, cash outflows from investing activities increased $11 million or 27%both periods. ~~This change was primarily attributable to taking operational ownership of two facilities previously managed by a related party in conjunction with the IPO.~~

Net cash from financing activities changed by ~~$366~~$530 million, from an ~~outflow~~inflow of ~~$27~~$376 million for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 to an ~~inflow~~outflow of ~~$339~~$154 million ~~for~~in the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The change ~~in cash flows from financing activities~~ was primarily attributable to the principal repayments of the Term Loan Facility and dividends paid during the 2021 period compared to the IPO related activities during the prior period, which included proceeds received from the IPO and the drawdown of the Term Loan Facility, partially offset by repayments of related party ~~balances and dividends paid during the 2020 period.~~balances.

Our principal sources of liquidity are existing cash and cash equivalents, cash generated from operating activities and available borrowings under the Revolving Facility.

On February 4, 2020, in conjunction with our Corporate Reorganization and IPO, we entered into the External Debt Facilities which consist of a $2,475 million Term Loan Facility and a Revolving Facility that provides for additional borrowing capacity of up to $250 million, reduced by amounts used for letters of credit.

As of March 31, 2021, the outstanding balance under the Term Loan Facility was $2,150 million. As of March 31, 2021, we had no outstanding borrowings under the Revolving Facility, and we had $7 million of letters of credit outstanding, which reduces the borrowing capacity under the Revolving Facility.

The initial borrower under the External Debt Facilities is Reynolds Consumer Products LLC (the “Borrower”). The Revolving Facility includes a sub-facility for letters of credit. In addition, the External Debt Facilities provide that the Borrower has the right at any time, subject to customary conditions, to request incremental term loans or incremental revolving credit commitments in amounts and on terms set forth therein. The lenders under the External Debt Facilities are not under any obligation to provide any such incremental loans or commitments, and any such addition of or increase in loans is subject to certain customary conditions precedent and other provisions.

Borrowings under the External Debt Facilities bear interest at a rate per annum equal to, at our option, either a base rate or a LIBO rate plus an applicable margin of 1.75%.

During the year ended December 31, 2020, we entered into a series of interest rate swaps which fixed the LIBO rate to an annual rate of 0.18% to 0.47% (for an annual effective interest rate of 1.93% to 2.22%, including margin) for an aggregate notional amount of $1,650 million. These interest rate swaps hedge a portion of the interest rate exposure resulting from our Term Loan Facility for periods ranging from one to five years.

The Term Loan Facility contains customary mandatory prepayments, including with respect to excess cash flow, asset sale proceeds and proceeds from certain incurrences of indebtedness.

The Borrower may voluntarily repay outstanding loans under the Term Loan Facility at any time without premium or penalty, other than customary breakage costs with respect to LIBO rate ~~loans; provided, however, that any voluntary prepayment, refinancing or repricing of~~loans. During the External Debt Facilities in connection with certain repricing transactions that occur prior to August 4, 2020 will be subject to a prepayment premium of 1% of the principal amount of the term loans so prepaid, refinanced or repriced. ~~Subsequent to June 30, 2020~~quarter ended March 31, 2021, we made a voluntary principal payment of $100 million related to the Term Loan ~~Facility, which was not subject to a prepayment premium.~~Facility.

All obligations under the External Debt Facilities and certain hedge agreements and cash management arrangements provided by any lender party to the External Debt Facilities or any of its affiliates and certain other persons are unconditionally guaranteed by the Reynolds Consumer Products Inc. (“RCPI”), the Borrower (with respect to hedge agreements and cash management arrangements not entered into by ~~affiliates of~~ the Borrower) and certain of RCPI’s existing and subsequently acquired or organized direct or indirect material wholly-owned U.S. restricted subsidiaries, with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in material adverse tax consequences.

All obligations under the External Debt Facilities and certain hedge agreements and cash management arrangements provided by any lender party to the External Debt Facilities or any of its affiliates and certain other persons, and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by: (i) a perfected first-priority pledge of all the equity interests of each wholly-owned material restricted subsidiary of RCPI, the Borrower or a subsidiary guarantor, including the equity interests of the Borrower (limited to 65% of voting stock in the case of first-tier non-U.S. subsidiaries of RCPI, the Borrower or any subsidiary guarantor) and (ii) perfected first-priority security interests in substantially all tangible and intangible personal property of RCPI, the Borrower and the subsidiary guarantors (subject to certain other exclusions).

The External Debt Facilities contain a number of covenants that, among other things, restrict, subject to certain exceptions, our ability and the ability of the restricted subsidiaries of RCPI to:

We are currently in compliance with the covenants contained in our External Debt Facilities.

During the quarter ended March 31, 2021, our Board of Directors declared and paid a quarterly cash dividend of $0.23 per share. On April 29, 2021, our Board of Directors declared a quarterly cash dividend of $0.23 per share, to be paid on May 27, 2021. We expect to continue paying cash dividends on a quarterly basis; however, future dividends are at the discretion of our Board of Directors and will depend upon our earnings, capital requirements, financial condition, contractual limitations (including under the Term Loan Facility) and other factors.

We believe that our projected cash position, cash flows from operations and borrowings under the External Debt Facilities are sufficient to meet the needs of our business for at least the next 12 months.

Accounting policies and estimates are considered critical when they require management to make subjective and complex judgments, estimates and assumptions about matters that have a material impact on the presentation of our financial statements and accompanying notes. For a description of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Statements of Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~	2
	Condensed Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~	3
	Condensed Consolidated Balance Sheets as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020	4
	Condensed Consolidated Statements of Stockholders’ Equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~	5
	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2623
Item 4.	Controls and Procedures	2623
PART II.	OTHER INFORMATION	2724
Item 1.	Legal Proceedings	2724
Item 1A.	Risk Factors	2724
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2825
Item 3.	Defaults Upon Senior Securities	2825
Item 4.	Mine Safety Disclosures	2825
Item 5.	Other Information	2825
Item 6.	Exhibits	2926
	Signatures	3027

Exhibit Number		Description

3.1		Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 4, 2020)
3.2		Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 4, 2020)
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

REYNOLDS CONSUMER PRODUCTS INC.
(Registrant)

By:		/s/ Chris Mayrhofer
		Chris Mayrhofer
		Senior Vice President and ~~Corporate~~ Controller ~~(Principal~~ (Principal Accounting Officer)
		~~August~~May 5, ~~2020~~2021

	For the Six Months Ended June 30,
(In millions)	2020			2019
Net cash provided by operating activities	$	3		$	78
Net cash used in by investing activities		(52	)		(60	)
Net cash provided by (used in) financing activities		339			(27	)
Increase (decrease) in cash and cash equivalents	$	290		$	(9	)

	For the Three Months Ended March 31,
(In millions)	2021			2020
Net cash provided by (used in) operating activities	$	9		$	(255	)
Net cash used in investing activities		(23	)		(23	)
Net cash (used in) provided by financing activities		(154	)		376
(Decrease) increase in cash and cash equivalents	$	(168	)	$	98

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company