SECURITIES AND EXCHANGE COMMISSION

☒
x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Title of each class

Trading

Symbol

Name of each exchange on which registered

Common stock, $0.001 par value

REYN

The Nasdaq Stock Market LLC

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 ☑ þ No ☐o

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 ☑ þ No ☐o

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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. ☐o

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

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, ~~2021~~2022 and as updated in our Quarterly Reports on Form 10-Q. You should specifically consider the numerous risks outlined in those “Risk Factors” sections. These risks and uncertainties include factors related to:

•

~~changes in consumer preferences, lifestyle and environmental concerns;~~

•changes in consumer preferences, lifestyle and environmental concerns;•

~~relationships with our major customers, consolidation of our customer bases and loss of a significant customer;~~

•relationships with our major customers, consolidation of our customer bases and loss of a significant customer;•

~~competition and pricing pressures;~~

•competition and pricing pressures;•

~~loss of, or disruption at, any of our key manufacturing facilities;~~

•loss of, or disruption at, any of our key manufacturing facilities;•

~~our suppliers of raw materials and any interruption in our supply of raw materials;~~

•our suppliers of raw materials and any interruption in our supply of raw materials;•

~~loss due to an accident, labor issues, weather conditions, natural disaster, the emergence of a pandemic or disease outbreak, such as coronavirus or otherwise;~~

•loss due to an accident, labor issues, weather conditions, natural disaster, the emergence of a pandemic or disease outbreak, such as coronavirus or otherwise;•

~~the unknown duration and economic, operational and financial impacts of the global COVID-19 pandemic;~~

•the unknown duration and economic, operational and financial impacts of the global COVID-19 pandemic;•

~~costs of raw materials, energy, labor and freight, including the impact of tariffs, trade sanctions and similar matters affecting our importation of certain raw materials;~~

•costs of raw materials, energy, labor and freight, including the impact of tariffs, trade sanctions and similar matters affecting our importation of certain raw materials;•

~~our ability to develop and maintain brands that are critical to our success;~~

•labor shortages and increased labor costs;•

~~economic downturns in our target markets;~~

•our ability to develop and maintain brands that are critical to our success;•

~~difficulty meeting our sales growth objectives and innovation goals; and~~

•economic downturns in our target markets;•

~~changes in market interest rates, or a phase-out or replacement of the LIBO rate as an interest rate benchmark.~~

•impacts from inflationary trends;

•difficulty meeting our sales growth objectives and innovation goals; and

•changes in market interest rates.

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 in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022, which was filed on February ~~9, 2022,~~8, 2023, under Part I, Item 1A. “Risk Factors” and as updated in our Quarterly Reports on Form 10-Q.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Reynolds Consumer Products Inc.

Condensed Consolidated Statements of Income

(in millions, except for per share data)

(Unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Net revenues

$
938

$
876

$
2,652

$
2,455

Related party net revenues

29

29

77

79

Total net revenues

967

905

2,729

2,534

Cost of sales

(789
)

(723
)

(2,199
)

(1,952
)
Gross profit

178

182

530

582

Selling, general and administrative expenses

(90
)

(77
)

(264
)

(244
)
Other expense, net

(5
)

(5
)

(17
)

(10
)
Income from operations

83

100

249

328

Interest expense, net

(20
)

(12
)

(48
)

(36
)
Income before income taxes

63

88

201

292

Income tax expense

(15
)

(22
)

(49
)

(72
)
Net income

$
48

$
66

$
152

$
220

Earnings per share:

Basic

$
0.23

$
0.31

$
0.72

$
1.05

Diluted

$
0.23

$
0.31

$
0.72

$
1.05

Weighted average shares outstanding:

Basic

209.9

209.7

209.8

209.7

Effect of dilutive securities

—

0.1

0.1

0.1

Diluted

209.9

209.8

209.9

209.8


	For the Three Months Ended March 31,
	2023		2022
Net revenues	$	852	$	818
Related party net revenues	22		27
Total net revenues	874		845
Cost of sales	(719)		(677)
Gross profit	155		168
Selling, general and administrative expenses	(105)		(83)
Other income (expense), net	2		(5)
Income from operations	52		80
Interest expense, net	(29)		(12)
Income before income taxes	23		68
Income tax expense	(6)		(16)
Net income	$	17	$	52

Earnings per share:
Basic	$	0.08	$	0.25
Diluted	$	0.08	$	0.25

Weighted average shares outstanding:
Basic	209.9		209.8
Effect of dilutive securities	—		—
Diluted	209.9		209.8

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Reynolds Consumer Products Inc.

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(Unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Net income

$
48

$
66

$
152

$
220

Other comprehensive income (loss), net of income taxes:

Currency translation adjustment

(2
)

—

(2
)

—

Employee benefit plans

—

—

(1
)

—

Interest rate derivatives

24

—

35

2

Other comprehensive income, net of income taxes

22

—

32

2

Comprehensive income

$
70

$
66

$
184

$
222


	For the Three Months Ended March 31,
	2023		2022
Net income	$	17	$	52
Other comprehensive (loss) income, net of income taxes:
Employee benefit plans	(1)		—
Interest rate derivatives	(12)		7
Other comprehensive (loss) income, net of income taxes	(13)		7
Comprehensive income	$	4	$	59

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Reynolds Consumer Products Inc.

Condensed Consolidated Balance Sheets

(in millions, except for per share data)

(Unaudited)
As of September 30,
2022

As of December 31,
2021

Assets

Cash and cash equivalents

$
33

$
164

Accounts receivable (net of allowance for doubtful accounts of $1 and $1)

289

316

Other receivables

12

12

Related party receivables

10

10

Inventories

796

583

Other current assets

41

19

Total current assets

1,181

1,104

Property, plant and equipment (net of accumulated depreciation of $808 and $752)

693

677

Operating lease right-of-use assets, net

63

55

Goodwill

1,879

1,879

Intangible assets, net

1,038

1,061

Other assets

58

36

Total assets

$
4,912

$
4,812

Liabilities

Accounts payable

$
295

$
261

Related party payables

44

38

Current portion of long-term debt

25

25

Accrued and other current liabilities

184

160

Total current liabilities

548

484

Long-term debt

2,071

2,087

Long-term operating lease liabilities

51

46

Deferred income taxes

362

351

Long-term postretirement benefit obligation

49

50

Other liabilities

33

38

Total liabilities

$
3,114

$
3,056

Commitments and contingencies (Note 7)

Stockholders’ equity

Common stock, $0.001 par value; 2,000 shares authorized; 210 shares issued and
outstanding

—

—

Additional paid-in capital

1,383

1,381

Accumulated other comprehensive income

42

10

Retained earnings

373

365

Total stockholders' equity

1,798

1,756

Total liabilities and stockholders' equity

$
4,912

$
4,812


	(Unaudited) As of March 31, 2023		As of December 31, 2022
Assets
Cash and cash equivalents	$	50	$	38
Accounts receivable (net of allowance for doubtful accounts of $1 and $1)	342		348
Other receivables	3		15
Related party receivables	18		7
Inventories	682		722
Other current assets	38		41
Total current assets	1,133		1,171
Property, plant and equipment (net of accumulated depreciation of $842 and $821)	714		722
Operating lease right-of-use assets, net	62		65
Goodwill	1,879		1,879
Intangible assets, net	1,023		1,031
Other assets	54		61
Total assets	$	4,865	$	4,929
Liabilities
Accounts payable	$	230	$	252
Related party payables	65		46
Current portion of long-term debt	25		25
Current operating lease liabilities	15		14
Income taxes payable	25		14
Accrued and other current liabilities	130		145
Total current liabilities	490		496
Long-term debt	2,061		2,066
Long-term operating lease liabilities	49		53
Deferred income taxes	354		365
Long-term postretirement benefit obligation	34		34
Other liabilities	52		47
Total liabilities	$	3,040	$	3,061
Commitments and contingencies (Note 7)
Stockholders’ equity
Common stock, $0.001 par value; 2,000 shares authorized; 210 shares issued and outstanding	—		—
Additional paid-in capital	1,386		1,385
Accumulated other comprehensive income	39		52
Retained earnings	400		431
Total stockholders' equity	1,825		1,868
Total liabilities and stockholders' equity	$	4,865	$	4,929

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Reynolds Consumer Products Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in millions, except for per share data)

(Unaudited)

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income

Total
Equity

Balance as of December 31, 2020

$
—

$
1,381

$
233

$
1

$
1,615

Net income

—

—

74

—

74

Other comprehensive income, net of income taxes

—

—

—

3

3

Dividends ($0.23 per share declared and paid)

—

—

(48
)

—

(48
)
Other

—

(1
)

—

—

(1
)
Balance as of March 31, 2021

$
—

$
1,380

$
259

$
4

$
1,643

Net income

—

—

80

—

80

Other comprehensive loss, net of income taxes

—

—

—

(1
)

(1
)
Dividends ($0.23 per share declared and paid)

—

—

(48
)

—

(48
)
Other

—

2

—

—

2

Balance as of June 30, 2021

$
—

$
1,382

$
291

$
3

$
1,676

Net income

—

—

66

—

66

Dividends ($0.23 per share declared and paid)

—

—

(48
)

—

(48
)
Balance as of September 30, 2021

$
—

$
1,382

$
309

$
3

$
1,694

Balance as of December 31, 2021

$
—

$
1,381

$
365

$
10

$
1,756

Net income

—

—

52

—

52

Other comprehensive income, net of income taxes

—

—

—

7

7

Dividends ($0.23 per share declared and paid)

—

—

(48
)

—

(48
)
Balance as of March 31, 2022

$
—

$
1,381

$
369

$
17

$
1,767

Net income

—

—

52

—

52

Other comprehensive income, net of income taxes

—

—

—

3

3

Dividends ($0.23 per share declared and paid)

—

—

(48
)

—

(48
)
Other

—

2

—

—

2

Balance as of June 30, 2022

$
—

$
1,383

$
373

$
20

$
1,776

Net income

—

—

48

—

48

Other comprehensive income, net of income taxes

—

—

—

22

22

Dividends ($0.23 per share declared and paid)

—

—

(48
)

—

(48
)
Balance as of September 30, 2022

$
—

$
1,383

$
373

$
42

$
1,798


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Equity
Balance as of December 31, 2021	$	—	$	1,381	$	365	$	10	$	1,756
Net income	—		—		52		—		52
Other comprehensive income, net of income taxes	—		—		—		7		7
Dividends ($0.23 per share declared and paid)	—		—		(48)		—		(48)
Other	—		—		—		—		—
Balance as of March 31, 2022	$	—	$	1,381	$	369	$	17	$	1,767

Balance as of December 31, 2022	$	—	$	1,385	$	431	$	52	$	1,868
Net income	—		—		17		—		17
Other comprehensive loss, net of income taxes	—		—		—		(13)		(13)
Dividends ($0.23 per share declared and paid)	—		—		(48)		—		(48)
Other	—		1		—		—		1
Balance as of March 31, 2023	$	—	$	1,386	$	400	$	39	$	1,825

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Reynolds Consumer Products Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

(Unaudited)

Nine Months Ended

September 30,

2022

2021

Cash provided by operating activities

Net income

$
152

$
220

Adjustments to reconcile net income to operating cash flows:

Depreciation and amortization

87

81

Deferred income taxes

(1
)

8

Stock compensation expense

4

5

Change in assets and liabilities:

Accounts receivable, net

27

(27
)
Other receivables

—

3

Related party receivables

—

(2
)
Inventories

(213
)

(197
)
Accounts payable

40

64

Related party payables

6

(6
)
Income taxes payable / receivable

—

(7
)
Accrued and other current liabilities

23

(20
)
Other assets and liabilities

(7
)

—

Net cash provided by operating activities

118

122

Cash used in investing activities

Acquisition of property, plant and equipment

(86
)

(101
)
Net cash used in investing activities

(86
)

(101
)
Cash used in financing activities

Repayment of long-term debt

(19
)

(119
)
Dividends paid

(144
)

(144
)
Net cash used in financing activities

(163
)

(263
)
Net decrease in cash and cash equivalents

(131
)

(242
)
Cash and cash equivalents at beginning of period

164

312

Cash and cash equivalents at end of period

$
33

$
70

Cash paid:

Income taxes

49

72

Interest

42

32


	Three Months Ended March 31,
	2023		2022
Cash provided by operating activities
Net income	$	17	$	52
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization	30		28
Deferred income taxes	(9)		(4)
Stock compensation expense	3		2
Change in assets and liabilities:
Accounts receivable, net	6		(6)
Other receivables	12		3
Related party receivables	(11)		(1)
Inventories	40		(64)
Accounts payable	(15)		5
Related party payables	19		3
Income taxes payable / receivable	12		20
Accrued and other current liabilities	(15)		(18)
Other assets and liabilities	(1)		(1)
Net cash provided by operating activities	88		19
Cash used in investing activities
Acquisition of property, plant and equipment	(22)		(28)
Net cash used in investing activities	(22)		(28)
Cash used in financing activities
Repayment of long-term debt	(6)		(6)
Dividends paid	(48)		(48)
Net cash used in financing activities	(54)		(54)
Net increase (decrease) in cash and cash equivalents	12		(63)
Cash and cash equivalents at beginning of period	38		164
Cash and cash equivalents at end of period	$	50	$	101

Cash paid:
Interest	28		10

See accompanying notes to the condensed consolidated financial statements.

Reynolds Consumer Products Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 – Description of Business and Basis of Presentation

Description of Business:

Reynolds Consumer Products Inc. and its subsidiaries (“we”, “us” or “our”) produce and sell products across three broad categories: cooking products, waste and 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.

Basis of Presentation:

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, ~~2021,~~2022, 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.

In ~~May 2022,~~March 2023, we ~~entered~~initiated a voluntary Supply Chain Finance program (the "SCF") with a global financial institution (the "SCF Bank"). Under the SCF, qualifying suppliers may elect to sell their receivables from us to the SCF Bank. These participating suppliers negotiate their receivables sales arrangements directly with the SCF Bank. We are not party to those agreements, nor do we provide any security or other forms of guarantees to the SCF Bank. The participation in the program is at the sole discretion of the supplier, we have no economic interest in a supplier's decision to enter into the agreement and have no direct financial relationship with SCF Bank, as it relates to the SCF. Once a qualifying supplier elects to participate in the SCF and reaches an ~~accounts receivable factoring~~ agreement with ~~JP Morgan Chase~~the SCF Bank, ~~N.A.~~they elect which individual invoices they sell to ~~sell certain~~the SCF Bank. The terms of our payment obligations are not impacted by a supplier's participation in the SCF and as such, the SCF has no direct impact on our balance sheets, cash flows, or liquidity. Amounts due to suppliers who voluntarily participate in the SCF are included in accounts receivable up to $190 million. The outstanding balance owed under the factoring arrangement as of September 30, 2022 was $70 million. Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from thepayable in our condensed consolidated balance sheet atand our payments made under the ~~time of the sales transaction. We classify proceeds received from the sales of accounts receivable~~SCF are reflected as an operating cash flow in the condensed consolidated statement of cash flows. ~~We record~~As of March 31, 2023, there were no obligations outstanding that we have confirmed as valid under the ~~discount as other expense, net in the condensed consolidated statement of income.~~

SCF.

Note 2 – New Accounting Standards

Recently Adopted Accounting ~~Guidance Issued But Not Yet Adopted:~~

Guidance:

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and subsequently in January 2021, FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, both of which ~~provides~~provide 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 ("LIBOR"), and other interbank offered rates expected to be discontinued, to alternative reference rates. ~~This ASU was~~Each of these ASUs were effective upon its issuance and ~~can~~could be applied prospectively through December 31, 2022. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which amended the sunset date of the guidance in Topic 848 to December 31, 2024 from December 31, 2022. We ~~are currently assessing~~adopted the ~~impact~~standards as of ~~this standard~~January 1, 2023. As a result of the planned phase out of the LIBOR as a reference rate and adoption of ASU 2020-04 and ASU 2021-01, we have amended our Credit Agreement and interest rate swaps and applied practical expedients under the guidance. The adoption did not have a material impact on our condensed consolidated financial statements.

In September 2022, FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. These amendments require disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. These amendments are effective for fiscal years beginning after December 31, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 31, 2023. We adopted the standard as of January 1, 2023. The adoption relates to disclosure only, and does not have an impact on our condensed consolidated financial statements.

Note 3 – Inventories

Inventories consisted of the following:


	September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
	(in millions)					(in millions)
Raw materials	$	236	$	206	Raw materials	$	201	$	215
Work in progress		83		63	Work in progress	80		81
Finished goods		435		276	Finished goods	355		383
Spare parts		42		38	Spare parts	46		43
Inventories	$	796	$	583	Inventories	$	682	$	722

Long-term debt consisted of the following:

September 30,
2022

December 31,
2021

(in millions)

Term loan facility

$
2,113

$
2,132

Deferred financing transaction costs

(15
)

(18
)
Original issue discounts

(2
)

(2
)

2,096

2,112

Less: current portion

(25
)

(25
)
Long-term debt

$
2,071

$
2,087


	March 31, 2023		December 31, 2022
	(in millions)
Term loan facility	$	2,101	$	2,107
Deferred financing transaction costs	(13)		(14)
Original issue discounts	(2)		(2)
	2,086		2,091
Less: current portion	(25)		(25)
Long-term debt	$	2,061	$	2,066

External Debt Facilities

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 February 2023 we amended the External Debt Facilities (as amended, the "Amended External Debt Facilities") which replaced the interest rate benchmark from the LIBOR to the Secured Overnight Financing Rate ("SOFR"). Other than the foregoing, the material terms of the External Debt Facilities remain unchanged, and our election to use practical expedients under ASU 2020-04 and ASU 2021-01, as described in Note 2 - New Accounting Standards, resulted in no material impacts on our condensed consolidated financial statements.

Borrowings under the Amended External Debt Facilities bear interest at a rate per annum equal to, at our option, either a base rate plus an applicable margin of 0.75% or ~~a LIBO rate~~SOFR plus an applicable margin of 1.75%. During September 2020, May 2022 and August 2022, we entered into a series of interest rate swaps to hedge a portion of the interest rate exposure resulting from these borrowings. In conjunction with the amendment of our External Debt Facilities, we amended the outstanding interest rate swaps to replace the interest rate benchmark from the LIBOR to SOFR. Refer to Note 5 – Financial Instruments for further details.

The Amended 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 Amended External Debt Facilities.

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

The Term Loan Facility matures in February ~~2027~~.2027. The Term Loan Facility amortizes in equal quarterly installments of $6 million, which commenced in June 2020, with the balance payable on maturity.

The Revolving Facility matures in February 2025 and includes a sub-facility for letters of credit. As of ~~September 30, 2022,~~March 31, 2023, 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.

Fair Value of Our Long-Term Debt

The fair value of our long-term debt as of ~~September 30, 2022,~~March 31, 2023, 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.

Note 5 - Financial Instruments

Interest Rate Derivatives

During 2020 and 2022, we entered into a series of interest rate swaps ~~which~~to fix the LIBOR of our External Debt Facilities. In February 2023, we amended our interest rate swaps to replace the interest rate benchmark from the LIBOR to SOFR. Other than the foregoing, the material terms of the interest rate swap agreements remained unchanged, and our election to use practical expedients under ASUs 2020-04 and 2021-01, as described in Note 2 - New Accounting Standards, resulted in no material impacts on our condensed consolidated financial statements. After the amendments, the aggregate notional amount of the interest rate swaps still in effect as of March 31, 2023 was $1,150 million, and the SOFR is fixed ~~the LIBO rate to~~at an annual rate of ~~0.18%~~0.40% to ~~0.47%~~3.40% (for an annual effective interest rate of ~~1.93%~~2.15% to ~~2.22%~~5.15%, including margin) for an aggregate notional amount of $1,650 million, of which $150 million notional value was still in effect as of September 30, 2022. In May 2022, we entered into additional interest rate swaps which fixed the LIBO rate to an annual rate of 2.70% to 2.74% (for an annual effective interest rate of 4.45% to 4.49%, including margin) for an aggregate notional amount of $600 million. In August 2022, we entered into additional interest rate swaps which fixed the LIBO rate to an annual rate of 3.42% to 3.44% (for an annual effective interest rate of 5.17% to 5.19%, including margin) for an aggregate notional amount of $400 million. As of September 30, 2022, we had interest rate swaps of an aggregate notional amount of $1,150 million.

The interest rate swaps outstanding as of ~~September 30, 2022~~March 31, 2023 hedge a portion of the interest rate exposure resulting from our Term Loan Facility for periods ranging from ~~three~~two to ~~four~~three years. We classified these instruments as cash flow hedges. The effective portion of the gain or loss on the open hedging instrument is recorded in accumulated other comprehensive income and is reclassified into earnings as interest expense, net when settled. The associated asset or liability on the open hedges is recorded at its fair value in other assets or other liabilities,, as applicable. The fair value of the interest rate swaps was determined using a discounted cash flow method based on market-based swap yield curves, taking into account current interest rates, and is classified as Level 2 within the fair value hierarchy.

The following table provides the notional amounts, the annual rates, the weighted average annual effective rates, and the fair value of our interest rate derivatives:

(In millions)

Notional Amount

Annual Rate

Weighted Average Annual Effective Rate

Fair Value Current Asset

Fair Value Non-Current Asset

As of September 30, 2022

$
1,150

2.19% to 5.19%

4.42%

$
19

$
32

As of December 31, 2021

$
800

1.93% to 2.22%

2.01%

$
1

$
4


(In millions)	Notional Amount		Annual Rate	Weighted Average Annual Effective Rate	Fair Value - Other Current Assets		Fair Value - Other Assets
As of March 31, 2023	$	1,150	2.15% to 5.15%	4.38%	$	23	$	9
As of December 31, 2022(1)	$	1,150	2.19% to 5.19%	4.42%	$	25	$	23

(1)Based on the ~~before tax effect of our~~ interest rate ~~derivatives~~swaps prior to the amendments entered into in February 2023, which is based on ~~accumulated other comprehensive income and~~ the ~~condensed consolidated statements~~LIBOR as of ~~income:~~

December 31, 2022.

(In millions)

Amount of Gain (Loss) Recognized in Other Comprehensive Income

Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income Into Income

For the three months ended September 30, 2022

$
34

$
3

For the three months ended September 30, 2021

$
(1
)

$
(1
)
For the nine months ended September 30, 2022

$
49

$
3

For the nine months ended September 30, 2021

$
1

$
(1
)

Note 6 – Stock-based Compensation

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”), which was satisfied when we completed our IPO on February 4, 2020, and a service-based vesting condition, which 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.~~

~~Additionally, we established an~~

Our equity incentive plan was established in 2020, for purposes of granting stock-based compensation awards to certain members 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~~restricted stock units ("RSUs") to certain employees and non-employee directors that have a service-based vesting condition. In addition, we have 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 were initially available for issuance under equity incentive awards granted pursuant to the ~~plan~~.plan. In the three ~~and nine~~ months ended ~~September 30, 2022, zero and~~March 31, 2023, 0.2 million RSUs ~~and zero~~ and 0.2 million PSUs were ~~granted, respectively.~~granted.

As of ~~September 30, 2022,~~March 31, 2023, there were stock-based compensation awards representing ~~0.4~~0.8 million shares outstanding compared to 0.4 million shares outstanding as of December 31, ~~2021.~~2022. Stock-based compensation expense was ~~zero and $4~~$3 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively, and~~March 31, 2023 compared to $2 million ~~and $5 million in~~for the ~~comparable prior year periods.~~

three months ended March 31, 2022.

Note 7 – Commitments and Contingencies

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, consumer complaints, 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 ~~September 30, 2022,~~March 31, 2023, there were no legal proceedings pending other than those for which we have determined that the possibility of a material outflow is remote.

Note 8 – Accumulated Other Comprehensive Income

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

income.

(In millions)

Currency Translation Adjustments

Employee Benefit Plans

Interest Rate Derivatives

Accumulated Other Comprehensive Income

Balance as of December 31, 2020

$
(6
)

$
8

$
(1
)

$
1

Other comprehensive income

—

—

3

3

Balance as of March 31, 2021

$
(6
)

$
8

$
2

$
4

Other comprehensive loss

—

—

(1
)

(1
)
Balance as of June 30, 2021

$
(6
)

$
8

$
1

$
3

Other comprehensive income

—

—

—

—

Balance as of September 30, 2021

$
(6
)

$
8

$
1

$
3

Balance as of December 31, 2021

$
(6
)

$
12

$
4

$
10

Other comprehensive income

—

—

7

7

Balance as of March 31, 2022

$
(6
)

$
12

$
11

$
17

Other comprehensive (loss) income

—

(1
)

4

3

Balance as of June 30, 2022

$
(6
)

$
11

$
15

$
20

Other comprehensive (loss) income

(2
)

—

24

22

Balance as of September 30, 2022

$
(8
)

$
11

$
39

$
42


(In millions)	Currency Translation Adjustments		Employee Benefit Plans		Interest Rate Derivatives		Accumulated Other Comprehensive Income
Balance as of December 31, 2021	$	(6)	$	12	$	4	$	10
Gain arising during the period	—		—		9		9
Reclassification to earnings	—		—		—		—
Effect of deferred taxes	—		—		(2)		(2)
Balance as of March 31, 2022	$	(6)	$	12	$	11	$	17

Balance as of December 31, 2022	$	(7)	$	23	$	36	$	52
Loss arising during the period	—		—		(10)		(10)
Reclassification to earnings	—		(1)		(6)		(7)
Effect of deferred taxes	—		—		4		4
Balance as of March 31, 2023	(7)		22		24		39

Note 9 – Segment Information

Our 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 CODM monitors performance, allocates capital and makes strategic and operational decisions. Our segments are described as follows:

Reynolds Cooking & Baking

Our Reynolds Cooking & Baking segment produces branded and store brand aluminum foil, disposable aluminum pans, parchment paper, freezer paper, wax paper, butcher 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~~EZ 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.

Hefty Waste & Storage

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 and Hefty Strong brands for trash bags, and as the Hefty and Baggies brands for our food storage bags.

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.

Information by Segment

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 e~~xclude~~exclude 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.

Transactions between segments are at negotiated prices.

Reynolds
Cooking
& Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Segment
Total

Unallocated⁽¹⁾

Total

Three Months Ended September 30, 2022

(in millions)

Net revenues

$
327

$
234

$
251

$
154

$
966

$
1

$
967

Intersegment revenues

—

3

—

1

4

(4
)

—

Total segment net revenues

327

237

251

155

970

(3
)

967

Adjusted EBITDA

33

44

24

23

124

Depreciation and amortization

6

5

4

6

21

9

30

Reynolds
Cooking
& Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Segment
Total

Unallocated⁽¹⁾

Total

Three Months Ended September 30, 2021

(in millions)

Net revenues

$
328

$
235

$
196

$
150

$
909

$
(4
)

$
905

Intersegment revenues

—

2

—

1

3

(3
)

—

Total segment net revenues

328

237

196

151

912

(7
)

905

Adjusted EBITDA

56

37

25

14

132

Depreciation and amortization

5

5

4

5

19

8

27

Reynolds
Cooking
& Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Segment
Total

Unallocated⁽¹⁾

Total

Nine Months Ended September 30, 2022

(in millions)

Net revenues

$
889

$
696

$
701

$
443

$
2,729

—

$
2,729

Intersegment revenues

—

8

—

4

12

(12
)

—

Total segment net revenues

889

704

701

447

2,741

(12
)

2,729

Adjusted EBITDA

97

135

72

67

371

Depreciation and amortization

18

14

12

17

61

26

87

Reynolds
Cooking
& Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Segment
Total

Unallocated⁽¹⁾

Total

Nine Months Ended September 30, 2021

(in millions)

Net revenues

$
902

$
645

$
582

$
417

$
2,546

$
(12
)

$
2,534

Intersegment revenues

—

6

—

3

9

(9
)

—

Total segment net revenues

902

651

582

420

2,555

(21
)

2,534

Adjusted EBITDA

167

127

104

52

450

Depreciation and amortization

15

14

12

15

56

25

81


	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated(1)		Total
Three Months Ended March 31, 2023	(in millions)
Net revenues	$	283	$	230	$	224	$	141	$	878	$	(4)	$	874
Intersegment revenues	—		3		—		3		6		(6)		—
Total segment net revenues	283		233		224		144		884		(10)		874
Adjusted EBITDA	4		55		30		19		108
Depreciation and amortization	7		5		4		5		21		9		30

	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated(1)		Total
Three Months Ended March 31, 2022	(in millions)
Net revenues	$	268	$	226	$	210	$	140	$	844	$	1	$	845
Intersegment revenues	—		2		—		1		3		(3)		—
Total segment net revenues	268		228		210		141		847		(2)		845
Adjusted EBITDA	28		45		23		19		115
Depreciation and amortization	6		4		4		5		19		9		28

Segment assets consisted of the following:

Reynolds
Cooking
& Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Segment
Total

Unallocated⁽¹⁾

Total

(in millions)

As of September 30, 2022

$
693

$
312

$
212

$
277

$
1,494

$
3,418

$
4,912

As of December 31, 2021

562

290

165

247

1,264

3,548

4,812

~~(1)~~

Unallocated includes the elimination of intersegment revenues, other revenue adjustments and certain corporate costs, depreciation and amortization and assets not allocated to segments. Unallocated assets are comprised of cash, accounts receivable, other receivables, entity-wide property, plant and equipment, entity-wide operating lease right-of-use assets, goodwill, intangible assets, related party receivables and other assets.


	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated(1)		Total
	(in millions)
As of March 31, 2023	$	639	$	293	$	227	$	257	$	1,416	$	3,449	$	4,865
As of December 31, 2022	646		314		226		274		1,460		3,469		4,929

(1)Unallocated includes the elimination of intersegment revenues, other revenue adjustments and certain corporate costs, depreciation and amortization and assets not allocated to segments. Unallocated assets are comprised of cash, accounts receivable, other receivables, entity-wide property, plant and equipment, entity-wide operating lease right-of-use assets, goodwill, intangible assets, related party receivables and other assets.

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

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

(in millions)

(in millions)

Segment Adjusted EBITDA

$
124

$
132

$
371

$
450

Corporate / unallocated expenses

(8
)

—

(25
)

(30
)

116

132

346

420

Adjustments to reconcile to GAAP income before income taxes

Depreciation and amortization

(30
)

(27
)

(87
)

(81
)
Interest expense, net

(20
)

(12
)

(48
)

(36
)
IPO and separation-related costs

(3
)

(5
)

(10
)

(11
)
Consolidated GAAP income before income taxes

$
63

$
88

$
201

$
292


	Three Months Ended March 31,
	2023		2022
	(in millions)
Segment Adjusted EBITDA	$	108	$	115
Corporate / unallocated expenses	(26)		(3)
	82		112
Adjustments to reconcile to GAAP income before income taxes
Depreciation and amortization	(30)		(28)
Interest expense, net	(29)		(12)
IPO and separation-related costs	—		(4)
Consolidated GAAP income before income taxes	$	23	$	68

Information in Relation to Products

Net revenues by product line are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

(in millions)

(in millions)

Waste and storage products ⁽¹⁾

$
392

$
388

$
1,151

$
1,071

Cooking products

327

328

889

902

Tableware

251

196

701

582

Unallocated

(3
)

(7
)

(12
)

(21
)
Net revenues

$
967

$
905

$
2,729

$
2,534

~~(1)~~

~~Waste and storage products are comprised of our Hefty Waste & Storage and Presto Products segments.~~


	Three Months Ended March 31,
	2023		2022
	(in millions)
Waste and storage products (1)	$	377	$	369
Cooking products	283		268
Tableware	224		210
Unallocated	(10)		(2)
Net revenues	$	874	$	845

(1)Waste and storage products are comprised of our Hefty Waste & Storage and Presto Products segments.

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.

Note 10 – Related Party Transactions

Packaging Finance Limited (“PFL”) owns the majority of our outstanding common stock and owns the majority of the outstanding common stock of Pactiv Evergreen Inc. and its subsidiaries (“PEI Group”). We sell and purchase various goods and services with PEI Group under contractual arrangements that expire over a variety of periods through December 31, 2027. During the three months ended March 31, 2023, we amended these contractual arrangements with PEI Group, which, among other things, extended the expiration date for certain arrangements. Transactions between us and PEI Group are described below.

For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, revenues from products sold to PEI Group were ~~$29~~$22 million, ~~and $77 million, respectively,~~ compared to ~~$29 million and $79~~$27 million in the comparable prior year ~~periods.~~period. For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, products purchased from PEI Group were ~~$101~~$106 million, ~~and $294 million, respectively,~~ compared to ~~$85 million and $247~~$93 million in the comparable prior year ~~periods.~~period. For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, PEI Group charged us freight and warehousing costs of ~~$12~~$9 million, ~~and $42 million, respectively,~~ compared to $14 ~~million and $44~~ million in the comparable prior year ~~periods,~~period, which were included in cost of sales. The resulting related party receivables and payables are settled regularly in the normal course of business.

Furthermore, $36 million of the dividends paid during each of the three months ended ~~September 30,~~March 31, 2023 and March 31, 2022, ~~and September 30, 2021, and $107 million of the dividends paid during each of the nine months ended September 30, 2022 and September 30, 2021,~~ were paid to PFL.

Note 11 – Subsequent Events

Quarterly Cash Dividend

On ~~October~~April 27, ~~2022,~~2023, our Board of Directors approved a cash dividend of $0.23 per common share to be paid on ~~November 30, 2022~~May 31, 2023 to shareholders of record on ~~November 16, 2022.~~

May 17, 2023.

Except as described above, there have been no events subsequent to ~~September 30, 2022~~March 31, 2023 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 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, ~~2021.~~

2022.

Description of the Company and its Business Segments

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 and 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. Over 65% of our revenue comes from products that are #1 in their respective categories. 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:

•

Reynolds Cooking & Baking: Through our Reynolds Cooking & Baking segment, we produce branded and store brand foil, disposable aluminum pans, parchment paper, freezer paper, wax paper, butcher 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. With our flagship Reynolds Wrap products, we hold the #1 market position in the U.S. consumer foil market measured by revenue and volume. We have no significant branded competitor in this market. Reynolds is one of the most recognized household brands in the United States and has been the top trusted brand in the consumer foil market for over 70 years, with greater than 50% market share in virtually all of its categories.

•Reynolds Cooking & Baking: Through our Reynolds Cooking & Baking segment, we produce branded and store brand aluminum foil, disposable aluminum pans, parchment paper, freezer paper, wax paper, butcher paper, plastic wrap, baking cups, oven bags and slow cooker liners. Our branded products are sold under the Reynolds Wrap, Reynolds KITCHENS and EZ 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. With our flagship Reynolds Wrap products, we hold the #1 market position in the U.S. consumer foil market measured by retail sales and volume. We have no significant branded competitor in this market. Reynolds is one of the most recognized household brands in the United States and has been the top trusted brand in the consumer foil market for over 75 years, with greater than 50% market share in most of its categories.•

Hefty Waste & Storage: Through our Hefty Waste & Storage segment, we produce both branded and store brand trash and food storage bags. Hefty is a well-recognized leader in the trash bag and food storage bag categories and our private label products offer value to our retail partners. Our branded products are sold under the Hefty Ultra Strong and Hefty Strong brands for trash bags, and as the Hefty and Baggies brands for our food storage bags. We have the #1 branded market share in the U.S. large black trash bag and slider bag segments, and the #2 branded market share in the tall kitchen trash bag segment. Our robust product portfolio in this segment includes a full suite of products, including sustainable solutions such as blue and clear recycling bags, compostable bags, bags made from recycled materials and the Hefty EnergyBag Program.

•Hefty Waste & Storage: Through our Hefty Waste & Storage segment, we produce both branded and store brand trash and food storage bags. Hefty is a well-recognized leader in the trash bag and food storage bag categories and our private label products offer value to our retail partners. Our branded products are sold under the Hefty Ultra Strong and Hefty Strong brands for trash bags, and as the Hefty and Baggies brands for our food storage bags. We have the #1 branded market share in the U.S. large black trash bag and slider bag segments, and the #2 branded market share in the tall kitchen trash bag segment. Our robust product portfolio in this segment includes a full suite of products, including sustainable solutions such as blue and clear recycling bags, compostable bags, bags made from recycled materials and the Hefty EnergyBag Program.•

Hefty Tableware: Through our Hefty Tableware segment, we sell both branded and store brand disposable and compostable plates, bowls, platters, cups and cutlery. Our Hefty branded products include dishes and party cups. Hefty branded party cups are the #1 party cup in America measured by market share. Our branded products use our Hefty brand to represent both quality and great price, and we bring this same quality and value promise to all of our store brands as well. We sell across a broad range of materials and price points in all retail channels, allowing our consumers to select the product that best suits their price, function and aesthetic needs.

•Hefty Tableware: Through our Hefty Tableware segment, we sell both branded and store brand disposable and compostable plates, bowls, platters, cups and cutlery. Our Hefty branded products include dishes and party cups. Hefty branded party cups are the #1 party cup in America measured by market share. Our branded products use our Hefty brand to represent both quality and great price, and we bring this same quality and value promise to all of our store brands as well. We sell across a broad range of materials and price points in all retail channels, allowing our consumers to select the product that best suits their price, function and aesthetic needs. These materials include sustainable solutions, such as Hefty ECOSAVE™ and Hefty Compostable Printed Paper Plates.•

Presto Products: Through our Presto Products segment, we primarily sell store brand products in four main categories: food storage bags, trash bags, reusable storage containers and plastic wrap. Presto Products is a market leader in food storage bags and differentiates itself by providing access to category management, consumer insights, marketing, merchandising and research and development (“R&D”) resources. 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.

•Presto Products: Through our Presto Products segment, we primarily sell store brand products in four main categories: food storage bags, trash bags, reusable storage containers and plastic wrap. Presto Products is a market leader in food storage bags and differentiates itself by providing access to category management, consumer insights, marketing, merchandising and research and development (“R&D”) resources. 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.

Overview

Total net revenues increased ~~7% and 8%~~3% in the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 compared to the same ~~periods~~period in ~~2021.~~2022. The revenue increase ~~in both periods~~ was primarily due to ~~higher pricing as a result of~~ pricing actions taken in response to increased material ~~manufacturing~~ and ~~logistics~~manufacturing costs, partially offset by lower volume.

We experienced significant increases in material costs as well as increases in manufacturing, logistics and advertising costs in the three and nine months ended September 30, 2022, compared to the same prior year periods. We have aggressively implemented price increases in an effort to recover these costs and maintain our profitability. Our earnings decline in

During the three months ended ~~September 30, 2022 compared to the same prior year period was primarily~~ ~~attributable to lower volume, higher personnel~~March 31, 2023, our earnings declined as anticipated increases in material and manufacturing costs ~~and higher advertising costs. Our earnings decline~~ in the nine months ended September 30, 2022 compared to the same prior year period was primarily attributable to lower volume, the timing of price actions lagging increased material, manufacturing and logistics costs,Reynolds Cooking & Baking business, as well as higher personnel costs, professional fees and advertising ~~costs.~~

~~Our Reynolds Cooking & Baking segment experienced unplanned equipment downtime~~costs, were partially offset by gross profit increases in the ~~third quarter, impacting throughput~~rest of ~~non-retail shipments and manufacturing~~our business. In addition, net income was negatively impacted by higher interest costs ~~and extending the timeline for reduction of higher cost aluminum inventory. While most of these issues are temporary in nature, we are implementing operational changes~~due to ~~address all of them.~~

increased interest rates.

Non-GAAP Measures

In this Quarterly Report on Form 10-Q we use the non-GAAP financial measures “Adjusted EBITDA”, “Adjusted Net Income” and “Adjusted Diluted Earnings Per Share" ("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 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 IPO and separation-related costs.

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 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 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 table presents a reconciliation of our net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA:

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

(in millions)

(in millions)

Net income – GAAP

$
48

$
66

$
152

$
220

Income tax expense

15

22

49

72

Interest expense, net

20

12

48

36

Depreciation and amortization

30

27

87

81

IPO and separation-related costs ⁽¹⁾

3

5

10

11

Adjusted EBITDA (Non-GAAP)

$
116

$
132

$
346

$
420

~~(1)~~

Reflects costs related to the IPO process, as well as costs related to our separation to operate as a stand-alone public company. These costs are included in Other expense, net in our condensed consolidated statements of income.


	Three Months Ended March 31,
	2023		2022
	(in millions)
Net income – GAAP	$	17	$	52
Income tax expense	6		16
Interest expense, net	29		12
Depreciation and amortization	30		28
IPO and separation-related costs ⁽¹⁾	—		4
Adjusted EBITDA (Non-GAAP)	$	82	$	112

(1)Reflects costs related to the IPO process, as well as costs related to our separation to operate as a stand-alone public company. These costs are included in Other income (expense), net in our condensed consolidated statements of income.

The following tables present reconciliations of our net income and diluted EPS, the most directly comparable GAAP financial measures, to Adjusted Net Income and Adjusted ~~Diluted~~ EPS:

	Three Months Ended September 30, 2022						Three Months Ended September 30, 2021
(In millions, except for per share data)	Net Income		Diluted Shares		Diluted EPS		Net Income		Diluted Shares		Diluted EPS
														Three Months Ended March 31, 2023					Three Months Ended March 31, 2022
(in millions, except for per share data)													(in millions, except for per share data)	Net Income		Diluted Shares	Diluted EPS		Net Income		Diluted Shares	Diluted EPS
As Reported - GAAP	$	48		210	$	0.23	$	66		210	$	0.31	As Reported - GAAP	$	17	210	$	0.08	$	52	210	$	0.25
Adjustments:													Adjustments:
IPO and separation-related costs ⁽¹⁾		2		210		0.01		4		210		0.02
IPO and separation-related costs ⁽¹⁾													IPO and separation-related costs ⁽¹⁾	—		210	—		3		210	0.01
Adjusted (Non-GAAP)	$	50		210	$	0.24	$	70		210	$	0.33	Adjusted (Non-GAAP)	$	17	210	$	0.08	$	55	210	$	0.26

~~(1)~~

~~Amounts are after tax, calculated using a tax rate of 24.0% and 24.6% for the three months ended September 30, 2022 and 2021, respectively, which is our effective tax rate for the periods presented.~~

Nine Months Ended September 30, 2022

Nine Months Ended September 30, 2021

(In millions, except for per share data)

Net Income

Diluted Shares

Diluted EPS

Net Income

Diluted Shares

Diluted EPS

As Reported - GAAP

$
152

210

$
0.72

$
220

210

$
1.05

Adjustments:

IPO and separation-related costs ⁽¹⁾

8

210

0.04

8

210

0.04

Adjusted (Non-GAAP)

$
160

210

$
0.76

$
228

210

$
1.09

(1)Amount is after tax, calculated using a tax rate of 24.3% for the three months ended March 31, 2022 which was our effective tax rate for the period presented.

~~(1)~~

~~Amounts are after tax, calculated using a tax rate of 24.5% and 24.6% for the nine months ended September 30, 2022 and 2021, respectively, which is our effective tax rate for the periods presented.~~

Results of Operations – Three Months Ended ~~September 30, 2022~~

March 31, 2023

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.

Aggregation of Segment Revenue and Adjusted EBITDA

(In millions)

Reynolds
Cooking &
Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Unallocated⁽¹⁾

Total
Reynolds
Consumer
Products

Net revenues for the three months ended September 30:

2022

$
327

$
237

$
251

$
155

$
(3
)

$
967

2021

328

237

196

151

(7
)

905

Adjusted EBITDA for the three months ended
September 30:

2022

$
33

$
44

$
24

$
23

$
(8
)

$
116

2021

56

37

25

14

—

132

~~(1)~~

The unallocated net revenues include elimination of intersegment revenues and other revenue adjustments. The unallocated Adjusted EBITDA represents the combination of corporate expenses which are not allocated to our segments and other unallocated revenue adjustments.


(in millions)	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Unallocated⁽1⁾		Total Reynolds Consumer Products
Net revenues for the three months ended March 31:
2023	$	283	$	233	$	224	$	144	$	(10)	$	874
2022	268		228		210		141		(2)		845
Adjusted EBITDA(2) for the three months ended March 31:
2023	$	4	$	55	$	30	$	19	$	(26)	$	82
2022	28		45		23		19		(3)		112

(1)The unallocated net revenues include elimination of intersegment revenues and other revenue adjustments. The unallocated Adjusted EBITDA represents the combination of corporate expenses which are not allocated to our segments and other unallocated revenue adjustments.

(2)Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" for details, including a reconciliation between net income and Adjusted EBITDA.

Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared with the Three Months Ended ~~September 30, 2021~~

March 31, 2022

Total Reynolds Consumer Products


	For the Three Months Ended March 31,
(in millions, except for %)	2023		% of Revenue		2022		% of Revenue		Change		% Change
Net revenues	$	852	97	%	$	818	97	%	$	34	4	%
Related party net revenues	22		3	%	27		3	%	(5)		(19)	%
Total net revenues	874		100	%	845		100	%	29		3	%
Cost of sales	(719)		(82)	%	(677)		(80)	%	(42)		(6)	%
Gross profit	155		18	%	168		20	%	(13)		(8)	%
Selling, general and administrative expenses	(105)		(12)	%	(83)		(10)	%	(22)		(27)	%
Other income (expense), net	2		—	%	(5)		(1)	%	7		NM	%
Income from operations	52		6	%	80		9	%	(28)		(35)	%
Interest expense, net	(29)		(3)	%	(12)		(1)	%	(17)		(142)	%
Income before income taxes	23		3	%	68		8	%	(45)		(66)	%
Income tax expense	(6)		(1)	%	(16)		(2)	%	10		63	%
Net income	$	17	2	%	$	52	6	%	$	(35)	(67)	%
Adjusted EBITDA ⁽¹⁾	$	82	9	%	$	112	13	%	$	(30)	(27)	%

For the Three Months Ended September 30,

(In millions, except for %)

2022

% of Revenue

2021

% of Revenue

Change

% Change

Net revenues

$
938

97
%

$
876

97
%

$
62

7
%
Related party net revenues

29

3
%

29

3
%

—

—
%
Total net revenues

967

100
%

905

100
%

62

7
%
Cost of sales

(789
)

(82
)%

(723
)

(80
)%

(66
)

(9
)%
Gross profit

178

18
%

182

20
%

(4
)

(2
)%
Selling, general and administrative expenses

(90
)

(9
)%

(77
)

(9
)%

(13
)

(17
)%
Other expense, net

(5
)

(1
)%

(5
)

(1
)%

—

—
%
Income from operations

83

9
%

100

11
%

(17
)

(17
)%
Interest expense, net

(20
)

(2
)%

(12
)

(1
)%

(8
)

(67
)%
Income before income taxes

63

7
%

88

10
%

(25
)

(28
)%
Income tax expense

(15
)

(2
)%

(22
)

(2
)%

7

32
%
Net income

$
48

5
%

$
66

7
%

$
(18
)

(27
)%
Adjusted EBITDA ⁽¹⁾

$
116

12
%

$
132

15
%

$
(16
)

(12
)%
NM - Percentage change is not meaningful.

(1)

Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures” for details, including a reconciliation between net income and Adjusted EBITDA.

Components of Change in Net Revenues for the Three Months Ended ~~September 30, 2022~~March 31, 2023 vs. the Three Months Ended ~~September 30, 2021~~

March 31, 2022

Price

Volume/Mix

Total

Reynolds Cooking & Baking

14
%

(14
)%

—
%
Hefty Waste & Storage

9
%

(9
)%

—
%
Hefty Tableware

21
%

7
%

28
%
Presto Products

11
%

(8
)%

3
%
Total RCP

14
%

(7
)%

7
%


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

Total Net Revenues. Total net revenues increased by ~~$62~~$29 million, or 7%3%, to ~~$967~~$874 million. The increase was primarily driven by higher pricing as a result of pricing actions taken in response to increased material ~~manufacturing~~ and ~~logistics~~manufacturing costs, partially offset by lower volume.

Cost of Sales. Cost of sales increased by ~~$66~~$42 million, or 9%6%, to ~~$789~~$719 million. The increase was primarily driven by ~~an increase of $81 million~~increases in material ~~costs, as well as increased~~and manufacturing ~~and logistics~~ costs, partially offset by lower ~~volume.~~logistics costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by ~~$13~~$22 million, or ~~17%~~27%, to ~~$90~~$105 million, primarily due to higher personnel costs, professional fees and advertising ~~expense.~~costs.

Other ~~Expense,~~Income (Expense), Net. Other income, net was $2 million in the three months ended March 31, 2023 compared to other expense, net of $5 million in the three months ended March 31, 2022. The change was ~~flat.~~primarily due to IPO and separation-related costs in the prior year that did not reoccur in the current year.

Interest Expense, Net. Interest expense, net increased by $8$17 million, or ~~67%~~142%, to ~~$20 million~~$29 million. The increase was primarily due to higher interest rates.

Income Tax Expense. We recognized income tax expense of ~~$15~~$6 million on income before income taxes of ~~$63~~$23 million (an effective tax rate of ~~24.0%~~24.9%) for the three months ended ~~September 30, 2022~~March 31, 2023 compared to income tax expense of ~~$22~~$16 million on income before income taxes of ~~$88~~$68 million (an effective tax rate of ~~25.6%~~24.3%) for the three months ended ~~September 30, 2021.~~March 31, 2022.

Adjusted EBITDA. Adjusted EBITDA decreased by ~~$16~~$30 million, or ~~12%~~27%, to ~~$116~~$82 million. The decrease in Adjusted EBITDA was primarily due to ~~lower volume, higher personnel costs and higher advertising costs. Price increases offset~~ higher material and manufacturing costs, as well as higher selling, general and administrative expenses. This was partially offset by the timing of pricing actions to recover the increased material and manufacturing costs, as well as lower logistics costs.

Segment Information

Reynolds Cooking & Baking

For the Three Months Ended September 30,

(In millions, except for %)

2022

2021

Change

% Change

Total segment net revenues

$
327

$
328

$
(1
)

—
%
Segment Adjusted EBITDA

33

56

(23
)

(41
)%
Segment Adjusted EBITDA Margin

10
%

17
%


	For the Three Months Ended March 31,
(in millions, except for %)	2023			2022			Change		% Change
Total segment net revenues	$	283		$	268		$	15	6	%
Segment Adjusted EBITDA	4			28			(24)		(86)	%
Segment Adjusted EBITDA Margin	1		%	10		%

Total Segment Net Revenues. Reynolds Cooking & Baking total segment net revenues ~~were flat. Lower non-retail and household foil volumes were offset~~increased by ~~higher pricing as a result of pricing actions taken in response to increased material, manufacturing and logistics costs.~~

~~Adjusted EBITDA. Reynolds Cooking & Baking Adjusted EBITDA decreased by $23~~$15 million, or ~~41%~~6%, to ~~$33 million. The decrease in Adjusted EBITDA was primarily~~ ~~driven by lower volume and higher material and manufacturing costs, which were partially offset by price increases.~~

~~Hefty Waste & Storage~~

For the Three Months Ended September 30,

(In millions, except for %)

2022

2021

Change

% Change

Total segment net revenues

$
237

$
237

—

—
%
Segment Adjusted EBITDA

44

37

7

19
%
Segment Adjusted EBITDA Margin

19
%

16
%

~~Total Segment Net Revenues. Hefty Waste & Storage total segment net revenues were flat. Higher~~ ~~pricing due to pricing actions taken in response to increased material, manufacturing and logistics costs were offset by lower waste and slider bag volume.~~

~~Adjusted EBITDA.~~ ~~Hefty Waste & Storage Adjusted EBITDA increased by $7 million, or 19%, to $44 million. The increase in Adjusted EBITDA was primarily driven by the timing of~~ ~~price increases to recover higher material, manufacturing and logistics costs, partially offset by higher advertising costs.~~

~~Hefty Tableware~~

For the Three Months Ended September 30,

(In millions, except for %)

2022

2021

Change

% Change

Total segment net revenues

$
251

$
196

$
55

28
%
Segment Adjusted EBITDA

24

25

(1
)

(4
)%
Segment Adjusted EBITDA Margin

10
%

13
%

~~Total Segment Net Revenues.~~ ~~Hefty Tableware total segment net revenues increased by $55 million, or 28%, to $251~~$283 million. The increase in net revenues was primarily due to higher pricing as a result of pricing actions taken in response to increased material, manufacturing and logistics costs, as well as higher volume driven by continued strength in the club channel and new products.

~~Adjusted EBITDA.~~ ~~Hefty Tableware Adjusted EBITDA decreased by $1 million, or 4%, to $24 million. The slight decrease in Adjusted EBITDA was primarily driven by~~ ~~increased material, manufacturing and logistics costs, mostly offset by higher pricing and higher volume.~~

~~Presto Products~~

For the Three Months Ended September 30,

(In millions, except for %)

2022

2021

Change

% Change

Total segment net revenues

$
155

$
151

$
4

3
%
Segment Adjusted EBITDA

23

14

9

64
%
Segment Adjusted EBITDA Margin

15
%

9
%

~~Total Segment Net Revenues.~~ ~~Presto Products total segment net revenues increased by $4 million, or 3%, to $155 million. The increase in net revenues was primarily due to~~ ~~higher pricing implemented in response to increased material, manufacturing and logistics costs, partially offset by lower waste and food bag volume.~~

~~Adjusted EBITDA. Presto Products Adjusted EBITDA increased by $9 million, or 64%, to $23 million. The increase in Adjusted EBITDA was primarily driven by~~ ~~the timing of price increases to recover higher material, manufacturing and logistics costs, partially offset by lower volume.~~

~~Results of Operations – Nine Months Ended September 30, 2022~~

~~Aggregation of Segment Revenue and Adjusted EBITDA~~

(In millions)

Reynolds
Cooking &
Baking

Hefty
Waste &
Storage

Hefty
Tableware

Presto
Products

Unallocated⁽¹⁾

Total
Reynolds
Consumer
Products

Net revenues for the nine months ended September 30:

2022

$
889

$
704

$
701

$
447

$
(12
)

$
2,729

2021

902

651

582

420

(21
)

2,534

Adjusted EBITDA for the nine months ended
September 30:

2022

$
97

$
135

$
72

$
67

$
(25
)

$
346

2021

167

127

104

52

(30
)

420

~~(1)~~

~~Nine Months Ended September 30, 2022 Compared with the Nine Months Ended September 30, 2021~~

~~Total Reynolds Consumer Products~~

For the Nine Months Ended September 30,

(In millions, except for %)

2022

% of Revenue

2021

% of Revenue

Change

% Change

Net revenues

$
2,652

97
%

$
2,455

97
%

$
197

8
%
Related party net revenues

77

3
%

79

3
%

(2
)

(3
)%
Total net revenues

2,729

100
%

2,534

100
%

195

8
%
Cost of sales

(2,199
)

(81
)%

(1,952
)

(77
)%

(247
)

(13
)%
Gross profit

530

19
%

582

23
%

(52
)

(9
)%
Selling, general and administrative expenses

(264
)

(10
)%

(244
)

(10
)%

(20
)

(8
)%
Other expense, net

(17
)

(1
)%

(10
)

—
%

(7
)

(70
)%
Income from operations

249

9
%

328

13
%

(79
)

(24
)%
Interest expense, net

(48
)

(2
)%

(36
)

(1
)%

(12
)

(33
)%
Income before income taxes

201

7
%

292

12
%

(91
)

(31
)%
Income tax expense

(49
)

(2
)%

(72
)

(3
)%

23

32
%
Net income

$
152

6
%

$
220

9
%

$
(68
)

(31
)%
Adjusted EBITDA ⁽¹⁾

$
346

13
%

$
420

17
%

$
(74
)

(18
)%

~~(1)~~

~~Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures” for details, including a reconciliation between net income and Adjusted EBITDA.~~

~~Components of Change in Net Revenues for the Nine Months Ended September 30, 2022 vs. the Nine Months Ended September 30, 2021~~

Price

Volume/Mix

Total

Reynolds Cooking & Baking

14
%

(15
)%

(1
)%
Hefty Waste & Storage

10
%

(2
)%

8
%
Hefty Tableware

15
%

5
%

20
%
Presto Products

13
%

(7
)%

6
%
Total RCP

14
%

(6
)%

8
%

~~Total Net Revenues. Total net revenues increased by $195 million, or 8%, to $2,729 million. The increase was primarily driven by~~ ~~higher pricing as a result of pricing actions taken in response to increased material, manufacturing and logistics costs, partially offset by lower volume.~~

~~Cost of Sales. Cost of sales increased by $247 million, or 13%, to $2,199 million. The increase was driven by~~ ~~an increase of $283 million in material costs, as well as increased manufacturing and logistics costs, partially offset by lower volume.~~

~~Selling, General and Administrative Expenses.~~ ~~Selling, general and administrative expenses increased by $20 million, or 8%, to $264 million primarily due to~~ ~~higher advertising expense and personnel costs.~~

~~Other Expense, Net.~~ ~~Other expense, net increased by $7 million, or 70%, to $17 million primarily due to~~ ~~changes in our deferred compensation plan assets.~~

~~Interest Expense~~, ~~Net. Interest expense, net increased by $12 million, or 33%, to $48 million primarily due to higher interest rates.~~

~~Income Tax Expense.~~ We recognized income tax expense of $49 million on income before income taxes of $201 million (an effective tax rate of 24.5%) for the nine months ended September 30, 2022 compared to income tax expense of $72 million on income before income taxes of $292 million (an effective tax rate of 24.8%) for the nine months ended September 30, 2021.

~~Adjusted EBITDA.~~ ~~Adjusted EBITDA decreased by $74 million, or 18%, to $346 million. The decrease in Adjusted EBITDA~~ ~~was primarily attributable to lower volume, the timing of price actions lagging increased material, manufacturing and logistics costs, as well as higher advertising costs.~~

~~Segment Information~~

~~Reynolds Cooking & Baking~~

For the Nine Months Ended September 30,

(In millions, except for %)

2022

2021

Change

% Change

Total segment net revenues

$
889

$
902

$
(13
)

(1
)%
Segment Adjusted EBITDA

97

167

(70
)

(42
)%
Segment Adjusted EBITDA Margin

11
%

19
%

~~Total Segment Net Revenues. Reynolds Cooking & Baking total segment net revenues decreased by $13 million, or 1%, to $889 million. The decrease in net revenues was primarily driven~~ by lower household foil and non-retail volumes, as well as timing of retailer inventory replenishment, partially offset by higher pricing as a result of pricing actions taken in response to increased material, manufacturing and logistics costs.

~~Adjusted EBITDA. Reynolds Cooking & Baking Adjusted EBITDA decreased by $70 million, or 42%, to $97 million. The decrease in Adjusted EBITDA was primarily driven by~~ ~~lower volume as well as pricing actions lagging material, manufacturing and logistics cost increases.~~

~~Hefty Waste & Storage~~

For the Nine Months Ended September 30,

(In millions, except for %)

2022

2021

Change

% Change

Total segment net revenues

$
704

$
651

$
53

8
%
Segment Adjusted EBITDA

135

127

8

6
%
Segment Adjusted EBITDA Margin

19
%

20
%

~~Total Segment Net Revenues. Hefty Waste & Storage total segment net revenues increased by $53 million, or 8%, to $704 million. The increase in net revenues was primarily driven by~~ higher pricing due to pricing actions taken in response to increased material and manufacturing costs, as well as higher volume.

Adjusted EBITDA. Reynolds Cooking & Baking Adjusted EBITDA decreased by $24 million, or 86%, to $4 million. The decrease in Adjusted EBITDA was primarily driven by higher material and ~~logistics~~manufacturing costs, slightly offset by the timing of pricing actions to recover the increased material and manufacturing costs and higher volume.

Hefty Waste & Storage


	For the Three Months Ended March 31,
(in millions, except for %)	2023			2022			Change		% Change
Total segment net revenues	$	233		$	228		$	5	2	%
Segment Adjusted EBITDA	55			45			10		22	%
Segment Adjusted EBITDA Margin	24		%	20		%

Total Segment Net Revenues. Hefty Waste & Storage total segment net revenues increased $5 million, or 2%, to $233 million. The increase in net revenues was primarily due to higher pricing due to pricing actions taken in response to increased material and manufacturing costs, partially offset by lower volume.

Adjusted EBITDA. Hefty Waste & Storage Adjusted EBITDA increased by $8$10 million, or 6%22%, to ~~$135~~$55 million. The increase in Adjusted EBITDA was primarily driven by higher pricing due to the timing of pricing actions taken in response to increased material and manufacturing costs, partially offset by higher ~~material, manufacturing and logistics costs as well as higher~~ advertising costs.

Hefty Tableware

For the Nine Months Ended September 30,

(In millions, except for %)

2022

2021

Change

% Change

Total segment net revenues

$
701

$
582

$
119

20
%
Segment Adjusted EBITDA

72

104

(32
)

(31
)%
Segment Adjusted EBITDA Margin

10
%

18
%


	For the Three Months Ended March 31,
(in millions, except for %)	2023			2022			Change		% Change
Total segment net revenues	$	224		$	210		$	14	7	%
Segment Adjusted EBITDA	30			23			7		30	%
Segment Adjusted EBITDA Margin	13		%	11		%

Total Segment Net Revenues. Hefty Tableware total segment net revenues increased by ~~$119~~$14 million, or ~~20%~~7%, to ~~$701~~$224 million. The increase in net revenues was primarily ~~driven by~~ due to higher pricing ~~as a result of~~due to pricing actions taken in response to increased material ~~manufacturing~~ and ~~logistics costs, as well as higher volume.~~

~~Adjusted EBITDA.~~ ~~Hefty Tableware Adjusted EBITDA decreased by $32 million, or 31%, to $72 million. The decrease in Adjusted EBITDA was primarily driven by~~ ~~pricing actions lagging material,~~ manufacturing ~~and logistics costs, partially offset by higher volume.~~

~~Presto Products~~

For the Nine Months Ended September 30,

(In millions, except for %)

2022

2021

Change

% Change

Total segment net revenues

$
447

$
420

$
27

6
%
Segment Adjusted EBITDA

67

52

15

29
%
Segment Adjusted EBITDA Margin

15
%

12
%

~~Total Segment Net Revenues.~~ ~~Presto Products total segment net revenues increased by $27 million, or 6%, to $447 million. The increase in net revenues was primarily driven by~~ ~~pricing actions taken in response to increased material, manufacturing and logistics~~ costs, partially offset by lower volume.

Adjusted ~~EBITDA~~EBITDA.~~. Presto Products~~ Hefty Tableware Adjusted EBITDA increased by ~~$15~~$7 million, or ~~29%~~30%, to ~~$67~~$30 million. The increase in Adjusted EBITDA was primarily driven by higher pricing due to the timing of ~~price~~pricing actions taken in response to increased material and manufacturing costs, partially offset by increases in material and manufacturing costs.

Presto Products


	For the Three Months Ended March 31,
(in millions, except for %)	2023			2022			Change		% Change
Total segment net revenues	$	144		$	141		$	3	2	%
Segment Adjusted EBITDA	19			19			—		—	%
Segment Adjusted EBITDA Margin	13		%	13		%

Total Segment Net Revenues. Presto Products total segment net revenues increased by $3 million, or 2%, to ~~recover~~$144 million. The increase in net revenues was primarily due to increased volume.

Adjusted EBITDA. Presto Products Adjusted EBITDA was flat with the prior year period as the impact of higher ~~material,~~volume was offset by increased manufacturing ~~and logistics~~ costs.

Liquidity and Capital Resources

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

The following table discloses our cash flows for the periods presented:

Cash provided by operating activities

Net cash from operating activities ~~decreased~~increased by $4$69 million to ~~$118~~$88 million in the ~~nine~~three months ended ~~September 30, 2022.~~ March 31, 2023. The ~~decrease~~increase was primarily driven by ~~lower net income,~~the benefit from working capital initiatives, partially offset by ~~$70 million of cash inflows related to our accounts receivable factoring arrangement in the current year period as well as~~ lower net ~~cash outlays related to employee costs in the current year period, compared to the prior year period.~~income.

Cash used in investing activities

Net cash used in investing activities decreased by ~~$15~~$6 million to ~~$86~~$22 million. The decrease was driven primarily by ~~a purchase of a previously leased manufacturing facility in the prior year period that did not repeat in the current year period.~~decreased cash outlays for capital expenditures.

Cash used in financing activities

Net cash used in financing activities ~~decreased by $100 million, to $163 million. The decrease was attributable to~~ ~~a voluntary payment of debt made in the prior year period that did not repeat in the current year period.~~

remained flat.

External Debt Facilities

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

In February 2023, we amended the External Debt Facilities ("Amended External Debt Facilities") which replaced the benchmark from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR"). Other than the foregoing, the material terms of the agreement remained unchanged.

As of ~~September 30, 2022,~~March 31, 2023, the outstanding balance under the Term Loan Facility was ~~$2,113~~$2,101 million. As of ~~September 30, 2022,~~March 31, 2023, 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 Amended External Debt Facilities is Reynolds Consumer Products LLC (the “Borrower”). The Revolving Facility includes a sub-facility for letters of credit. In addition, the Amended 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 Amended 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.

Interest rate and fees

During ~~the year ended December 31,~~ 2020 and 2022, we entered into a series of interest rate swaps ~~which~~to fix the LIBOR of our External Debt Facilities. On February 28, 2023, we amended our interest rate swaps to replace the interest rate benchmark from the LIBOR to SOFR. Other than the foregoing, the material terms of the interest rate swap agreements remained unchanged, and our election to use practical expedients under ASUs 2020-04 and 2021-01 resulted in no material impacts on the condensed consolidated financial statements. After the amendments, the aggregate notional amount of our interest rate swaps still in effect as of March 31, 2023 was $1,150 million, and the SOFR is fixed ~~the LIBO rate to~~at an annual rate of ~~0.18%~~0.40% to ~~0.47%~~3.40% (for an annual effective interest rate of ~~1.93%~~2.15% to ~~2.22%~~5.15%, including margin) ~~for an aggregate notional amount of $1,650 million, of which $150 million notional value was still in effect as of September 30, 2022. In May 2022, we entered into additional~~. These interest rate swaps which fixed the LIBO rate to an annual rate of 2.70% to 2.74% (for an annual effective interest rate of 4.45% to 4.49%, including margin) for an aggregate notional amount of $600 million. In August 2022, we entered into additional interest rate swaps which fixed the LIBO rate to an annual rate of 3.42% to 3.44% (for an annual effective interest rate of 5.17% to 5.19%, including margin) for an aggregate notional amount of $400 million. As of September 30, 2022, we had interest rate swaps of an aggregate notional amount of $1,150 million. The interest rate swaps outstanding as of September 30, 2022 hedge a portion of the interest rate exposure resulting from our Term Loan Facility for periods ranging from two to three ~~to four~~ 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.

Amortization and maturity

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 payable on maturity. The Revolving Facility matures in February 2025.

Guarantee and security

All obligations under the Amended External Debt Facilities and certain hedge agreements and cash management arrangements provided by any lender party to the Amended External Debt Facilities or any of its affiliates and certain other persons are unconditionally guaranteed by Reynolds Consumer Products Inc. (“RCPI”), the Borrower (with respect to hedge agreements and cash management arrangements not entered into by 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 Amended External Debt Facilities and certain hedge agreements and cash management arrangements provided by any lender party to the Amended 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).

Certain covenants and events of default

The Amended 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:

•

~~incur additional indebtedness and guarantee indebtedness;~~

•incur additional indebtedness and guarantee indebtedness;•

~~create or incur liens;~~

•create or incur liens;•

~~engage in mergers or consolidations;~~

•engage in mergers or consolidations;•

~~sell, transfer or otherwise dispose of assets;~~

•sell, transfer or otherwise dispose of assets;•

~~pay dividends and distributions or repurchase capital stock;~~

•pay dividends and distributions or repurchase capital stock;•

~~prepay, redeem or repurchase certain indebtedness;~~

•prepay, redeem or repurchase certain indebtedness;•

~~make investments, loans and advances;~~

•make investments, loans and advances;•

~~enter into certain transactions with affiliates;~~

•enter into certain transactions with affiliates;•

~~enter into agreements which limit the ability of our restricted subsidiaries to incur restrictions on their ability to make distributions; and~~

•enter into agreements which limit the ability of our restricted subsidiaries to incur restrictions on their ability to make distributions; and•

~~enter into amendments to certain indebtedness in a manner materially adverse to the lenders.~~

•enter into amendments to certain indebtedness in a manner materially adverse to the lenders.

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

Accounts Receivable Factoring

~~In May 2022, we entered into an~~

Our accounts receivable factoring agreement with JP Morgan Chase Bank, N.A. allows us to sell certain accounts receivable up to $190 million. ~~The~~We had no outstanding balance owed under the factoring arrangement as of ~~September 30, 2022 was $70 million.~~March 31, 2023. Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the condensed consolidated balance sheet at the time of the sales transaction. We classify the proceeds received from the sales of accounts receivable as an operating cash flow in the condensed consolidated statement of cash flows. We record the discount as other expense, net in the condensed consolidated statement of income.

Supply Chain Financing

In March 2023, we initiated a voluntary Supply Chain Finance program (the "SCF") with a global financial institution (the "SCF Bank"). Under the SCF, qualifying suppliers may elect to sell their receivables from us to the SCF Bank. These participating suppliers negotiate their receivables sales arrangements directly with the SCF Bank. We are not party to those agreements, nor do we provide any security or other forms of guarantees to the SCF Bank. The participation in the program is at the sole discretion of the supplier, we have no economic interest in a supplier's decision to enter into the agreement and have no direct financial relationship with the SCF Bank, as it relates to the SCF. Once a qualifying supplier elects to participate in the SCF and reaches an agreement with the SCF Bank, they elect which individual invoices they sell to the SCF Bank.

The terms of our payment obligations are not impacted by a supplier's participation in the SCF and as such, the SCF has no direct impact on our balance sheets, cash flows, or liquidity. Our payment terms with our suppliers for similar services and materials within individual markets are consistent between suppliers that elect to participate in the SCF and those that do not participate.

All outstanding amounts related to suppliers participating in the SCF are recorded within accounts payable in the condensed consolidated balance sheet and the associated payments are included as an operating cash flow in the condensed consolidated statement of cash flows. As of March 31, 2023, there were no obligations outstanding that we have confirmed as valid under the SCF.

Dividends

During the three ~~and nine~~ months ended ~~September 30, 2022~~,March 31, 2023, a cash ~~dividends~~dividend of $0.23 ~~and $0.69~~ per share ~~respectively, were~~was declared and paid. On ~~October~~April 27, ~~2022,~~2023, a quarterly cash dividend of $0.23 per share was declared and is to be paid on ~~November 30, 2022.~~May 31, 2023. 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 ~~including proceeds from factored receivables,~~ and available borrowings under the Revolving Facility are sufficient to meet debt service, capital expenditures and working capital needs for the foreseeable future. However, we cannot ensure that our business will generate sufficient cash flow from operations or that future borrowings will be available under our borrowing agreements in amounts sufficient to pay indebtedness or fund other liquidity needs. Actual results of operations will depend on numerous factors, many of which are beyond our control as further discussed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~

2022.

Critical Accounting Policies and Estimates

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, ~~2021.~~

2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

See “Item 7A: Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, there have been no material changes in our exposure to market risk.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this report, management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September 30, 2022.~~March 31, 2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~September 30, 2022,~~March 31, 2023, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The information required to be set forth under this heading is incorporated by reference from Note 7 - Commitments and Contingencies, to the condensed consolidated financial statements included in Part I, Item 1.

Item 1A. Risk Factors.

There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~

2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

~~Exhibit~~ ~~Number~~	~~Description~~
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)
10.1*		Amendment No. 1, dated February 28, 2023, to the Credit Agreement between Reynolds Consumer Products LLC, as borrower, Reynolds Consumer Products Inc., as parent, and certain lenders party thereto
10.2*		Amendment No. 1, dated January 15, 2022 and Amendment No. 2, dated March 31, 2023, to the Master Supply Agreement between Reynolds Consumer Products LLC, as seller, and Pactiv LLC, as buyer
10.3*		Amendment No. 1, dated January 15, 2022 and Amendment No. 2, dated March 31, 2023, to the Master Supply Agreement between Pactiv LLC, as seller, and Reynolds Consumer Products LLC, as buyer
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		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	~~Filed herewith.~~

_____________________________

*Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


REYNOLDS CONSUMER PRODUCTS INC.
(Registrant)

By:		/s/ Chris Mayrhofer
		Chris Mayrhofer
		Senior Vice President and Controller (Principal Accounting Officer)
	May 10, 2023	~~November 8, 2022~~

~~Delaware~~	~~45-3464426~~
Delaware		45-3464426
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

☐
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	~~Page~~
~~PART I.~~	~~FINANCIAL INFORMATION~~		2 Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)		2
	Condensed Consolidated Statements of Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		2
	Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		3
	Condensed Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022		4
	Condensed Consolidated Statements of Stockholders’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		5
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~		6
	Notes to Unaudited Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		25 23
Item 4.	Controls and Procedures		25 23
PART II.	OTHER INFORMATION		26 24
Item 1.	Legal Proceedings		26 24
Item 1A.	Risk Factors		26 24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		27 25
Item 3.	Defaults Upon Senior Securities		27 25
Item 4.	Mine Safety Disclosures		27 25
Item 5.	Other Information		27 25
Item 6.	Exhibits		28 26
	Signatures		29 27

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Net revenues	$	938		$	876		$	2,652		$	2,455
Related party net revenues		29			29			77			79
Total net revenues		967			905			2,729			2,534
Cost of sales		(789	)		(723	)		(2,199	)		(1,952	)
Gross profit		178			182			530			582
Selling, general and administrative expenses		(90	)		(77	)		(264	)		(244	)
Other expense, net		(5	)		(5	)		(17	)		(10	)
Income from operations		83			100			249			328
Interest expense, net		(20	)		(12	)		(48	)		(36	)
Income before income taxes		63			88			201			292
Income tax expense		(15	)		(22	)		(49	)		(72	)
Net income	$	48		$	66		$	152		$	220

Earnings per share:
Basic	$	0.23		$	0.31		$	0.72		$	1.05
Diluted	$	0.23		$	0.31		$	0.72		$	1.05

Weighted average shares outstanding:
Basic		209.9			209.7			209.8			209.7
Effect of dilutive securities		—			0.1			0.1			0.1
Diluted		209.9			209.8			209.9			209.8

	(Unaudited) As of September 30, 2022		As of December 31, 2021
Assets
Cash and cash equivalents	$	33	$	164
Accounts receivable (net of allowance for doubtful accounts of $1 and $1)		289		316
Other receivables		12		12
Related party receivables		10		10
Inventories		796		583
Other current assets		41		19
Total current assets		1,181		1,104
Property, plant and equipment (net of accumulated depreciation of $808 and $752)		693		677
Operating lease right-of-use assets, net		63		55
Goodwill		1,879		1,879
Intangible assets, net		1,038		1,061
Other assets		58		36
Total assets	$	4,912	$	4,812
Liabilities
Accounts payable	$	295	$	261
Related party payables		44		38
Current portion of long-term debt		25		25
Accrued and other current liabilities		184		160
Total current liabilities		548		484
Long-term debt		2,071		2,087
Long-term operating lease liabilities		51		46
Deferred income taxes		362		351
Long-term postretirement benefit obligation		49		50
Other liabilities		33		38
Total liabilities	$	3,114	$	3,056
Commitments and contingencies (Note 7)
Stockholders’ equity
Common stock, $0.001 par value; 2,000 shares authorized; 210 shares issued and outstanding		—		—
Additional paid-in capital		1,383		1,381
Accumulated other comprehensive income		42		10
Retained earnings		373		365
Total stockholders' equity		1,798		1,756
Total liabilities and stockholders' equity	$	4,912	$	4,812

	Nine Months Ended
	September 30,
	2022			2021
Cash provided by operating activities
Net income	$	152		$	220
Adjustments to reconcile net income to operating cash flows:
Depreciation and amortization		87			81
Deferred income taxes		(1	)		8
Stock compensation expense		4			5
Change in assets and liabilities:
Accounts receivable, net		27			(27	)
Other receivables		—			3
Related party receivables		—			(2	)
Inventories		(213	)		(197	)
Accounts payable		40			64
Related party payables		6			(6	)
Income taxes payable / receivable		—			(7	)
Accrued and other current liabilities		23			(20	)
Other assets and liabilities		(7	)		—
Net cash provided by operating activities		118			122
Cash used in investing activities
Acquisition of property, plant and equipment		(86	)		(101	)
Net cash used in investing activities		(86	)		(101	)
Cash used in financing activities
Repayment of long-term debt		(19	)		(119	)
Dividends paid		(144	)		(144	)
Net cash used in financing activities		(163	)		(263	)
Net decrease in cash and cash equivalents		(131	)		(242	)
Cash and cash equivalents at beginning of period		164			312
Cash and cash equivalents at end of period	$	33		$	70

Cash paid:
Income taxes		49			72
Interest		42			32

(In millions)	Amount of Gain (Loss) Recognized in Other Comprehensive Income			Amount of Gain (Loss) Reclassified From Accumulated Other Comprehensive Income Into Income
For the three months ended September 30, 2022	$	34		$	3
For the three months ended September 30, 2021	$	(1	)	$	(1	)
For the nine months ended September 30, 2022	$	49		$	3
For the nine months ended September 30, 2021	$	1		$	(1	)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(in millions)						(in millions)
Segment Adjusted EBITDA	$	124		$	132		$	371		$	450
Corporate / unallocated expenses		(8	)		—			(25	)		(30	)
		116			132			346			420
Adjustments to reconcile to GAAP income before income taxes
Depreciation and amortization		(30	)		(27	)		(87	)		(81	)
Interest expense, net		(20	)		(12	)		(48	)		(36	)
IPO and separation-related costs		(3	)		(5	)		(10	)		(11	)
Consolidated GAAP income before income taxes	$	63		$	88		$	201		$	292

	Nine Months Ended September 30, 2022						Nine Months Ended September 30, 2021
(In millions, except for per share data)	Net Income		Diluted Shares		Diluted EPS		Net Income		Diluted Shares		Diluted EPS
As Reported - GAAP	$	152		210	$	0.72	$	220		210	$	1.05
Adjustments:
IPO and separation-related costs ⁽¹⁾		8		210		0.04		8		210		0.04
Adjusted (Non-GAAP)	$	160		210	$	0.76	$	228		210	$	1.09

	For the Nine Months Ended September 30,
(In millions, except for %)	2022			% of Revenue			2021			% of Revenue			Change			% Change
Net revenues	$	2,652			97	%	$	2,455			97	%	$	197			8	%
Related party net revenues		77			3	%		79			3	%		(2	)		(3	)%
Total net revenues		2,729			100	%		2,534			100	%		195			8	%
Cost of sales		(2,199	)		(81	)%		(1,952	)		(77	)%		(247	)		(13	)%
Gross profit		530			19	%		582			23	%		(52	)		(9	)%
Selling, general and administrative expenses		(264	)		(10	)%		(244	)		(10	)%		(20	)		(8	)%
Other expense, net		(17	)		(1	)%		(10	)		—	%		(7	)		(70	)%
Income from operations		249			9	%		328			13	%		(79	)		(24	)%
Interest expense, net		(48	)		(2	)%		(36	)		(1	)%		(12	)		(33	)%
Income before income taxes		201			7	%		292			12	%		(91	)		(31	)%
Income tax expense		(49	)		(2	)%		(72	)		(3	)%		23			32	%
Net income	$	152			6	%	$	220			9	%	$	(68	)		(31	)%
Adjusted EBITDA ⁽¹⁾	$	346			13	%	$	420			17	%	$	(74	)		(18	)%

	For the Nine Months Ended September 30,
(In millions)	2022			2021
								For the Three Months Ended March 31,
(in millions)							(in millions)	2023		2022
Net cash provided by operating activities	$	118		$	122		Net cash provided by operating activities	$	88	$	19
Net cash used in investing activities		(86	)		(101	)	Net cash used in investing activities	$	(22)	$	(28)
Net cash used in financing activities		(163	)		(263	)	Net cash used in financing activities	$	(54)	$	(54)
Decrease in cash and cash equivalents	$	(131	)	$	(242	)
Increase (decrease) in cash and cash equivalents							Increase (decrease) in cash and cash equivalents	$	12	$	(63)