What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-02-07 compared with 2023-02-08 · 106 added, 74 removed, 328 unchanged (35% of the section changed)

5 unchanged sentences

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.

We sell our products under iconic brands such as Reynolds and Hefty and also under store brands that are strategically important to our retail partners.

Overall, across both our branded and store brand offerings, we hold the #1 or #2 U.S.

2 unchanged sentences

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 mix of branded and store brand products is a key competitive advantage that aligns our goal of growing the overall product categories where we have offerings.

Our retail partners also measure their success in category growth, which positions us as a trusted strategic partner.

Our Reynolds and Hefty brands have preeminent positions in their categories and carry strong brand recognition in household aisles.

2 unchanged sentences

• 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.

Through our Reynolds Cooking & Baking segment, we sell both 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.

1 unchanged sentence

consumer foil market measured by retail sales and volume.

We also hold the #1 market position in the Canadian branded foil market under the ALCAN brand.

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 75 years, with greater than 50% market share in most of its categories.

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:

2 unchanged sentences

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.

Hefty has 99% brand awareness and is most commonly identified with the Brand's famous “Hefty!

Hefty!” slogan.

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.

Our robust product portfolio in this segment includes a full suite of products, including sustainable solutions such as compostable bags, bags made from recycled materials and orange bags through the Hefty ReNew Program.

• Hefty Tableware:

2 unchanged sentences

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.

Our branded products use our Hefty brand to represent both quality and great value, 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.

In 2023, we also tapped into the nostalgia trend and brought back Zoo Pals plates, garnering 3.7 billion media impressions.

• Presto Products:

2 unchanged sentences

Presto Products is a market leader in food storage bags and differentiates itself by providing access to category management, consumer insights, marketing, merchandising and R&D resources.

Presto Products was the first in the U.S.

market to offer a store branded sandwich bag made with an approximately 20% proprietary blend of plant and ocean, renewable materials.

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.

7 unchanged sentences

While advanced features are already prevalent in many of our products, we intend to continue investing in product development to accommodate the convenience-oriented lifestyles of today’s consumers.

Consumer demand is also impacted by changes in consumer lifestyle, environmental concerns and other considerations.

In addition, customers’ sensitivity to price points contributes to fluctuations in demand in portions of our business.

3 unchanged sentences

Through our category captain level advisor roles with our retail partners, we offer marketing and consumer shopping strategies, both in store and online, which expand usage occasions and stimulate consumption.

Costs for Raw Material, Energy, Labor and Freight

Our business is impacted by fluctuations in the prices of the raw materials, energy and freight costs incurred in manufacturing and distributing our products as well as fluctuations in labor and logistics costs related thereto.

Costs for Raw Materials, Energy, Labor and Freight

Our business is impacted by fluctuations in the prices of the raw materials, energy and freight costs incurred in manufacturing and distributing our products as well as fluctuations in labor costs.

The primary raw materials used to manufacture our products are plastic resins and aluminum, and we also use commodity chemicals and energy.

2 unchanged sentences

Sales contracts for our products typically do not contain pass-through mechanisms for raw material, energy, labor and freight cost changes, but we adjust prices, where possible, in response to such price fluctuations.

Resin prices have historically fluctuated with changes in the prices of crude oil and natural gas, as well as changes in refining capacity and the demand for other petroleum-based products.

Resin prices have historically fluctuated with supply and demand, changes in the prices of crude oil and natural gas, changes in refining capacity and the demand for other petroleum-based products.

Aluminum prices have also historically fluctuated, as aluminum is a cyclical commodity with prices subject to global market factors.

24 unchanged sentences

We intend to continue sustainability innovation in our efforts to be at the leading edge of recyclability, renewability and compostability in order to offer our customers environmentally sustainable choices.

Total net revenues increased 7% for the year ended December 31, 2022, compared to the year ended December 31, 2021.

The revenue increase was primarily due to higher pricing as a result of pricing actions taken in response to increased material, manufacturing and logistics costs, partially offset by lower volume.

We experienced significant increases in material costs as well as increases in manufacturing, logistics and advertising costs in 2022.

We have aggressively implemented price increases in an effort to recover these costs and maintain our profitability.

Our 2022 earnings decline was primarily attributable to lower volume and higher advertising costs, partially offset by the timing of pricing actions to recover increased material, manufacturing and logistics costs.

During the year ended December 31, 2023, we acquired privately held Atacama Manufacturing Inc., which is an innovation driven company that designs, formulates, manufactures and commercializes products that include recycled or renewable, plant-based materials.

Non-GAAP Measures

In this Annual Report on Form 10-K we use the non-GAAP financial measures “Adjusted EBITDA”, “Adjusted Net Income” and “Adjusted Earnings Per Share” ("Adjusted EPS"), which are measures adjusted for the impact of specified items and are not in accordance with GAAP.

In this Annual Report on Form 10-K 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, as well as other non-recurring costs.

We define Adjusted Net Income and Adjusted EPS as Net Income and Earnings Per Share ("EPS") calculated in accordance with GAAP, plus IPO and separation-related costs, other non-recurring costs and the impact of a tax legislation change under the CARES Act enacted on March 27, 2020.

We define Adjusted Net Income and Adjusted EPS as Net Income and Earnings Per Share (“EPS”) calculated in accordance with GAAP, plus IPO and separation-related costs and other non-recurring 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.

15 unchanged sentences

(1) Reflects costs during the years ended December 31, 2022 and 2021 related to our separation to operate as a stand-alone public company as well as costs related to the IPO process.

No such costs were incurred during the year ended December 31, 2023.

The following table presents a reconciliation of our net income and diluted EPS, the most directly comparable GAAP financial measures, to Adjusted Net Income and Adjusted EPS:

2 unchanged sentences

As Reported - GAAP $ 298 210 $ 1.42 $ 258 210 $ 1.23 $ 324 210 $ 1.54

Assume full period impact of IPO shares ⁽¹⁾ — — — — — — — 5 —

Total 258 210 1.23 324 210 1.54 363 210 1.73

IPO and separation-related costs (1)

Impact of tax legislation change from the CARES Act — — — — — — 27 210 0.13

Other ⁽²⁾ 2 210 0.01 — — — — — —

— — — 9 210 0.04 11 210 0.05

— — — 2 210 0.01 — — —

Adjusted (Non-GAAP) $ 298 210 $ 1.42 $ 269 210 $ 1.28 $ 335 210 $ 1.59

(1) Represents incremental shares required to adjust the weighted average shares outstanding for the period to the actual shares outstanding as of December 31, 2020.

We utilize the shares outstanding at period end as if they had been outstanding for the full period rather than weighted average shares outstanding over the course of the period as it is a more meaningful calculation that provides consistency in comparability due to the additional shares issued as a result of the IPO in the period.

(2) Amounts are after tax, calculated using a tax rate of 23.6% for the year ended December 31, 2022 and 24.6% for each of the years ended December 31, 2021 and 2020, which is our effective tax rate for the periods presented excluding the 2020 one-time discrete expense associated with the legislation change from the CARES Act.

(1) Amounts are after tax, calculated using a tax rate of 23.6% for the year ended December 31, 2022 and 24.6% for the year ended December 31, 2021, which is our effective tax rate for the periods presented.

Results of Operations

1 unchanged sentence

Detailed comparisons of revenue and results are presented in the discussions of the operating segments, which follow our consolidated results discussion.

Certain discussions in this section provide a breakdown of net revenues between our retail business and our non-retail business.

Our retail business net revenues consist of sales to grocery stores, mass merchants, warehouse clubs, discount chains, dollar stores, drug stores, home improvement stores, military outlets and eCommerce retailers.

Our non-retail business net revenues consist of sales to food service customers, which are classified as related party revenues, and industrial customers.

Discussions of the year ended December 31, 2022 items and comparisons between the year ended December 31, 2022 and the year ended December 31, 2021 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed on February 8, 2023.

6 unchanged sentences

2022 1,287 946 1,000 604 (20) 3,817

2020 1,159 818 763 533 (10) 3,263

Adjusted EBITDA (1)

1 unchanged sentence

2022 142 207 134 96 (33) 546

2020 254 236 170 98 (41) 717

(1) Adjusted EBITDA is a non-GAAP measure.

21 unchanged sentences

Adjusted EBITDA (1)

$ 636 17 % $ 546 14 % $ 90 16 %

(1) Adjusted EBITDA is a non-GAAP measure.

9 unchanged sentences

Total Net Revenues .

Total net revenues increased by $261 million, or 7%, to $3,817 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.

Total net revenues decreased by $61 million, or 2%, to $3,756 million.

The 2% decrease was driven by a 2% volume decline and 1% lower pricing in our non-retail business, as well as a 2% volume decline in our retail business, partially offset by 3% higher pricing in our retail business.

This resulted in a net revenue decline of $71 million in our non-retail business, which is in our Reynolds Cooking & Baking segment, partially offset by a $10 million increase in net revenue in our retail business across all segments.

Cost of Sales .

Cost of sales increased by $296 million, or 11%, to $3,041 million.

The increase was driven by an increase of $333 million in material costs, as well as increased manufacturing and logistics costs, partially offset by lower volume.

Cost of sales decreased by $227 million, or 7%, to $2,814 million.

The decrease was primarily driven by lower volume and lower material and manufacturing costs, as well as lower logistics costs.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased by $20 million, or 6%, to $340 million primarily due to higher advertising expense.

Selling, general and administrative expenses ("SG&A") increased by $90 million, or 26%, to $430 million, primarily due to higher personnel costs, increased investment in advertising and higher professional fees.

Other Expense, Net.

Other expense, net increased by $9 million, or 69%, to $22 million.

The increase was primarily attributable to changes in our deferred compensation plan assets.

Other expense, net decreased by $22 million, or 100%, to $0 million.

The decrease was primarily attributable to IPO and separation-related costs in the prior year period that did not reoccur in the current year period.

Interest Expense , Net .

Interest expense, net increased by $43 million, or 57%, to $119 million.

The increase was primarily due to higher interest rates.

The increase was primarily due to higher interest rates, partially offset by the lower principal balance on our term loan facility.

Income Tax Expense.

1 unchanged sentence

Adjusted EBITDA.

Adjusted EBITDA decreased by $55 million, or 9%, to $546 million.

The decrease in Adjusted EBITDA was primarily due to lower volume and higher advertising costs, partially offset by the timing of pricing actions to recover increased material, manufacturing and logistics costs.

Adjusted EBITDA increased by $90 million, or 16%, to $636 million.

The increase in Adjusted EBITDA was primarily due to previously implemented pricing actions and lower material and manufacturing costs, as well as lower logistics costs, partially offset by higher SG&A.

Segment Information

2 unchanged sentences

(in millions, except for %) 2023 2022 Change % Change

Retail net revenues $ 1,076 $ 1,019 $ 57 6 %

Non-retail net revenues 197 268 (71) (26) %

Total segment net revenues $ 1,273 $ 1,287 $ (14) (1) %

3 unchanged sentences

Reynolds Cooking & Baking total segment net revenues decreased by $14 million, or 1%, to $1,273 million.

The decrease in net revenues was primarily driven by lower household foil 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.

The decrease in net revenues was due to a $71 million decline in our non-retail business, partially offset by a $57 million increase in our retail business.

Adjusted EBITDA .

Reynolds Cooking & Baking Adjusted EBITDA decreased by $113 million, or 44%, to $142 million.

The decrease in Adjusted EBITDA was primarily driven by lower volume and the timing of pricing actions lagging higher material and manufacturing costs.

The increase in manufacturing costs was primarily driven by equipment reliability and related inefficiencies.

Reynolds Cooking & Baking Adjusted EBITDA increased by $42 million, or 30%, to $184 million.

The increase in Adjusted EBITDA was primarily driven by the optimization of our retail product portfolio mix, lower material and manufacturing costs and lower logistics costs, partially offset by an increased investment in advertising.

Hefty Waste & Storage

5 unchanged sentences

Total Segment Net Revenues .

Hefty Waste & Storage total segment net revenues increased by $62 million, or 7%, to $946 million.

The increase in net revenues was primarily driven by higher pricing due to pricing actions taken in response to increased material, manufacturing and logistics costs, partially offset by lower volume.

Hefty Waste & Storage total segment net revenues decreased by $4 million, to $942 million.

The decrease in net revenues was primarily due to lower volume, mostly offset by higher pricing due to previously implemented pricing actions.

Adjusted EBITDA.

Hefty Waste & Storage Adjusted EBITDA increased by $54 million, or 26%, to $261 million.

The increase in Adjusted EBITDA was primarily driven by the timing of pricing actions to recover higher material, manufacturing and logistics costs and cost savings initiatives, partially offset by higher advertising costs.

The increase in Adjusted EBITDA was primarily driven by higher pricing due to previously implemented pricing actions and lower material and manufacturing costs, as well as lower logistics costs, partially offset by lower volume and an increased investment in advertising.

Hefty Tableware

5 unchanged sentences

Total Segment Net Revenues.

Hefty Tableware total segment net revenues increased by $185 million, or 23%, to $1,000 million.

The increase in net revenues was primarily driven by higher pricing due to pricing actions taken in response to increased material, manufacturing and logistics costs, as well as higher volume.

Hefty Tableware total segment net revenues decreased by $33 million, or 3%, to $967 million.

The decrease in net revenues was primarily due to lower volume, partially offset by higher pricing due to previously implemented pricing actions.

Adjusted EBITDA.

Hefty Tableware Adjusted EBITDA decreased by $3 million, or 2%, to $134 million.

The decrease in Adjusted EBITDA was primarily driven by pricing actions lagging material, manufacturing and logistics costs and higher advertising costs, partially offset by higher volume.

Hefty Tableware Adjusted EBITDA increased by $40 million, or 30%, to $174 million.

Presto Products

5 unchanged sentences

Total Segment Net Revenues.

Presto Products total segment net revenues increased by $40 million, or 7%, to $604 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.

Presto Products total segment net revenues decreased by $11 million, or 2%, to $593 million.

The decrease in net revenues was primarily due to lower volume.

Adjusted EBITDA .

Presto Products Adjusted EBITDA increased by $16 million, or 17%, to $112 million.

The increase in Adjusted EBITDA was primarily driven by the timing of price increases to recover higher material, manufacturing and logistics costs and cost savings initiatives.

The increase in Adjusted EBITDA was primarily driven by lower material and manufacturing costs, as well as lower logistics costs, partially offset by lower volume.

Portions of our business historically have been moderately seasonal.

11 unchanged sentences

Net cash used in financing activities (457) (217)

Decrease in cash and cash equivalents $ (126) $ (148)

Increase (decrease) in cash and cash equivalents $ 77 $ (126)

Cash provided by operating activities

Net cash from operating activities decreased by $91 million, or 29%, to $219 million.

The decrease was primarily driven by lower net income and higher investment in net working capital, partially offset by lower net cash outlays related to employee costs in the current year period compared to the prior year period.

Net cash from operating activities increased by $425 million, or 194%, to $644 million.

The increase was primarily driven by improved earnings and the benefit of various working capital reduction initiatives.

Cash used in investing activities

Net cash used in investing activities decreased by $18 million, or 14%, to $110 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.

The decrease was driven primarily by decreased cash outlays for capital expenditures.

Cash used in financing activities

Net cash used in financing activities decreased by $100 million, or 32%, to $217.

The decrease in cash flows from financing activities was attributable to a voluntary payment of debt made in the prior year period that did not repeat in the current year period.

Net cash used in financing activities increased by $240 million, or 111%, to $457 million.

The increase was primarily attributable to voluntary principal payments related to our Term Loan Facility that were made throughout the year ended December 31, 2023.

External Debt Facilities

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

In February 2020, we entered into the External Debt Facilities which consists of a $2,475 million Term Loan Facility and a Revolving Facility that provides for additional borrowing capacity of up to $250 million, reduced by amounts used for letters of credit.

In February 2023, we amended the External Debt Facilities (“Amendment No.

1”) which replaced the benchmark from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”).

Additionally, in November 2023, we further amended the External Debt Facilities (“Amendment No.

2”) to extend the maturity date of the Revolving Facility by one year.

Other than the foregoing, the material terms of the External Debt Facilities, as amended by Amendment No.

1 and Amendment No.

2 (“Amended External Debt Facilities”) remain unchanged.

As of December 31, 2023, the outstanding balance under the Term Loan Facility was $1,845 million.

As of December 31, 2023, we had no outstanding borrowings under the Revolving Facility, and we had $6 million of letters of credit outstanding, which reduces the borrowing capacity under the Revolving Facility.

The borrower under the External Debt Facilities is Reynolds Consumer Products LLC (the “Borrower”).

The 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 External Debt Facilities provide that the Borrower has the right at any time, subject to customary conditions, to request incremental term loans or incremental revolving credit commitments in amounts and on terms set forth therein.

The lenders under the External Debt Facilities are not under any obligation to provide any such incremental loans or commitments, and any such addition of or increase in loans is subject to certain customary conditions precedent and other provisions.

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

Borrowings under the 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 plus an applicable margin of 1.75%.

During the year ended December 31, 2020, we entered into a series of interest rate swaps which fixed the LIBO rate to an annual rate of 0.18% to 0.47% (for an annual effective interest rate of 1.93% to 2.22%, including margin) for an aggregate notional amount of $1,650 million, of which $150 million notional value was still in effect as of December 31, 2022.

During the year ended December 31, 2022, we entered into additional interest rate swaps which fixed the LIBO rate to an annual rate of 2.70% to 3.44% (for an annual effective interest rate of 4.45% to 5.19%, including margin) for an aggregate notional amount of $1,000 million.

As of December 31, 2022, we had interest rate swaps of an aggregate notional amount of $1,150 million.

These interest rate swaps hedge a portion of the interest rate exposure resulting from our Term Loan Facility for periods ranging from three to four years.

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 SOFR rate plus an applicable margin of 1.75%.

During 2020 and 2022, we entered into a series of interest rate swaps 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 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 Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , and ASU 2021-01, Reference Rate Reform (Topic 848):

Scope , resulted in no material impacts on the consolidated financial statements.

The aggregate notional amount of our interest rate swaps still in effect as of December 31, 2023 was $1,150 million, and the SOFR is fixed at an annual rate of 0.40% to 3.40% (for an annual effective interest rate of 2.15% to 5.15%, including margin).

These interest rate swaps hedge a portion of the interest rate exposure resulting from our Term Loan Facility for periods ranging from two to three years.

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

The Borrower may voluntarily repay outstanding loans under the Term Loan Facility at any time without premium or penalty, other than customary breakage costs.

The Borrower may voluntarily repay outstanding loans under the Term Loan Facility at any time without premium or penalty, other than customary breakage costs with respect to SOFR based loans.

During the year ended December 31, 2023, we made voluntary principal payments of $250 million related to the Term Loan Facility, which were not subject to a prepayment premium.

Amortization and maturity

1 unchanged sentence

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.

During the year ended December 31, 2023, we made voluntary principal payments of $250 million related to our Term Loan Facility, which were first applied to pay the remaining quarterly amortization payments in full, with the residual balance applied to the outstanding principal balance due at maturity.

As amended, the Revolving Facility matures in February 2026.

Guarantee and security

All obligations under the External Debt Facilities and certain hedge agreements and cash management arrangements provided by any lender party to the External Debt Facilities or any of its affiliates and certain other persons are unconditionally guaranteed by Reynolds Consumer Products Inc.

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 External Debt Facilities and certain hedge agreements and cash management arrangements provided by any lender party to the External Debt Facilities or any of its affiliates and certain other persons, and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by:

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.

1 unchanged sentence

Certain covenants and events of default

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

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;

8 unchanged sentences

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

The External Debt Facilities contain a springing financial covenant requiring compliance with a ratio of first lien net indebtedness to consolidated EBITDA, applicable solely to the Revolving Facility.

The 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.

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

We are currently in compliance with the covenants contained in our 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.

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

Accounts Receivable Factoring

During the year ended December 31, 2022, we entered into an accounts receivable factoring agreement with JP Morgan Chase Bank, N.A.

We are party to a factoring agreement with JP Morgan Chase Bank, N.A.

to sell certain accounts receivable up to $95 million.

We had no outstanding balance owed under the factoring arrangement as of December 31, 2023.

The outstanding balance owed under the factoring arrangement as of December 31, 2022 was $15 million.

2 unchanged sentences

We record the discount as other expense, net in the consolidated statement of income.

Supply Chain Financing

During the year ended December 31, 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 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 consolidated balance sheet and associated payments are included as an operating cash flow in the consolidated statement of cash flows.

As of December 31, 2023, the amount of obligations outstanding that we have confirmed as valid under the SCF was $19 million.

During the year ended December 31, 2023, cash dividends totaling $0.92 per share were declared and paid.

1 unchanged sentence

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 External Debt Facilities) 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.

9 unchanged sentences

Long-term debt (1)

$ 2,262 $ 135 $ 270 $ 1,857 $ —

Operating lease liabilities (2)

119 21 43 26 29

Finance lease liabilities 22 2 4 4 12

4 unchanged sentences

The interest rate on the floating rate debt balances has been assumed to be the same as the rate in effect as of December 31, 2023.

(2) Total operating lease liabilities include $55 million in commitments related to operating leases executed that have not yet commenced.

As of December 31, 2023, our liabilities for uncertain tax positions and defined benefit pension obligations totaled $13 million.

62 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis