Reynolds Consumer Products Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ( PCAOB ID 238 ) 45 Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 47 Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 48 Consolidated Balance Sheets as of December 31, 2024 and 2023 49 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, 2023 and 2022 50 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 51 Notes to the Consolidated Financial Statements 52 44 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Reynolds Consumer Products Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Reynolds Consumer Products Inc. and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management ’ s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 45 Table of Contents Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition for Certain Contracts with Customers As described in Note 2 to the consolidated financial statements, the Company recorded total net revenues of $3,695 million for the year ended December 31, 2024, of which a portion relates to certain contracts with customers, recorded net of discounts, allowances and trade promotions (collectively referred to as “sales incentives”) recognized throughout the year . Consideration in contracts with customers is variable due to anticipated reductions such as sales incentives. Accordingly, revenues are recorded net of estimated sales incentives recognized throughout the year and as of year-end. The transaction price is estimated based on the amount of consideration to which management believes the Company will be entitled, using an expected value method. The principal considerations for our determination that performing procedures relating to revenue recognition for certain contracts with customers is a critical audit matter is a high degree of auditor effort in performing procedures related to revenue recognition for certain contracts with customers, recorded net of sales incentives recognized throughout the year. Addressin g the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process. These procedures also included, among others (i) evaluating certain revenue transactions by testing the issuance and settlement of invoices and credit memos, tracing transactions not settled to a detailed listing of accounts receivable, and testing the completeness and accuracy of data provided by management; (ii) evaluating and recalculating, on a sample basis, certain sales incentives recognized by obtaining and inspecting source documents, such as executed contracts and support for the amount; and (iii) evaluating, on a sample basis, outstanding customer invoice balances as of December 31, 2024 by obtaining and inspecting source documents, such as executed contracts, invoices, proof of shipment, and subsequent cash receipts. /s/ PricewaterhouseCoopers LLP Chicago, Illinois February 5, 2025 We have served as the Company’s auditor since 2015. 46 Table of Contents Reynolds Consumer Products Inc. Consolidated Statements of Income For the Years Ended December 31 (in millions, except for per share data) 2024 2023 2022 Net revenues $ 3,618 $ 3,673 $ 3,716 Related party net revenues 77 83 101 Total net revenues 3,695 3,756 3,817 Cost of sales ( 2,717 ) ( 2,814 ) ( 3,041 ) Gross profit 978 942 776 Selling, general and administrative expenses ( 429 ) ( 430 ) ( 340 ) Other expense, net — — ( 22 ) Income from operations 549 512 414 Interest expense, net ( 98 ) ( 119 ) ( 76 ) Income before income taxes 451 393 338 Income tax expense ( 99 ) ( 95 ) ( 80 ) Net income $ 352 $ 298 $ 258 Earnings per share Basic $ 1.68 $ 1.42 $ 1.23 Diluted $ 1.67 $ 1.42 $ 1.23 Weighted average shares outstanding: Basic 210.1 210.0 209.8 Diluted 210.4 210.0 209.9 See accompanying notes to the consolidated financial statements. 47 Table of Contents Reynolds Consumer Products Inc. Consolidated Statements of Comprehensive Income For the Years Ended December 31 (in millions) 2024 2023 2022 Net income $ 352 $ 298 $ 258 Other comprehensive (loss) income, net of income taxes: Currency translation adjustment ( 3 ) — ( 1 ) Employee benefit plans ( 3 ) 11 11 Derivative instruments ( 9 ) ( 13 ) 32 Other comprehensive (loss) income, net of income taxes ( 15 ) ( 2 ) 42 Comprehensive income $ 337 $ 296 $ 300 See accompanying notes to the consolidated financial statements. 48 Table of Contents Reynolds Consumer Products Inc. Consolidated Balance Sheets As of December 31 (in millions, except for per share data) 2024 2023 Assets Cash and cash equivalents $ 137 $ 115 Accounts receivable, net 337 347 Other receivables 7 7 Related party receivables 6 7 Inventories 567 524 Other current assets 47 41 Total current assets 1,101 1,041 Property, plant and equipment, net 758 732 Operating lease right-of-use assets, net 90 56 Goodwill 1,895 1,895 Intangible assets, net 972 1,001 Other assets 57 55 Total assets $ 4,873 $ 4,780 Liabilities Accounts payable $ 319 $ 219 Related party payables 34 34 Current operating lease liabilities 20 16 Income taxes payable 5 22 Accrued and other current liabilities 161 187 Total current liabilities 539 478 Long-term debt 1,686 1,832 Long-term operating lease liabilities 73 42 Deferred income taxes 342 357 Long-term postretirement benefit obligation 14 16 Other liabilities 77 72 Total liabilities $ 2,731 $ 2,797 Commitments and contingencies (Note 13) Stockholders’ equity Common stock, $ 0.001 par value; 2,000 shares authorized; 210.2 shares issued and outstanding — — Additional paid-in capital 1,413 1,396 Accumulated other comprehensive income 35 50 Retained earnings 694 537 Total stockholders’ equity 2,142 1,983 Total liabilities and stockholders’ equity $ 4,873 $ 4,780 See accompanying notes to the consolidated financial statements. 49 Table of Contents Reynolds Consumer Products Inc. Consolidated Statements of Stockholders’ Equity (in millions, except for per share data) 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 — — 258 — 258 Other comprehensive income, net of income taxes — — — 42 42 Dividends ($ 0.92 per share declared and paid) — — ( 192 ) — ( 192 ) Other — 4 — — $ 4 Balance as of December 31, 2022 $ — $ 1,385 $ 431 $ 52 $ 1,868 Net income — — 298 — 298 Other comprehensive income, net of income taxes — — — ( 2 ) ( 2 ) Dividends ($ 0.92 per share declared and paid) — — ( 192 ) — ( 192 ) Other — 11 — — 11 Balance as of December 31, 2023 $ — $ 1,396 $ 537 $ 50 $ 1,983 Net income — — 352 — 352 Other comprehensive loss, net of income taxes — — — ( 15 ) ( 15 ) Dividends ($ 0.92 per share declared and paid) — — ( 192 ) — ( 192 ) Other — 17 ( 3 ) — 14 Balance as of December 31, 2024 $ — $ 1,413 $ 694 $ 35 $ 2,142 See accompanying notes to the consolidated financial statements. 50 Table of Contents Reynolds Consumer Products Inc. Consolidated Statements of Cash Flows For the Years Ended December 31 (in millions) 2024 2023 2022 Cash provided by operating activities Net income $ 352 $ 298 $ 258 Adjustments to reconcile net income to operating cash flows: Depreciation and amortization 129 124 117 Deferred income taxes ( 11 ) ( 5 ) 1 Stock compensation expense 19 14 5 Change in assets and liabilities: Accounts receivable, net 11 — ( 31 ) Other receivables 1 7 ( 3 ) Related party receivables 1 — 3 Inventories ( 42 ) 198 ( 139 ) Accounts payable 95 ( 31 ) ( 14 ) Related party payables — ( 12 ) 8 Income taxes payable / receivable ( 17 ) 9 13 Accrued and other current liabilities ( 26 ) 42 1 Other assets and liabilities ( 23 ) — — Net cash provided by operating activities 489 644 219 Cash used in investing activities Acquisition of property, plant and equipment ( 120 ) ( 104 ) ( 128 ) Acquisition of business — ( 6 ) — Net cash used in investing activities ( 120 ) ( 110 ) ( 128 ) Cash used in financing activities Repayment of long-term debt ( 150 ) ( 262 ) ( 25 ) Dividends paid ( 192 ) ( 192 ) ( 192 ) Other financing activities ( 4 ) ( 3 ) — Net cash used in financing activities ( 346 ) ( 457 ) ( 217 ) Effect of exchange rate changes on cash and cash equivalents ( 1 ) — — Cash and cash equivalents: Increase (decrease) in cash and cash equivalents 22 77 ( 126 ) Balance as of beginning of the year 115 38 164 Balance as of end of the year $ 137 $ 115 $ 38 Cash paid: Interest – long-term debt, net of interest rate swaps $ 98 $ 114 $ 68 Income taxes 125 90 64 Significant non-cash investing and financing activities Refer to Note 7 – Leases for details of non-cash additions to lease right-of-use assets, net as a result of changes in lease liabilities. See accompanying notes to the consolidated financial statements. 51 Table of Contents Reynolds Consumer Products Inc. Notes to the 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 that people use in their homes for cooking, serving, cleanup and storage. 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 audited consolidated financial statements in accordance with United States generally accepted accounting principles (“GAAP”). Note 2 – Summary of Significant Accounting Policies Basis of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates: We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions that affect a number of amounts in our consolidated financial statements. Significant accounting policy elections, estimates and assumptions include, among others, valuation assumptions of goodwill and intangible assets, useful lives of long-lived assets, sales incentives, income taxes and benefit plan assumptions. We base our estimates on historical experience and other assumptions that we believe are reasonable. If actual amounts differ from estimates, we include the revisions in our consolidated results of operations in the period the actual amounts become known. Historically, the aggregate differences, if any, between our estimates and actual amounts in any year have not had a material effect on our consolidated financial statements. Currency Translation: Our consolidated financial statements are presented in U.S. dollars, which is our reporting currency. We translate the results of operations of our subsidiaries with functional currencies other than the U.S. dollar using average exchange rates during each period and translate balance sheet accounts using exchange rates at the end of each period. We record currency translation adjustments as a component of stockholders’ equity within accumulated other comprehensive income and transaction gains and losses in other expense, net in our consolidated statements of income. Cash and Cash Equivalents: Cash and cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less. We maintain our bank accounts with a relatively small number of high quality financial institutions. Cash balances held by non-U.S. entities as of December 31, 2024 and 2023 were $ 10 million and $ 12 million, respectively. Accounts Receivable: Accounts receivable are recorded at face amounts less an allowance for doubtful accounts. The allowance is an estimate based on historical collection experience, current economic and market conditions and a review of the current status of each customer’s trade accounts receivable balance. We evaluate the aging of the accounts receivable balances and the financial condition of our customers to estimate the amount of accounts receivable that may not be collected in the future and record the appropriate provision. The allowance for doubtful accounts was not material as of December 31, 2024 and 2023. 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, 2024 and 2023. Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the consolidated balance sheet at the time of the sales transaction. We classify proceeds received from the sales of accounts receivable as an operating cash flow in the consolidated statement of cash flows. We record the discount as other expense, net in the consolidated statement of income. 52 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Inventories: We value our inventories using the first-in, first-out method. Inventory is valued at actual cost, which includes raw materials, supplies, direct labor and manufacturing overhead associated with production. Inventory is stated at the lower of cost or net realizable value, which includes any costs to sell or dispose. In addition, appropriate consideration is given to obsolescence, excessive inventory levels, product deterioration and other factors in evaluating net realizable value. Long-Lived Assets: Property, plant and equipment are stated at historical cost less depreciation, which is computed using the straight-line method over the estimated useful lives of the assets. Machinery and equipment are depreciated over periods ranging from 5 to 20 years and buildings and building improvements over periods ranging from 15 to 40 years. Finite-lived intangible assets, which primarily consist of customer relationships, are stated at historical cost and amortized using the straight-line method (which reflects the pattern of how the assets’ economic benefits are consumed) over the assets’ estimated useful lives which range from 18 to 20 years. Expenditures for maintenance and repairs are expensed as incurred. When property, plant or equipment is sold or otherwise disposed of, the related cost and accumulated depreciation is removed from the respective accounts and any gain or loss realized on disposition is reflected in other expense, net in our consolidated statements of income. We review long-lived assets, including finite-lived intangible assets, for recoverability on an ongoing basis. Changes in depreciation or amortization are recorded prospectively when estimates of the remaining useful lives or residual values of long-lived assets change. We also review our long-lived assets for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. In those circumstances, we perform undiscounted cash flow analysis to determine if an impairment exists. When testing for asset impairment, we group assets and liabilities at the lowest level for which cash flows are separately identifiable. If an impairment loss is recorded, it is calculated as the excess of the asset’s carrying value over its estimated fair value as determined by an estimate of discounted future cash flows. Depending on the nature of the asset, impairment losses are recorded in either cost of sales or selling, general and administrative expenses in our consolidated statements of income. There were no impairments of long-lived assets in any of the years presented. Leases: We determine whether a contract is or contains a lease at contract inception. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets are recognized at the commencement date at the value of the lease liability, adjusted for any prepayments, lease incentives received and initial direct costs incurred. Lease liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term. For operating leases, following initial recognition, lease liability balances are amortized using the effective interest method, while the related operating lease ROU assets are adjusted by the difference between the fixed lease expense recognized under a straight-line method and the interest expense associated with the effective interest method in the period. Some of our leases contain non-lease components, for example common area or other maintenance costs, that relate to the lease components of the agreement. Non-lease components and the lease components to which they relate are accounted for as a single lease component as we have elected to combine lease and non-lease components for all classes of underlying assets. All operating lease cash payments are recorded within cash flows from operating activities in the consolidated statements of cash flows. Principal cash payments on finance leases are recorded within cash flows from financing activities, while interest payments associated with finance leases are recorded within cash flows from operating activities in the consolidated statements of cash flows. Our lease agreements do not include significant restrictions, covenants or residual value guarantees. 53 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Goodwill and Indefinite-Lived Intangible Assets: Goodwill represents the excess of purchase price over the fair value of net assets acquired. We test goodwill for impairment on an annual basis in the fourth quarter and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. We assess goodwill impairment risk by performing a qualitative review of entity-specific, industry, market and general economic factors affecting our goodwill reporting units. Depending on factors such as prior-year test results, current year developments, current risk evaluations and other practical considerations, we may elect to perform quantitative testing instead. In our quantitative testing, we compare a reporting unit’s estimated fair value with its carrying value. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans and industry and economic conditions. The key assumptions associated with determining the estimated fair value are forecasted Adjusted EBITDA and a relevant earnings multiple. Our actual results and conditions may differ over time. If the carrying value of a reporting unit’s net assets exceeds its fair value, we would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value. Our indefinite-lived intangible assets consist of certain trade names. We test indefinite-lived intangible assets for impairment on an annual basis in the fourth quarter and whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Depending on factors such as prior-year test results, current year developments, current risk evaluations and other practical considerations, we may elect to perform quantitative testing instead. If potential impairment risk exists for a specific asset, we quantitatively test it for impairment by comparing its estimated fair value with its carrying value. We determine estimated fair value using the relief-from-royalty method, using key assumptions including planned revenue growth rates, market-based discount rates and estimates of royalty rates. If the carrying value of the asset exceeds its fair value, we consider the asset impaired and reduce its carrying value to the estimated fair value. 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. Our outstanding obligations confirmed as valid under our SCF for the year ended December 31, 2024 is as follows: As of December 31, 2024 (in millions) Confirmed obligations outstanding at the beginning of the year $ 19 Invoices confirmed during the year 60 Confirmed invoices paid during the year ( 67 ) Confirmed obligations outstanding at the end of the year $ 12 54 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Revenue Recognition: After assessing our customers’ creditworthiness, we recognize revenue when control over products transfers to our customers, which generally occurs upon delivery or shipment of the products. We account for product shipping, handling and insurance as fulfillment activities, with revenues for these activities recorded in net revenues and costs recorded in cost of sales. Any taxes collected on behalf of government authorities are excluded from net revenues. Consideration in our contracts with customers is variable due to anticipated reductions such as discounts, allowances and trade promotions, collectively referred to as “sales incentives”. Accordingly, revenues are recorded net of estimated sales incentives, recognized throughout the year and as of year-end. The transaction price reflects our estimate of the amount of consideration to which we will be entitled, using an expected value method. We base these estimates principally on historical utilization and redemption rates, anticipated performance and our best judgment at the time to the extent that it is probable that a significant reversal of revenue recognized will not occur. Estimates of sales incentives are monitored and adjusted each period until the sales incentives are realized. We consider purchase orders, which in some cases are governed by master supply agreements, to be the contracts with a customer. Key sales terms, such as pricing and quantities ordered, are established frequently, so most customer arrangements and related sales incentives have a duration of one year or shorter. We generally do not have any unbilled receivables at the end of a period. Deferred revenues are not material and primarily include customer advance payments typically collected a few days before product delivery, at which time deferred revenues are reclassified and recorded as net revenues. We generally do not receive non-cash consideration for the sale of goods nor do we grant payment financing terms greater than one year. We do not incur any significant costs to obtain a contract. Marketing, Advertising and Research and Development: We promote our products with marketing and advertising programs. These programs include, but are not limited to, cooperative advertising, in-store displays and consumer marketing promotions. The costs of end-consumer marketing programs that are conducted in conjunction with our customers, such as coupons, are recorded as a reduction to revenue. We do not defer these costs on our consolidated balance sheets and all marketing and advertising costs are recorded as an expense in the year incurred. Advertising expense was $ 78 million, $ 79 million and $ 59 million in the years ended December 31, 2024, 2023 and 2022, respectively. We expense product research and development costs as incurred. Research and development expense was $ 45 million, $ 44 million and $ 38 million in the years ended December 31, 2024, 2023 and 2022, respectively. We record marketing and advertising as well as research and development expenses in selling, general and administrative expenses. Stock-based Compensation: Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense over the period in which the award vests in accordance with applicable guidance under Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation. We have granted restricted stock units (“RSUs”) to certain members of management and to certain members of our Board of 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. Interest Rate Derivatives: We manage interest rate risk by using interest rate derivative instruments. Interest rate swaps (pay fixed, receive variable) are entered into as cash flow hedges to manage a portion of the interest rate risk associated with our floating-rate borrowings. We record interest rate derivative instruments at fair value (Level 2) and on a net basis by counterparty based on our master netting arrangements. The fair value of our interest rate derivatives is determined using a discounted cash flow method based on market-based swap yield curves, taking into account current interest rates. The instruments are classified in our consolidated balance sheets in other assets or other liabilities, as applicable. Cash flows from interest rate derivative instruments are classified as operating activities in our consolidated statements of cash flows based on the nature of the derivative instrument. We have elected to use hedge accounting for our interest rate derivative instruments. Accordingly, the effective portion of the gain or loss on the open hedging instrument is recorded in other comprehensive income and is reclassified into earnings as interest expense, net when settled. We terminate derivative instruments if the underlying asset or liability matures or is repaid, or if we determine the underlying forecasted transaction is no longer probable of occurring. 55 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Income Taxes: Our income tax expense includes amounts payable or refundable for the current year, the effects of deferred taxes and impacts from uncertain tax positions. We recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax basis of our assets and liabilities, operating loss carryforwards and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those differences are expected to reverse. The realization of certain deferred tax assets is dependent on generating sufficient taxable income in the appropriate jurisdiction prior to the expiration of the carryforward periods. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. When assessing the need for a valuation allowance, we consider any carryback potential, future reversals of existing taxable temporary differences (including liabilities for unrecognized tax benefits), future taxable income and tax planning strategies. We recognize the tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained based on the technical merits of the position. The amount we recognize is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon resolution. Future changes related to the expected resolution of uncertain tax positions could affect tax expense in the period when the change occurs. Fair Value Measurements and Disclosures: GAAP establishes a hierarchy for measuring fair value. A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. The following three levels of inputs may be used to measure fair value: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 inputs include inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities. • Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Our assets and liabilities measured at fair value on a recurring basis are presented in Note 8 - Financial Instruments. We had no assets or liabilities measured at fair value on a non-recurring basis in any of the years presented. In addition to fair value disclosure requirements related to financial instruments carried at fair value, accounting standards require disclosures regarding the fair value of all of our financial instruments. The carrying values of cash equivalents, accounts receivables, other receivables, related party receivables, accounts payable, related party payables and accrued and other current liabilities are reasonable estimates of their fair values as of December 31, 2024 and 2023 due to the short-term nature of these instruments. 56 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Recently Adopted Accounting 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, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope , both of which provide optional expedients 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. Each of these ASUs were effective upon its issuance and 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 adopted the standards as of 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, in February 2023 we amended our external debt facilities and related interest rate swaps to replace the interest rate benchmark from LIBOR to the Secured Overnight Financing Rate (“SOFR”), and applied practical expedients under the guidance. The adoption of these ASUs did not have a material impact on our 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 were 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 the amounts recognized in our consolidated financial statements. In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280) , which enhances disclosures about significant segment expenses by requiring disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We adopted the standard as of January 1, 2024, with no material impact on our consolidated financial statements. Recently Issued Accounting Guidance: In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740) , which enhances disclosures within the income tax rate reconciliation and information disclosed related to income taxes paid, and requires disaggregation of certain financial statement captions between domestic, foreign, federal and state. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently assessing the impact of this standard on our consolidated financial statements. In March 2024, the SEC adopted final rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors , which will require public companies to include climate-related disclosures in their annual reports and registration statements. The final rules will require, among other matters, information about climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, a registrant, including on its strategy, results of operations, or financial condition. In addition, under the final rules, certain disclosures related to severe weather events and other natural conditions will be required in the audited financial statements. The disclosure requirements related to financial statements are expected to be effective for our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. We are currently assessing the impact of these rules on our consolidated financial statements and related disclosures. In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) , which will require additional disclosure about specific expense categories included in the income statement. Annual disclosure requirements will be effective for us in our Annual Report on Form 10-K for the fiscal year ending December 31, 2026, and quarterly disclosure requirements will be effective for us in the first quarter of 2027, with early adoption permitted. We are currently assessing the impact of this standard on our consolidated financial statements and related disclosures. 57 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Note 3 – Inventories Inventories consisted of the following: As of December 31, 2024 2023 (in millions) Raw materials $ 129 $ 153 Work in progress 60 60 Finished goods 318 260 Spare parts 60 51 Inventories $ 567 $ 524 Note 4 – Property, Plant and Equipment, Net Property, plant and equipment, net consisted of the following: As of December 31, 2024 2023 (in millions) Land and land improvements $ 47 $ 46 Buildings and building improvements 230 220 Machinery and equipment 1,355 1,279 Construction in progress 87 84 Property, plant and equipment, at cost 1,719 1,629 Less: accumulated depreciation ( 961 ) ( 897 ) Property, plant and equipment, net $ 758 $ 732 Depreciation expense was $ 98 million, $ 93 million and $ 86 million for the years ended December 31, 2024, 2023 and 2022, respectively, of which $ 89 million, $ 82 million and $ 76 million, respectively, was recognized in cost of sales and $ 9 million, $ 11 million and $ 10 million, respectively, was recognized in selling, general and administrative expenses. Note 5 – Goodwill and Intangible Assets Goodwill by reportable segment was as follows: Reynolds Cooking & Baking Hefty Waste & Storage Hefty Tableware Presto Products Total (in millions) Balance as of December 31, 2022 $ 794 $ 505 $ 282 $ 298 $ 1,879 Acquisition of business (1) — — 16 — 16 Balance as of December 31, 2023 794 505 298 298 1,895 Movements — — — — — Balance as of December 31, 2024 $ 794 $ 505 $ 298 $ 298 $ 1,895 (1) During the year ended December 31, 2023, we recognized $ 16 million of goodwill associated with the acquisition of Atacama Manufacturing Inc. The acquisition did not have a material impact on our financial statements. 58 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Intangible assets, net consisted of the following: As of December 31, 2024 As of December 31, 2023 Gross carrying amount Accumulated amortization Net Gross carrying amount Accumulated amortization Net (in millions) Finite-lived intangible assets Customer relationships $ 580 $ ( 458 ) $ 122 $ 580 $ ( 429 ) $ 151 Trade names 25 ( 25 ) — 25 ( 25 ) — Total finite-lived intangible assets 605 ( 483 ) 122 605 ( 454 ) 151 Indefinite-lived intangible assets Trade names 850 — 850 850 — 850 Total intangible assets $ 1,455 $ ( 483 ) $ 972 $ 1,455 $ ( 454 ) $ 1,001 Amortization expense for intangible assets was $ 29 million, $ 30 million and $ 31 million for the years ended December 31, 2024, 2023 and 2022, respectively, and has been recognized in selling, general and administrative expenses. Estimated annual amortization for intangible assets over the next five calendar years are as follows: (in millions) 2025 2026 2027 2028 2029 Estimated annual amortization $ ( 29 ) $ ( 22 ) $ ( 21 ) $ ( 18 ) $ ( 17 ) 59 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Note 6 – Debt Long-Term Debt Long-term debt consisted of the following: As of December 31, 2024 2023 (in millions) Term Loan Facility $ 1,695 $ 1,845 Deferred financing transaction costs ( 8 ) ( 12 ) Original issue discounts ( 1 ) ( 1 ) Long-term debt $ 1,686 $ 1,832 External Debt Facilities In February 2020, we entered into new external debt facilities (“External Debt Facilities”), which consisted 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 (“Amendment No. 1”) which replaced the interest rate benchmark from LIBOR to the SOFR. Additionally, in November 2023, we further amended the External Debt Facilities (“Amendment No. 2”) to extend the maturity of the Revolving Facility by one year. In October 2024, we further amended our External Debt Facilities (“Amendment No. 3”) to replace the undrawn $ 250 million revolving facility maturing in February 2026 with an undrawn $ 700 million revolving facility maturing in October 2029. Other than the foregoing, the material terms of the External Debt Facilities, as amended by Amendment No. 1, Amendment No. 2 and Amendment No. 3 (“Amended External Debt Facilities”) remained unchanged, and our election to use practical expedients under ASU 2020-04 and ASU 2021-01, as described in Note 2 - Summary of Significant Accounting Policies, resulted in no material impacts on our 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 SOFR plus an applicable margin of 1.75 %. We have entered into a series of interest rate swaps to hedge a portion of the interest rate exposure resulting from these borrowings. Refer to Note 8 – 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 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. Term Loan Facility The Term Loan Facility matures in February 2027. As a result of voluntary principal repayments, the Term Loan Facility has no remaining quarterly amortization payments due. During the years ended December 31, 2024 and 2023, we made voluntary principal repayments of $ 150 million and $ 250 million, respectively. Revolving Facility In November 2023, we amended the External Debt Facilities to extend the maturity date of the Revolving Facility by one year. In October 2024, we further amended the External Debt Facilities to replace the undrawn $ 250 million revolving facility maturing in February 2026 with an undrawn $ 700 million revolving facility maturing in October 2029. The Revolving Facility includes a sub-facility for letters of credit. As of December 31, 2024, 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. 60 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Fair Value of Our Long-Term Debt The fair value of our long-term debt as of December 31, 2024, 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. Interest expense, net: Interest expense, net consisted of the following: For the Years Ended December 31, 2024 2023 2022 (in millions) Interest expense, Term Loan Facility $ 127 $ 142 $ 74 Amortization of deferred financing transaction costs 4 4 4 Interest rate swaps (benefit) expense ( 31 ) ( 29 ) ( 6 ) Other ( 2 ) 2 4 Interest expense, net $ 98 $ 119 $ 76 Scheduled Maturities Below is a schedule of required future repayments on our debt outstanding as of December 31, 2024: (in millions) 2025 $ — 2026 — 2027 1,695 Total long-term debt $ 1,695 61 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Note 7 – Leases We lease certain buildings and plant and equipment. Our leases have reasonably assured remaining lease terms of up to 12 years. Certain leases include options to renew for up to 15 years. At lease inception, we determine the lease term by assuming the exercise of those renewal options that are reasonably certain. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in the measurement of ROU assets and lease liabilities. Variable payments for real estate leases relate primarily to common area maintenance, insurance, taxes and utilities associated with the properties. Variable payments for equipment leases relate primarily to hours, miles, or other quantifiable usage factors, which are not determinable at the time of lease inception. These variable payments are expensed as incurred. The discount rate applied to our leases in determining the present value of lease payments is our incremental borrowing rate based on the information available at the commencement date. Leases with an initial term of 12 months or less are not recorded in our consolidated balance sheets and we recognize lease expense for these leases on a straight-line basis over the lease term. Operating lease costs consisted of the following: As of December 31, 2024 2023 2022 (in millions) Operating lease costs $ 23 $ 18 $ 17 Variable lease costs — 1 1 Short-term lease costs 4 4 4 Total operating lease costs $ 27 $ 23 $ 22 Lease costs related to the amortization of finance lease assets and interest on finance lease liabilities were not material for the years ended December 31, 2024, 2023 and 2022. Future lease payments under non-cancellable leases were as follows: As of December 31, 2024 Operating Leases Finance Leases Total (in millions) 2025 $ 25 $ 2 $ 27 2026 22 2 24 2027 19 2 21 2028 14 2 16 2029 11 2 13 Thereafter 15 10 25 Total undiscounted lease payments 106 20 126 Less: imputed interest ( 13 ) ( 5 ) ( 18 ) Present value of lease liabilities $ 93 $ 15 $ 108 As of December 31, 2024, we had an additional $ 17 million in commitments related to operating leases executed that have not yet commenced. The leases are expected to commence during 2025. 62 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Lease liabilities and ROU assets included in our consolidated balance sheets were as follows: As of December 31, 2024 2023 (in millions) Operating leases Balance Sheet Classification Right-of-use assets Operating lease right-of-use assets $ 90 $ 56 Current lease liabilities Current operating lease liabilities $ 20 $ 16 Non-current lease liabilities Long-term operating lease liabilities 73 42 Total operating lease liabilities $ 93 $ 58 Finance leases Balance Sheet Classification Right-of-use assets Other assets $ 15 $ 16 Current lease liabilities Accrued and other current liabilities $ 1 $ 1 Non-current lease liabilities Other liabilities 14 15 Total finance lease liabilities $ 15 $ 16 During the years ended December 31, 2024 and 2023, new leases and lease modifications resulted in the recognition of operating ROU assets and corresponding operating lease liabilities totaling $ 53 million and $ 6 million, respectively. During the year ended December 31, 2023, new leases resulted in the recognition of finance lease ROU assets and corresponding finance lease liabilities totaling $ 6 million. New leases and lease modifications resulting in the recognition of finance lease ROU assets and corresponding finance lease liabilities were not material during the year ended December 31, 2024. During the years ended December 31, 2024, 2023 and 2022, cash flows from operating activities in the consolidated statements of cash flows reflected $ 21 million, $ 18 million and $ 17 million, respectively, of payments for operating lease liabilities. Payments for finance lease liabilities in the years ended December 31, 2024, 2023 and 2022 were not material. The weighted average remaining lease term and weighted average discount rates were as follows: As of December 31, 2024 Operating Leases Finance Leases Weighted-average remaining lease term (in years) 5.06 10.69 Weighted-average discount rate 4.95 % 5.53 % Note 8 – Financial Instruments Interest Rate Derivatives 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 remain unchanged, and our election to use practical expedients under ASUs 2020-04 and 2021-01, as described in Note 2 - Summary of Significant Accounting Policies, resulted in no material impacts on our consolidated financial statements. The aggregate notional amount of the interest rate swaps still in effect as of December 31, 2024 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). The interest rate swaps outstanding as of December 31, 2024 hedge a portion of the interest rate exposure resulting from our Term Loan Facility for periods ranging from one to two years . We classified these instruments as cash flow hedges. 63 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements 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 - Other Current Assets Fair Value - Other Assets As of December 31, 2024 $ 1,150 2.15 % to 5.15 % 4.38 % $ 15 $ 1 As of December 31, 2023 $ 1,150 2.15 % to 5.15 % 4.38 % $ 23 $ 7 Note 9 – Benefit Plans Defined Benefit Plan We have a defined benefit plan for certain of our employees, which is non-contributory and eligible employees are fully vested after five years of service. The impact of the liability of the defined benefit plan on our consolidated balance sheets as of December 31, 2024 and 2023 was not material. Defined Contribution Plans We offer defined contribution plans to eligible employees in the United States as well as employees in certain other countries. Our expense relating to defined contribution plans was $ 32 million, $ 29 million and $ 27 million for the years ended December 31, 2024, 2023 and 2022, respectively. Postretirement Benefit Plan Certain of our employees in the United States participate in a postretirement benefit plan. Our postretirement benefit plan is not funded. The changes in and the amount of the accumulated postretirement benefit obligation were as follows: As of December 31, 2024 2023 (in millions) Accumulated postretirement benefit obligation as of January 1 $ 16 $ 34 Service cost — — Interest cost 1 2 Benefits paid ( 2 ) ( 2 ) Actuarial gains — ( 18 ) Accumulated postretirement benefit obligation as of December 31 $ 15 $ 16 The accrued benefit obligation was included in our consolidated balance sheets as follows: As of December 31, 2024 2023 (in millions) Accrued and other current liabilities $ 2 $ 2 Long-term postretirement benefit obligation 13 14 $ 15 $ 16 64 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements A portion of our accrued benefit obligation has been recorded in accumulated other comprehensive income as follows: As of December 31, 2022 Changes As of December 31, 2023 Changes As of December 31, 2024 (in millions) Net actuarial gain $ 29 $ 15 $ 44 $ ( 4 ) $ 40 Deferred income tax expense ( 6 ) ( 4 ) ( 10 ) 1 ( 9 ) Accumulated other comprehensive income $ 23 $ 11 $ 34 $ ( 3 ) $ 31 We used the following weighted-average assumptions to determine our postretirement benefit obligations: As of December 31, 2024 2023 Discount rate 5.58 % 4.95 % Health care cost trend rate assumed for next year 8.50 % 8.00 % Ultimate trend rate 4.40 % 4.50 % Year that the rate reaches the ultimate trend rate 2035 2033 The year-end discount rate for our plan reflects a weighted-average rate from a high-quality corporate bond yield curve that matches the expected duration of the benefit payments. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. Our expected health care cost trend rate is based on historical costs and long-term expectations. We also review our participation rates based on historical actual and expected trends on an annual basis. Components of Net Periodic Postretirement Costs: Our total net periodic pension and postretirement benefit cost for each of the years ended December 31, 2024, 2023 and 2022 was not material. We used the following weighted-average assumptions to determine our net periodic postretirement health care cost: For the Years Ended December 31, 2024 2023 2022 Discount rate 4.95 % 5.18 % 2.90 % Health care cost trend rate assumed for next year 8.00 % 7.00 % 6.60 % Ultimate trend rate 4.50 % 4.50 % 4.50 % Year that the rate reaches the ultimate trend rate 2033 2032 2029 Future Benefit Payments: Expected contributions for the next fiscal year equal the estimated benefit payments of $ 2 million. Our estimated future benefit payments for our postretirement benefit plan as of December 31, 2024 were as follows: (in millions) 2025 $ 2 2026 2 2027 1 2028 1 2029 1 2030-2034 6 65 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Note 10 – Stock-based Compensation 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 to certain employees and non-employee directors that have a service-based vesting condition. In addition, we have granted 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. In the year ended December 31, 2024, 0.3 million RSUs and 0.3 million PSUs were granted. A summary of activity for RSUs and PSUs for the year ended December 31, 2024 is as follows (in millions, except for per share data): Shares Weighted-Average Grant-Date Fair Value Per Share Unvested, at December 31, 2023 0.8 $ 29.49 Granted 0.6 27.80 Forfeited — — Vested ( 0.3 ) 29.33 PSU performance adjustment 0.2 27.73 Unvested, at December 31, 2024 1.3 $ 28.52 Unrecognized compensation expense relating to unvested RSUs as of December 31, 2024, was $ 5 million, which is expected to be recognized over a weighted average period of 1.23 years. Unrecognized compensation expense relating to unvested PSUs as of December 31, 2024, was $ 6 million, which is expected to be recognized over a weighted average period of 1.63 years. There were stock-based compensation awards, representing 1.3 million shares and 0.8 million shares outstanding at December 31, 2024 and 2023, respectively. Stock-based compensation expense was $ 19 million, $ 14 million and $ 5 million for the years ended December 31, 2024, 2023 and 2022, respectively. Note 11 – Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following: As of December 31, 2024 2023 (in millions) Accrued personnel costs $ 66 $ 76 Trade promotion allowances 36 40 Other 59 71 Accrued and other current liabilities $ 161 $ 187 66 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Note 12 – Other Expense, Net Other expense, net consisted of the following: For the Years Ended December 31, 2024 2023 2022 (in millions) IPO and separation-related costs (1) $ — $ — $ 12 Other — — 10 Other expense, net $ — $ — $ 22 (1) Reflects costs related to our separation to operate as a stand-alone public company and the IPO process. Note 13 – Commitments and Contingencies Legal Proceedings: 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 related to employment matters, consumer complaints, advertising/labeling claims, personal injury claims 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 as of December 31, 2024, 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. Note 14 – Accumulated Other Comprehensive Income The following table summarizes the changes in our balances of each component of accumulated other comprehensive income. Currency Translation Adjustments Employee Benefit Plans Derivative Instruments Accumulated Other Comprehensive Income (in millions) Balance as of December 31, 2021 $ ( 6 ) $ 12 $ 4 $ 10 (Loss) gain arising during the period ( 1 ) 16 48 63 Reclassification to earnings — ( 2 ) ( 6 ) ( 8 ) Effect of deferred taxes — ( 3 ) ( 10 ) ( 13 ) Balance as of December 31, 2022 $ ( 7 ) $ 23 $ 36 $ 52 Gain arising during the period — 18 12 30 Reclassification to earnings — ( 3 ) ( 29 ) ( 32 ) Effect of deferred taxes — ( 4 ) 4 — Balance as of December 31, 2023 $ ( 7 ) $ 34 $ 23 $ 50 (Loss) gain arising during the period ( 3 ) 2 20 19 Reclassification to earnings — ( 6 ) ( 32 ) ( 38 ) Effect of deferred taxes — 1 3 4 Balance as of December 31, 2024 $ ( 10 ) $ 31 $ 14 $ 35 67 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Note 15 – Income Taxes The components of income before income tax were as follows: For the Years Ended December 31, 2024 2023 2022 (in millions) Income before income taxes: United States $ 438 $ 380 $ 332 International 13 13 6 Total income before income taxes $ 451 $ 393 $ 338 Significant components of income tax expense were as follows: For the Years Ended December 31, 2024 2023 2022 (in millions) Current United States Federal $ 93 $ 83 $ 64 State 13 16 14 Foreign 4 3 1 Total current income tax expense 110 102 79 Deferred United States Federal ( 1 ) ( 4 ) 3 State ( 10 ) ( 3 ) ( 3 ) Foreign — — 1 Total deferred income tax (benefit) expense ( 11 ) ( 7 ) 1 Total income tax expense $ 99 $ 95 $ 80 A reconciliation of income taxes computed at the U.S. Federal statutory income tax rate of 21% for 2024, 2023 and 2022, to our income tax expense was as follows: For the Years Ended December 31, 2024 2023 2022 (in millions) U.S. Federal income tax expense at the statutory rate $ 95 $ 82 $ 71 U.S. State income tax expense 12 10 9 Change in tax rates (1) ( 9 ) — — Non-deductible expenses 2 3 1 Return to provision adjustments ( 1 ) — ( 1 ) Total income tax expense $ 99 $ 95 $ 80 (1) Primarily due to a discrete tax benefit for the remeasurement of deferred tax liabilities due to a change in our state tax rates after apportionment. 68 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Deferred Tax Assets and Liabilities Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of our net deferred income tax liability were as follows: As of December 31, 2024 2023 (in millions) Deferred tax assets Employee benefits $ 25 $ 20 Lease obligations 24 18 Inventory 8 6 Reserves 5 5 Tax losses 4 5 Total deferred tax assets 66 54 Valuation allowance ( 7 ) ( 5 ) Total deferred tax assets after valuation allowance 59 49 Deferred tax liabilities Intangible assets ( 260 ) ( 279 ) Property, plant and equipment ( 101 ) ( 101 ) Lease right-of-use assets ( 23 ) ( 17 ) Prepaid expense ( 12 ) — Financial instruments ( 4 ) ( 7 ) Other ( 1 ) ( 2 ) Total deferred tax liabilities ( 401 ) ( 406 ) Net deferred tax liabilities $ ( 342 ) $ ( 357 ) Uncertain Tax Positions ASC 740 prescribes a recognition threshold of more-likely-than not to be sustained upon examination as it relates to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. Our policy is to include interest and penalties related to gross unrecognized tax benefits in income tax expense. The following table summarizes the activity related to our gross unrecognized tax benefits: For the Years Ended December 31, 2024 2023 2022 (in millions) Balance as of beginning of the year $ 11 $ 8 $ 5 Increase associated with tax positions taken during the current year 1 2 2 (Decrease) increase associated with tax positions taken in prior years ( 1 ) 1 1 Ending unrecognized tax benefits $ 11 $ 11 $ 8 Each year we file income tax returns in the various federal, state, local and foreign income taxing jurisdictions in which we operate. Canada is the only foreign jurisdiction in which we operate. Our income tax returns are subject to examination and possible challenge by the tax authorities. Although ultimate timing is uncertain, the net amount of tax liability for unrecognized tax benefits may change within the next twelve months due to changes in audit status, settlements of tax assessments and other events. 69 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Note 16 – 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 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. Hefty Tableware 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. Presto Products 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 evaluates the performance of each segment and allocates resources (including employees, property and financial or capital resources) for each segment, predominantly in the annual budgeting and forecasting process. The CODM considers budget-to-actual variances on a monthly basis when making decisions about allocating capital and personnel to the segments. Adjusted EBITDA represents each segment’s earnings before interest, tax, depreciation and amortization and may be further adjusted to exclude IPO and separation-related costs, as well as certain other non-recurring items, if applicable. 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. 70 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements The accounting policies applied by our segments are the same as those described in Note 2 - Summary of Significant Accounting Policies. Transactions between segments are at negotiated prices. Reynolds Cooking & Baking Hefty Waste & Storage Hefty Tableware Presto Products Segment total Unallocated (1) Total 2024 (in millions) Net revenues $ 1,247 $ 949 $ 918 $ 584 $ 3,698 $ ( 3 ) $ 3,695 Intersegment revenues — 10 — 12 22 ( 22 ) — Total segment net revenues 1,247 959 918 596 3,720 ( 25 ) 3,695 Other segment items (2) ( 1,025 ) ( 687 ) ( 771 ) ( 466 ) ( 2,949 ) Adjusted EBITDA 222 272 147 130 771 Depreciation and amortization 33 21 20 21 95 34 129 Capital expenditures 50 19 36 12 117 3 120 Total assets 563 282 259 252 1,356 3,517 4,873 Reynolds Cooking & Baking Hefty Waste & Storage Hefty Tableware Presto Products Segment total Unallocated (1) Total 2023 (in millions) Net revenues $ 1,273 $ 931 $ 967 $ 579 $ 3,750 $ 6 $ 3,756 Intersegment revenues — 11 — 14 25 ( 25 ) — Total segment net revenues 1,273 942 967 593 3,775 ( 19 ) 3,756 Other segment items (2) ( 1,089 ) ( 681 ) ( 793 ) ( 481 ) ( 3,044 ) Adjusted EBITDA 184 261 174 112 731 Depreciation and amortization 31 19 16 21 87 37 124 Capital expenditures 46 11 28 8 93 11 104 Total assets 556 267 216 239 1,278 3,502 4,780 Reynolds Cooking & Baking Hefty Waste & Storage Hefty Tableware Presto Products Segment total Unallocated (1) Total 2022 (in millions) Net revenues $ 1,287 $ 934 $ 1,000 $ 597 $ 3,818 $ ( 1 ) $ 3,817 Intersegment revenues — 12 — 7 19 ( 19 ) — Total segment net revenues 1,287 946 1,000 604 3,837 ( 20 ) 3,817 Other segment items (2) ( 1,145 ) ( 739 ) ( 866 ) ( 508 ) ( 3,258 ) Adjusted EBITDA 142 207 134 96 579 Depreciation and amortization 24 19 17 22 82 35 117 Capital expenditures 51 15 36 20 122 6 128 (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 ROU assets, goodwill, intangible assets, related party receivables and other assets. (2) Other segment items included in Segment Adjusted EBITDA primarily include cost of sales (including material, manufacturing and logistics costs), salaries and benefits, advertising expenses and professional fees. The CODM allocates resources and assesses performance on a consolidated level for these other segment items. 71 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements The following table presents a reconciliation of segment Adjusted EBITDA to consolidated GAAP income before income taxes: For the Years Ended December 31, 2024 2023 2022 (in millions) Segment Adjusted EBITDA $ 771 $ 731 $ 579 Corporate / unallocated expenses ( 93 ) ( 95 ) ( 33 ) 678 636 546 Adjustments to reconcile to GAAP income before income taxes Depreciation and amortization ( 129 ) ( 124 ) ( 117 ) Interest expense, net ( 98 ) ( 119 ) ( 76 ) IPO and separation-related costs — — ( 12 ) Other — — ( 3 ) Consolidated GAAP income before income taxes $ 451 $ 393 $ 338 Information in Relation to Products Net revenues by product line are as follows: For the Years Ended December 31, 2024 2023 2022 (in millions) Waste and storage products (1) $ 1,555 $ 1,535 $ 1,550 Cooking products 1,247 1,273 1,287 Tableware products 918 967 1,000 Unallocated ( 25 ) ( 19 ) ( 20 ) Net revenues $ 3,695 $ 3,756 $ 3,817 (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. Geographic Data Geographic data for net revenues (recognized based on location of our business operations) and long-lived assets (representing property, plant and equipment) are as follows: For the Years Ended December 31, 2024 2023 2022 (in millions) Net revenues: United States $ 3,601 $ 3,661 $ 3,742 Other 94 95 75 Net revenues $ 3,695 $ 3,756 $ 3,817 As of December 31, 2024 2023 (in millions) Long-lived assets United States $ 751 $ 725 Other 7 7 Long-lived assets $ 758 $ 732 72 Table of Contents Reynolds Consumer Products Inc. Notes to the Consolidated Financial Statements Entity-wide Disclosures Net revenues from our largest customer and its affiliates were 48 % of total net revenues for each of the years ended December 31, 2024, 2023 and 2022. The net revenues from our largest customer were recognized across all of our segments. No other customers accounted for 10% or more of our total net revenues in any of the years presented. Note 17 – 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 years ended December 31, 2024 and 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. On-going Related Party Transactions For the years ended December 31, 2024, 2023 and 2022, revenues from products sold to PEI Group were $ 77 million, $ 83 million and $ 101 million, respectively. For the years ended December 31, 2024, 2023 and 2022, products purchased from PEI Group were $ 332 million, $ 381 million and $ 399 million, respectively. For the years ended December 31, 2024, 2023 and 2022, PEI Group charged us freight and warehousing costs of $ 28 million, $ 37 million and $ 54 million, respectively, which were included in cost of sales. The resulting related party receivables and payables are settled regularly with PEI Group in the normal course of business. Furthermore, $ 143 million of dividends were paid to PFL during the years ended December 31, 2024, 2023 and 2022, respectively. Note 18 – Subsequent Events Quarterly Cash Dividend On January 30, 2025, our Board of Directors approved a cash dividend of $ 0.23 per common share to be paid on February 28, 2025 to shareholders of record on February 14, 2025. Term Loan Facility Subsequent to December 31, 2024, we made a voluntary principal payment of $ 50 million related to our Term Loan Facility. Except as described above, there have been no events subsequent to December 31, 2024 which would require accrual or disclosure in these consolidated financial statements. 73 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.