Reynolds Consumer Products (REYN) Q3 2026 earnings review
Reynolds raises prices by 9%, but its retail volume drops
Reynolds Consumer Products, the maker of Reynolds Wrap foil and Hefty trash bags, raised prices again while shoppers bought less. Revenue edged up 1% to $944 million only because a 9% price increase and wholesale aluminum sales covered a 7% drop in retail volume. Chief executive Scott Huckins kept the full-year operating profit outlook unchanged, which puts fourth-quarter Adjusted EBITDA down 8% at the middle of the range by our math.
| Revenue | $944M +1.4% from a year ago (price +9%, retail volume -7%) |
|---|---|
| Adjusted EBITDA | $163M -3.0% from a year ago |
| Profit per share, excluding one-offs | $0.39 $0.42 a year ago |
| Full-year Adjusted EBITDA outlook | Unchanged $660–675M (-7.5% in Q4 at the middle of the range) |
⚖️ Verdict: 🔴 Bearish
The story got worse because volume losses now outweigh price hikes across three of the company's four divisions. In tableware, where leaving the foam plate business lifted margins during the first half, an 11% volume drop pulled segment profit down 14%. One bright spot: supply-chain savings in trash bags and an 18% jump in wholesale aluminum kept the quarter inside the company's plan.
The question now is whether fourth-quarter profit falls 8% as the plan says, or holds up on holiday baking demand and cautious targets. Either shoppers are trading down after a 9% price hike, or management is repeating the caution that produced four straight quarterly beats. Fourth-quarter retail volume and holiday foil sales will settle it.
🐂 Bull Case
Supply-Chain Savings Lifted Waste Bag Profit
Reynolds Consumer Products makes Reynolds Wrap foil and Hefty trash bags, and it has spent the year automating factories to cut manufacturing costs. Finance chief Nathan Lowe said the group is "improving our profitability through strong productivity gains". Those savings kept gross profit (sales minus the cost of making the products) growing by $3 million to $236 million, even though retail volume fell 7%.
The clearest gain came in Hefty Waste & Clean-Up, the trash bag division. Segment sales rose 2% to $248 million on a 5% price increase, while volume and product mix slipped 3%. Segment Adjusted EBITDA (operating profit before depreciation, taxes and one-offs) still rose 6% to $76 million "due to productivity gains across the supply chain". Distribution wins were not updated in the release.
What to watch: fourth-quarter gross margin against last year's 25.7%. Holding that rate while volume drops would show factory savings can still offset lower production runs.
Wholesale Aluminum Sales Beat the Flat Plan
Alongside its supermarket brands, Reynolds runs a non-retail business that sells aluminum to food-service companies and industrial buyers. Three months ago, management forecast that non-retail revenue would be flat in the third quarter and for the full year. Instead, third-quarter non-retail sales jumped 18% from a year ago to $79 million, beating the flat target by $12 million by our math.
That wholesale jump carried the entire top line. Retail revenue across the US household products maker barely moved, rising $1 million to $865 million, so non-retail sales supplied $12 million of the company's $13 million revenue increase. For the first nine months, non-retail revenue is up 23% to $209 million.
What to watch: whether management updates its full-year non-retail forecast on the call. A fourth quarter near $70 million would push annual wholesale revenue 16% above last year's $240 million.
🐻 Bear Case
Higher Prices Cut Retail Volume by 7%
Reynolds has raised shelf prices all year to pass along higher aluminum and plastic resin costs, testing how much shoppers will pay before they buy less. Chief executive Scott Huckins said the company delivered a solid quarter, "acting decisively to address significant commodity inflation and delivering earnings in-line with our guidance". Across the company, price increases stepped up to 9%, from 7% in the second quarter.
- Total retail volume and mix: down 7%, after falling 5% in the second quarter
- Reynolds Cooking & Kitchen Essentials: prices up 18%, retail volume down 6%, segment Adjusted EBITDA down $4 million to $49 million
- Selling, general and administrative expenses (advertising and overhead): up 0.6 percentage points of revenue to 11.2%
The numbers cut against the upbeat framing because the price hikes no longer grow profit. In the foil and kitchen division, an 18% price increase covered higher metal costs, but the 6% retail volume drop pulled segment profit down 8%. Company-wide Adjusted EBITDA fell 3% to $163 million.
What to watch: fourth-quarter retail volume in the foil division. Another drop near 6% during the holiday baking season would show shoppers are trading down to cheaper store brands.
Tableware Profit Reversed as Volume Dropped 11%
In the first half of 2026, Hefty Home & Tableware—which sells disposable plates, cups and partyware—grew its profit even as sales fell, because low-margin foam plates were leaving the product mix. In the third quarter, that margin boost stopped working. Segment revenue fell 7% to $186 million "due to the impact of lower volumes driven by elasticities and continued foam declines".
A 4% price increase triggered an 11% drop in retail volume, and segment Adjusted EBITDA fell 14% from a year ago to $25 million. By our math, the division's Adjusted EBITDA margin shrank by 1.1 percentage points to 13.4%, reversing the first half's 6-point expansion. The quarter proves that shrinking volume now outweighs the favorable mix shift away from foam.
What to watch: fourth-quarter Adjusted EBITDA in Hefty Home & Tableware against last year's $52 million. A second straight profit drop would confirm the foam mix benefit has run out.
Storage Profit Fell 17% After Q2 Promotions
Hefty Storage & Organization sells food storage bags and containers, a category where rivals have stepped up price discounts all year. In the second quarter, Reynolds ran heavy promotions that lifted segment volume 8%, but cost it 10% in segment profit. In the third quarter, Reynolds raised segment prices by 4% and pulled back on deals.
Retailers and shoppers bought less right away. Segment volume fell 8% "reflecting volume timing after strong Q2 promotions", pushing revenue down 4% to $172 million. Segment Adjusted EBITDA dropped 17% to $30 million, and the margin fell 2.6 percentage points to 17.4% by our math. The division lost profit when it promoted in the spring, and lost more profit when it raised prices in the summer.
What to watch: whether fourth-quarter Storage volume recovers without giving back the 4% price increase. Another volume drop would show competitors are taking share with lower prices.
Risks this quarter didn't answer
Three standing concerns from the first half were not updated in the third-quarter earnings release, leaving their current readings for the call or the quarterly filing.
- Retail volume excluding foam: published in the last four releases, but absent from this release just as total retail volume worsened to down 7%.
- Annualized commodity cost headwind: doubled from $200 million in April to $400 million in July; the release gives no updated dollar figure for current aluminum and resin rates.
- Store-brand contract losses: cut first-half volume by 2 percentage points; the release gives no third-quarter figure for private-label bid wins or losses.
👓 Other Themes
Aluminum Mill Purchase and Factory Cleanup Charge
After the quarter closed, Reynolds bought Owl's Head Alloys for $110 million using its credit line, adding "specialized aluminum processing capabilities that complement our manufacturing network and expands our vertically integrated capabilities". Separately, third-quarter other expense rose by 2.2 percentage points of revenue to $32 million because the company booked $25 million for "estimated costs for environmental remediation at one of our manufacturing facilities" and $7 million for acquisition and settlement costs.
💲 Other KPIs
Inventories rose 33% since December (and 21% from a year ago) to $775 million, as higher metal and resin costs inflated the value of stock on hand. That $191 million nine-month inventory build absorbed cash, cutting third-quarter free cash flow (operating cash flow minus capital spending) by 81% from a year ago to $9 million by our math.
Net debt (total debt minus cash) crept up from $1,464 million in June to $1,506 million, or 2.2 times trailing 12-month Adjusted EBITDA, as cash fell to $25 million. That figure does not yet include the $110 million borrowed after September 30 to buy Owl's Head Alloys, which raises leverage to about 2.4 times by our math.
Spending on property and factory equipment rose 15% from a year ago in the first nine months to $143 million, or 5.2% of revenue. In the third quarter alone, capital spending was $42 million against $45 million a year ago by our math, funding the factory automation projects behind the group's supply-chain savings.
🔮 Guidance
Unchanged. The plan still calls for 2% growth at the middle of the range over last year's $3,721 million. Management kept this target after raising it from a 1% decline three months ago (+$0M, +$112M, +$0M across the last three updates). With nine-month sales up 2.9%, the full-year target is well within reach.
New. The fourth-quarter outlook points to flat sales at the middle of the range against last year's $1,034 million, down from 1.4% growth in the third quarter. The wide 6-point range reflects uncertainty over how much holiday volume will drop in response to higher shelf prices.
Unchanged. Management has kept this exact range for three straight updates (+$0M, +$0M, +$0M), pointing to flat full-year profit at the $667.5 million middle against $667 million in 2025. Even though nine-month Adjusted EBITDA is up $17 million, the company expects fourth-quarter volume drops to give back all of the year-to-date gain.
New. The plan calls for $203.5 million at the middle of the range, a 7.5% drop from last year's $220 million by our math. That is a steeper fall than the third quarter's 3% dip. Reynolds has beaten its quarterly Adjusted EBITDA midpoint four quarters in a row by an average of 2.8%; if the pattern holds, it would deliver $209 million, still down 5% from a year ago.
Cut. The middle of the range dropped by $23.5 million, leaving full-year profit up 4.2% from last year's $301 million by our math. The cut passes through the $25 million in after-tax environmental cleanup and acquisition charges booked in the third quarter.
Raised. Excluding the third-quarter charges, the middle of the range nudged up $1.5 million to $338.5 million, down 1.9% from last year's $345 million by our math. Lower full-year tax expense ($100–102 million vs $108–111 million previously) provided the slight lift.
Cut. The middle of the range fell by $0.12 per share to $1.48, up 3.5% from $1.43 in 2025 by our math, reflecting the $0.09 environmental reserve and $0.03 in acquisition and settlement costs.
Unchanged. The full-year target stays at $1.60 at the middle of the range, down 2.4% from last year's $1.64 by our math.
New. With no one-off charges planned for the fourth quarter, both measures are set at $107.5 million at the middle of the range. By our math, that is down 8.9% from last year's $118 million GAAP net income and down 14.0% from last year's $125 million excluding one-offs.
New. The fourth-quarter plan calls for $0.51 per share at the middle of the range, down 13.6% from last year's $0.59 per share excluding one-offs by our math.
❓ Key Questions
What was retail volume growth excluding foam plates?
Reynolds published retail volume excluding foam in each of the last four releases, showing a 2% drop in the second quarter. It left the figure out this quarter as total retail volume fell 7%. Investors need the clean number to separate foam runoff from shopper pushback.
How much revenue and profit does Owl's Head Alloys add?
The company paid $110 million from its credit line after quarter-end to buy Owl's Head Alloys, lifting net debt to about 2.4 times Adjusted EBITDA by our math. Management did not disclose the mill's sales, profit, or whether it is included in the fourth-quarter outlook.
Why did Inventories climb $191 million over nine months?
Inventories reached $775 million at the end of September, up 33% since December and 21% from a year ago, reducing third-quarter free cash flow to $9 million. How much of that build is higher aluminum and resin prices versus unsold cases sitting in warehouses?
Will the $25 million factory cleanup reserve require cash soon?
Reynolds booked a $25 million pre-tax charge for environmental cleanup at one of its plants, cutting GAAP profit by 27%. Management did not name the facility, state when the cash will be spent, or say whether further inspections could add to the bill.