Segment Reporting

9 Months Ended

Sep. 30, 2020

Note 9 – Segment Reporting

We have four reportable segments - Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware and Presto Products. The key factors used to identify these reportable segments are the organization and alignment of our internal operations and the nature of our products. This reflects how our Chief Operating Decision Maker (“CODM”) monitors performance, allocates capital and makes strategic and operational decisions. We present segment adjusted EBITDA ("Adjusted EBITDA") as this is the financial measure by which management and our CODM allocate resources and analyze the performance of our reportable segments. Adjusted EBITDA represents each segment's earnings before interest, tax, depreciation and amortization and is further adjusted to exclude unrealized gains and losses on commodity derivatives, factoring discounts (pre-IPO), the allocated related party management fee (pre-IPO) and IPO and separation-related costs.

	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated⁽¹⁾			Total
Three Months Ended September 30, 2020	(in millions)
Net revenues	$	285	$	207	$	192	$	136	$	820	$	3		$	823
Intersegment revenues		—		2		—		—		2		(2	)		—
Total segment net revenues		285		209		192		136		822		1			823
Adjusted EBITDA		63		65		43		28		199
Depreciation and amortization		5		4		3		4		16		8			24

	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated⁽¹⁾			Total
Three Months Ended September 30, 2019	(in millions)
Net revenues	$	256	$	183	$	174	$	128	$	741	$	—		$	741
Intersegment revenues		—		2		—		1		3		(3	)		—
Total segment net revenues		256		185		174		129		744		(3	)		741
Adjusted EBITDA		49		51		40		23		163
Depreciation and amortization		5		3		1		5		14		7			21

	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated⁽¹⁾			Total
Nine Months Ended September 30, 2020	(in millions)
Net revenues	$	824	$	597	$	556	$	400	$	2,377	$	(2	)	$	2,375
Intersegment revenues		—		7		—		1		8		(8	)		—
Total segment net revenues		824		604		556		401		2,385		(10	)		2,375
Adjusted EBITDA		169		183		120		80		552
Depreciation and amortization		15		12		10		13		50		22			72

	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated⁽¹⁾			Total
Nine Months Ended September 30, 2019	(in millions)
Net revenues	$	744	$	522	$	545	$	386	$	2,197	$	—		$	2,197
Intersegment revenues		—		11		—		1		12		(12	)		—
Total segment net revenues		744		533		545		387		2,209		(12	)		2,197
Adjusted EBITDA		116		142		126		67		451
Depreciation and amortization		13		9		5		15		42		21			63

Segment assets consisted of the following:

	Reynolds Cooking & Baking		Hefty Waste & Storage		Hefty Tableware		Presto Products		Segment Total		Unallocated⁽¹⁾		Total
	(in millions)
As of September 30, 2020	$	416	$	235	$	146	$	196	$	993	$	3,731	$	4,724
As of December 31, 2019		395		251		137		182		965		3,195		4,160

(1)

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

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(in millions)						(in millions)
Segment Adjusted EBITDA	$	199		$	163		$	552		$	451
Corporate / unallocated expenses		(7	)		(1	)		(33	)		(10	)
		192			162			519			441
Adjustments to reconcile to GAAP income before income taxes
Depreciation and amortization		(24	)		(21	)		(72	)		(63	)
Interest expense, net		(13	)		(39	)		(57	)		(174	)
Factoring discount		—			(5	)		—			(15	)
Allocated related party management fee		—			(3	)		—			(7	)
IPO and separation-related costs		(5	)		(11	)		(26	)		(12	)
Unrealized gains (losses) on derivatives		—			1			(1	)		9
Other		—			(1	)		—			—
Consolidated GAAP income before income taxes	$	150		$	83		$	363		$	179

Information in Relation to Products

Net revenues by product line are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020			2019
	(in millions)				(in millions)
Waste and storage products ⁽¹⁾	$	343	$	311	$	997		$	908
Cooking products		285		256		824			744
Tableware		192		174		556			545
Unallocated		3		—		(2	)		—
Net revenues	$	823	$	741	$	2,375		$	2,197

(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.