REYNOLDS CONSUMER PRODUCTS INC. Our management's discussion and analysis is intended to help the reader understand our results of operations and financial condition and is provided as an addition to, and should be read in connection with, our condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and the accompanying notes contained in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Tabular dollars are presented in millions. Description of the Company and its Business Segments We are a market-leading consumer products company with a presence in 95% of households acrossthe United States . We produce and sell products across three broad categories: cooking products, waste & storage products and tableware. We sell our products under iconic brands such as Reynolds and Hefty and also under store brands that are strategically important to our customers. Overall, across both our branded and store brand offerings, we hold the #1 or #2 U.S. market share position in the majority of product categories in which we participate. We have developed our market-leading position by investing in our product categories and consistently developing innovative products that meet the evolving needs and preferences of the modern consumer. Our mix of branded and store brand products is a key competitive advantage that aligns our goal of growing the overall product categories with our customers' goals and positions us as a trusted strategic partner to our retailers. Our Reynolds and Hefty brands have preeminent positions in their categories and carry strong brand recognition in household aisles.
We manage our operations in four operating and reportable segments: Reynolds Cooking & Baking, Hefty Waste & Storage, Hefty Tableware and Presto Products:
• Reynolds Cooking & Baking: Through our Reynolds Cooking & Baking segment, we
produce branded and store brand foil, disposable aluminum pans, parchment
paper, freezer paper, wax paper, plastic wrap, baking cups, oven bags and
slow cooker liners. Our branded products are sold under the Reynolds Wrap,
Reynolds KITCHENS and E-Z Foil brands in
international markets, under the ALCAN brand in
brand outside of
• Hefty Waste & Storage: Through our Hefty Waste & Storage segment, we produce
both branded and store brand trash and food storage bags. Our branded
products are sold under the Hefty Ultra Strong, Hefty Strong Trash Bags,
Hefty Renew and Hefty Slider Bags brands.
• Hefty Tableware: Through our Hefty Tableware segment, we sell both branded
and store brand disposable and compostable plates, bowls, platters, cups and
cutlery. Our Hefty branded products include dishes and party cups.
• Presto Products: Through our Presto Products segment, we primarily sell
store brand products in four main categories: food storage bags, trash bags,
reusable storage containers and plastic wrap. 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.
Our Separation from PEI Group
On February 4, 2020 we separated from PEI Group and completed our IPO as a
stand-alone public entity. In conjunction with our separation from PEI Group , we
entered into a transition services agreement with a subsidiary of PEI Group
whereby PEI Group will continue to provide certain administrative services to
us, including information technology services; accounting, treasury, financial
reporting and transaction support; human resources; procurement; tax, legal and
compliance related services; and other corporate services for up to 24 months
beginning on February 4, 2020 . In addition, we entered into a transition
services agreement with Rank Group Limited whereby, upon our request, Rank Group
Limited will provide certain administrative services to us, including financial
reporting, consulting and compliance services, insurance procurement and human
resources support, legal and corporate secretarial support, and related services
for up to 24 months. At the conclusion of these transitional arrangements, we
will have to perform these services with internal resources or contract with
third party providers. The previous arrangements we had with PEI Group may be
materially different from the arrangements that we have entered into as part of
our separation from PEI Group .
On February 4, 2020 , in conjunction with our Corporate Reorganization and IPO,
we entered into new external debt facilities ("External Debt Facilities"),
consisting of a $2,475 million senior secured term loan facility ("Term Loan
Facility") and a $250 million senior secured revolving credit facility
("Revolving Facility"), and repaid portions of the related party borrowings owed
to PEI Group that were reflected on our balance sheet prior to that date. PEI
Group contributed the remaining balance of related party borrowings owed by us
to PEI Group as additional paid-in capital without the issuance of any
additional shares prior to the closing of our IPO. In addition, all indebtedness
that we had borrowed under PEI Group's Credit Agreement was reallocated and we
were released as a borrower and guarantor from such facilities and released as a
guarantor of PEI Group's outstanding senior notes.
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Impact of COVID-19
As previously discussed, in connection with the COVID-19 pandemic, we
implemented policies and procedures designed to protect our employees and our
customers, including implementing recommendations from the Centers for Disease
Control and Prevention . As the pandemic evolves, we remain committed to adapting
our policies and procedures to ensure the safety of our employees and compliance
with federal, state and local regulations.
While we have experienced increased costs as a result of COVID-19, including in
the three months ended March 31, 2021 , such increased costs were not material to
our results of operations. However, these costs may not be representative of
what we may incur moving forward. Further, although we have not to date
experienced notable supply chain or customer base disruptions related to
COVID-19, those and other negative impacts remain potential risks as the ongoing
and future effects of the pandemic are difficult to predict. See the "Risk
Factors" section in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2020 for a further discussion of risks related to the COVID-19
pandemic.
We continue to see a fundamental shift to more at-home use of our products
driven by the consumer response to the COVID-19 pandemic. The duration and
magnitude of the increased demand remains unknown, particularly as vaccine
rollouts continue, and its ongoing impact on our operations may not be
consistent with our experiences to date. At this time, we are unable to predict
with any certainty the nature, timing or magnitude of any changes in future
sales and/or earnings attributable to the impact of COVID-19 and efforts to
reduce its spread. In addition, since the COVID-19 pandemic has been ongoing for
over a year, quarterly results in 2021 will have comparisons against results in
2020 that benefited significantly from the shift to more at-home use of our
products and related increases in demand, which may not be sustained in 2021.
We do not currently anticipate that the COVID-19 pandemic will materially impact our liquidity over the next 12 months.
Overview
In the three months ended March 31, 2021 , net revenues increased 4% compared to
the three months ended March 31, 2020 , primarily driven by higher pricing
through a combination of fewer trade promotions and price increases in response
to increased commodity costs. In addition, the severe winter storms affecting
certain parts of the United States in February 2021 negatively impacted volume
in the first quarter of 2021, particularly in our Hefty Waste & Storage and
Presto Products segments. We estimate that February's storms negatively impacted
net revenues by approximately two percentage points and expect there will be
some level of continuing impacts from February's storms over the short term.
We have experienced significant cost pressures in the first quarter of 2021 and
cost increases are expected to continue. Price increases have been implemented
and a second round is underway, with plans for a third round to be implemented
in the third quarter of 2021. On an annualized basis, aggregated pricing actions
are expected to cover the increases in input costs, but we expect to see some
near term margin pressure as the pricing actions get implemented before
expanding sequentially in the third and fourth quarters of 2021.
Non-GAAP Measures
In this Quarterly Report on Form 10-Q we use the non-GAAP financial measures
"Adjusted EBITDA", "Adjusted Net Income" and "Adjusted EPS", which are measures
adjusted for the impact of specified items and are not in accordance with GAAP.
We define Adjusted EBITDA as net income calculated in accordance with GAAP, plus
the sum of income tax expense, net interest expense, depreciation and
amortization and further adjusted to exclude, as applicable, unrealized gains
and losses on commodity derivatives and IPO and separation-related costs. We
define Adjusted Net Income and Adjusted EPS as Net Income and Earnings Per Share
calculated in accordance with GAAP, plus, as applicable, the sum of unrealized
gains and losses on commodity derivatives, IPO and separation-related costs and
the impact of a tax legislation change under the CARES Act enacted on March 27,
2020 .
We present Adjusted EBITDA because it is a key measure used by our management
team to evaluate our operating performance, generate future operating plans and
make strategic decisions. In addition, our chief operating decision maker uses
Adjusted EBITDA of each reportable segment to evaluate the operating performance
of such segments. We use Adjusted Net Income and Adjusted EPS as supplemental
measures to evaluate our business' performance in a way that also considers our
ability to generate profit without the impact of certain items. Accordingly, we
believe presenting these measures provides useful information to investors and
others in understanding and evaluating our operating results in the same manner
as our management team and board of directors.
Non-GAAP information should be considered as supplemental in nature and is not
meant to be considered in isolation or as a substitute for the related financial
information prepared in accordance with GAAP. In addition, our non-GAAP
financial measures may not be the same as or comparable to similar non-GAAP
financial measures presented by other companies.
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--------------------------------------------------------------------------------The following table presents a reconciliation of our net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA:
Three Months Ended March 31,
2021 2020
(in millions)
Net income - GAAP $ 74 $ 26
Income tax expense 25 39
Interest expense, net 12 27
Depreciation and amortization 26 24
IPO and separation-related costs (1) 3 14
Unrealized losses on derivatives (2) - 4
Other - 1
Adjusted EBITDA (Non-GAAP) $ 140 $ 135
(1) Reflects costs related to the IPO process, as well as costs related to our
separation to operate as a stand-alone public company. These costs are
included in Other expense, net in our condensed consolidated statements of
income.
(2) Reflects the mark-to-market movements in our commodity derivatives.
The following table presents a reconciliation of our net income and diluted EPS,
the most directly comparable GAAP financial measures, to Adjusted Net Income and
Adjusted Diluted EPS:
Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
(In millions, except for per share
data) Net Income Diluted Shares Diluted EPS Net Income Diluted Shares Diluted EPS
As Reported - GAAP $ 74 210 $ 0.35 $ 26 189 $ 0.14
Assume full period impact of IPO
shares (1) - - - - 21 -
Total 74 210 0.35 26 210 0.12
Adjustments:
IPO and separation-related costs (2) 2 210 0.01 11 210 0.05
Impact of tax legislation change from the CARES Act - - - 23 210
0.11
Unrealized losses on derivatives (2) - - - 3 210 0.02 Adjusted (Non-GAAP) $ 76 210$ 0.36 $ 63 210$ 0.30
(1) Represents incremental shares required to adjust the weighted average shares
outstanding for the period to the actual shares outstanding as of
2020. We utilize the shares outstanding at period end as if they had been
outstanding for the full period rather than weighted average shares
outstanding over the course of the period as it is a more meaningful
calculation that provides consistency in comparability.
(2) Amounts are after tax, calculated using a tax rate of 25.0% and 24.7% for the
three months ended
effective tax rate excluding the 2020 one-time discrete expense associated
with the legislation change from the CARES Act.
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Results of Operations - Three Months Ended March 31, 2021
The following discussion should be read in conjunction with our condensed
consolidated financial statements included elsewhere in this Quarterly Report on
Form 10-Q. Detailed comparisons of revenue and results are presented in the
discussions of the operating segments, which follow our consolidated results
discussion.
Aggregation of Segment Revenue and Adjusted EBITDA
Total
Reynolds Hefty Reynolds
Cooking & Waste & Hefty Presto Consumer
(In millions) Baking Storage Tableware Products Unallocated(2) Products
Net revenues for the three months
ended March 31:
2021 $ 272 $ 194 $ 170 $ 126 $ (5 ) $ 757
2020 243 192 178 127 (10 ) 730
Adjusted EBITDA for the three months
ended
March 31: ?¹?
2021 $ 53 $ 44 $ 34 $ 18 $ (9 ) $ 140
2020 40 55 35 23 (18 ) 135
(1) Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" for details,
including a reconciliation between net income and Adjusted EBITDA.
(2) The unallocated net revenues include elimination of intersegment revenues and
other revenue adjustments. These transactions arise primarily from sales by
Hefty Waste & Storage to Presto Products. The unallocated Adjusted EBITDA
represents corporate expenses which are not allocated to our segments.
Three Months Ended
2020
Total
For the Three Months Ended March 31,
(In millions, except for %) 2021 % of Revenue 2020 % of Revenue Change % Change
Net revenues $ 732 97 % $ 691 95 % $ 41 6 %
Related party net revenues 25 3 % 39 5 % (14 ) (36 )%
Total net revenues 757 100 % 730 100 % 27 4 %
Cost of sales (565 ) (75 )% (541 ) (74 )% (24 ) (4 )%
Gross profit 192 25 % 189 26 % 3 2 %
Selling, general and
administrative expenses (78 ) (10 )% (82 ) (11 )% 4 5 %
Other expense, net (3 ) (0 )% (15 ) (2 )% 12 80 %
Income from operations 111 15 % 92 13 % 19 21 %
Interest expense, net (12 ) (2 )% (27 ) (4 )% 15 56 %
Income before income taxes 99 13 % 65 9 % 34 52 %
Income tax expense (25 ) (3 )% (39 ) (5 )% 14 36 %
Net income $ 74 10 % $ 26 4 % $ 48 185 %
Adjusted EBITDA (1) $ 140 18 % $ 135 18 % $ 5 4 %
(1) Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" for details,
including a reconciliation between net income and Adjusted EBITDA.
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Components of Change in Net Revenues for the Three Months Ended
Price Volume/Mix Total
Reynolds Cooking & Baking 6 % 6 % 12 %
Hefty Waste & Storage 4 % (3 )% 1 %
Hefty Tableware 5 % (9 )% (4 )%
Presto Products 3 % (4 )% (1 )%
Total RCP 5 % (1 )% 4 %
Total Net Revenues. Total net revenues increased by $27 million , or 4%, to $757
million . The increase was primarily driven by higher pricing as a result of
fewer trade promotions in the current year period and pricing increases in
response to increased commodity costs. Higher volume in our Reynolds Cooking &
Baking segment as a result of increased at-home usage was more than offset by
lower volume in our Hefty Tableware segment as well as the impact of severe
winter storms affecting certain parts of the United States during the 2021
period primarily impacting our Hefty Waste & Storage and Presto Products
segments.
Cost of Sales. Cost of sales increased by
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by
Other Expense, Net. Other expense, net decreased by$12 million , or 80%, to$3 million . The decrease was primarily attributable to separation-related costs associated with our IPO incurred in the prior year period. Interest Expense, Net. Interest expense, net decreased by$15 million , or 56%, to$12 million . The decrease was primarily due to lower interest expense as a result of principal payments under our Term Loan Facility and the change in our debt structure as a result of our IPO in the first quarter of 2020. Prior to the IPO we had related party debt and associated interest expense that was replaced with our External Debt Facilities in conjunction with the IPO. Income Tax Expense. We recognized income tax expense of$25 million on income before income taxes of$99 million (an effective tax rate of 25.0%) for the three months endedMarch 31, 2021 compared to income tax expense of$39 million on income before income taxes of$65 million (an effective tax rate of 60.0%) for the three months endedMarch 31, 2020 . The decrease in the effective tax rate was due to the recognition of a$23 million discrete tax expense associated with the remeasurement of our deferred taxes as a result of the legislation change from the CARES Act in the prior year period. Excluding the impact of this, our effective tax rate was 24.7% for the three months endedMarch 31, 2020 .
Adjusted EBITDA. Adjusted EBITDA increased by
Segment Information
Reynolds Cooking & Baking
For the Three Months Ended (In millions, except for %) 2021 2020 Change % Change Total segment net revenues$ 272 $ 243 $ 29 12 % Segment Adjusted EBITDA 53 40 13 33 % Segment Adjusted EBITDA Margin 19 % 16 % Total Segment Net Revenues. Reynolds Cooking & Baking total segment net revenues increased by$29 million , or 12%, to$272 million . The increase in net revenues was primarily driven by higher volume as a result of continued heightened demand driven by increased at-home usage and higher pricing, mostly driven by fewer promotional programs in the current year period.
Adjusted EBITDA. Reynolds Cooking & Baking Adjusted EBITDA increased by
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Hefty Waste & Storage
For the Three Months Ended March 31 ,(In millions, except for %) 2021 2020 Change % Change Total segment net revenues$ 194 $ 192 $ 2 1 % Segment Adjusted EBITDA 44 55 (11 ) (20 )% Segment Adjusted EBITDA Margin 23 % 29 % Total Segment Net Revenues. Hefty Waste & Storage total segment net revenues increased by$2 million , or 1%, to$194 million . The increase in net revenues was primarily driven by higher pricing in response to increased commodity costs and fewer trade promotions, mostly offset by lower volume as a result of severe winter storms impacting certain parts ofthe United States during the 2021 period. Adjusted EBITDA. Hefty Waste & Storage Adjusted EBITDA decreased by$11 million , or 20%, to$44 million . The decrease in Adjusted EBITDA was primarily driven by higher material, manufacturing and logistics costs partially offset by lower discretionary spend. Hefty Tableware For the Three Months Ended March 31, (In millions, except for %) 2021 2020 Change
% Change
Total segment net revenues
(4 )%
Segment Adjusted EBITDA 34 35 (1 ) (3 )%
Segment Adjusted EBITDA Margin 20 % 20 %
Total Segment Net Revenues. Hefty Tableware total segment net revenues decreased
by $8 million , or 4%, to $170 million . The decrease in net revenues was
primarily driven by lower volume which was partially offset by higher pricing in
the current year period as a result of fewer trade promotions.
Adjusted EBITDA. Hefty Tableware Adjusted EBITDA decreased by $1 million , or 3%,
to $34 million . The decrease in Adjusted EBITDA was primarily driven by higher
material and manufacturing costs, partially offset by higher pricing, as noted
above.
Presto Products
For the Three Months Ended March 31,(In millions, except for %) 2021 2020 Change % Change Total segment net revenues$ 126 $ 127 $ (1 ) (1 )% Segment Adjusted EBITDA 18 23 (5 ) (22 )% Segment Adjusted EBITDA Margin 14 % 18 % Total Segment Net Revenues. Presto Products total segment net revenues decreased by$1 million , or 1%, to$126 million . The decrease in net revenues was primarily driven by lower volume as a result of severe winter storms impacting certain parts ofthe United States during the 2021 period mostly offset by increased pricing in response to increased commodity costs. Adjusted EBITDA. Presto Products Adjusted EBITDA decreased by$5 million , or 22%, to$18 million . The decrease in Adjusted EBITDA was primarily driven by increased material and manufacturing costs. Historical Cash Flows
The following table discloses our cash flows for the periods presented:
For the Three Months
Ended March 31,
(In millions) 2021 2020Net cash provided by (used in) operating activities$ 9 $ (255 ) Net cash used in investing activities (23 ) (23 ) Net cash (used in) provided by financing activities (154 ) 376 (Decrease) increase in cash and cash equivalents$ (168 ) $ 98 20
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Cash provided by (used in) operating activities
Net cash from operating activities changed by$264 million , from an outflow of$255 million for the three months endedMarch 31, 2020 to an inflow of$9 million for the three months endedMarch 31, 2021 . The change was primarily driven by a$312 million increase in accounts receivable,$240 million of which was related to accounts receivables previously sold throughPEI Group's securitization facility prior to our separation fromPEI Group , and an increase in net income, partially offset by higher inventory during the current period due to inventory replenishment, the impact of higher commodity prices and a decrease in accrued and other current liabilities.
Cash used in investing activities
Net cash used in investing activities was flat at
Cash (used in) provided by financing activities
Net cash from financing activities changed by$530 million , from an inflow of$376 million for the three months endedMarch 31, 2020 to an outflow of$154 million in the three months endedMarch 31, 2021 . The change was primarily attributable to the principal repayments of the Term Loan Facility and dividends paid during the 2021 period compared to the IPO related activities during the prior period, which included proceeds received from the IPO and the drawdown of the Term Loan Facility, partially offset by repayments of related party balances. Liquidity and Capital Resources Our principal sources of liquidity are existing cash and cash equivalents, cash generated from operating activities and available borrowings under the Revolving Facility. External Debt Facilities OnFebruary 4, 2020 , in conjunction with our Corporate Reorganization and IPO, we entered into the External Debt Facilities which consist of a$2,475 million Term Loan Facility and a Revolving Facility that provides for additional borrowing capacity of up to$250 million , reduced by amounts used for letters of credit. As ofMarch 31, 2021 , the outstanding balance under the Term Loan Facility was$2,150 million . As ofMarch 31, 2021 , we had no outstanding borrowings under the Revolving Facility, and we had$7 million of letters of credit outstanding, which reduces the borrowing capacity under the Revolving Facility. The initial borrower under the External Debt Facilities isReynolds Consumer Products LLC (the "Borrower"). The Revolving Facility includes a sub-facility for letters of credit. In addition, the External Debt Facilities provide that the Borrower has the right at any time, subject to customary conditions, to request incremental term loans or incremental revolving credit commitments in amounts and on terms set forth therein. The lenders under the External Debt Facilities are not under any obligation to provide any such incremental loans or commitments, and any such addition of or increase in loans is subject to certain customary conditions precedent and other provisions.
Interest rate and fees
Borrowings under the External Debt Facilities bear interest at a rate per annum equal to, at our option, either a base rate or a LIBO rate plus an applicable margin of 1.75%. During the year endedDecember 31, 2020 , we entered into a series of interest rate swaps which fixed the LIBO rate to an annual rate of 0.18% to 0.47% (for an annual effective interest rate of 1.93% to 2.22%, including margin) for an aggregate notional amount of$1,650 million . These interest rate swaps hedge a portion of the interest rate exposure resulting from our Term Loan Facility for periods ranging from one to five years.
Prepayments
The Term Loan Facility contains customary mandatory prepayments, including with respect to excess cash flow, asset sale proceeds and proceeds from certain incurrences of indebtedness.
The Borrower may voluntarily repay outstanding loans under the Term Loan Facility at any time without premium or penalty, other than customary breakage costs with respect to LIBO rate loans. During the quarter endedMarch 31, 2021 , we made a voluntary principal payment of$100 million related to the Term Loan Facility. Amortization and maturity The Term Loan Facility matures inFebruary 2027 . The Term Loan Facility amortizes in equal quarterly installments of$6 million , which commenced inJune 2020 , with the balance payable on maturity. The Revolving Facility matures inFebruary 2025 . 21
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Guarantee and security
All obligations under the External Debt Facilities and certain hedge agreements and cash management arrangements provided by any lender party to the External Debt Facilities or any of its affiliates and certain other persons are unconditionally guaranteed by theReynolds Consumer Products Inc. ("RCPI"), the Borrower (with respect to hedge agreements and cash management arrangements not entered into by the Borrower) and certain of RCPI's existing and subsequently acquired or organized direct or indirect material wholly-ownedU.S. restricted subsidiaries, with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in material adverse tax consequences. All obligations under the External Debt Facilities and certain hedge agreements and cash management arrangements provided by any lender party to the External Debt Facilities or any of its affiliates and certain other persons, and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by: (i) a perfected first-priority pledge of all the equity interests of each wholly-owned material restricted subsidiary of RCPI, the Borrower or a subsidiary guarantor, including the equity interests of the Borrower (limited to 65% of voting stock in the case of first-tier non-U.S. subsidiaries of RCPI, the Borrower or any subsidiary guarantor) and (ii) perfected first-priority security interests in substantially all tangible and intangible personal property of RCPI, the Borrower and the subsidiary guarantors (subject to certain other exclusions).
Certain covenants and events of default
The External Debt Facilities contain a number of covenants that, among other
things, restrict, subject to certain exceptions, our ability and the ability of
the restricted subsidiaries of RCPI to:
• incur additional indebtedness and guarantee indebtedness;
• create or incur liens;
• engage in mergers or consolidations;
• sell, transfer or otherwise dispose of assets;
• pay dividends and distributions or repurchase capital stock;
• prepay, redeem or repurchase certain indebtedness;
• make investments, loans and advances;
• enter into certain transactions with affiliates;
• enter into agreements which limit the ability of our restrictedsubsidiaries to incur restrictions on their ability to make distributions;
and
• enter into amendments to certain indebtedness in a manner materially
adverse to the lenders.
The External Debt Facilities contain a springing financial covenant requiring compliance with a ratio of first lien net indebtedness to consolidated EBITDA, applicable solely to the Revolving Facility. The financial covenant is tested on the last day of any fiscal quarter only if the aggregate principal amount of borrowings under the Revolving Facility and drawn but unreimbursed letters of credit exceed 35% of the total amount of commitments under the Revolving Facility on such day. If an event of default occurs, the lenders under the External Debt Facilities are entitled to take various actions, including the acceleration of amounts due under the External Debt Facilities and all actions permitted to be taken by secured creditors.
We are currently in compliance with the covenants contained in our External Debt Facilities.
During the quarter endedMarch 31, 2021 , our Board of Directors declared and paid a quarterly cash dividend of$0.23 per share. OnApril 29, 2021 , our Board of Directors declared a quarterly cash dividend of$0.23 per share, to be paid onMay 27, 2021 . We expect to continue paying cash dividends on a quarterly basis; however, future dividends are at the discretion of our Board of Directors and will depend upon our earnings, capital requirements, financial condition, contractual limitations (including under the Term Loan Facility) and other factors.
We believe that our projected cash position, cash flows from operations and borrowings under the External Debt Facilities are sufficient to meet the needs of our business for at least the next 12 months.
Critical Accounting Policies and Estimates
Accounting policies and estimates are considered critical when they require
management to make subjective and complex judgments, estimates and assumptions
about matters that have a material impact on the presentation of our financial
statements and accompanying notes. For a description of our critical accounting
policies and estimates, see our Annual Report on Form 10-K for the fiscal year
ended December 31, 2020 .
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