Turnaround Gains Momentum As Sales Improve
Sequentially Gross and Operating Margin Expand Significantly Versus
Prior Year Operating Cash Flow Increases Versus Prior Year Affirms
Outlook for Full Year 2024
Newell Brands (NASDAQ: NWL) today announced its first quarter
2024 financial results.
Chris Peterson, Newell Brands President and Chief Executive
Officer, said, "The decisive actions we've taken as part of our new
strategy have led to excellent progress on the major operational
and financial priorities for this year. During the first quarter,
core sales performance improved sequentially, normalized operating
margin nearly doubled versus last year and we meaningfully
increased operating cash flow. We remain confident in our ability
to strengthen the company's performance and create value for our
stakeholders over time, as we continue to move with speed and
agility to operationalize our strategy, which focuses on
disproportionately investing in innovation, brand building and
go-to-market excellence in our largest and most profitable brands
and markets."
Mark Erceg, Newell Brands Chief Financial Officer, said, "The
interventions made to operationalize Newell’s new corporate
strategy and improve the structural economics of the business are
taking hold as evidenced by the fact this was the third consecutive
quarter of strong year-over-year gross margin expansion, enabled by
world class productivity, favorable mix and pricing. In addition,
working capital reduction, together with operating income growth,
resulted in positive operating cash flow during the first quarter
which, historically, has been very hard to achieve due to the
seasonality of the business. With a stronger than anticipated start
to the year we remain confident in our full year outlook."
Executive Summary
- Net sales were $1.7 billion, a decline of 8.4 percent compared
with the prior year period. Core sales declined 4.7 percent
compared with the prior year period.
- Reported gross margin increased to 30.5 percent compared with
26.7 percent in the prior year period. Normalized gross margin
increased to 31.2 percent compared with 27.1 percent in the prior
year period.
- Reported operating margin increased to 1.0 percent compared
with negative 2.0 percent in the prior year period. Normalized
operating margin increased to 4.6 percent compared with 2.4 percent
in the prior year period.
- Reported net loss was $9 million compared with $102 million in
the prior year period. Normalized net loss was $2 million compared
with $26 million in the prior year period. Normalized EBITDA
increased to $143 million compared with $109 million in the prior
year period.
- Reported diluted loss per share was $0.02 compared with $0.25
in the prior year period. Normalized diluted loss per share was
$0.00 compared with $0.06 in the prior year period.
- Operating cash flow increased by $109 million to $32 million
compared with the prior year period.
- The company affirmed its full year 2024 outlook.
First Quarter 2024 Operating
Results
Net sales were $1.7 billion, an 8.4 percent decline compared
with the prior year period, reflecting a core sales decline of 4.7
percent, as well as the impact of unfavorable foreign exchange and
business exits. Pricing in international markets to offset
inflation and currency movements was a meaningful contributor to
the company's core sales performance.
Reported gross margin was 30.5 percent compared with 26.7
percent in the prior year period, as the benefits from productivity
savings, mix and pricing more than offset the impact of inflation
and slightly higher restructuring-related charges. Normalized gross
margin was 31.2 percent compared with 27.1 percent in the prior
year period, which represents the third consecutive quarter of
year-over-year improvement.
Reported operating income was $16 million compared with
operating loss of $36 million in the prior year period. Reported
operating margin was 1.0 percent compared with negative 2.0 percent
in the prior year period, as the contribution from mix, pricing and
savings from productivity, Project Phoenix and organizational
realignment, as well as lower restructuring and related costs, more
than offset the impact of lower net sales, inflation and higher
advertising and promotion expense. Normalized operating income was
$76 million, or 4.6 percent of sales, compared with $43 million, or
2.4 percent of sales, in the prior year period.
Net interest expense was $70 million compared with $68 million
in the prior year period.
Reported tax benefit was $51 million compared with $14 million
in the prior year period. The normalized tax provision was $5
million compared with a benefit of $1 million in the prior year
period.
Reported net loss was $9 million compared with $102 million in
the prior year period. Normalized net loss was $2 million compared
with $26 million in the prior year period. Normalized EBITDA was
$143 million compared with $109 million in the prior year
period.
Reported diluted loss per share was $0.02 compared with $0.25 in
the prior year period. Normalized diluted loss per share was $0.00
compared with $0.06 in the prior year period.
An explanation of non-GAAP measures disclosed in this release
and a reconciliation of these non-GAAP results to comparable GAAP
measures, if available, are included in the tables attached to this
release.
Balance Sheet and Cash
Flow
Operating cash flow increased by $109 million to $32 million
compared with outflow of $77 million in the prior year period, with
the improvement mostly driven by working capital and an increase in
operating income. Inventories decreased nearly $550 million versus
the prior year period.
At the end of the first quarter, Newell Brands had debt
outstanding of $5.0 billion and cash and cash equivalents of $372
million, compared with $5.6 billion and $271 million, respectively,
at the end of the first quarter of 2023.
First Quarter 2024 Operating Segment
Results
The Home & Commercial Solutions segment generated net sales
of $893 million compared with $971 million in the prior year
period, reflecting a core sales decline of 4.3 percent and the
impact of unfavorable foreign exchange and certain business exits.
Core sales growth in Commercial, primarily driven by pricing in
international markets, was more than offset by declines in the
Kitchen and Home Fragrance businesses. Reported operating income
was $16 million, or 1.8 percent of sales, compared with operating
loss of $37 million, or negative 3.8 percent of sales, in the prior
year period. Normalized operating income was $41 million, or 4.6
percent of sales, versus a loss of $4 million, or negative 0.4
percent of sales, in the prior year period.
The Learning & Development segment generated net sales of
$559 million compared with $564 million in the prior year period,
as core sales growth of 1.8 percent was more than offset by the
impact of unfavorable foreign exchange. Core sales increased in
both the Writing and Baby businesses, with growth in Writing
primarily driven by pricing in international markets. Reported
operating income was $94 million, or 16.8 percent of sales,
compared with $72 million, or 12.8 percent of sales, in the prior
year period. Normalized operating income was $104 million, or 18.6
percent of sales, compared with $82 million, or 14.5 percent of
sales, in the prior year period.
The Outdoor & Recreation segment generated net sales of $201
million compared with $270 million in the prior year period,
reflecting a core sales decline of 20.3 percent and the impact of
unfavorable foreign exchange and certain business exits. Reported
operating loss was $18 million, or negative 9.0 percent of sales,
compared with $1 million, or negative 0.4 percent of sales, in the
prior year period. Normalized operating loss was $10 million, or
negative 5.0 percent of sales, compared with normalized operating
income of $13 million, or 4.8 percent of sales, in the prior year
period.
Organizational Realignment
Update
In January 2024, the company announced an organizational
realignment, which is expected to strengthen the company’s
front-end commercial capabilities, such as consumer understanding
and brand communication, in support of the Where to Play / How to
Win choices the company unveiled in June of 2023 (the "Realignment
Plan"). In addition to improving accountability, the Realignment
Plan should further unlock operational efficiencies and cost
savings, reduce complexity and free up funds for reinvestment. As
part of the organizational realignment, the company made several
organizational design changes, which entailed: standing up a
cross-functional brand management organization, realigning business
unit finance to fully support the new global brand management
model, further simplifying and standardizing regional go-to-market
organizations, and centralizing domestic retail sales teams, the
digital technology team, business-aligned accounting personnel, the
Manufacturing Quality team, and the Human Resources functions into
the appropriate center-led teams to drive standardization,
efficiency and scale with a One Newell approach. The company will
also further optimize Newell’s real estate footprint and pursue
other cost reduction initiatives. These actions are expected to be
substantially implemented by the end of 2024. Once the
organizational design changes are fully executed, the company
expects to realize annualized pretax savings in the range of $65
million to $90 million, net of reinvestment, with $55 million to
$70 million expected in 2024. Restructuring and related charges
associated with these actions are estimated to be in the range of
$75 million to $90 million and are expected to be substantially
incurred by the end of 2024. During the first quarter 2024, the
company incurred restructuring and related charges of $22 million
related to the Realignment Plan.
Outlook for Second Quarter and Full
Year 2024
The company initiated its outlook for second quarter 2024 and
affirmed its full year 2024 outlook.
Q2 2024
Outlook
Full
Year 2024 Outlook
Net Sales
9% to 7% decline
8% to 5% decline
Core Sales
6% to 4% decline
6% to 3% decline
Normalized Operating Margin
9.1% to 9.6%
7.8% to 8.2%
Normalized EPS
$0.18 to $0.21
$0.52 to $0.62
The company continues to expect full year 2024 operating cash
flow of $400 million to $500 million, including approximately $150
million to $200 million in cash payments associated with
restructuring and related initiatives.
The company has presented forward-looking statements regarding
core sales, normalized operating margin and normalized earnings per
share. These non-GAAP financial measures are derived by excluding
certain amounts, expenses or income, from the corresponding
financial measures determined in accordance with GAAP. The
determination of the amounts that are excluded from these non-GAAP
financial measures is a matter of management judgement and depends
upon, among other factors, the nature of the underlying expense or
income amounts recognized in a given period in reliance on the
exception provided by item 10(e)(1)(i)(B) of Regulation S-K. We are
unable to present a quantitative reconciliation of forward-looking
normalized operating margin or normalized earnings per share to
their most directly comparable forward-looking GAAP financial
measures because such information is not available, and management
cannot reliably predict all of the necessary components of such
GAAP measures without unreasonable effort or expense. In addition,
we believe such reconciliations would imply a degree of precision
that would be confusing or misleading to investors. The unavailable
information could have a significant impact on the company's future
financial results. These non-GAAP financial measures are
preliminary estimates and are subject to risks and uncertainties,
including, among others, changes in connection with quarter-end and
year-end adjustments. Any variation between the company's actual
results and preliminary financial data set forth above may be
material.
Conference Call
Newell Brands’ first quarter 2024 earnings conference call will
be held today, April 26, at 9:30 a.m. ET. A link to the webcast is
provided under Events & Presentations in the Investors section
of the company’s website at www.newellbrands.com. A webcast replay
will be made available in the Quarterly Earnings section of the
company’s website.
Non-GAAP Financial
Measures
This release and the accompanying remarks contain non-GAAP
financial measures within the meaning of Regulation G promulgated
by the U.S. Securities and Exchange Commission (the "SEC") and
includes a reconciliation of non-GAAP financial measures to the
most directly comparable financial measures calculated in
accordance with GAAP.
The company uses certain non-GAAP financial measures that are
included in this press release, the additional financial
information and accompanying remarks both to explain its results to
stockholders and the investment community and in the internal
evaluation and management of its businesses. The company’s
management believes that these non-GAAP financial measures and the
information they provide are useful to investors since these
measures (a) permit investors to view the company’s performance and
liquidity using the same tools that management uses to evaluate the
company’s past performance, reportable segments, prospects for
future performance and liquidity, and (b) determine certain
elements of management incentive compensation.
The company’s management believes that core sales provides a
more complete understanding of underlying sales trends by providing
sales on a consistent basis as it excludes the impacts of
acquisitions, divestitures, retail store openings and closings,
certain market and category exits, and changes in foreign exchange
from year-over-year comparisons. The effect of changes in foreign
exchange on reported sales is calculated by applying the prior year
average monthly exchange rates to the current year local currency
sales amounts (excluding acquisitions and divestitures), with the
difference between the current year reported sales and constant
currency sales presented as the foreign exchange impact increase or
decrease in core sales. The company’s management believes that
“normalized” gross margin, “normalized” operating income,
“normalized” operating margin, "normalized EBITDA", “normalized”
net income, “normalized” diluted earnings per share, “normalized”
interest and “normalized” income tax benefit or expense, which
exclude restructuring and restructuring-related expenses and
one-time and other events such as costs related to the
extinguishment of debt; certain tax benefits and charges;
impairment charges; pension settlement charges; divestiture costs;
costs related to the acquisition, integration and financing of
acquired businesses; amortization of acquisition-related intangible
assets; inflationary adjustments; fire related loss, net of
insurance recoveries; and certain other items, are useful because
they provide investors with a meaningful perspective on the current
underlying performance of the company’s core ongoing operations and
liquidity. “Normalized EBITDA” is an ongoing liquidity measure
(that excludes non-cash items) and is calculated as normalized
earnings before interest, tax, depreciation, amortization and
stock-based compensation expense.
The company determines the tax effect of the items excluded from
normalized diluted earnings per share by applying the estimated
effective rate for the applicable jurisdiction in which the pretax
items were incurred, and for which realization of the resulting tax
benefit, if any, is expected. In certain situations in which an
item excluded from normalized results impacts income tax expense,
the company utilizes a “with” and “without” approach to determine
normalized income tax benefit or expense.
The company defines "net debt" as short-term debt, current
portion of long-term debt and long-term debt less cash and cash
equivalents.
While the company believes these non-GAAP financial measures are
useful in evaluating the company’s performance and liquidity, this
information should be considered as supplemental in nature and not
as a substitute for or superior to the related financial
information prepared in accordance with GAAP. Additionally, these
non-GAAP financial measures may differ from similar measures
presented by other companies.
About Newell Brands
Newell Brands (NASDAQ: NWL) is a leading global consumer goods
company with a strong portfolio of well-known brands, including
Rubbermaid, Sharpie, Graco, Coleman, Rubbermaid Commercial
Products, Yankee Candle, Paper Mate, FoodSaver, Dymo, EXPO,
Elmer’s, Oster, NUK, Spontex and Campingaz. Newell Brands is
focused on delighting consumers by lighting up everyday
moments.
This press release and additional information about Newell
Brands are available on the company’s website,
www.newellbrands.com.
Caution Concerning Forward-Looking
Statements
Some of the statements in this press release and its exhibits,
particularly those anticipating future financial performance,
business prospects, growth, operating strategies, the benefits and
savings associated with Project Phoenix and the Realignment Plan,
future macroeconomic conditions and similar matters, are
forward-looking statements within the meaning of the federal
securities laws. These statements generally can be identified by
the use of words or phrases, including, but not limited to,
"guidance," "outlook," “intend,” “anticipate,” “believe,”
“estimate,” “project,” “target,” “plan,” “expect,” “setting up,”
"beginning to,” “will,” “should,” “would,” "could," “resume,”
“remain confident,” "remain optimistic," "seek to," or similar
statements. We caution that forward-looking statements are not
guarantees because there are inherent difficulties in predicting
future results. Actual results may differ materially from those
expressed or implied in the forward-looking statements, including
impairment charges and accounting for income taxes. Important
factors that could cause actual results to differ materially from
those suggested by the forward-looking statements include, but are
not limited to:
- our ability to optimize costs and cash flow and mitigate the
impact of soft global demand and retailer inventory rebalancing
through discretionary and overhead spend management, advertising
and promotion expense optimization, demand forecast and supply plan
adjustments and actions to improve working capital;
- our dependence on the strength of retail and consumer demand
and commercial and industrial sectors of the economy in various
countries around the world;
- our ability to improve productivity, reduce complexity and
streamline operations;
- risks related to our substantial indebtedness, potential
increases in interest rates or changes in our credit ratings,
including the failure to maintain financial covenants which if
breached could subject us to cross-default and acceleration
provisions in our debt documents;
- competition with other manufacturers and distributors of
consumer products;
- major retailers’ strong bargaining power and consolidation of
our customers;
- supply chain and operational disruptions in the markets in
which we operate, including as a result of geopolitical and
macroeconomic conditions and any global military conflicts,
including those between Russia and Ukraine and in the Middle
East;
- changes in the prices and availability of labor,
transportation, raw materials and sourced products, including
significant inflation, and our ability to offset cost increases
through pricing and productivity in a timely manner;
- our ability to effectively execute our turnaround plan,
including Project Ovid, Project Phoenix, the Network Optimization
Project and the Realignment Plan;
- our ability to develop innovative new products, to develop,
maintain and strengthen end-user brands and to realize the benefits
of increased advertising and promotion spend;
- the risks inherent to our foreign operations, including
currency fluctuations, exchange controls and pricing
restrictions;
- future events that could adversely affect the value of our
assets and/or stock price and require additional impairment
charges;
- unexpected costs or expenses associated with dispositions;
- the cost and outcomes of governmental investigations,
inspections, lawsuits, legislative requests or other actions by
third parties, the potential outcomes of which could exceed policy
limits, to the extent insured;
- our ability to remediate the material weaknesses in internal
control over financial reporting and to maintain effective internal
control over financial reporting;
- a failure or breach of one of our key information technology
systems, networks, processes or related controls or those of our
service providers;
- the impact of U.S. and foreign regulations on our operations,
including the impact of tariffs and environmental remediation costs
and legislation and regulatory actions related to product safety,
data privacy and climate change;
- the potential inability to attract, retain and motivate key
employees;
- changes in tax laws and the resolution of tax contingencies
resulting in additional tax liabilities;
- product liability, product recalls or related regulatory
actions;
- our ability to protect our intellectual property rights;
- significant increases in the funding obligations related to our
pension plans; and
- other factors listed from time to time in our SEC filings,
including but not limited to our Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q and other filings.
The consolidated condensed financial statements are prepared in
conformity with accounting principles generally accepted in the
United States (“U.S. GAAP”). Management’s application of U.S. GAAP
requires the pervasive use of estimates and assumptions in
preparing the condensed consolidated financial statements. The
company continues to be impacted by inflationary pressures, soft
global demand, major retailers' focus on tight control over
inventory levels, elevated interest rates and indirect
macroeconomic impacts from geopolitical conflicts, which has
required greater use of estimates and assumptions in the
preparation of our condensed consolidated financial statements.
Although we believe we have made our best estimates based upon
current information, actual results could differ materially and may
require future changes to such estimates and assumptions, including
reserves, which may result in future expense or impairment
charges.
The information contained in this press release and the tables
is as of the date indicated. The company assumes no obligation to
update any forward-looking statements as a result of new
information, future events or developments.
NEWELL BRANDS INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per
share amounts)
Three Months Ended March
31,
2024
2023
% Change
Net sales
$
1,653
$
1,805
(8.4
)%
Cost of products sold
1,149
1,323
Gross profit
504
482
4.6
%
Selling, general and administrative
expenses
462
480
(3.8
)%
Restructuring costs, net
26
38
Operating income (loss)
16
(36
)
NM
Non-operating expenses:
Interest expense, net
70
68
Loss on extinguishment and modification of
debt
1
—
Other expense, net
5
12
Loss before income taxes
(60
)
(116
)
48.3
%
Income tax benefit
(51
)
(14
)
Net loss
$
(9
)
$
(102
)
91.2
%
Weighted average common shares
outstanding:
Basic
414.7
413.9
Diluted
414.7
413.9
Loss per share:
Basic
$
(0.02
)
$
(0.25
)
Diluted
$
(0.02
)
$
(0.25
)
Dividends per share
$
0.07
$
0.23
* NM - NOT MEANINGFUL
NEWELL BRANDS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in millions)
March 31, 2024
December 31, 2023
Assets
Current assets
Cash and cash equivalents
$
372
$
332
Accounts receivable, net
958
1,195
Inventories
1,695
1,531
Prepaid expenses and other current
assets
376
296
Total current assets
3,401
3,354
Property, plant and equipment, net
1,194
1,212
Operating lease assets
492
515
Goodwill
3,059
3,071
Other intangible assets, net
2,447
2,488
Deferred income taxes
775
806
Other assets
732
717
Total Assets
$
12,100
$
12,163
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable
$
1,038
$
1,003
Other accrued liabilities
1,489
1,565
Short-term debt and current portion of
long-term debt
429
329
Total current liabilities
2,956
2,897
Long-term debt
4,558
4,575
Deferred income taxes
237
241
Operating lease liabilities
422
446
Other noncurrent liabilities
851
892
Total liabilities
9,024
9,051
Total stockholders' equity
3,076
3,112
Total Liabilities and Stockholders'
Equity
$
12,100
$
12,163
NEWELL BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
(Amounts in millions)
Three Months Ended March
31,
2024
2023
Cash flows from operating
activities:
Net loss
$
(9
)
$
(102
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
85
81
Deferred income taxes
8
6
Stock based compensation expense
16
11
Other, net
(3
)
(9
)
Changes in operating accounts:
Accounts receivable
221
45
Inventories
(178
)
(27
)
Accounts payable
38
26
Accrued liabilities and other
(146
)
(108
)
Net cash provided by (used in)
operating activities
32
(77
)
Cash flows from investing
activities:
Capital expenditures
(59
)
(83
)
Swap proceeds
8
14
Other investing activities, net
1
1
Net cash used in investing
activities
(50
)
(68
)
Cash flows from financing
activities:
Proceeds from (payments on) short-term
debt, net
(131
)
232
Proceeds from short-term debt with
original maturities greater than 90 days
431
—
Payments on short-term debt with original
maturities greater than 90 days
(200
)
—
Cash dividends
(31
)
(97
)
Equity compensation activity and other,
net
(9
)
(7
)
Net cash provided by financing
activities
60
128
Exchange rate effect on cash, cash
equivalents and restricted cash
(3
)
(1
)
Increase (decrease) in cash, cash
equivalents and restricted cash
39
(18
)
Cash, cash equivalents and restricted cash
at beginning of period
361
303
Cash, cash equivalents and restricted
cash at end of period
$
400
$
285
Supplemental disclosures:
Restricted cash at beginning of period
$
29
$
16
Restricted cash at end of period
28
14
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended March 31,
2024
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
1,653
$
—
$
—
$
—
$
1,653
Cost of products sold
1,149
(8
)
—
(4
)
1,137
Gross profit
504
8
—
4
516
30.5
%
31.2
%
Selling, general and administrative
expenses
462
(5
)
(25
)
8
440
27.9
%
26.6
%
Restructuring costs, net
26
(26
)
—
—
—
Operating income (loss)
16
39
25
(4
)
76
1.0
%
4.6
%
Non-operating (income) expense
76
—
—
(3
)
73
Income (loss) before income
taxes
(60
)
39
25
(1
)
3
Income tax provision (benefit) [2]
(51
)
41
26
(11
)
5
Net income (loss)
$
(9
)
$
(2
)
$
(1
)
$
10
$
(2
)
Diluted earnings (loss) per share **
$
(0.02
)
$
0.00
$
0.00
$
0.02
$
0.00
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
414.7 million shares for the three months ended March 31, 2024.
Totals may not add due to rounding.
[1]
Transaction costs and other includes a $6
million loss related to Argentina devaluation and hyperinflationary
adjustment; $2 million related to accelerated depreciation and
amortization associated with other integration projects; $1 million
loss on modification of debt; $9 million release of a bad debt
reserve due to a recovery of a receivable from an international
customer and $1 million gain related to a completed divestiture.
Includes $10 million of income tax expense that results from
amortization of a prior year normalized tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pretax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended March 31,
2023
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
1,805
$
—
$
—
$
—
$
1,805
Cost of products sold
1,323
(5
)
—
(2
)
1,316
Gross profit
482
5
—
2
489
26.7
%
27.1
%
Selling, general and administrative
expenses
480
(8
)
(19
)
(7
)
446
26.6
%
24.7
%
Restructuring costs, net
38
(38
)
—
—
—
Operating income (loss)
(36
)
51
19
9
43
(2.0
)%
2.4
%
Non-operating (income) expense
80
—
—
(10
)
70
Income (loss) before income
taxes
(116
)
51
19
19
(27
)
Income tax provision (benefit) [2]
(14
)
13
5
(5
)
(1
)
Net income (loss)
$
(102
)
$
38
$
14
$
24
$
(26
)
Diluted earnings (loss) per share **
$
(0.25
)
$
0.09
$
0.03
$
0.06
$
(0.06
)
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
413.9 million shares for the three months ended March 31, 2023.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $8
million related to expenses for certain legal proceedings; $7
million of fire-related losses, net of recoveries; $5 million loss
related to Argentina hyperinflationary adjustment and reversal of
$1 million to true-up an indirect tax reserve for an international
entity. Includes $9 million of income tax expense that results from
amortization of a prior year normalized tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pretax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT
REPORTING
(Amounts in millions)
Three Months Ended March 31,
2024
Three Months Ended March 31,
2023
Year over year changes
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [1]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [2]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Normalized Operating
Net Sales
Income (Loss)
Net Sales
Net Sales
$
%
$
%
Home and Commercial Solutions
$
893
$
16
1.8
%
$
25
$
41
4.6
%
$
971
$
(37
)
(3.8
)%
$
33
$
(4
)
(0.4
)%
$
(78
)
(8.0
)%
$
45
NM
Learning and Development
559
94
16.8
%
10
104
18.6
%
564
72
12.8
%
10
82
14.5
%
(5
)
(0.9
)%
22
26.8
%
Outdoor and Recreation
201
(18
)
(9.0
)%
8
(10
)
(5.0
)%
270
(1
)
(0.4
)%
14
13
4.8
%
(69
)
(25.6
)%
(23
)
NM
Corporate
—
(76
)
—
%
17
(59
)
—
%
—
(70
)
—
%
22
(48
)
—
%
—
—
%
(11
)
(22.9
)%
$
1,653
$
16
1.0
%
$
60
$
76
4.6
%
$
1,805
$
(36
)
(2.0
)%
$
79
$
43
2.4
%
$
(152
)
(8.4
)%
$
33
76.7
%
* NM - NOT MEANINGFUL
[1]
The three months ended March 31, 2024
normalized items consist of $39 million of restructuring and
restructuring-related charges; $25 million of acquisition
amortization costs; $4 million loss related to Argentina
hyperinflationary adjustment; $2 million related to accelerated
depreciation and amortization associated with other integration
projects; $9 million release of a bad debt reserve due to a
recovery of a receivable from an international customer and $1
million gain related to a completed divestiture.
[2]
The three months ended March 31, 2023
normalized items consist of $51 million of restructuring and
restructuring-related charges; $19 million of acquisition
amortization costs; $8 million related to expenses for certain
legal proceedings; $2 million of Argentina hyperinflationary
adjustment and reversal of $1 million to true-up an indirect tax
reserve for an international entity.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES GROWTH BY
SEGMENT
Three Months Ended March 31,
2024
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
Home and Commercial Solutions
(8.0
)%
0.7
%
3.0
%
(4.3
)%
Learning and Development
(0.9
)%
—
%
2.7
%
1.8
%
Outdoor and Recreation
(25.6
)%
0.9
%
4.4
%
(20.3
)%
Total Company
(8.4
)%
0.6
%
3.1
%
(4.7
)%
CORE SALES GROWTH BY
GEOGRAPHY
Three Months Ended March 31,
2024
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact
[3]
Core Sales [1] [4]
North America
(9.1
)%
0.7
%
—
%
(8.4
)%
International
(7.2
)%
0.4
%
9.1
%
2.3
%
Total Company
(8.4
)%
0.6
%
3.1
%
(4.7
)%
[1]
“Core Sales” provides a consistent basis
for year-over-year comparisons in sales as it excludes the impacts
of acquisitions, completed and planned divestitures (including the
sale of the Millefiori business), retail store openings and
closings, certain market and category exits, as well as changes in
foreign currency.
[2]
Divestitures include the sale of the
Millefiori business, certain market and category exits and current
and prior period net sales from retail store closures (consistent
with standard retail practice).
[3]
“Currency Impact” represents the effect of
foreign currency on 2024 reported sales and is calculated by
applying the 2023 average monthly exchange rates to the current
year local currency sales amounts (excluding acquisitions and
divestitures) and comparing to 2024 reported sales.
[4]
Totals may not add due to rounding.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
NORMALIZED EBITDA
RECONCILIATION
(Amounts in millions)
Three Months Ended March
31,
Change
2024
2023
$
%
Net loss [1]
$
(9
)
$
(102
)
$
93
91.2
%
Restructuring and restructuring-related
costs
(2
)
38
Acquisition amortization and
impairment
(1
)
14
Transaction costs and other (income)
expense, net
10
24
Total normalized items, net of tax [1]
7
76
NORMALIZED NET LOSS [1]
(2
)
(26
)
Normalized income tax [1]
5
(1
)
Interest expense, net [2]
70
68
Normalized depreciation and amortization
[1] [3] [4]
54
57
Stock-based compensation [3]
16
11
NORMALIZED EBITDA
$
143
$
109
$
34
31.2
%
[1]
Refer to “Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items” for the
three months ended March 31, 2024 and 2023.
[2]
Refer to “Condensed Consolidated
Statements of Operations (Unaudited)” for the three months ended
March 31, 2024 and 2023.
[3]
Refer to "Consolidated Statement of Cash
Flows (Unaudited) for the three months ended March 31, 2024 and
2023.
[4]
Normalized depreciation and amortization
excludes the amortization of acquired intangibles and accelerated
depreciation costs associated with integration projects and
restructuring-related activities. For the three months ended March
31, 2024 and 2023, excludes $25 million and $19 million,
respectively, of amortization of acquired intangibles, and $6
million and $5 million, respectively, of accelerated depreciation
associated with restructuring-related activities.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
NET DEBT AND NORMALIZED EBITDA
RECONCILIATION
(Amounts in millions)
March 31, 2024
December 31, 2023 [2]
March 31, 2023
NET DEBT RECONCILIATION:
Short-term debt and current portion of
long-term debt
$
429
$
329
$
852
Long-term debt
4,558
4,575
4,776
Gross debt
4,987
4,904
5,628
Less: Cash and cash equivalents
372
332
271
NET DEBT [1]
$
4,615
$
4,572
$
5,357
Net loss [3]
$
(295
)
$
(388
)
$
(133
)
Restructuring and restructuring-related
costs
113
153
59
Acquisition amortization and
impairment
361
376
461
Transaction costs and other (income)
expense, net
175
189
92
Total normalized items, net of tax [3]
649
718
612
NORMALIZED NET INCOME
354
330
479
Normalized income tax [3]
(62
)
(68
)
(19
)
Interest expense, net [3]
285
283
244
Normalized depreciation and amortization
[3] [4]
224
227
224
Stock-based compensation [3] [5]
55
50
9
NORMALIZED EBITDA
$
856
$
822
$
937
[1]
The Company defines net debt as gross debt
less the total of cash and cash equivalents. The Company believes
net debt is meaningful to investors as it considers net debt and
its components to be an important indicator of liquidity and a
guiding measure of capital structure strategy.
[2]
For the twelve months ended December 31,
2023, refer to “Reconciliation of GAAP and Non-GAAP Information
(Unaudited) - Certain Line Items” for the twelve months ended
December 31, 2023, on the Company’s Form 8-K furnished on February
9, 2024.
[3]
For the trailing-twelve months ended March
31, 2024, refer to “Reconciliation of GAAP and Non-GAAP Information
(Unaudited) - Certain Line Items” for the three months ended March
31, 2024, December 31, 2023, September 30, 2023 and June 30, 2023
in this release and on the Company’s Forms 8-K furnished on
February 9, 2024, October 27, 2023 and July 28, 2023, respectively.
For the trailing-twelve months ended March 31, 2023, refer to
“Reconciliation of GAAP and Non-GAAP Information (Unaudited) -
Certain Line Items” for the three months ended March 31, 2023,
December 31, 2022, September 30, 2022 and June 30, 2022 in this
release and on the Company’s Forms 8-K furnished on February 9,
2024, October 27, 2023 and July 28, 2023, respectively.
[4]
For the trailing-twelve months ended March
31, 2024, normalized depreciation and amortization excludes the
following items: (a) acquisition amortization expense of $82
million associated with intangible assets recognized in purchase
accounting; and (b) $32 million of accelerated depreciation costs
associated with integration projects and restructuring activities.
Refer to “Reconciliation of GAAP and Non-GAAP Information
(Unaudited) - Certain Line Items” for the three months ended March
31, 2024, December 31, 2023, September 30, 2023 and June 30, 2023
in this release and on the Company’s Forms 8-K furnished on
February 9, 2024, October 27, 2023 and July 28, 2023, respectively.
For the trailing-twelve months ended March 31, 2023, normalized
depreciation and amortization excludes the following items: (a)
acquisition amortization expense of $68 million associated with
intangible assets recognized in purchase accounting; and (b) $9
million of accelerated depreciation costs associated with
restructuring activities. Refer to “Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items” for the
three months ended March 31, 2023, December 31, 2022, September 30,
2022 and June 30, 2022 in this release and on the Company’s Forms
8-K furnished on February 9, 2024, October 27, 2023 and July 28,
2023, respectively. Normalized depreciation and amortization
excludes from GAAP depreciation and amortization for the twelve
months ended December 31, 2023, the following items: (a)
acquisition amortization expense of $76 million associated with
intangible assets recognized in purchase accounting; and (b)
accelerated depreciation and amortization costs of $31 million
associated with restructuring activities. Refer to “Reconciliation
of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items”
for the twelve months ended December 31, 2023 on the Company’s Form
8-K furnished on February 9, 2024 for further information.
[5]
Represents the trailing-twelve months
ended March 31, 2024, December 31, 2023 and March 31, 2023 non-cash
expense associated with stock-based compensation.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES OUTLOOK
Three Months Ending
June 30, 2024
Twelve Months Ending
December 31, 2024
Estimated net sales change (GAAP)
(9
)%
to
(7
)%
(8
)%
to
(5
)%
Estimated currency impact [1] and
divestitures [2], net
~3%
~3%
Core sales change (NON-GAAP) [3]
(6
)%
to
(4
)%
(6
)%
to
(3
)%
[1]
“Currency Impact” represents the effect of
foreign currency on 2024 reported sales and is calculated by
applying the 2023 average monthly exchange rates to the current
year local currency sales amounts (excluding acquisitions and
divestitures) and comparing to 2024 reported sales.
[2]
Divestitures include the sale of the
Millefiori business, certain market and category exits and current
and prior period net sales from retail store closures (consistent
with standard retail practice).
[3]
Totals may not add due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240426613767/en/
Investor Contact: Sofya
Tsinis VP, Investor Relations +1 (201) 610-6901
sofya.tsinis@newellco.com
Media Contact: Beth Stellato
Chief Communications Officer +1 (470) 580-1086
beth.stellato@newellco.com
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