Turnaround On Track As Year-over-Year Sales
Improve Sequentially Strong Gross and Operating Margin Performance
Versus Prior Year Raises Outlook for Full Year 2024
Newell Brands (NASDAQ: NWL) today announced its third quarter
2024 financial results.
Chris Peterson, Newell Brands President and Chief Executive
Officer, said, "This is the fifth full quarter since we deployed
our new corporate strategy, and based on our reported results, it
is clear that Newell Brand’s business transformation is well
underway. During the third quarter, year-over-year sales
performance improved sequentially, we drove continued gross and
operating margin improvement, while purposefully increasing our
level of A&P investment, and we meaningfully de-levered the
balance sheet through both debt reduction and EBITDA growth. While
much work remains and the macroeconomic backdrop is still
uncertain, we are confident that the actions we are taking and the
capabilities we are building are laying a solid foundation for the
company’s future."
Mark Erceg, Newell Brands Chief Financial Officer, said, "Our
reported gross margin in the third quarter increased by 460 basis
points compared to the same quarter last year, marking the fifth
consecutive quarter of significant gross margin expansion.
Importantly, outstanding productivity and cost reduction efforts
drove third quarter gross margin to the highest level achieved
since 2020 on both a GAAP and normalized basis. In addition,
leverage metrics improved notably as we continue along our
multi-year journey towards earning an investment grade credit
rating. Given strong third quarter results, we are increasing our
2024 normalized operating margin, normalized earnings per share and
operating cash flow outlook for the second time this year."
Third Quarter 2024 Executive
Summary
- Net sales were $1.9 billion, a decline of 4.9 percent compared
with the prior year period. Core sales declined 1.7 percent
compared with the prior year period.
- Reported gross margin increased to 34.9 percent compared with
30.3 percent in the prior year period. Normalized gross margin
increased to 35.4 percent compared with 30.7 percent in the prior
year period.
- Reported operating margin improved to negative 6.2 percent
compared with negative 7.8 percent in the prior year period.
Normalized operating margin increased to 9.5 percent compared with
7.4 percent in the prior year period.
- Reported net loss was $198 million compared with $218 million
in the prior year period. Normalized net income was $69 million
compared with $154 million in the prior year period.
- Normalized EBITDA increased to $250 million compared with $218
million in the prior year period.
- Reported diluted loss per share were $0.48 compared $0.53 in
the prior year period. Normalized diluted earnings per share were
$0.16 compared with $0.37 in the prior year period. Normalized
diluted earnings per share included a negative $0.02 impact
associated with a change in the company's normalization
practice.
- Year-to-date operating cash flow was $346 million compared with
$679 million in the prior year period.
- The company increased its full year 2024 outlook for normalized
operating margin, normalized earnings per share and operating cash
flow.
Third Quarter 2024 Operating
Results
Net sales were $1.9 billion, a 4.9 percent decline compared with
the prior year period, reflecting a core sales decline of 1.7
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 34.9 percent compared with 30.3
percent in the prior year period, as the positive impact from
productivity savings and lower restructuring-related charges more
than offset the headwinds from lower sales volume, inflation and
foreign exchange. Normalized gross margin was 35.4 percent compared
with 30.7 percent in the prior year period, which represents the
fifth consecutive quarter of year-over-year improvement.
Reported operating loss was $121 million compared with $159
million in the prior year period. Non-cash impairment charges of
$260 million and $263 million were incurred in the current and
prior year periods, respectively, related to goodwill and
intangible assets. Reported operating margin was negative 6.2
percent compared with negative 7.8 percent in the prior year
period, largely reflecting benefits from higher gross profit and
savings from restructuring actions that were partially offset by
higher incentive compensation expense, advertising and promotions
costs and additional amortization of certain tradenames. Normalized
operating income was $185 million, or 9.5 percent of sales,
compared with $152 million, or 7.4 percent of sales, in the prior
year period.
Net interest expense was $75 million compared with $69 million
in the prior year period.
Reported tax benefit was $7 million compared with a benefit of
$80 million in the prior year period. The normalized tax provision
was $34 million compared with a benefit of $79 million in the prior
year period.
Reported net loss was $198 million compared with $218 million in
the prior year period. Normalized net income was $69 million
compared with $154 million in the prior year period. Normalized
EBITDA was $250 million compared with $218 million in the prior
year period.
Reported diluted loss per share were $0.48 compared with $0.53
in the prior year period. Normalized diluted earnings per share
were $0.16 compared with $0.37 in the prior year period. Normalized
diluted earnings per share included a negative $0.02 impact
associated with a change in the company's normalization
practice.
Change to Normalization
Practice
In addition to its GAAP results, the company has provided and
will continue to provide certain non-GAAP financial measures,
referred to as “normalized” measures, which provide investors
supplementary information helpful in understanding the company’s
underlying operating performance. Commencing in the third quarter
of 2024, the company changed its normalization practice.
Historically, the company has excluded from normalized results
inventory write-downs and accelerated depreciation charges relating
to restructuring and exit activities that were reflected within its
restructuring-related costs non-GAAP adjustment. Beginning in the
third quarter 2024, the company no longer excludes these charges
from its normalized results. These changes had no impact on
reported diluted earnings per share and a negative impact of
approximately $0.02 on normalized diluted earnings per share for
the third quarter of 2024. The company has also ceased to exclude
from normalized results prior period adjustments related to a bad
debt reserve and subsequent recovery with respect to the bankruptcy
of an international customer. The company’s outlook for the three
months and twelve months ending December 31, 2024 reflect these
changes, and we have recast prior periods presented in this release
to conform to current period presentation. The company will
continue to provide normalized measures which exclude the impact of
restructuring costs and restructuring-related costs (other than
inventory write-downs and accelerated depreciation),
acquisition-related amortization expense and impairment charges,
pension settlement losses and other items. Additional prior periods
have been recast as presented in Exhibit 99.2 to the company’s
current report on Form 8-K dated October 25, 2024.
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
Year-to-date operating cash flow was $346 million compared with
$679 million in the prior year period. The prior year operating
cash flow included a significant contribution from working capital
primarily due to inventory reduction.
At the end of the third quarter, Newell Brands had debt
outstanding of $5.0 billion and cash and cash equivalents of $494
million, compared with $5.1 billion and $396 million, respectively,
at the end of the third quarter of 2023.
Third Quarter 2024 Operating Segment
Results
The Learning & Development segment generated net sales of
$717 million compared with $694 million in the prior year period,
reflecting core sales growth of 4.4 percent, as well as the impact
of unfavorable foreign exchange. Core sales increased in the Baby
business and decreased in the Writing business. Reported operating
income was $75 million, or 10.5 percent of sales, including the
impact of a non-cash impairment charge of $70 million, compared
with a loss of $127 million, or negative 18.3 percent of sales,
which included a non-cash impairment charge of $241 million, in the
prior year period. Normalized operating income was $154 million, or
21.5 percent of sales, compared with $123 million, or 17.7 percent
of sales, in the prior year period.
The Home & Commercial Solutions segment generated net sales
of $1.0 billion compared with $1.1 billion in the prior year
period, reflecting a core sales decline of 2.3 percent, as well as
the impact of unfavorable foreign exchange and certain business
exits. Core sales increased in Commercial, primarily due to
international pricing to offset inflation and currency movements,
and declined in Kitchen and Home Fragrance. Reported operating loss
was $94 million, or negative 9.0 percent of sales, including the
impact of a non-cash impairment charge of $190 million, compared
with operating income of $64 million, or 5.7 percent of sales, in
the prior year period. Normalized operating income was $122
million, or 11.7 percent of sales, compared with $91 million, or
8.1 percent of sales, in the prior year period.
The Outdoor & Recreation segment generated net sales of $183
million compared with $231 million in the prior year period,
reflecting a core sales decline of 16.8 percent, as well as the
impact of unfavorable foreign exchange and certain business exits.
Reported operating loss was $23 million, or negative 12.6 percent
of sales, compared with $42 million, or negative 18.2 percent of
sales, including a non-cash impairment charge of $22 million in the
prior year period. Normalized operating loss was $15 million, or
negative 8.2 percent of sales, compared with loss of $16 million,
or negative 6.9 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 nine months of 2024,
the company incurred restructuring and related charges of $42
million related to the Realignment Plan.
Outlook for Fourth Quarter and Full
Year 2024
The company initiated its outlook for fourth quarter 2024 and
increased its full year 2024 outlook for normalized operating
margin, normalized EPS and operating cash flow.
Q4 2024
Outlook
Net Sales
7% to 4% decline
Core Sales
5% to 2% decline
Normalized Operating Margin
7.0% to 7.7%
Normalized EPS
$0.11 to $0.14
Previous
Full Year 2024 Outlook
Updated
Full Year 2024 Outlook
Net Sales
7% to 6% decline
7% to 6% decline
Core Sales
4% to 3% decline
4% to 3% decline
Normalized Operating Margin
8.0% to 8.2%
8.1% to 8.3%
Normalized EPS
$0.60 to $0.65
$0.63 to $0.66
The company also increased its outlook for full year 2024
operating cash flow to a range of $500 million to $600 million from
the previous range of $450 million to $550 million. The operating
cash flow outlook assumes approximately $150 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’ third quarter 2024 earnings conference call will
be held today, October 25, 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; 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 uses a "with" and "without" approach to calculate
normalized income tax expense or benefit. At an interim period, the
company determines the year to date tax effect of the pretax items
excluded from normalized results by allocating the difference
between the calculated GAAP and calculated normalized tax expense
or benefit.
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 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. 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 the Realignment Plan and other restructuring and cost
saving initiatives;
- 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 September
30,
Nine Months Ended September
30,
2024
2023
% Change
2024
2023
% Change
Net sales
$
1,947
$
2,048
(4.9)%
$
5,633
$
6,057
(7.0)%
Cost of products sold
1,268
1,427
3,751
4,325
Gross profit
679
621
9.3%
1,882
1,732
8.7%
Selling, general and administrative
expenses
536
501
7.0%
1,518
1,457
4.2%
Restructuring costs, net
4
16
40
76
Impairment of goodwill, intangibles and
other assets
260
263
266
274
Operating income (loss)
(121
)
(159
)
23.9%
58
(75
)
NM
Non-operating expenses:
Interest expense, net
75
69
223
213
Loss on extinguishment and modification of
debt
—
—
1
—
Other expense, net
9
70
15
91
Loss before income taxes
(205
)
(298
)
31.2%
(181
)
(379
)
52.2%
Income tax benefit
(7
)
(80
)
(19
)
(77
)
Net loss
$
(198
)
$
(218
)
9.2%
$
(162
)
$
(302
)
46.4%
Weighted average common shares
outstanding:
Basic
416.0
414.2
415.3
414.1
Diluted
416.0
414.2
415.3
414.1
Loss per share:
Basic
$
(0.48
)
$
(0.53
)
$
(0.39
)
$
(0.73
)
Diluted
$
(0.48
)
$
(0.53
)
$
(0.39
)
$
(0.73
)
Dividends per share
$
0.07
$
0.07
$
0.21
$
0.37
* NM - NOT MEANINGFUL
NEWELL BRANDS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in millions)
September 30, 2024
December 31, 2023
Assets
Current assets
Cash and cash equivalents
$
494
$
332
Accounts receivable, net
931
1,195
Inventories
1,652
1,531
Prepaid expenses and other current
assets
285
296
Total current assets
3,362
3,354
Property, plant and equipment, net
1,153
1,212
Operating lease assets
488
515
Goodwill
3,074
3,071
Other intangible assets, net
2,155
2,488
Deferred income taxes
791
806
Other assets
750
717
Total Assets
$
11,773
$
12,163
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable
$
1,047
$
1,003
Other accrued liabilities
1,486
1,565
Short-term debt and current portion of
long-term debt
869
329
Total current liabilities
3,402
2,897
Long-term debt
4,092
4,575
Deferred income taxes
223
241
Operating lease liabilities
422
446
Other noncurrent liabilities
774
892
Total liabilities
8,913
9,051
Total stockholders' equity
2,860
3,112
Total Liabilities and Stockholders'
Equity
$
11,773
$
12,163
NEWELL BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
(Amounts in millions)
Nine Months Ended September
30,
2024
2023
Cash flows from operating
activities:
Net loss
$
(162
)
$
(302
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
245
240
Impairment of goodwill, intangibles and
other assets
266
274
Deferred income taxes
(9
)
(108
)
Stock based compensation expense
49
32
Pension settlement charge
—
66
Other, net
(7
)
(39
)
Changes in operating accounts:
Accounts receivable
238
26
Inventories
(138
)
411
Accounts payable
41
31
Accrued liabilities and other, net
(177
)
48
Net cash provided by operating
activities
346
679
Cash flows from investing
activities:
Capital expenditures
(163
)
(209
)
Proceeds from sale of divested businesses
and investment
14
—
Swap proceeds
25
34
Other investing activities, net
17
28
Net cash used in investing
activities
(107
)
(147
)
Cash flows from financing
activities:
Payments on short-term debt, net
39
(244
)
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
(431
)
—
Payments on current portion of long-term
debt
—
(2
)
Cash dividends
(89
)
(155
)
Equity compensation activity and other,
net
(14
)
(4
)
Net cash used in financing
activities
(64
)
(405
)
Exchange rate effect on cash, cash
equivalents and restricted cash
(15
)
(8
)
Increase in cash, cash equivalents and
restricted cash
160
119
Cash, cash equivalents and restricted cash
at beginning of period
361
303
Cash, cash equivalents and restricted
cash at end of period
$
521
$
422
Supplemental disclosures:
Restricted cash at beginning of period
$
29
$
16
Restricted cash at end of period
27
26
NEWELL BRANDS INC. RECONCILIATION OF
GAAP AND NON-GAAP INFORMATION (UNAUDITED)
The following tables present a reconciliation of certain
non-GAAP financial measures to the most directly comparable
financial measures in accordance with GAAP for the three and nine
months ended September 30, 2024 and a comparison to prior year. The
Company has chosen to present the following non-GAAP measures to
investors to enable additional analyses of past, present and future
operating performance and as a supplemental means of evaluating the
Company’s performance and operating results absent the effect of
certain items that are deemed to be stand-alone items apart from
the Company’s core operations (“Normalized Adjustments”). While
these costs or gains are not expected to continue for any
individual transaction on an ongoing basis, similar types of costs,
expenses and charges or gains have occurred in prior periods.
Normalized Adjustments in 2024 and 2023 include the
following:
Restructuring and restructuring-related
costs
The Company incurs restructuring and
restructuring-related costs in connection with various discrete
initiatives, including previously disclosed initiatives such as our
Realignment Plan, Network Optimization Project, Project Phoenix as
well as other discrete actions. Restructuring charges primarily
relate to severance and other employee termination costs as well as
contract termination and other costs. Restructuring-related costs
are costs that are directly attributable to a restructuring action
or exit activity and would not have been incurred absent the
action. Restructuring-related costs primarily relate to duplicative
costs pending facility closure, asset valuation adjustments and
disposal gains and consulting costs. Restructuring-related costs
primarily related to manufacturing and distribution personnel,
facilities and assets are generally recorded in cost of products
sold, while restructuring-related costs primarily related to office
facilities and assets and professional or clerical personnel are
generally recorded in selling, general and administrative expenses
in the Condensed Consolidated Statements of Operations.
Restructuring and restructuring-related charges primarily related
to the Realignment Plan for the three and nine months ended
September 30, 2024 and to Project Phoenix for the comparable
periods ended September 30, 2023, respectively.
Amortization expense and impairments of
acquired intangible assets
Represents the amortization expense and
impairment charges associated with acquired intangible assets.
Argentina hyperinflationary currency
movements
Represents the favorable or unfavorable
movement in Argentine pesos related to our subsidiary operating in
Argentina, which is considered a hyperinflationary economy
(Gain) loss on divestitures and
transaction costs
Represents the gain or loss on disposal of
a business, which represents the difference between the fair value
(less costs to sell) and carrying value of the business being
disposed, as well as transaction costs associated with acquisitions
and divestitures.
Loss on pension settlement
Represents charges associated with
settlement of certain of the Company’s defined benefit plans, which
relates to the recognition of previously unrecognized actuarial
losses in accumulated other comprehensive loss.
Other adjustments
The following adjustments comprise other
adjustments below: Legal expenses for certain proceedings primarily
related to a completed U.S. Securities and Exchange Commission
investigation as well as completed shareholder securities class
action and derivative litigation which is disclosed in Note 18
(Litigation and Contingencies) to our audited consolidated
financial statements contained in our most recent annual report on
Form 10-K; the portion of a tax reserve associated with prior
periods that was recorded due to the outcome of a judicial ruling
relating to indirect taxes in an international entity; gains/losses
arising from the mark-to-market of an investment with a readily
determinable fair value; loss on modification of debt; and an
insurance recovery related to fire-related costs that were
previously normalized.
Normalized income tax
adjustments
The company uses a “with” and “without”
approach to calculate normalized income tax expense or benefit. At
an interim period, the company determines the year-to-date tax
effect of the pretax items excluded from normalized results by
allocating the difference between the calculated GAAP and
calculated normalized tax expense or benefit. In addition,
normalized income tax adjustments includes the income tax expense
($11 million and $31 million for the three months ended September
30, 2024 and 2023, respectively, $33 million and $54 million for
the nine months ended September 30, 2024 and 2023, respectively)
that results from the amortization of a prior year normalized tax
benefit.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Gross profit, as reported under
GAAP
$
679
$
621
$
1,882
$
1,732
As a % of net sales
34.9
%
30.3
%
33.4
%
28.6
%
Normalized Adjustments:
Restructuring-related costs:
Asset valuation adjustments and disposal
gains or losses
6
4
15
9
Duplicative costs pending facility closure
or exit of business activity
2
1
3
4
Argentina hyperinflationary charge
3
2
9
7
Normalized gross profit
$
690
$
628
$
1,909
$
1,752
As a % of net sales
35.4
%
30.7
%
33.9
%
28.9
%
Operating income (loss), as reported
under GAAP
$
(121
)
$
(159
)
$
58
$
(75
)
As a % of net sales
(6.2
)%
(7.8
)%
1.0
%
(1.2
)%
Normalized Adjustments:
Restructuring:
Severance and other employee termination
costs
4
14
36
71
Contract termination and other costs
—
2
4
5
Restructuring-related costs:
Asset valuation adjustments and disposal
gains or losses
9
8
24
—
Duplicative costs pending facility closure
or exit of business activity
3
1
6
8
Consulting costs
1
1
7
2
Amortization of acquired intangible
assets
25
19
75
57
Impairment of acquired intangible
assets
260
263
260
271
Gain or loss on divestitures and
transaction costs
2
—
1
7
Argentina hyperinflationary charge
3
2
9
7
Other, net
(1
)
1
(1
)
13
Total normalized adjustments to operating
income (loss), as reported under GAAP
306
311
421
441
Normalized operating income
$
185
$
152
$
479
$
366
As a % of net sales
9.5
%
7.4
%
8.5
%
6.0
%
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Loss before income taxes, as reported
under GAAP
$
(205
)
$
(298
)
$
(181
)
$
(379
)
Normalized Adjustments:
Restructuring:
Severance and other employee termination
costs
4
14
36
71
Contract termination and other costs
—
2
4
5
Restructuring-related costs:
Asset valuation adjustments and disposal
gains or losses
9
8
24
—
Duplicative costs pending facility closure
or exit of business activity
3
1
6
8
Consulting costs
1
1
7
2
Amortization of acquired intangible
assets
25
19
75
57
Impairment of acquired intangible
assets
260
263
260
271
Gain or loss on divestitures and
transaction costs
3
—
(1
)
7
Loss on pension settlement
—
61
—
66
Argentina hyperinflationary charge
5
6
13
16
Other, net
(2
)
(2
)
(1
)
11
Normalized income before income
taxes
$
103
$
75
$
242
$
135
Income tax benefit, as reported under
GAAP
$
(7
)
$
(80
)
$
(19
)
$
(77
)
Effective income tax rates, as reported
under GAAP
(3.4
)%
(26.8
)%
(10.5
)%
(20.3
)%
Normalized income tax adjustments
41
1
44
8
Normalized income tax provision
(benefit)
$
34
$
(79
)
$
25
$
(69
)
Effective income tax rates, as
adjusted
33.0
%
(105.3
)%
10.3
%
(51.1
)%
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net loss, as reported under
GAAP
$
(198
)
$
(218
)
$
(162
)
$
(302
)
Normalized Adjustments:
Restructuring:
Severance and other employee termination
costs
4
14
36
71
Contract termination and other costs
—
2
4
5
Restructuring-related costs:
Asset valuation adjustments and disposal
gains or losses
9
8
24
—
Duplicative costs pending facility closure
or exit of business activity
3
1
6
8
Consulting costs
1
1
7
2
Amortization of acquired intangible
assets
25
19
75
57
Impairment of acquired intangible
assets
260
263
260
271
Gain or loss on divestitures and
transaction costs
3
—
(1
)
7
Loss on pension settlement
—
61
—
66
Argentina hyperinflationary charge
5
6
13
16
Other, net
(2
)
(2
)
(1
)
11
Normalized income tax adjustments
(41
)
(1
)
(44
)
(8
)
Total normalized adjustments, net of
tax
267
372
379
506
Normalized net income
$
69
$
154
$
217
$
204
Weighted average common shares
outstanding:
Basic
416.0
414.2
415.3
414.1
Diluted
418.5
416.3
418.1
415.6
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Diluted loss per share, as reported
under GAAP
$
(0.48
)
$
(0.53
)
$
(0.39
)
$
(0.73
)
Normalized Adjustments:
Restructuring:
Severance and other employee termination
costs
0.01
0.03
0.09
0.17
Contract termination and other costs
—
—
0.01
0.01
Restructuring-related costs:
Asset valuation adjustments and disposal
gains or losses
0.02
0.02
0.06
—
Duplicative costs pending facility closure
or exit of business activity
0.01
—
0.01
0.02
Consulting costs
—
—
0.02
—
Amortization of acquired intangible
assets
0.06
0.05
0.18
0.14
Impairment of acquired intangible
assets
0.62
0.63
0.62
0.65
Gain or loss on divestitures and
transaction costs
0.01
—
—
0.02
Loss on pension settlement
—
0.15
—
0.16
Argentina hyperinflationary charge
0.01
0.01
0.03
0.04
Other, net
—
—
—
0.03
Normalized income tax adjustments
(0.10
)
—
(0.11
)
(0.02
)
Normalized diluted earnings per share
*
$
0.16
$
0.37
$
0.52
$
0.49
*Totals may not add due to
rounding
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT
REPORTING
(Amounts in millions)
Three Months Ended September
30, 2024
Three Months Ended September
30, 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 [1]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Normalized
Net Sales
Operating Income
Net Sales
Net Sales
$
%
$
%
Home and Commercial Solutions
$
1,047
$
(94
)
(9.0
)%
$
216
$
122
11.7
%
$
1,123
$
64
5.7
%
$
27
$
91
8.1
%
$
(76
)
(6.8
)%
$
31
34.1
%
Learning and Development
717
75
10.5
%
79
154
21.5
%
694
(127
)
(18.3
)%
250
123
17.7
%
23
3.3
%
31
25.2
%
Outdoor and Recreation
183
(23
)
(12.6
)%
8
(15
)
(8.2
)%
231
(42
)
(18.2
)%
26
(16
)
(6.9
)%
(48
)
(20.8
)%
1
6.3
%
Corporate
—
(79
)
—
%
3
(76
)
—
%
—
(54
)
—
%
8
(46
)
—
%
—
—
%
(30
)
(65.2
)%
$
1,947
$
(121
)
(6.2
)%
$
306
$
185
9.5
%
$
2,048
$
(159
)
(7.8
)%
$
311
$
152
7.4
%
$
(101
)
(4.9
)%
$
33
21.7
%
[1]
Refer to Total normalized adjustments to
operating income (loss), as reported under GAAP in the
"Reconciliation of GAAP and Non-GAAP Information (Unaudited) -
Certain Line Items" for the three months ended September 30, 2024
and 2023 in this release.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT
REPORTING
(Amounts in millions)
Nine Months Ended September
30, 2024
Nine Months Ended September
30, 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 [1]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Normalized Operating
Net Sales
Income (Loss)
Net Sales
Net Sales
$
%
$
%
Home and Commercial Solutions
$
2,902
$
(30
)
(1.0
)%
$
267
$
237
8.2
%
$
3,152
$
6
0.2
%
$
92
$
98
3.1
%
$
(250
)
(7.9
)%
$
139
NM
Learning and Development
2,089
374
17.9
%
96
470
22.5
%
2,071
133
6.4
%
271
404
19.5
%
18
0.9
%
66
16.3
%
Outdoor and Recreation
642
(52
)
(8.1
)%
27
(25
)
(3.9
)%
834
(38
)
(4.6
)%
33
(5
)
(0.6
)%
(192
)
(23.0
)%
(20
)
NM
Corporate
—
(234
)
—
%
31
(203
)
—
%
—
(176
)
—
%
45
(131
)
—
%
—
—
%
(72
)
(55.0
)%
$
5,633
$
58
1.0
%
$
421
$
479
8.5
%
$
6,057
$
(75
)
(1.2
)%
$
441
$
366
6.0
%
$
(424
)
(7.0
)%
$
113
30.9
%
* NM - NOT MEANINGFUL
[1]
Refer to Total normalized adjustments to
operating income (loss), as reported under GAAP in the
"Reconciliation of GAAP and Non-GAAP Information (Unaudited) -
Certain Line Items" for the nine months ended September 30, 2024
and 2023 in this release.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES GROWTH BY
SEGMENT
Three Months Ended September
30, 2024
Nine Months Ended September
30, 2024
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
Home and Commercial Solutions
(6.8
)%
0.8
%
3.7
%
(2.3
)%
(7.9
)%
0.8
%
3.5
%
(3.6
)%
Learning and Development
3.3
%
—
%
1.1
%
4.4
%
0.9
%
—
%
1.6
%
2.5
%
Outdoor and Recreation
(20.8
)%
0.5
%
3.5
%
(16.8
)%
(23.0
)%
0.7
%
3.8
%
(18.5
)%
Total Company
(4.9
)%
0.4
%
2.8
%
(1.7
)%
(7.0
)%
0.6
%
2.9
%
(3.5
)%
CORE SALES GROWTH BY
GEOGRAPHY
Three Months Ended September
30, 2024
Nine Months Ended September
30, 2024
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
North America
(5.5
)%
0.6
%
0.1
%
(4.8
)%
(7.2
)%
0.6
%
0.1
%
(6.5
)%
International
(3.8
)%
0.4
%
8.5
%
5.1
%
(6.7
)%
0.4
%
8.9
%
2.6
%
Total Company
(4.9
)%
0.4
%
2.8
%
(1.7
)%
(7.0
)%
0.6
%
2.9
%
(3.5
)%
[1]
“Core Sales” provides a consistent basis
for year-over-year comparisons in sales as it excludes the impacts
of acquisitions and 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
September 30,
Change
Nine Months Ended
September 30,
Change
2024
2023
$
%
2024
2023
$
%
Net loss, as reported under GAAP [1]
$
(198
)
$
(218
)
$
20
9.2%
$
(162
)
$
(302
)
$
140
46.4%
Total normalized adjustments, net of tax
[2]
267
372
379
506
Normalized net income [2]
69
154
217
204
Normalized income tax [3]
34
(79
)
25
(69
)
Interest expense, net [1]
75
69
223
213
Normalized depreciation and amortization
[2] [4] [5]
56
62
170
183
Stock-based compensation [4]
16
12
49
32
Normalized EBITDA [6]
$
250
$
218
$
32
14.7%
$
684
$
563
$
121
21.5%
[1]
Refer to “Condensed Consolidated
Statements of Operations (Unaudited)” for the three and nine months
ended September 30, 2024 and 2023 in this release.
[2]
Refer to Total normalized adjustments, net
of tax in the "Reconciliation of GAAP and Non-GAAP Information
(Unaudited) - Certain Line Items" for the three and nine months
ended September 30, 2024 and 2023 in this release.
[3]
Refer to Normalized income tax provision
(benefit) in the "Reconciliation of GAAP and Non-GAAP Information
(Unaudited) - Certain Line Items" for the three and nine months
ended September 30, 2024 and 2023 in this release.
[4]
Refer to "Consolidated Statement of Cash
Flows (Unaudited)" for the nine months ended September 30, 2024 and
2023 in this release.
[5]
Normalized depreciation and amortization
exclude the amortization of acquired intangibles. For the three
months ended September 30, 2024 and 2023, excludes $25 million and
$19 million, respectively, and for the nine months ended September
30, 2024 and 2023 excludes $75 million and $57 million,
respectively.
[6]
The Company defines Normalized EBITDA as
earnings before interest, taxes, depreciation and amortization,
adjusted for certain items and non-cash stock-based compensation
expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
NET DEBT AND TRAILING 12-MONTHS
NORMALIZED EBITDA RECONCILIATION
(Amounts in millions)
Trailing-twelve months ended
September 30, 2024
Twelve months ended December 31,
2023
Trailing-twelve months ended
September 30, 2023
NET DEBT RECONCILIATION:
Short-term debt and current portion of
long-term debt
$
869
$
329
$
376
Long-term debt
4,092
4,575
4,737
Gross debt
4,961
4,904
5,113
Less: Cash and cash equivalents
494
332
396
Net debt [1]
$
4,467
$
4,572
$
4,717
Net loss, as reported under
GAAP
$
(248
)
$
(388
)
$
(551
)
Normalized Adjustments:
Restructuring:
Severance and other employee termination
costs
54
89
73
Contract termination and other costs
5
6
6
Restructuring-related costs:
Asset valuation adjustments and disposal
gains or losses
37
13
2
Duplicative costs pending facility closure
or exit of business activity
9
11
12
Consulting costs
9
4
2
Amortization of acquired intangible
assets
94
76
73
Impairment of acquired intangible
assets
328
339
597
Gain or loss on divestitures and
transaction costs
9
17
8
Loss on pension settlement
60
126
66
Argentina hyperinflationary charge
27
30
19
Other, net
11
23
36
Normalized income tax adjustments
(105
)
(69
)
(81
)
Total normalized adjustments, net of
tax
538
665
813
Normalized net income
290
277
262
Normalized income tax
8
(86
)
(77
)
Interest expense, net
293
283
277
Normalized depreciation and amortization
[2]
245
258
241
Stock based compensation expense
67
50
36
Normalized EBITDA
$
903
$
782
$
739
[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]
Normalized depreciation and amortization
excludes from GAAP depreciation and amortization acquisition
amortization expense of $94 million; $73 million and 76 million
associated with amortization of intangible assets recognized in
purchase accounting for the trailing-twelve months ended September
30, 2024, September 30, 2023 and for the year ended December 31,
2023, respectively.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES OUTLOOK
Three Months Ending
December 31, 2024
Six Months Ending
December 31, 2024
Twelve Months Ending
December 31, 2024
Estimated net sales change (GAAP)
(7)%
to
(4)%
(6)%
to
(5)%
(7)%
to
(6)%
Estimated currency impact [1] and
divestitures [2], net
~2%
~3%
~3%
Core sales change (NON-GAAP) [3]
(5)%
to
(2)%
(3)%
to
(2)%
(4)%
to
(3)%
[1]
“Currency Impact” represents the effect of
foreign currency on 2024 estimated 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 estimated 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/20241025720479/en/
Investor Contact: Joanne
Freiberger VP, Investor Relations +1 (727) 947-0891
joanne.freiberger@newellco.com
Media Contact: Beth Stellato
Chief Communications Officer +1 (470) 580-1086
beth.stellato@newellco.com
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