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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Newell Brands Inc | NASDAQ:NWL | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
2.52 | 39.75% | 8.86 | 8.85 | 8.91 | 8.96 | 7.14 | 7.23 | 26,245,788 | 22:12:48 |
Turnaround Gains Further Traction as Sales Improve Sequentially Gross and Operating Margin Increase Significantly Versus Prior Year Raises Outlook for Full Year 2024
Newell Brands (NASDAQ: NWL) today announced its second quarter 2024 financial results.
Chris Peterson, Newell Brands President and Chief Executive Officer, said, "We are making significant progress in driving Newell's turnaround. During the second quarter, we continued to deliver on our operational and financial priorities for the year, as results came in at the high-end or ahead of our plan across key metrics. Since implementing the new corporate strategy, we have taken decisive actions that have improved the company's top line trajectory, driven significant gross and operating margin expansion, delevered the balance sheet and improved cash flow performance, while strengthening our team, Newell's front-end commercial capabilities and fostering a high-performance, high-accountability culture. We remain laser focused on returning the business to sustainable and profitable growth and are confident that we are pursuing the right strategy to accomplish this."
Mark Erceg, Newell Brands Chief Financial Officer, said, "Second quarter reported gross margin increased by 590 basis points versus last year, which builds on the 110, 360 and 380 basis point expansions that occurred during the three sequential quarters that preceded it, respectively. The rapid and dramatic improvement we have delivered in gross margin ties directly back to the development and implementation of our new strategy and has allowed us to invest more in advertising and critical front-end commercial capabilities, while also expanding reported operating margins - which were up 260 basis points versus last year in the second quarter. During each of the last four quarters we have also achieved significant year-over-year improvements in our cash conversion cycle and reduced Newell's leverage ratio on a sequential basis. While the macroeconomic environment remains choppy, the transformation of our business is clearly underway, which has given us confidence to improve our financial outlook for the year."
Executive Summary
Second Quarter 2024 Operating Results
Net sales were $2.0 billion, a 7.8 percent decline compared with the prior year period, reflecting a core sales decline of 4.2 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 34.4 percent compared with 28.5 percent in the prior year period, as the impact from productivity savings, favorable mix and pricing more than offset the headwind from inflation and foreign exchange. Normalized gross margin was 34.8 percent compared with 29.9 percent in the prior year period, which represents the fourth consecutive quarter of year-over-year improvement.
Reported operating income was $163 million compared with $120 million in the prior year period. Reported operating margin was 8.0 percent compared with 5.4 percent in the prior year period, largely reflecting benefits from productivity savings, favorable mix and pricing, which more than offset the impact of lower net sales, inflation and unfavorable foreign exchange. Normalized operating income was $219 million, or 10.8 percent of sales, compared with $201 million, or 9.1 percent of sales, in the prior year period.
Net interest expense was $78 million compared with $76 million in the prior year period.
Reported tax provision was $39 million compared with $17 million in the prior year period. The normalized tax benefit was $14 million compared with a provision of $16 million in the prior year period.
Reported net income was $45 million compared with $18 million in the prior year period. Normalized net income was $151 million compared with $101 million in the prior year period. Normalized EBITDA was $284 million compared with $258 million in the prior year period.
Reported diluted earnings per share were $0.11 compared with $0.04 in the prior year period. Normalized diluted earnings per share were $0.36 compared with $0.24 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
Year-to-date operating cash flow was $64 million compared with $277 million in the prior year period. The prior year included significant contribution from working capital. Inventories have decreased by approximately $300 million versus the prior year period.
At the end of the second quarter, Newell Brands had debt outstanding of $5.0 billion and cash and cash equivalents of $382 million, compared with $5.4 billion and $317 million, respectively, at the end of the second quarter of 2023.
Second Quarter 2024 Operating Segment Results
The Home & Commercial Solutions segment generated net sales of $962 million compared with $1.1 billion in the prior year period, reflecting a core sales decline of 4.3 percent, as well as the impact of unfavorable foreign exchange and certain business exits. Core sales declined in all three businesses: Kitchen, Home Fragrance and Commercial. Reported operating income was $48 million, or 5.0 percent of sales, compared with operating loss of $21 million, or negative 2.0 percent of sales, in the prior year period. Normalized operating income was $71 million, or 7.4 percent of sales, compared with $23 million, or 2.2 percent of sales, in the prior year period.
The Learning & Development segment generated net sales of $813 million, in-line with the prior year period, as core sales growth of 1.5 percent was offset by the impact of unfavorable foreign exchange. Core sales increased in both the Writing and Baby businesses. Reported operating income was $205 million, or 25.2 percent of sales, compared with $188 million, or 23.1 percent of sales, in the prior year period. Normalized operating income was $212 million, or 26.1 percent of sales, compared with $199 million, or 24.5 percent of sales, in the prior year period.
The Outdoor & Recreation segment generated net sales of $258 million compared with $333 million in the prior year period, reflecting a core sales decline of 18.2 percent, as well as the impact of unfavorable foreign exchange and certain business exits. Reported operating loss was $11 million, or negative 4.3 percent of sales, compared with operating income of $5 million, or 1.5 percent of sales, in the prior year period. Normalized operating loss was $1 million, or negative 0.4 percent of sales, compared with normalized operating income of $14 million, or 4.2 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 six months of 2024, the company incurred restructuring and related charges of $39 million related to the Realignment Plan.
Outlook for Third Quarter and Full Year 2024
The company initiated its outlook for third quarter 2024 and raised its full year 2024 outlook.
Q3 2024 Outlook
Net Sales
6% to 4% decline
Core Sales
2% decline to flat
Normalized Operating Margin
8.3% to 8.8%
Normalized EPS
$0.14 to $0.17
Previous Full Year 2024 Outlook
Updated Full Year 2024 Outlook
Net Sales
8% to 5% decline
7% to 6% decline
Core Sales
6% to 3% decline
4% to 3% decline
Normalized Operating Margin
7.8% to 8.2%
8.0% to 8.2%
Normalized EPS
$0.52 to $0.62
$0.60 to $0.65
The company also increased its outlook for full year 2024 operating cash flow to $450 million to $550 million from the previous range of $400 million to $500 million. The operating cash flow outlook continues to assume 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’ second quarter 2024 earnings conference call will be held today, July 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 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, 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:
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 June 30,
Six Months Ended June 30,
2024
2023
% Change
2024
2023
% Change
Net sales
$
2,033
$
2,204
(7.8
)%
$
3,686
$
4,009
(8.1
)%
Cost of products sold
1,334
1,575
2,483
2,898
Gross profit
699
629
11.1
%
1,203
1,111
8.3
%
Selling, general and administrative expenses
520
476
9.2
%
982
956
2.7
%
Restructuring costs, net
10
22
36
60
Impairment of goodwill, intangibles and other assets
6
11
6
11
Operating income
163
120
35.8
%
179
84
NM
Non-operating expenses:
Interest expense, net
78
76
148
144
Loss on extinguishment and modification of debt
—
—
1
—
Other expense, net
1
9
6
21
Income (loss) before income taxes
84
35
NM
24
(81
)
NM
Income tax provision (benefit)
39
17
(12
)
3
Net income (loss)
$
45
$
18
NM
$
36
$
(84
)
NM
Weighted average common shares outstanding:
Basic
415.2
414.2
415.0
414.0
Diluted
418.2
415.3
417.9
414.0
Earnings (loss) per share:
Basic
$
0.11
$
0.04
$
0.09
$
(0.20
)
Diluted
$
0.11
$
0.04
$
0.09
$
(0.20
)
Dividends per share
$
0.07
$
0.07
$
0.14
$
0.30
* NM - NOT MEANINGFUL
NEWELL BRANDS INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in millions)
June 30, 2024
December 31, 2023
Assets
Current assets
Cash and cash equivalents
$
382
$
332
Accounts receivable, net
1,072
1,195
Inventories
1,639
1,531
Prepaid expenses and other current assets
332
296
Total current assets
3,425
3,354
Property, plant and equipment, net
1,153
1,212
Operating lease assets
481
515
Goodwill
3,055
3,071
Other intangible assets, net
2,412
2,488
Deferred income taxes
757
806
Other assets
765
717
Total Assets
$
12,048
$
12,163
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable
$
1,079
$
1,003
Other accrued liabilities
1,440
1,565
Short-term debt and current portion of long-term debt
983
329
Total current liabilities
3,502
2,897
Long-term debt
4,059
4,575
Deferred income taxes
236
241
Operating lease liabilities
414
446
Other noncurrent liabilities
757
892
Total liabilities
8,968
9,051
Total stockholders' equity
3,080
3,112
Total Liabilities and Stockholders' Equity
$
12,048
$
12,163
NEWELL BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in millions)
Six Months Ended June 30,
2024
2023
Cash flows from operating activities:
Net income (loss)
$
36
$
(84
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
164
159
Impairment of goodwill, intangibles and other assets
6
11
Deferred income taxes
14
4
Stock based compensation expense
33
20
Pension settlement charge
—
5
Other, net
(8
)
(34
)
Changes in operating accounts:
Accounts receivable
84
(14
)
Inventories
(139
)
282
Accounts payable
80
(54
)
Accrued liabilities and other, net
(206
)
(18
)
Net cash provided by operating activities
64
277
Cash flows from investing activities:
Capital expenditures
(112
)
(142
)
Swap proceeds
17
23
Other investing activities, net
11
25
Net cash used in investing activities
(84
)
(94
)
Cash flows from financing activities:
Payments on short-term debt
(52
)
(23
)
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
(225
)
—
Payments on current portion of long-term debt
—
(1
)
Cash dividends
(60
)
(126
)
Equity compensation activity and other, net
(16
)
(8
)
Net cash provided by (used in) financing activities
78
(158
)
Exchange rate effect on cash, cash equivalents and restricted cash
(14
)
2
Increase in cash, cash equivalents and restricted cash
44
27
Cash, cash equivalents and restricted cash at beginning of period
361
303
Cash, cash equivalents and restricted cash at end of period
$
405
$
330
Supplemental disclosures:
Restricted cash at beginning of period
$
29
$
16
Restricted cash at end of period
23
13
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per share amounts)
Three Months Ended June 30, 2024
GAAP
Restructuring and restructuring- related costs
Acquisition amortization
Transaction costs and other [1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
2,033
$
—
$
—
$
—
$
2,033
Cost of products sold
1,334
(7
)
—
(2
)
1,325
Gross profit
699
7
—
2
708
34.4
%
34.8
%
Selling, general and administrative expenses
520
(3
)
(25
)
(3
)
489
25.6
%
24.1
%
Restructuring costs, net
10
(10
)
—
—
—
Impairment of goodwill, intangibles and other assets
6
(6
)
—
—
—
Operating income
163
26
25
5
219
8.0
%
10.8
%
Non-operating expense
79
—
—
3
82
Income before income taxes
84
26
25
2
137
Income tax provision (benefit) [2]
39
(19
)
(20
)
(14
)
(14
)
Net income
$
45
$
45
$
45
$
16
$
151
Diluted earnings per share **
$
0.11
$
0.11
$
0.11
$
0.04
$
0.36
*
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 418.2 million shares for the three months ended June 30, 2024.
Totals may not add due to rounding.
[1]
Transaction costs and other includes a $2 million loss related to Argentina devaluation and hyperinflationary adjustment; $1 million and $2 million related to accelerated amortization and write-off of other assets, respectively, associated with integration projects and $3 million gain related to completed divestitures. Includes $12 million of income tax expense that results from amortization of a prior year normalized tax benefit.
[2]
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.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per share amounts)
Three Months Ended June 30, 2023
GAAP
Restructuring and restructuring- related costs
Acquisition amortization and impairment
Transaction costs and other [1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
2,204
$
—
$
—
$
—
$
2,204
Cost of products sold
1,575
(26
)
—
(3
)
1,546
Gross profit
629
26
—
3
658
28.5
%
29.9
%
Selling, general and administrative expenses
476
9
(19
)
(9
)
457
21.6
%
20.7
%
Restructuring costs, net
22
(22
)
—
—
—
Impairment of goodwill, intangibles and other assets
11
—
(11
)
—
—
Operating income
120
39
30
12
201
5.4
%
9.1
%
Non-operating (income) expense
85
—
—
(1
)
84
Income before income taxes
35
39
30
13
117
Income tax provision (benefit) [2]
17
9
6
(16
)
16
Net income
$
18
$
30
$
24
$
29
$
101
Diluted earnings per share **
$
0.04
$
0.07
$
0.06
$
0.07
$
0.24
*
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 415.3 million shares for the three months ended June 30, 2023.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $7 million of costs related to completed divestitures; $5 million loss related to Argentina hyperinflationary adjustment; $5 million loss on pension settlement; $2 million related to expenses for certain legal proceedings; $4 million of fire-related recoveries and $2 million gain due to changes in fair value of investment. Includes $14 million of income tax expense that results from amortization of a prior year normalized tax benefit.
[2]
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.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per share amounts)
Six Months Ended June 30, 2024
GAAP
Restructuring and restructuring- related costs
Acquisition amortization
Transaction costs and other [1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
3,686
$
—
$
—
$
—
$
3,686
Cost of products sold
2,483
(15
)
—
(6
)
2,462
Gross profit
1,203
15
—
6
1,224
32.6
%
33.2
%
Selling, general and administrative expenses
982
(8
)
(50
)
5
929
26.6
%
25.2
%
Restructuring costs, net
36
(36
)
—
—
—
Impairment of goodwill, intangibles and other assets
6
(6
)
—
—
—
Operating income
179
65
50
1
295
4.9
%
8.0
%
Non-operating expense
155
—
—
—
155
Income before income taxes
24
65
50
1
140
Income tax provision (benefit) [2]
(12
)
22
6
(25
)
(9
)
Net income
$
36
$
43
$
44
$
26
$
149
Diluted earnings per share **
$
0.09
$
0.10
$
0.11
$
0.06
$
0.36
*
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 417.9 million shares for the six months ended June 30, 2024.
Totals may not add due to rounding.
[1]
Transaction costs and other includes an $8 million loss related to Argentina devaluation and hyperinflationary adjustment; $3 million and $2 million related to accelerated amortization and write-off of other assets, respectively, associated with 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 $4 million gain related to completed divestitures. Includes $22 million of income tax expense that results from amortization of a prior year normalized tax benefit.
[2]
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.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per share amounts)
Six Months Ended June 30, 2023
GAAP
Restructuring and restructuring- related costs
Acquisition amortization and impairment
Transaction costs and other [1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
4,009
$
—
$
—
$
—
$
4,009
Cost of products sold
2,898
(31
)
—
(5
)
2,862
Gross profit
1,111
31
—
5
1,147
27.7
%
28.6
%
Selling, general and administrative expenses
956
1
(38
)
(16
)
903
23.8
%
22.5
%
Restructuring costs, net
60
(60
)
—
—
—
Impairment of goodwill, intangibles and other assets
11
—
(11
)
—
—
Operating income
84
90
49
21
244
2.1
%
6.1
%
Non-operating (income) expense
165
—
—
(11
)
154
Income (loss) before income taxes
(81
)
90
49
32
90
Income tax provision (benefit) [2]
3
22
11
(21
)
15
Net income (loss)
$
(84
)
$
68
$
38
$
53
$
75
Diluted earnings (loss) per share **
$
(0.20
)
$
0.16
$
0.09
$
0.13
$
0.18
*
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 415.2 million shares for the six months ended June 30, 2023.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $10 million related to expenses for certain legal proceedings; $10 million related to Argentina hyperinflationary adjustments; $7 million of costs related to completed divestitures; $5 million loss on pension settlement; $3 million of fire-related losses, net of recoveries; $2 million gain due to changes in fair value of investments and reversal of $1 million to true-up an indirect tax reserve for an international entity. Includes $23 million of income tax expense that results from amortization of a prior year normalized tax benefit.
[2]
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.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT REPORTING
(Amounts in millions)
Three Months Ended June 30, 2024
Three Months Ended June 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 [2]
Normalized Operating Income (Loss)
Normalized Operating Margin
Normalized
Net Sales
Operating Income
Net Sales
Net Sales
$
%
$
%
Home and Commercial Solutions
$
962
$
48
5.0
%
$
23
$
71
7.4
%
$
1,058
$
(21
)
(2.0
)%
$
44
$
23
2.2
%
$
(96
)
(9.1
)%
$
48
NM
Learning and Development
813
205
25.2
%
7
212
26.1
%
813
188
23.1
%
11
199
24.5
%
—
—
%
13
6.5
%
Outdoor and Recreation
258
(11
)
(4.3
)%
10
(1
)
(0.4
)%
333
5
1.5
%
9
14
4.2
%
(75
)
(22.5
)%
(15
)
NM
Corporate
—
(79
)
—
%
16
(63
)
—
%
—
(52
)
—
%
17
(35
)
—
%
—
—
%
(28
)
(80.0
)%
$
2,033
$
163
8.0
%
$
56
$
219
10.8
%
$
2,204
$
120
5.4
%
$
81
$
201
9.1
%
$
(171
)
(7.8
)%
$
18
9.0
%
*NM - NOT MEANINGFUL
[1]
The three months ended June 30, 2024 normalized items consist of $26 million of restructuring and restructuring-related charges (including $6 million impairment of other assets); $25 million of acquisition amortization costs; $2 million loss related to Argentina hyperinflationary adjustment; $1 million and $2 million related to accelerated amortization and write-off of other assets, respectively, associated with integration projects.
[2]
The three months ended June 30, 2023 normalized items consist of $39 million of restructuring and restructuring-related charges; $19 million of acquisition amortization costs; $11 million impairment of an indefinite-lived tradename in the Home and Commercial Solutions segment and other assets; $7 million of costs related to completed divestitures; $3 million of Argentina hyperinflationary adjustment and $2 million related to expenses for certain legal proceedings.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT REPORTING
(Amounts in millions)
Six Months Ended June 30, 2024
Six Months Ended June 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 [2]
Normalized Operating Income (Loss)
Normalized Operating Margin
Normalized Operating
Net Sales
Income (Loss)
Net Sales
Net Sales
$
%
$
%
Home and Commercial Solutions
$
1,855
$
64
3.5
%
$
48
$
112
6.0
%
$
2,029
$
(58
)
(2.9
)%
$
77
$
19
0.9
%
$
(174
)
(8.6
)%
$
93
NM
Learning and Development
1,372
299
21.8
%
17
316
23.0
%
1,377
260
18.9
%
21
281
20.4
%
(5
)
(0.4
)%
35
12.5
%
Outdoor and Recreation
459
(29
)
(6.3
)%
18
(11
)
(2.4
)%
603
4
0.7
%
23
27
4.5
%
(144
)
(23.9
)%
(38
)
NM
Corporate
—
(155
)
—
%
33
(122
)
—
%
—
(122
)
—
%
39
(83
)
—
%
—
—
%
(39
)
(47.0
)%
$
3,686
$
179
4.9
%
$
116
$
295
8.0
%
$
4,009
$
84
2.1
%
$
160
$
244
6.1
%
$
(323
)
(8.1
)%
$
51
20.9
%
* NM - NOT MEANINGFUL
[1]
The six months ended June 30, 2024 normalized items consist of $65 million of restructuring and restructuring-related charges (including $6 million impairment of other assets); $50 million of acquisition amortization costs; $6 million loss related to Argentina hyperinflationary adjustment; $3 million and $2 million related to accelerated amortization and write-off of other assets, respectively, associated with 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 six months ended June 30, 2023 normalized items consist of $90 million of restructuring and restructuring-related charges; $38 million of acquisition amortization costs; $11 million impairment of an indefinite-lived tradename in the Home and Commercial Solutions segment and other assets; $10 million related to expenses for certain legal proceedings; $7 million of costs related to completed divestitures; $5 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 June 30, 2024
Six Months Ended June 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
(9.1
)%
0.8
%
4.0
%
(4.3
)%
(8.6
)%
0.8
%
3.5
%
(4.3
)%
Learning and Development
—
%
—
%
1.5
%
1.5
%
(0.4
)%
—
%
2.0
%
1.6
%
Outdoor and Recreation
(22.5
)%
0.7
%
3.6
%
(18.2
)%
(23.9
)%
0.8
%
4.0
%
(19.1
)%
Total Company
(7.8
)%
0.6
%
3.0
%
(4.2
)%
(8.1
)%
0.6
%
3.0
%
(4.5
)%
CORE SALES GROWTH BY GEOGRAPHY
Three Months Ended June 30, 2024
Six Months Ended June 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
(7.2
)%
0.6
%
0.1
%
(6.5
)%
(8.0
)%
0.5
%
0.1
%
(7.4
)%
International
(9.0
)%
0.3
%
9.2
%
0.5
%
(8.1
)%
0.4
%
9.0
%
1.3
%
Total Company
(7.8
)%
0.6
%
3.0
%
(4.2
)%
(8.1
)%
0.6
%
3.0
%
(4.5
)%
[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 June 30,
Change
Six Months Ended June 30,
Change
2024
2023
$
%
2024
2023
$
%
Net income (loss) [1]
$
45
$
18
$
27
NM
$
36
$
(84
)
$
120
NM
Restructuring and restructuring-related costs
45
30
43
68
Acquisition amortization and impairment
45
24
44
38
Transaction costs and other (income) expense, net
16
29
26
53
Total normalized items, net of tax [1]
106
83
113
159
NORMALIZED NET INCOME [1]
151
101
149
75
Normalized income tax [1]
(14
)
16
(9
)
15
Interest expense, net [2]
78
76
148
144
Normalized depreciation and amortization [1] [3] [4]
52
56
106
113
Stock-based compensation [3]
17
9
33
20
NORMALIZED EBITDA [5]
$
284
$
258
$
26
10.1
%
$
427
$
367
$
60
16.3
%
*NM - NOT MEANINGFUL
[1]
Refer to “Reconciliation of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items” for the three and six months ended June 30, 2024 and 2023 in this release.
[2]
Refer to “Condensed Consolidated Statements of Operations (Unaudited)” for the three and six months ended June 30, 2024 and 2023 in this release.
[3]
Refer to "Consolidated Statement of Cash Flows (Unaudited) for the six months ended June 30, 2024 and 2023 in this release.
[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 June 30, 2024 and 2023, excludes $25 million and $19 million, respectively, of amortization of acquired intangibles, and $2 million and $3 million, respectively, of accelerated depreciation and amortization associated with integration projects and restructuring-related activities. For the six months ended June 30, 2024 and 2023, excludes $50 million and $38 million, respectively, of amortization of acquired intangibles, and $8 million for both periods, of accelerated depreciation and amortization associated with integration projects and restructuring-related activities.
[5]
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)
June 30, 2024
December 31, 2023 [2]
June 30, 2023
NET DEBT RECONCILIATION:
Short-term debt and current portion of long-term debt
$
983
$
329
$
597
Long-term debt
4,059
4,575
4,753
Gross debt
5,042
4,904
5,350
Less: Cash and cash equivalents
382
332
317
NET DEBT [1]
$
4,660
$
4,572
$
5,033
Net loss [3]
$
(268
)
$
(388
)
$
(314
)
Restructuring and restructuring-related costs
128
153
85
Acquisition amortization and impairment
382
376
471
Transaction costs and other (income) expense, net
162
189
106
Total normalized items, net of tax [3]
672
718
662
NORMALIZED NET INCOME
404
330
348
Normalized income tax [3]
(92
)
(68
)
(47
)
Interest expense, net [3]
287
283
265
Normalized depreciation and amortization [3] [4]
220
227
226
Stock-based compensation [3] [5]
63
50
9
NORMALIZED EBITDA
$
882
$
822
$
801
[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 June 30, 2024, refer to “Reconciliation of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items” for the three months ended June 30, 2024, March 31, 2024, December 31, 2023 and September 30, 2023 in this release and on the Company’s Forms 8-K furnished on April 26, 2024, February 9, 2024 and October 27, 2023, respectively. For the trailing-twelve months ended June 30, 2023, refer to “Reconciliation of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items” for the three months ended June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022 in this release and on the Company’s Forms 8-K furnished on April 26, 2024, February 9, 2024 and October 27, 2023, respectively.
[4]
For the trailing-twelve months ended June 30, 2024, normalized depreciation and amortization excludes the following items: (a) acquisition amortization expense of $88 million associated with intangible assets recognized in purchase accounting; and (b) $31 million of accelerated depreciation and amortization 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 June 30, 2024, March 31, 2024, December 31, 2023 and September 30, 2023 in this release and on the Company’s Forms 8-K furnished on April 26, 2024, February 9, 2024 and October 27, 2023, respectively. For the trailing-twelve months ended June 30, 2023, normalized depreciation and amortization excludes the following items: (a) acquisition amortization expense of $70 million associated with intangible assets recognized in purchase accounting; and (b) $12 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 June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022 in this release and on the Company’s Forms 8-K furnished on April 26, 2024, February 9, 2024 and October 27, 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 June 30, 2024, December 31, 2023 and June 30, 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
September 30, 2024
Twelve Months Ending
December 31, 2024
Estimated net sales change (GAAP)
(6
)%
to
(4
)%
(7
)%
to
(6
)%
Estimated currency impact [1] and divestitures [2], net
~4%
~3%
Core sales change (NON-GAAP) [3]
(2
)%
to
0
%
(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/20240726614970/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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