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 net sales were $2.0 billion, a decline of 7.8
percent compared with the prior year period. Core sales declined
4.2 percent compared with the prior year period.
- Second quarter reported gross margin increased to 34.4 percent
compared with 28.5 percent in the prior year period. Normalized
gross margin increased to 34.8 percent compared with 29.9 percent
in the prior year period.
- Second quarter reported operating margin increased to 8.0
percent compared with 5.4 percent in the prior year period.
Normalized operating margin increased to 10.8 percent compared with
9.1 percent in the prior year period.
- Second quarter 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 increased to $284 million compared with
$258 million in the prior year period.
- Second quarter 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.
- Year-to-date operating cash flow was $64 million compared with
$277 million in the prior year period.
- The company raised its full year 2024 outlook.
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:
- 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 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
Newell Brands (NASDAQ:NWL)
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