Newell Brands(US:NWL)2025-08-01 13:15PART I. FINANCIAL INFORMATION Financial Statements The company's unaudited statements show decreased sales and a significant drop in year-to-date net income Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Q2 net sales declined 4.8% to $1.94 billion, while six-month net income fell sharply by 75% to $9 million Key Financial Metrics | Financial Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,935M | $2,033M | $3,501M | $3,686M | | Gross profit | $685M | $699M | $1,188M | $1,203M | | Operating income | $171M | $163M | $192M | $179M | | Net income | $46M | $45M | $9M | $36M | | Diluted EPS | $0.11 | $0.11 | $0.02 | $0.09 | Condensed Consolidated Balance Sheets Total assets increased to $11.51 billion, while total stockholders' equity slightly decreased to $2.69 billion Balance Sheet Summary | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $3,111M | $2,775M | | Total assets | $11,507M | $11,004M | | Total current liabilities | $2,779M | $2,437M | | Long-term debt | $4,535M | $4,508M | | Total liabilities | $8,815M | $8,253M | | Total stockholders' equity | $2,692M | $2,751M | Condensed Consolidated Statements of Cash Flows Net cash from operations turned negative to ($271 million) for the first six months, a reversal from the prior year Cash Flow Summary | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($271M) | $64M | | Net cash used in investing activities | ($92M) | ($84M) | | Net cash provided by financing activities | $382M | $78M | | Increase in cash, cash equivalents and restricted cash | $23M | $44M | Notes to Condensed Consolidated Financial Statements Notes detail the 'Realignment Plan', a major debt refinancing, credit downgrades, and segment performance - The company is implementing an 'Organizational Realignment Plan' announced in January 2024 to strengthen commercial capabilities and reduce costs, with estimated restructuring charges between $75 million and $90 million31 - In May 2025, the company issued $1.25 billion of 8.500% senior notes due 2028 and used the proceeds to redeem its 4.200% senior notes due 2026, resulting in a $13 million loss on debt extinguishment4041 - During Q2 2025, Moody's and S&P downgraded the company's senior unsecured debt rating, which will increase annual interest expense by about $5 million44 Segment Performance | Segment Performance (Three Months Ended June 30) | Net Sales 2025 | Net Sales 2024 | % Change | Operating Income 2025 | Operating Income 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Home and Commercial Solutions | $892M | $962M | (7.3)% | $24M | $48M | | Learning and Development | $809M | $813M | (0.5)% | $202M | $205M | | Outdoor and Recreation | $234M | $258M | (9.3)% | $8M | ($11M) | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses a 4.8% Q2 sales decline, an ongoing turnaround plan, and negative operating cash flow Overview and Business Strategy The company is executing a multi-year turnaround plan focused on growth, margin expansion, and cash flow - The company's key priorities for 2025 are returning to profitable top line growth, expanding margins, deleveraging the balance sheet, driving operational excellence, and strengthening its culture99 - A key initiative is the 'Realignment Plan,' which involves creating a cross-functional brand management organization and centralizing functions to drive efficiency under a 'One Newell' approach97101 Recent Developments The company is managing new U.S. tariffs, a major debt refinancing, and recent credit rating downgrades - The company anticipates an incremental cash tariff cost of approximately $155 million in 2025 due to new U.S. tariffs, prior to any mitigating actions105 - The company completed a debt offering of $1.25 billion of 8.500% senior notes due 2028 and used the proceeds to redeem its 4.200% senior notes due 2026106 - Debt rating downgrades by Moody's and S&P in Q2 2025 will increase the company's annualized interest expense by approximately $5 million, effective in the fourth quarter107 Results of Operations Q2 net sales fell 4.8% to $1.94 billion, though gross margin improved and operating income increased Consolidated Results (Q2) | Consolidated Results (Three Months Ended June 30) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $1,935M | $2,033M | (4.8)% | | Gross margin | 35.4% | 34.4% | +100 bps | | Operating income | $171M | $163M | 4.9% | | Net income | $46M | $45M | 2.2% | Consolidated Results (YTD) | Consolidated Results (Six Months Ended June 30) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $3,501M | $3,686M | (5.0)% | | Gross margin | 33.9% | 32.6% | +130 bps | | Operating income | $192M | $179M | 7.3% | | Net income | $9M | $36M | (75.0)% | Liquidity and Capital Resources Operating cash flow was negative $271 million for the first half, a $335 million decline from the prior year Cash Flow Summary | Cash Flow Summary (Six Months Ended June 30) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Cash from operating activities | ($271M) | $64M | ($335M) | | Cash used in investing activities | ($92M) | ($84M) | ($8M) | | Cash from financing activities | $382M | $78M | $304M | - At June 30, 2025, the company had net availability of approximately $459 million under its $1.0 billion Credit Revolver145 Quantitative and Qualitative Disclosures about Market Risk There were no material changes to the company's market risk disclosures from its 2024 Annual Report - There have been no material changes from the market risk information previously reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024151 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025153 - No material changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2025154 PART II. OTHER INFORMATION Legal Proceedings Information on legal proceedings is incorporated by reference from the financial statement footnotes - Information on legal proceedings is incorporated by reference from the Notes to Condensed Consolidated Financial Statements (Footnote 14) in Part I of this report156 Risk Factors There have been no material changes to the company's risk factors since its 2024 Annual Report - There have been no material changes in risk factors from those disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024157 Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities The company purchased 81,254 shares to satisfy employee tax obligations from vested stock units Issuer Purchases of Equity Securities | Calendar Month | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April | — | $ — | | May | 34,548 | $5.85 | | June | 46,706 | $5.30 | | Total | 81,254 | $5.54 | - Shares purchased during the quarter were acquired to satisfy employees' tax withholding obligations in connection with vesting of restricted stock units, not as part of a publicly announced buyback plan158 Other Information No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement this quarter - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter159 Exhibits This section lists exhibits filed with the report, including material contracts and required certifications