Newell's (NWL) Q2 Earnings Beat Mark, Soft Core Sales Hurt

Core Insights - The company reported a 7.8% year-over-year decline in net sales to $2,033 million, primarily due to lower core sales, business exits, and adverse foreign exchange impacts, falling short of the consensus estimate of $2,043 million [1] - Core sales decreased by 4.2% year over year, although pricing strategies in international markets helped mitigate some inflation and currency effects [1] Segment Performance - The Learning and Development segment achieved net sales of $813 million, matching the previous year's quarter and exceeding the consensus estimate of $781.2 million, with core sales growing by 1.5% despite foreign exchange challenges [3] - The Outdoor and Recreation segment saw a significant decline in net sales, down 22.5% year over year to $258 million, which was below the consensus mark of $271.9 million, with core sales falling 18.2% [4] - The Home & Commercial Solutions segment reported net sales of $962 million, a 9.1% decrease from the prior year, missing the Zacks Consensus Estimate of $981.8 million, with core sales down 4.3% due to declines across all three businesses [12] Financial Overview - The company ended the quarter with cash and cash equivalents of $382 million, long-term debt of $4.1 billion, and shareholders' equity of $3.1 billion, while providing $64 million in cash for operating activities year-to-date [13] - The normalized earnings per share (EPS) increased to 36 cents from 24 cents in the previous year, surpassing the consensus estimate of 21 cents [10] - The normalized gross margin expanded by 490 basis points year over year to 34.8%, and the normalized operating margin increased by 170 basis points to 10.8% [11] Future Outlook - The company anticipates operating cash flow to be between $450 million and $550 million, including $150 million to $200 million in cash payments related to restructuring efforts [5] - For 2024, the company expects sales to decline by 6-7% year over year, with core sales projected to dip by 3-4%, an adjustment from earlier estimates [14] - The forecast for the third quarter includes a net sales decline of 4-6% and core sales expected to remain flat to a 2% drop, with a normalized operating margin of 8.3-8.8% and normalized EPS of 14-17 cents [15]