Newell Brands (NasdaqGS:NWL) Q3 2025 Earnings Call October 31, 2025 07:30 AM ET Speaker2Good morning and welcome to Newell Brands' third quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After a brief discussion by management, we will open up the call for questions. To ask a question, please press star one one. If your question has been answered and you'd like to remove yourself from the queue, press star one one again. In order to stay within the time scheduled ...

Financial Data and Key Metrics Changes - Normalized operating margin increased by 10 basis points year-over-year to 10.7%, with all three business segments showing positive results for the first time since 2022 [6][22] - Normalized gross margin rose by 80 basis points to 35.6%, marking the highest rate in four years and the eighth consecutive quarter of year-over-year expansion [7][22] - Normalized earnings per share (EPS) reached $0.24, at the top end of the guidance range, despite a higher than expected tax rate [8][22] - Core sales for the second quarter decreased by 4.4%, while net sales contracted by 4.8% due to unfavorable foreign exchange and business exits [21][22] Business Line Data and Key Metrics Changes - The international business, accounting for nearly 40% of total sales, achieved positive core sales growth for the sixth consecutive quarter [22] - The Writing and Home Fragrance segments reported growth in core sales, while the Baby business also showed positive trends [22][49] Market Data and Key Metrics Changes - Market growth was estimated to be down in low single digits for 2025, with Newell Brands largely maintaining market share during the first half of the year [9][10] - The company expects subdued market growth as certain consumer cohorts remain under pressure [10] Company Strategy and Development Direction - The company is focused on improving front-end capabilities and has strengthened distribution, innovation, and marketing plans for the second half of the year [10][11] - Newell Brands is positioned to benefit from global tariff-driven trade realignment, leveraging its North American manufacturing capabilities [11][12] - A significant investment in marketing is planned for 2025, with expectations of higher returns on investment due to improved marketing capabilities [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the mid- to long-term trajectory of the U.S. and global economy, while remaining cautious in the short term due to inflation and high interest rates [17][18] - The company updated its core sales guidance to reflect category growth expectations at the low end of the prior range, offset by better foreign exchange [18][27] Other Important Information - The company redeemed $1.25 billion in outstanding bonds, indicating strong investor support for its corporate strategy [24] - ERP harmonization efforts are on track to be completed by 2026, following successful integrations in the second quarter [25] Q&A Session Summary Question: Comments on back-to-school performance and exit rates across categories - Management noted that it is early to assess back-to-school performance but expressed confidence in sell-in and setup heading into the season, with record high fill rates and secured exclusivity on key products [36][38] Question: Core sales moving in the wrong direction despite innovation - Management highlighted sequential progress in core sales growth, with improvements noted in specific segments like Writing and Baby, while acknowledging challenges in broader category growth dynamics [47][48] Question: Drivers of expected core sales improvement in Q4 - Management indicated that tariff distribution wins and significant innovation launches, particularly for Yankee Candle, are expected to drive improvement in Q4 [56][58] Question: Impact of retailer inventory destocking and competitive pricing response - Management observed some impact from inventory destocking due to direct import issues but noted that overall retail inventories remain in good shape [82][83]

Financial Data and Key Metrics Changes - Normalized operating margin increased by 10 basis points year-over-year to 10.7%, with all three business segments showing positive results for the first time since 2022 [6][21] - Normalized gross margin rose by 80 basis points to 35.6%, marking the highest rate in four years and the eighth consecutive quarter of year-over-year expansion [7][21] - Normalized earnings per share (EPS) reached $0.24, at the top end of the guidance range, despite a higher than expected tax rate [7][23] - Core sales for the second quarter decreased by 4.4%, while net sales contracted by 4.8% due to unfavorable foreign exchange and business exits [20][21] - First half core sales for 2025 were down 3.4%, an improvement compared to the previous year [8] Business Line Data and Key Metrics Changes - The international business, accounting for nearly 40% of total sales, achieved positive core sales growth for the sixth consecutive quarter [20] - The Writing and Home Fragrance businesses both experienced core sales growth [21] - The Baby business showed strong core sales growth in the first quarter, with continued positive trends in the second quarter [39] Market Data and Key Metrics Changes - Market growth was estimated to be down in low single digits for 2025, with Newell Brands largely maintaining market share during the first half of the year [8] - The company noted that certain consumer cohorts remain under pressure, impacting overall market growth expectations [9] Company Strategy and Development Direction - The company is focused on improving front-end capabilities and strengthening distribution, innovation, and marketing plans [9] - Newell Brands is positioned to benefit from global tariff-driven trade realignment, with over half of U.S. sales manufactured domestically [10] - A significant investment of nearly $2 billion in the North American production system since 2017 has provided untapped capacity to meet strategic customer needs [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the mid- to long-term trajectory of the U.S. and global economy, while remaining cautious in the short term due to inflation and high interest rates [15][16] - The company updated its core sales guidance to reflect short-term category softness, while also anticipating better foreign exchange impacts [17] - Management expects sequential top-line progress to resume, driven by distribution gains, innovation launches, and marketing programs [19] Other Important Information - The company fully redeemed $1.25 billion of outstanding bonds, indicating strong investor support for its corporate strategy [24] - Two additional ERP integrations were successfully completed, moving towards a harmonized system by 2026 [25] Q&A Session Summary Question: Can you comment on the back-to-school category performance and exit rates across all categories? - Management indicated it is early to assess consumer off-take for back-to-school, but they feel confident about their setup and sell-in [36][37] Question: With core sales moving in the wrong direction, what is driving that? - Management noted sequential progress in core sales growth, with improvements from previous periods, and emphasized the timing of retailer shipments and category growth dynamics [46][49] Question: What drives the expected material inflection in Q4 core sales? - Management highlighted tariff distribution wins, significant innovation launches, and retailer shelf resets as key drivers for expected improvements in Q4 [57] Question: How is the retailer environment affecting inventory levels and repurchasing? - Management observed some impact from inventory destocking, particularly in direct import business, but overall retail inventories remain in good shape [80][81]