Financial Data and Key Metrics Changes - The company has seen a significant improvement in core sales growth compared to two and a half years ago, although it is still negative this year, it is less negative than in previous years [5] - Gross margin has increased by almost 600 basis points over the past two years, which is a notable achievement [5] - The net leverage ratio has been reduced, and the balance sheet has improved, contributing to strong cash flow [5] Business Line Data and Key Metrics Changes - The company has established a new operating model focused on global segments managing P&L for brands, which has led to improved core sales growth [4] - The company has ramped up its innovation pipeline, with a significant increase in Tier one and Tier two innovations, leading to improved distribution and market share [32][33] Market Data and Key Metrics Changes - The company expects category growth to decline by about 2% this year, with no catalysts for improvement in the second half [9][10] - The lower-income and middle-income consumers are under pressure, leading to a focus on value, while high-income consumers remain strong [11][12] Company Strategy and Development Direction - The company has implemented a new strategy since June 2023, focusing on capability improvement and a new operating model [3][4] - The company is optimistic about category growth improving next year, driven by a potential decrease in interest rates and positive GDP growth [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing pressure on consumers, particularly those in lower and middle-income brackets, but believes that focusing on value will help navigate the environment [51][52] - There is cautious optimism regarding the macro environment, with expectations for improved category growth next year [13] Other Important Information - The company has created a trade expertise center to manage tariff impacts effectively, reducing reliance on China for sourcing [14][15] - The company has taken proactive measures to mitigate tariff impacts, including price adjustments and overhead cost management [17][18] Q&A Session Summary Question: What drove the change in category growth expectations? - The company reset its guidance to reflect sustained category growth decline due to tariffs and consumer dynamics, with no recent changes observed [10] Question: How is the back-to-school season performing? - The back-to-school season has shown flat category growth, with no significant price increases observed, indicating a stable environment [41][42] Question: What are the expectations for Q4 core sales? - Management expects Q4 to be significantly better than Q3 due to stronger innovation, a one-time inventory reduction impact in Q3, and pronounced tariff advantage selling [50] Question: How does the company view divestitures? - The company does not see divestitures as a path to value creation, believing it can win in its current categories, including Outdoor and Rec [68][70] Question: Will acquisitions be considered in the future? - While near-term acquisitions are unlikely, the company is open to medium-sized acquisitions in the future to create value [73][74]

Financial Data and Key Metrics Changes - The company has seen a significant improvement in core sales growth compared to two and a half years ago, although it remains negative this year, it is less negative than in previous years [5] - Gross margin has increased by almost 600 basis points over the past two years, indicating strong financial performance [5] - The net leverage ratio has been reduced, and the balance sheet has improved, contributing to strong cash flow [5] Business Line Data and Key Metrics Changes - The company has established global segments to manage P&L for brands, focusing on brand management and scaling supply chain operations [4] - The Writing business, a key segment, has shown flat category growth this year compared to last year, which is seen as a positive sign [43] Market Data and Key Metrics Changes - The company expects category growth rates to decline by about 2% this year, with no catalysts for improvement in the second half [9] - Lower-income consumers are under pressure, leading to a demand for more value, while high-income consumers remain strong [10][11] Company Strategy and Development Direction - A new strategy was implemented in June 2023, focusing on capability improvement and a new operating model [4] - The company is optimistic about category growth improving next year, driven by a potential decrease in interest rates and positive GDP growth [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing pressure on consumers, particularly in lower and middle-income brackets, but believes that focusing on value will help navigate the current environment [53] - There is cautious optimism for improved category growth next year, with expectations that the company can outperform the market if it executes well [56] Other Important Information - The company has created a trade expertise center to manage tariff impacts effectively, reducing reliance on Chinese sourcing from 35% to less than 10% [14] - The company has secured $35 million in incremental sales from tariff-advantaged categories, with expectations for further growth next year [21] Q&A Session Summary Question: What drove the change in category growth expectations? - The company reset its guidance to reflect sustained category growth rates of minus 2% for the year, based on first-half performance and lack of consumer catalysts [9] Question: How is the company addressing tariff impacts? - The company has implemented pricing strategies and cost management to offset the $155 million cash impact from tariffs, with pricing fully in place [16][19] Question: What is the outlook for the back-to-school season? - The back-to-school season has shown flat category growth, with no significant price increases observed, indicating a stable market environment [44] Question: What are the expectations for Q4? - Management expects Q4 to be significantly better than Q3 due to stronger innovation, a one-time inventory reduction impact in Q3, and tariff advantages becoming more pronounced [52] Question: How does the company view potential divestitures? - The company does not see a path for divestitures to create value, believing it can win in its current categories, including Outdoor and Rec [72] Question: Will acquisitions be considered in the future? - While near-term acquisitions are unlikely, the company is open to medium-sized acquisitions in the future to create synergies [76] Question: What excites management about the company's future? - Management is excited about the progress made in complexity reduction and the implementation of AI to improve capabilities and drive top-line growth [78]

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]

Core Insights - The refreshed collection of Yankee Candle emphasizes the emotional connection of fragrance, aiming to help consumers rediscover meaningful moments through scent [1][2] - The relaunch is a significant evolution for Yankee Candle, focusing on elevated and personal experiences for today's fragrance lovers [2] - The brand has partnered with actress Brittany Snow to enhance its emotional storytelling through fragrance [3] Product Enhancements - The new portfolio includes 95 expertly crafted fragrances designed to evoke joy and connection [1] - Improvements include a premium plant wax blend for better burn and fragrance throw, and a modernized product design for a cohesive look [7] - The candles are engineered to reduce soot and tunneling, ensuring a consistent burn experience [7] Marketing and Events - Yankee Candle will host the "Love at First Light Event" on August 16, 2025, offering free candles to Fragrance Family Rewards members [4] - The brand encourages consumers to explore its full range of fragrances online and through social media platforms [5] Company Background - Yankee Candle Company, Inc. has a 50-year history of creating long-lasting home fragrances and is a subsidiary of Newell Brands Inc. [6] - The company sells its products through various channels, including mass and specialty retailers, and has an international wholesale network [6][9]

Summary of Newell Brands Conference Call Company Overview - Newell Brands is a $7.6 billion company with approximately $900 million in trailing twelve-month EBITDA [4][46] - The company operates 25 brands that account for 90% of sales, with 62% of revenue generated in the US and 38% internationally [4][5] Core Business Segments - Newell's portfolio is divided into three segments: Home and Commercial, Learning and Development, and Outdoor and Recreation [5] - Key brands include Rubbermaid, Graco, Coleman, Sharpie, Papermate, Yankee Candle, and Oster [5] Strategic Initiatives - A new corporate strategy was implemented in February 2023, focusing on capability assessment and operational improvements [6][46] - The strategy aims to enhance consumer understanding, innovation, brand building, and retail expertise [9][10] - Significant changes included a consumer-first global brand management organization and a centralized operating model [11][12] Financial Performance - Gross margins have improved for seven consecutive quarters, reaching 34.4%, a 610 basis point increase [47][48] - The company has seen strong operating cash flow and expects continued value creation [46][47] - Normalized EBITDA growth of over 15% was reported, with a trailing twelve-month EBITDA of $900 million [59] Market Trends and Consumer Insights - Core sales trends have improved, particularly in the Learning and Development segment and international markets, which have shown positive growth for five consecutive quarters [46][47] - The company aims to grow faster than market growth by focusing on innovation and targeting higher-income consumers [66][67] Supply Chain and Operational Efficiency - Newell has reduced its supplier base by approximately 45% since 2020, aiming for further reductions to improve procurement efficiency [51][52] - The global fill rate exceeded 95%, the highest in the company's history, with a significant reduction in customer penalties and shortages [53][54] - The company has invested over $2 billion in capital to automate its 42 manufacturing plants, improving efficiency [42][49] Innovation and Product Development - New product launches include innovations in the Sharpie and Rubbermaid brands, with a focus on higher price point segments [25][34][35] - The company is actively pursuing new market segments, such as wet erase markers and premium candles, to drive growth [27][34] Future Outlook - Newell Brands is positioned for continued growth with a focus on operational excellence, innovation, and market share expansion [46][62] - The company plans to maintain a dividend payout ratio of 30-35% while pursuing high-return internal growth opportunities [61] Additional Insights - The company has resumed purchases from China, particularly in the baby gear sector, while also gaining traction in tariff-advantaged categories [70][71] - Retailers are increasingly shifting towards US manufacturing to mitigate supply chain risks, which Newell is leveraging in its sales strategy [71]

Financial Data and Key Metrics Changes - The company reported a core sales decline of 2.1%, which was at the high end of the guidance range, reflecting new product innovation and some pricing benefits [27][32] - Normalized gross margin increased by 150 basis points to 32.5%, marking the seventh consecutive quarter of year-over-year improvement [28][34] - Normalized operating margin was 4.5%, exceeding the guidance range despite increased advertising and promotion investments [34] - The company recorded a normalized diluted earnings per share loss of $0.01, which was $0.05 to $0.08 above the guidance range [35] Business Line Data and Key Metrics Changes - The Learning and Development segment and the International business, which represent nearly 40% of total sales, posted positive core sales growth for the last five consecutive quarters [28][33] - The first quarter net sales included about 2.5 points of currency headwind and just over half a point from category exits [28][33] Market Data and Key Metrics Changes - The company maintained its net sales guidance for the year but moderated expectations for category growth from flat to down 1% to 2% due to lower consumer confidence levels [17][44] - The foreign exchange outlook improved by one to two percentage points based on current rates [19] Company Strategy and Development Direction - The company is focused on product innovation and has rebuilt its multiyear innovation funnel, with new products set to launch in the second half of the year [7][8] - The company believes it is well-positioned to benefit from global trade realignment due to proactive sourcing strategies and investments in domestic manufacturing [9][10] - The company plans to reduce dependency on sourced finished goods from China, aiming to lower this to 10% by the end of 2025 [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic operating environment and emphasized the importance of their domestic manufacturing capabilities [26][45] - The company expects to fully offset the impact of certain tariffs through proactive actions and has affirmed its 2025 financial outlook for net sales, normalized operating margin, and normalized earnings per share [41][45] - Management acknowledged the challenges posed by the additional 125% China tariff but indicated that they have plans to mitigate its impact [46] Other Important Information - The company has made significant investments in U.S. manufacturing, totaling nearly $2 billion since the 2017 Tax Cuts and Jobs Act, which has enhanced its competitive position [13][14] - The company has a strong pipeline of new products and is actively engaging with retailers to shift their sourcing from China to U.S. or Mexican manufacturing [66] Q&A Session Summary Question: Retail destocking and tariff mitigation efforts - Management noted that they have not seen significant changes in retailer inventory levels in Q1 and are adjusting their core sales guidance out of caution due to macroeconomic forecasts [52][53] - They have taken proactive actions to mitigate the impact of tariffs, particularly in the baby gear category, which is their biggest exposure [54][56] Question: Leveraging U.S. capacity and private label considerations - Management clarified that they are not set up to produce private label products but are encouraging retailers to replace private label items with their branded products, leveraging U.S. manufacturing advantages [63][66] Question: Guidance and market growth expectations - Management explained that while forecasting market growth is challenging, they believe providing guidance is important for clarity and that they have a plan to offset tariff impacts [86][89]

Financial Data and Key Metrics Changes - The company reported a core sales decline of 2.1%, which was at the high end of the guidance range, reflecting new product innovation and some pricing benefits [26][32] - Normalized gross margin increased by 150 basis points to 32.5%, marking the seventh consecutive quarter of year-over-year improvement [27][32] - Normalized operating margin was 4.5%, exceeding the guidance range despite increased advertising and promotion investments [32][33] - The company recorded a normalized diluted earnings per share loss of $0.01, which was $0.05 to $0.08 above the guidance range [33] Business Line Data and Key Metrics Changes - The Learning and Development segment and the International business, which represent nearly 40% of total sales, posted positive core sales growth for five consecutive quarters [26][32] - The first quarter net sales included about 2.5 points of currency headwind and just over half a point from category exits [27][32] Market Data and Key Metrics Changes - Over 60% of total sales were in the United States, with significant investments made in U.S. manufacturing, totaling nearly $2 billion since the 2017 Tax Cuts and Jobs Act [12][13] - The company plans to reduce U.S. sourced finished goods from China to 10% by the end of 2025 [11] Company Strategy and Development Direction - The company is focused on product innovation and has rebuilt its multiyear innovation funnel, with new products set to launch in the second half of the year [7][25] - The strategy includes leveraging U.S. manufacturing capabilities to mitigate tariff impacts and capitalize on competitive advantages [14][25] - The company is actively pursuing sales opportunities in categories where it has domestic production exempt from tariffs [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic operating environment and emphasized the potential for long-term gains despite short-term challenges [25][44] - The company is maintaining its net sales guidance for the year but moderating expectations for category growth from flat to down 1% to 2% due to lower consumer confidence [16][41] - Management highlighted that the number of categories with domestic production significantly exceeds those that are disadvantaged by tariffs [25][86] Other Important Information - The company has paused virtually all outstanding Chinese purchase orders in response to the new tariffs and is focusing on alternative sourcing solutions [22][23] - A significant portion of the baby gear business is exposed to tariffs, with management actively working on mitigation strategies [55][56] Q&A Session Summary Question: Retail destocking and tariff mitigation efforts - Management noted that core sales growth was at the high end of guidance and that they have not seen significant changes in retailer inventory levels in Q1 [50][52] - They have taken proactive actions to mitigate tariffs, particularly in the baby gear category, which is their most exposed segment [53][54] Question: Leveraging U.S. manufacturing capacity - Management clarified that they are not set up for private label production but are encouraging retailers to replace private label products with their branded products [63][64] Question: Guidance and market growth expectations - Management acknowledged the challenges in forecasting market growth but emphasized that the majority of their business is not significantly impacted by tariffs [84][86] Question: Sensitivity of China tariffs and impacts - The majority of the tariff impact is concentrated in the baby gear category, which is primarily sourced from China [93]