Newell Brands(US:NWL)2021-10-29 19:17Financial Data and Key Metrics Changes - Core sales grew 15.2% year-over-year, with normalized operating profit improving over 21% and normalized earnings per share increasing about 14% [5][29]. - Net sales increased 3.3% year-over-year to $2.8 billion, driven by a core sales increase of 3.2% [48]. - Normalized gross margin contracted 330 basis points year-over-year to 30.6%, while normalized operating margin decreased to 11.4% from 14.9% a year ago [49][50]. Business Line Data and Key Metrics Changes - Writing business saw double-digit core sales growth, driven by strong performance in the U.S. and international markets [14]. - Baby business also experienced double-digit core sales growth, supported by expanded distribution and e-commerce strength [16]. - Home appliances core sales grew 1.9%, primarily driven by Latin America, while home solutions segment saw a decline of 3.6% [51]. Market Data and Key Metrics Changes - Domestic consumption trends remained ahead of 2020 and 2019 levels, despite supply constraints [10][11]. - Latin America delivered another quarter of double-digit growth, showcasing strong performance in the region [11]. - Net sales were 8.5% above the third quarter of 2019, with each segment exceeding levels from two years ago [52]. Company Strategy and Development Direction - The company is focused on improving margins in 2022 through pricing optimization, productivity improvements, and operational efficiencies [36][37]. - A new supply chain initiative, Project Ovid, aims to consolidate 23 supply chains into a single integrated supply chain to enhance operational efficiency [46][93]. - The company is committed to leveraging consumer insights and innovation to drive growth across its diverse portfolio [32][38]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant inflation and supply chain disruptions impacting costs, with inflation expected to represent 9% of full-year cost of goods sold [41][40]. - Despite challenges, the company raised its normalized EPS guidance for the year, reflecting confidence in operational execution [42][55]. - The outlook for 2022 anticipates stronger margin performance due to carryover pricing and productivity improvements [62]. Other Important Information - The company redeemed approximately EUR300 million of 3.75% notes due in October 2021 and plans to redeem remaining senior notes [54]. - The leverage ratio improved to 3.1 times, down from 3.9 times a year ago, reflecting proactive debt reduction efforts [53][55]. Q&A Session Summary Question: How did the writing business perform versus expectations? - Management noted that the writing business performed very well, exceeding expectations due to strong back-to-school sales and effective merchandising strategies [65][71]. Question: Are there concerns about inventory levels for the holiday season? - Management expressed confidence in inventory levels, stating that early adjustments to planning allowed for sufficient stock to meet expected demand [72][74]. Question: What is the outlook for pricing and margin progression? - Management indicated that pricing actions are in place across all business units, with expectations for significant margin growth in 2022 as pricing benefits materialize [80][111]. Question: Why is now the right time for Project Ovid? - Management explained that significant progress in SKU rationalization has positioned the company to consolidate supply chains effectively, enhancing service and cost efficiency [90][92]. Question: How does the company view the sales outlook for Q4? - Management acknowledged challenges due to high comps from the previous year but emphasized a focus on sustainable, profitable growth across the portfolio [101][103].