Net Sales Decline 9%; Core Sales Decline 9%
Gross Margin Improves Over 100 Basis Points Versus Prior Year
Year-to-Date Operating Cash Flow Increases Over $1.2 Billion Versus
Prior Year Updates Outlook for Full Year 2023
Newell Brands (NASDAQ: NWL) today announced its third quarter
2023 financial results.
Chris Peterson, Newell Brands President and Chief Executive
Officer, said, "Since introducing a new strategy in June, we have
been laser focused on implementing the organizational, operational
and cultural changes required to strengthen the company's front-end
consumer facing capabilities, while harnessing the scale and power
of One Newell. We have improved gross margin and strengthened
operating cash flow, which were the top two financial priorities we
established at the start of the year. The substantial progress we
are making gives me great confidence that our new strategy, which
focuses on our leading brands in top markets and puts consumer
understanding and insights at the center of everything we do, will
accelerate the company's performance and drive significant value
creation over time, despite a challenging macroeconomic
backdrop."
Mark Erceg, Newell Brands Chief Financial Officer, said, "During
the third quarter we improved the structural economics of the
business by increasing gross margin both sequentially and versus
last year. Year-to-date, we increased operating cash flow by more
than $1.2 billion and reduced net debt by nearly $400 million.
Based on these strong results, we expect gross margin will continue
to improve during the fourth quarter and we have raised our cash
flow outlook for the year, even as top line expectations and
earnings per share estimates have been tempered."
Third Quarter 2023 Executive
Summary
- Net sales were $2.0 billion, a decline of 9.1 percent compared
with the prior year period.
- Core sales declined 9.2 percent compared with the prior year
period.
- Reported gross margin was 30.3 percent compared with 29.2
percent in the prior year period.
- Normalized gross margin was 31.3 percent compared with 29.6
percent in the prior year period.
- Reported operating margin was negative 7.8 percent, including
the impact of a $263 million non-cash impairment charge, compared
with positive 1.8 percent in the prior year period, which included
the impact of a $148 million non-cash impairment charge.
- Normalized operating margin was 8.2 percent compared with 10.4
percent in the prior year period.
- Reported diluted loss per share was $0.53 compared with
reported diluted earnings per share of $0.05 in the prior year
period.
- Normalized diluted earnings per share were $0.39 compared with
$0.50 per share in the prior year period.
- Year-to-date operating cash flow increased by more than $1.2
billion to $679 million compared with outflow of $567 million in
the prior year period.
- The company updated its full year 2023 outlook for net sales
and normalized earnings per share to $8.02 billion to $8.09 billion
and $0.72 to $0.77, respectively. The company raised its outlook
for full year 2023 operating cash flow to $800 million to $900
million.
Third Quarter 2023 Operating
Results
Net sales were $2.0 billion, a 9.1 percent decline compared to
the prior year period, reflecting a core sales decrease of 9.2
percent and a slight headwind from category exits, partially offset
by the impact of favorable foreign exchange.
Reported gross margin was 30.3 percent compared with 29.2
percent in the prior year period, as the benefits from FUEL
productivity savings and pricing more than offset the impact of
fixed cost deleveraging, inflation and higher restructuring-related
charges. Normalized gross margin was 31.3 percent compared with
29.6 percent in the prior year period, marking an inflection point
in the company's normalized gross margin performance.
Reported operating loss was $159 million compared with operating
income of $40 million in the prior year period. Non-cash impairment
charges of $263 million and $148 million were incurred in the
current and prior year periods, respectively, related to goodwill
and intangible assets. Reported operating margin was negative 7.8
percent compared with positive 1.8 percent in the prior year
period, as the effect of lower net sales, inflation, restructuring
and related costs and the non-cash impairment charge more than
offset the contribution from pricing, FUEL productivity savings and
Project Phoenix savings. Normalized operating income was $167
million, or 8.2 percent of sales, compared with $234 million, or
10.4 percent of sales, in the prior year period.
Net interest expense was $69 million compared with $57 million
in the prior year period.
Reported tax benefit was $80 million compared with $60 million
in the prior year period. The normalized tax benefit was $73
million compared with $57 million in the prior year period.
The company reported a net loss of $218 million, or $0.53
diluted loss per share, compared with net income of $19 million, or
$0.05 diluted earnings per share, in the prior year period.
Normalized net income was $163 million, or $0.39 normalized
diluted earnings per share, compared with $208 million, or $0.50
normalized diluted earnings per share, in the prior year
period.
An explanation of non-GAAP measures disclosed in this release
and a reconciliation of these non-GAAP results to comparable GAAP
measures, if available, are included in the tables attached to this
release.
Balance Sheet and Cash
Flow
Year-to-date operating cash flow increased by more than $1.2
billion to $679 million compared with outflow of $567 million in
the prior year period, with the significant improvement largely
driven by working capital and a reduction in incentive compensation
payments, which more than offset the impact of lower operating
income and higher restructuring payments. The company continued to
reduce inventories, which declined nearly $900 million versus the
prior year period and nearly $200 million versus the second quarter
of 2023.
At the end of the third quarter, Newell Brands had cash and cash
equivalents of $396 million and net debt outstanding of $4.7
billion, as compared to $5.0 billion at the end of the second
quarter.
Third Quarter 2023 Operating Segment
Results
The Home & Commercial Solutions segment generated net sales
of $1.1 billion compared with $1.2 billion in the prior year
period, reflecting a core sales decline of 7.1 percent and the
impact of certain category exits, partially offset by the impact of
favorable foreign exchange. Core sales decreased in all three
businesses: Kitchen, Home Fragrance and Commercial. Reported
operating income was $64 million, or 5.7 percent of sales, compared
with operating loss of $75 million, or negative 6.2 percent of
sales, in the prior year period. Normalized operating income was
$95 million, or 8.5 percent of sales, versus $63 million, or 5.2
percent of sales, in the prior year period.
The Learning & Development segment generated net sales of
$694 million compared with $751 million in the prior year period,
as a core sales decline of 8.1 percent was partially offset by the
impact of favorable foreign exchange. Core sales decreased in both
the Writing and Baby businesses. Reported operating loss was $127
million, or negative 18.3 percent of sales, including the impact of
a non-cash impairment charge of $241 million, compared with
operating income of $122 million, or 16.2 percent of sales, in the
prior year period. Normalized operating income was $123 million, or
17.7 percent of sales, compared with $150 million, or 20.0 percent
of sales, in the prior year period.
The Outdoor & Recreation segment generated net sales of $231
million compared with $289 million in the prior year period, as a
core sales decline of 20.9 percent was partially offset by the
impact of favorable foreign exchange. Reported operating loss was
$42 million, or negative 18.2 percent of sales, including the
impact of a non-cash impairment charge of $22 million, compared
with operating income of $6 million, or 2.1 percent of sales, in
the prior year period. Normalized operating loss was $7 million, or
negative 3.0 percent of sales, compared with normalized operating
income of $16 million, or 5.5 percent of sales, in the prior year
period.
Restructuring and Savings
Initiatives
In January 2023, the company announced a restructuring and
savings initiative, Project Phoenix, that aims to strengthen the
company by leveraging its scale to further reduce complexity,
streamlining its operating model and driving operational
efficiencies.
Project Phoenix is expected to be substantially implemented by
the end of 2023. It incorporates a variety of initiatives designed
to simplify the organizational structure, streamline the company’s
real estate, centralize its supply chain functions, which include
manufacturing, distribution, transportation and customer service,
transition to a unified One Newell go-to-market model in key
international geographies, and otherwise reduce overhead costs. The
company implemented the new operating model in the first quarter,
consolidating its prior five operating segments into three
operating segments: Home & Commercial Solutions, Learning &
Development and Outdoor & Recreation.
The company's expectations for savings and charges in connection
with Project Phoenix remain unchanged. The company expects to
realize annualized pre-tax savings in the range of $220 million to
$250 million when fully implemented, with $140 million to $160
million expected to be realized in 2023. Restructuring and related
charges associated with these actions are estimated to be in the
range of $100 million to $130 million and are expected to be
substantially incurred by the end of 2023. Year-to-date through the
third quarter 2023, the company incurred restructuring and related
charges of $78 million and realized savings of $101 million related
to Project Phoenix. The restructuring plan is expected to result in
the elimination of approximately 13 percent of office positions.
The company began reducing headcount in the first quarter 2023,
with most of these actions still expected to be completed by the
end of 2023, subject to local law and consultation
requirements.
Following the successful completion of the first phase of
Project Ovid, the multi-year initiative to transform the company's
go-to-market capabilities in the U.S., in May 2023, the company
announced the Network Optimization Project, which aims to simplify
and streamline its North American distribution network. The Network
Optimization Project incorporates a variety of initiatives,
including a reduction in the overall number of distribution
centers, an optimization of distribution by location, and
completion of select automation investments intended to further
streamline the company’s cost structure and to maximize operating
performance. The company commenced this initiative during the
second quarter 2023 and expects it to be substantially implemented
by the end of 2024. The company continues to expect to realize
annual pre-tax savings of $25 million to $35 million when fully
implemented. Restructuring and related charges associated with the
Network Optimization Project are estimated to be in the range of
approximately $37 million to $49 million and are expected to be
substantially incurred by the end of 2024. The Company also expects
to incur $30 million to $40 million in capital expenditures in
connection with this project. Year-to-date through the third
quarter 2023, the company incurred restructuring and related
charges of $17 million related to the Network Optimization
Project.
Outlook for Fourth Quarter and Full
Year 2023
The company initiated its outlook for fourth quarter 2023 and
updated its full year 2023 outlook.
Q4 2023
Outlook
Updated
Full Year 2023 Outlook
Net Sales
$1.96 to $2.03 billion
$8.02 to $8.09 billion
Core Sales
14% to 11% decline
~13% decline
Normalized Operating Margin
7.8% to 8.8%
7.0% to 7.3%
Normalized EPS
$0.15 to $0.20
$0.72 to $0.77
The company raised its outlook for full year 2023 operating cash
flow to $800 million to $900 million; cash payments associated with
Project Phoenix are still expected to be approximately $95 million
to $120 million.
The company has presented forward-looking statements regarding
core sales, normalized operating margin and normalized earnings per
share. These non-GAAP financial measures are derived by excluding
certain amounts, expenses or income, from the corresponding
financial measures determined in accordance with GAAP. The
determination of the amounts that are excluded from these non-GAAP
financial measures is a matter of management judgement and depends
upon, among other factors, the nature of the underlying expense or
income amounts recognized in a given period in reliance on the
exception provided by item 10(e)(1)(i)(B) of Regulation S-K. We are
unable to present a quantitative reconciliation of forward-looking
normalized operating margin or normalized earnings per share to
their most directly comparable forward-looking GAAP financial
measures because such information is not available, and management
cannot reliably predict all of the necessary components of such
GAAP measures without unreasonable effort or expense. In addition,
we believe such reconciliations would imply a degree of precision
that would be confusing or misleading to investors. The unavailable
information could have a significant impact on the company's future
financial results. These non-GAAP financial measures are
preliminary estimates and are subject to risks and uncertainties,
including, among others, changes in connection with quarter-end and
year-end adjustments. Any variation between the company's actual
results and preliminary financial data set forth above may be
material.
Conference Call
Newell Brands’ third quarter 2023 earnings conference call will
be held today, October 27, at 9:30 a.m. ET. A link to the webcast
is provided under Events & Presentations in the Investors
section of the company’s website at www.newellbrands.com. A
webcast replay will be made available in the Quarterly Earnings
section of the company’s website.
Non-GAAP Financial
Measures
This release and the accompanying remarks contain non-GAAP
financial measures within the meaning of Regulation G promulgated
by the U.S. Securities and Exchange Commission (the "SEC") and
includes a reconciliation of non-GAAP financial measures to the
most directly comparable financial measures calculated in
accordance with GAAP.
The company uses certain non-GAAP financial measures that are
included in this press release, the additional financial
information and accompanying remarks both to explain its results to
stockholders and the investment community and in the internal
evaluation and management of its businesses. The company’s
management believes that these non-GAAP financial measures and the
information they provide are useful to investors since these
measures (a) permit investors to view the company’s performance and
liquidity using the same tools that management uses to evaluate the
company’s past performance, reportable segments, prospects for
future performance and liquidity, and (b) determine certain
elements of management incentive compensation.
The company’s management believes that core sales provides a
more complete understanding of underlying sales trends by providing
sales on a consistent basis as it excludes the impacts of
acquisitions, divestitures, retail store openings and closings,
certain market and category exits, and changes in foreign exchange
from year-over-year comparisons. The effect of changes in foreign
exchange on reported sales is calculated by applying the prior year
average monthly exchange rates to the current year local currency
sales amounts (excluding acquisitions and divestitures), with the
difference between the current year reported sales and constant
currency sales presented as the foreign exchange impact increase or
decrease in core sales. The company’s management believes that
“normalized” gross margin, “normalized” operating income,
“normalized” operating margin, "normalized EBITDA", “normalized”
net income, “normalized” diluted earnings per share, “normalized”
interest and “normalized” income tax benefit or expense, which
exclude restructuring and restructuring-related expenses and
one-time and other events such as costs related to the
extinguishment of debt, certain tax benefits and charges,
impairment charges, pension settlement charges, divestiture costs,
integration and financing of acquired businesses, amortization of
acquisition-related intangible assets, inflationary adjustments,
fire related loss, net of insurance recoveries and certain other
items, are useful because they provide investors with a meaningful
perspective on the current underlying performance of the company’s
core ongoing operations and liquidity. “Normalized EBITDA” is an
ongoing liquidity measure (that excludes non-cash items) and is
calculated as normalized earnings before interest, tax,
depreciation, amortization and stock-based compensation
expense.
The company determines the tax effect of the items excluded from
normalized diluted earnings per share by applying the estimated
effective rate for the applicable jurisdiction in which the pre-tax
items were incurred, and for which realization of the resulting tax
benefit, if any, is expected. In certain situations in which an
item excluded from normalized results impacts income tax expense,
the company utilizes a “with” and “without” approach to determine
normalized income tax benefit or expense.
The company defines "net debt" as short-term debt, current
portion of long-term debt and long-term debt less cash and cash
equivalents. "Free cash flow" is defined as net cash provided by
operating activities less capital expenditures. "Free cash flow
productivity" is defined as the ratio of free cash flow to
normalized net income. We are unable to present a quantitative
reconciliation of forward-looking free cash flow productivity or
normalized gross margin to their most directly comparable
forward-looking GAAP financial measures because such information is
not available, and management cannot reliably predict all of the
necessary components of such GAAP measure without unreasonable
effort or expense.
While the company believes these non-GAAP financial measures are
useful in evaluating the company’s performance and liquidity, this
information should be considered as supplemental in nature and not
as a substitute for or superior to the related financial
information prepared in accordance with GAAP. Additionally, these
non-GAAP financial measures may differ from similar measures
presented by other companies.
About Newell Brands
Newell Brands (NASDAQ: NWL) is a leading global consumer goods
company with a strong portfolio of well-known brands, including
Rubbermaid, Sharpie, Graco, Coleman, Rubbermaid Commercial
Products, Yankee Candle, Paper Mate, FoodSaver, Dymo, EXPO,
Elmer’s, Oster, NUK, Spontex and Campingaz. Newell Brands is
focused on delighting consumers by lighting up everyday
moments.
This press release and additional information about Newell
Brands are available on the company’s website,
www.newellbrands.com.
Caution Concerning Forward-Looking
Statements
Some of the statements in this press release and its exhibits,
particularly those anticipating future financial performance,
business prospects, growth, operating strategies, the benefits and
savings associated with Project Phoenix, future macroeconomic
conditions and similar matters, are forward-looking statements
within the meaning of the federal securities laws. These statements
generally can be identified by the use of words or phrases,
including, but not limited to, "guidance," "outlook," “intend,”
“anticipate,” “believe,” “estimate,” “project,” “target,” “plan,”
“expect,” “setting up,” "beginning to,” “will,” “should,” “would,”
"could," “resume,” “remain confident,” "remain optimistic," "seek
to," or similar statements. We caution that forward-looking
statements are not guarantees because there are inherent
difficulties in predicting future results. Actual results may
differ materially from those expressed or implied in the
forward-looking statements, including impairment charges and
accounting for income taxes. Important factors that could cause
actual results to differ materially from those suggested by the
forward-looking statements include, but are not limited to:
- our ability to optimize costs and cash flow and mitigate the
impact of retailer inventory rebalancing through discretionary and
overhead spend management, advertising and promotion expense
optimization, demand forecast and supply plan adjustments and
actions to improve working capital;
- our dependence on the strength of retail and consumer demand
and commercial and industrial sectors of the economy in various
countries around the world;
- our ability to improve productivity, reduce complexity and
streamline operations;
- risks related to our substantial indebtedness, potential
increases in interest rates and changes in our credit ratings,
including the failure to maintain financial covenants which if
breached could subject us to cross-default and acceleration
provisions in our debt documents;
- competition with other manufacturers and distributors of
consumer products;
- major retailers’ strong bargaining power and consolidation of
our customers;
- supply chain and operational disruptions in the markets in
which we operate, whether as a result of the actual or perceived
effects of the COVID-19 pandemic or broader geopolitical and
macroeconomic conditions, including any global military
conflicts;
- changes in the prices and availability of labor,
transportation, raw materials and sourced products, including
significant inflation, and our ability to offset cost increases
through pricing and productivity in a timely manner;
- the cost and outcomes of governmental investigations,
inspections, lawsuits, legislative requests or other actions by
third parties, the potential outcomes of which could exceed policy
limits, to the extent insured;
- our ability to effectively execute our turnaround plan,
including Project Ovid, Project Phoenix and the Network
Optimization Project;
- our ability to develop innovative new products, to develop,
maintain and strengthen end-user brands and to realize the benefits
of increased advertising and promotion spend;
- our ability to consistently maintain effective internal control
over financial reporting;
- the risks inherent to our foreign operations, including
currency fluctuations, exchange controls and pricing
restrictions;
- future events that could adversely affect the value of our
assets and/or stock price and require additional impairment
charges;
- unexpected costs or expenses associated with dispositions;
- a failure or breach of one of our key information technology
systems, networks, processes or related controls or those of our
service providers;
- the impact of U.S. and foreign regulations on our operations,
including the impact of tariffs, product regulation and legislation
and environmental remediation costs and legislation and regulatory
actions related to data privacy and climate change;
- the potential inability to attract, retain and motivate key
employees;
- changes in tax laws and the resolution of tax contingencies
resulting in additional tax liabilities;
- product liability, product recalls or related regulatory
actions;
- our ability to protect intellectual property rights;
- our ability to manage any actual or perceived ongoing effects
of the COVID-19 pandemic, including as a result of any additional
variants of the virus or the efficacy and distribution of
vaccines;
- significant increases in the funding obligations related to our
pension plans; and
- other factors listed from time to time in our SEC filings,
including but not limited to our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and our other SEC filings.
The consolidated condensed financial statements are prepared in
conformity with accounting principles generally accepted in the
United States (“U.S. GAAP”). Management’s application of U.S. GAAP
requires the pervasive use of estimates and assumptions in
preparing the condensed consolidated financial statements. The
company continues to be impacted by inflationary pressures,
softening global demand, focus by major retailers to rebalance
inventory levels, rising interest rates and the indirect
macroeconomic impact of global military conflicts, which has
required greater use of estimates and assumptions in the
preparation of our condensed consolidated financial statements.
Although we believe we have made our best estimates based upon
current information, actual results could differ materially and may
require future changes to such estimates and assumptions, including
reserves, which may result in future expense.
The information contained in this press release and the tables
is as of the date indicated. The company assumes no obligation to
update any forward-looking statements as a result of new
information, future events or developments.
NEWELL BRANDS INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per
share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
% Change
2023
2022
% Change
Net sales
$
2,048
$
2,252
(9.1
)%
$
6,057
$
7,174
(15.6
)%
Cost of products sold
1,427
1,594
4,325
4,940
Gross profit
621
658
(5.6
)%
1,732
2,234
(22.5
)%
Selling, general and administrative
expenses
501
467
7.3
%
1,457
1,489
(2.1
)%
Restructuring costs, net
16
3
76
12
Impairment of goodwill, intangibles and
other assets
263
148
274
148
Operating income (loss)
(159
)
40
NM
(75
)
585
NM
Non-operating expenses:
Interest expense, net
69
57
213
171
Other (income) expense, net
70
24
91
(73
)
Income (loss) before income
taxes
(298
)
(41
)
NM
(379
)
487
NM
Income tax provision (benefit)
(80
)
(60
)
(77
)
41
Net income (loss)
$
(218
)
$
19
NM
$
(302
)
$
446
NM
Weighted average common shares
outstanding:
Basic
414.2
413.6
414.1
416.4
Diluted
414.2
414.6
414.1
418.3
Earnings (loss) per share:
Basic
$
(0.53
)
$
0.05
$
(0.73
)
$
1.07
Diluted
$
(0.53
)
$
0.05
$
(0.73
)
$
1.07
Dividends per share
$
0.07
$
0.23
$
0.37
$
0.69
* NM - NOT MEANINGFUL
NEWELL BRANDS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in millions)
September 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
396
$
287
Accounts receivable, net
1,212
1,250
Inventories
1,778
2,203
Prepaid expenses and other current
assets
362
312
Total current assets
3,748
4,052
Property, plant and equipment, net
1,202
1,184
Operating lease assets
521
578
Goodwill
3,049
3,298
Other intangible assets, net
2,550
2,649
Deferred income taxes
783
810
Other assets
719
691
TOTAL ASSETS
$
12,572
$
13,262
Liabilities and stockholders'
equity
Current liabilities
Accounts payable
$
1,084
$
1,062
Accrued compensation
150
123
Other accrued liabilities
1,409
1,272
Short-term debt and current portion of
long-term debt
376
621
Total current liabilities
3,019
3,078
Long-term debt
4,737
4,756
Deferred income taxes
393
520
Operating lease liabilities
458
512
Other noncurrent liabilities
839
877
Total liabilities
9,446
9,743
Total stockholders' equity
3,126
3,519
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
12,572
$
13,262
NEWELL BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
(Amounts in millions)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net income (loss)
$
(302
)
$
446
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
240
222
Impairment of goodwill, intangibles and
other assets
274
148
Gain from sale of business
—
(136
)
Deferred income taxes
(108
)
215
Stock based compensation expense
32
8
Pension settlement charge
66
—
Other, net
3
(2
)
Changes in operating accounts excluding
the effects of divestiture:
Accounts receivable
26
(165
)
Inventories
411
(754
)
Accounts payable
31
(143
)
Accrued liabilities and other
6
(406
)
Net cash provided by (used in)
operating activities
679
(567
)
Cash flows from investing
activities:
Proceeds from sale of divested
business
—
616
Capital expenditures
(209
)
(221
)
Other investing activities, net
62
25
Net cash provided by (used in)
investing activities
(147
)
420
Cash flows from financing
activities:
Net payments of short-term debt
(244
)
—
Net proceeds from issuance of long-term
debt
—
990
Payments on current portion of long-term
debt
(2
)
(2
)
Repurchase of shares of common stock
—
(325
)
Cash dividends
(155
)
(290
)
Equity compensation activity and other,
net
(4
)
(29
)
Net cash provided by (used in)
financing activities
(405
)
344
Exchange rate effect on cash, cash
equivalents and restricted cash
(8
)
(13
)
Increase in cash, cash equivalents and
restricted cash
119
184
Cash, cash equivalents and restricted cash
at beginning of period
303
477
Cash, cash equivalents and restricted
cash at end of period
$
422
$
661
Supplemental disclosures:
Restricted cash at beginning of period
$
16
$
37
Restricted cash at end of period
26
25
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended September
30, 2023
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization and
Impairment
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
2,048
$
—
$
—
$
—
$
2,048
Cost of products sold
1,427
(18
)
—
(2
)
1,407
Gross profit
621
18
—
2
641
30.3
%
31.3
%
Selling, general and administrative
expenses
501
(7
)
(19
)
(1
)
474
24.5
%
23.1
%
Restructuring costs, net
16
(16
)
—
—
—
Impairment of goodwill, intangibles and
other assets
263
—
(263
)
—
—
Operating income (loss)
(159
)
41
282
3
167
(7.8
)%
8.2
%
Non-operating (income) expense
139
—
—
(62
)
77
Income (loss) before income
taxes
(298
)
41
282
65
90
Income tax provision (benefit) [2]
(80
)
3
17
(13
)
(73
)
Net income (loss)
$
(218
)
$
38
$
265
$
78
$
163
Diluted earnings (loss) per share **
$
(0.53
)
$
0.09
$
0.64
$
0.19
$
0.39
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
416.3 million shares for the three months ended September 30,
2023.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $61
million loss on pension settlement; $6 million related to Argentina
hyperinflationary adjustment; $1 million related to expenses for
certain legal proceedings; $1 million loss due to changes in fair
market value of investment and $4 million fire-related insurance
recoveries. Includes $31 million of income tax expense that results
from amortization of a prior year normalized tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended September
30, 2022
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization and
Impairment
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
2,252
$
—
$
—
$
—
$
2,252
Cost of products sold
1,594
(7
)
—
(1
)
1,586
Gross profit
658
7
—
1
666
29.2
%
29.6
%
Selling, general and administrative
expenses
467
(2
)
(16
)
(17
)
432
20.7
%
19.2
%
Restructuring costs, net
3
(3
)
—
—
—
Impairment of goodwill, intangibles and
other assets
148
—
(148
)
—
—
Operating income
40
12
164
18
234
1.8
%
10.4
%
Non-operating expense
81
—
—
2
83
Income (loss) before income
taxes
(41
)
12
164
16
151
Income tax provision (benefit) [2]
(60
)
3
9
(9
)
(57
)
Net income
$
19
$
9
$
155
$
25
$
208
Diluted earnings per share **
$
0.05
$
0.02
$
0.37
$
0.06
$
0.50
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
414.6 million shares for the three months ended September 30,
2022.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $16
million related to expenses for certain legal proceedings; $3
million related to Argentina hyperinflationary adjustment; $1
million of costs related to completed divestitures; $3 million gain
on disposition of business and $1 million gain due to changes in
fair market value of investments. Includes income tax expense of
$14 million that results from amortization of prior year normalized
tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Nine Months Ended September
30, 2023
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization and
Impairment
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
6,057
$
—
$
—
$
—
$
6,057
Cost of products sold
4,325
(49
)
—
(7
)
4,269
Gross profit
1,732
49
—
7
1,788
28.6
%
29.5
%
Selling, general and administrative
expenses
1,457
(6
)
(57
)
(17
)
1,377
24.1
%
22.7
%
Restructuring costs, net
76
(76
)
—
—
—
Impairment of goodwill, intangibles and
other assets
274
—
(274
)
—
—
Operating income (loss)
(75
)
131
331
24
411
(1.2
)%
6.8
%
Non-operating (income) expense
304
—
—
(73
)
231
Income (loss) before income
taxes
(379
)
131
331
97
180
Income tax provision (benefit) [2]
(77
)
25
28
(34
)
(58
)
Net income (loss)
$
(302
)
$
106
$
303
$
131
$
238
Diluted earnings (loss) per share **
$
(0.73
)
$
0.26
$
0.73
$
0.32
$
0.57
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
415.6 million shares for the nine months ended September 30,
2023.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $66
million loss on pension settlement; $16 million related to
Argentina hyperinflationary adjustment; $11 million related to
expenses for certain legal proceedings; $7 million of costs related
to completed divestitures; $1 million fire-related insurance
recoveries; $1 million gain due to changes in fair market value of
investments and reversal of $1 million to true-up an indirect tax
reserve for an international entity. Includes $54 million of income
tax expense that results from amortization of a prior year
normalized tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Nine Months Ended September
30, 2022
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization and
Impairment
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
7,174
$
—
$
—
$
—
$
7,174
Cost of products sold
4,940
(15
)
—
(3
)
4,922
Gross profit
2,234
15
—
3
2,252
31.1
%
31.4
%
Selling, general and administrative
expenses
1,489
(2
)
(51
)
(27
)
1,409
20.8
%
19.6
%
Restructuring costs, net
12
(12
)
—
—
—
Impairment of goodwill, intangibles and
other assets
148
—
(148
)
—
—
Operating income
585
29
199
30
843
8.2
%
11.8
%
Non-operating expense
98
—
—
134
232
Income (loss) before income
taxes
487
29
199
(104
)
611
Income tax provision (benefit) [2]
41
8
15
(42
)
22
Net income (loss)
$
446
$
21
$
184
$
(62
)
$
589
Diluted earnings (loss) per share **
$
1.07
$
0.05
$
0.44
$
(0.15
)
$
1.41
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
418.3 million shares for the nine months ended September 30,
2022.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $22
million related to expenses for certain legal proceedings; $7
million related to Argentina hyperinflationary adjustment; $5
million of costs related to completed divestitures; $136 million
gain on disposition of business and $2 million gain due to changes
in fair market value of investments. Includes income tax expense of
$35 million that results from amortization of prior year normalized
tax benefit.
[2]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT
REPORTING
(Amounts in millions)
Three Months Ended September
30, 2023
Three Months Ended September
30, 2022
Year over year changes
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [1]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [2]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Normalized
Net Sales
Operating Income
Net Sales
Net Sales
$
%
$
%
Home and Commercial Solutions
$
1,123
$
64
5.7
%
$
31
$
95
8.5
%
$
1,212
$
(75
)
(6.2
)%
$
138
$
63
5.2
%
$
(89
)
(7.3
)%
$
32
50.8
%
Learning and Development
694
(127
)
(18.3
)%
250
123
17.7
%
751
122
16.2
%
28
150
20.0
%
(57
)
(7.6
)%
(27
)
(18.0
)%
Outdoor and Recreation
231
(42
)
(18.2
)%
35
(7
)
(3.0
)%
289
6
2.1
%
10
16
5.5
%
(58
)
(20.1
)%
(23
)
NM
Corporate
—
(54
)
—
%
10
(44
)
—
%
—
(13
)
—
%
18
5
—
%
—
—
%
(49
)
NM
$
2,048
$
(159
)
(7.8
)%
$
326
$
167
8.2
%
$
2,252
$
40
1.8
%
$
194
$
234
10.4
%
$
(204
)
(9.1
)%
$
(67
)
(28.6
)%
*NM - NOT MEANINGFUL
[1]
The three months ended September 30, 2023
normalized items consists of $263 million of impairment of goodwill
and intangible asset; $41 million of restructuring and
restructuring-related charges; $19 million of acquisition
amortization costs; $2 million Argentina hyperinflationary
adjustment and $1 million related to expenses for certain legal
proceedings.
[2]
The three months ended September 30, 2022
normalized items consists of $148 million impairment of goodwill
and intangible assets; $16 million of acquisition amortization; $16
million of expenses related to certain legal proceedings; $12
million of restructuring and restructuring-related costs; $1
million of costs related to completed divestitures and $1 million
of Argentina hyperinflationary adjustment.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT
REPORTING
(Amounts in millions)
Nine Months Ended September
30, 2023
Nine Months Ended September
30, 2022
Year over year changes
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [1]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Reported Operating Income
(Loss)
Reported Operating Margin
Normalized Items [2]
Normalized Operating Income
(Loss)
Normalized Operating Margin
Normalized Operating
Net Sales
Income (Loss)
Net Sales
Net Sales
$
%
$
%
Home and Commercial Solutions
$
3,152
$
6
0.2
%
$
108
$
114
3.6
%
$
3,804
$
88
2.3
%
$
170
$
258
6.8
%
$
(652
)
(17.1
)%
$
(144
)
(55.8
)%
Learning and Development
2,071
133
6.4
%
271
404
19.5
%
2,266
505
22.3
%
38
543
24.0
%
(195
)
(8.6
)%
(139
)
(25.6
)%
Outdoor and Recreation
834
(38
)
(4.6
)%
58
20
2.4
%
1,104
100
9.1
%
20
120
10.9
%
(270
)
(24.5
)%
(100
)
(83.3
)%
Corporate
—
(176
)
—
%
49
(127
)
—
%
—
(108
)
—
%
30
(78
)
—
%
—
—
%
(49
)
(62.8
)%
$
6,057
$
(75
)
(1.2
)%
$
486
$
411
6.8
%
$
7,174
$
585
8.2
%
$
258
$
843
11.8
%
$
(1,117
)
(15.6
)%
$
(432
)
(51.2
)%
[1]
The nine months ended September 30, 2023
normalized items consists of $274 million of impairment of
goodwill, intangible and other assets; $131 million of
restructuring and restructuring-related charges; $57 million of
acquisition amortization costs; $11 million related to expenses for
certain legal proceedings; $7 million of costs related to completed
divestitures; $7 million Argentina hyperinflationary adjustment and
reversal of $1 million to true-up an indirect tax reserve for an
international entity.
[2]
The nine months ended September 30, 2022
normalized items consists of $148 million impairment of goodwill
and intangible assets; $51 million of acquisition amortization; $29
million of restructuring and restructuring-related costs; $22
million of expenses related to certain legal proceedings; $5
million of costs related to completed divestitures and $3 million
of Argentina hyperinflationary adjustment.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES GROWTH BY
SEGMENT
Three Months Ended September
30, 2023
Nine Months Ended September
30, 2023
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
Home and Commercial Solutions
(7.3
)%
0.9
%
(0.7
)%
(7.1
)%
(17.1
)%
3.5
%
0.6
%
(13.0
)%
Learning and Development
(7.6
)%
—
%
(0.5
)%
(8.1
)%
(8.6
)%
—
%
0.6
%
(8.0
)%
Outdoor and Recreation
(20.1
)%
—
%
(0.8
)%
(20.9
)%
(24.5
)%
—
%
1.3
%
(23.2
)%
TOTAL COMPANY
(9.1
)%
0.5
%
(0.6
)%
(9.2
)%
(15.6
)%
1.9
%
0.7
%
(13.0
)%
CORE SALES GROWTH BY
GEOGRAPHY
Three Months Ended September
30, 2023
Nine Months Ended September
30, 2023
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact
[3]
Core Sales [1] [4]
Net Sales (Reported)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
North America
(10.1
)%
0.8
%
0.1
%
(9.2
)%
(17.9
)%
2.7
%
0.2
%
(15.0
)%
Europe, Middle East, Africa
(6.9
)%
(0.2
)%
(6.2
)%
(13.3
)%
(10.0
)%
—
%
(0.5
)%
(10.5
)%
Latin America
4.5
%
—
%
(0.9
)%
3.6
%
1.6
%
—
%
3.3
%
4.9
%
Asia Pacific
(20.1
)%
—
%
3.1
%
(17.0
)%
(24.9
)%
—
%
4.7
%
(20.2
)%
TOTAL COMPANY
(9.1
)%
0.5
%
(0.6
)%
(9.2
)%
(15.6
)%
1.9
%
0.7
%
(13.0
)%
[1]
“Core Sales” provides a consistent basis
for year-over-year comparisons in sales as it excludes the impacts
of acquisitions, completed and planned divestitures (including the
sale of the Connected Home & Security business), retail store
openings and closings, certain market and category exits, as well
as changes in foreign currency.
[2]
Divestitures include the sale of the
Connected Home & Security business, certain market and category
exits and current and prior period net sales from retail store
closures (consistent with standard retail practice).
[3]
“Currency Impact” represents the effect of
foreign currency on 2023 reported sales and is calculated by
applying the 2022 average monthly exchange rates to the current
year local currency sales amounts (excluding acquisitions and
divestitures) and comparing to 2023 reported sales.
[4]
Totals may not add due to rounding.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
NET DEBT AND NORMALIZED EBITDA
RECONCILIATION
(Amounts in millions)
September 30, 2023
December 31, 2022 [1]
September 30, 2022
NET DEBT RECONCILIATION:
Short-term debt and current portion of
long-term debt
$
376
$
621
$
1,078
Long-term debt
4,737
4,756
4,762
Gross debt
5,113
5,377
5,840
Less: Cash and cash equivalents
396
287
636
NET DEBT
$
4,717
$
5,090
$
5,204
Net income (loss) [2]
$
(551
)
$
197
$
544
Normalized items [2]
854
457
227
NET INCOME
303
654
771
Normalized income tax [2]
(63
)
17
60
Interest expense, net [2]
277
235
230
Normalized depreciation and amortization
[2] [3]
226
225
228
Stock-based compensation [4]
36
12
23
NORMALIZED EBITDA
$
779
$
1,143
$
1,312
[1]
For the twelve months ended December 31,
2022, refer to “Reconciliation of GAAP and Non-GAAP Information
(Unaudited) - Certain Line Items” for the twelve months ended
December 31, 2022, on the Company’s Form 8-K furnished on February
10, 2023.
[2]
For the trailing-twelve months ended
September 30, 2023, refer to “Reconciliation of GAAP and Non-GAAP
Information (Unaudited) - Certain Line Items” for the three months
ended December 31, 2022, March 31, 2023 and June 30, 2023 on the
Company’s Forms 8-K furnished on February 10, 2023, April 28, 2023
and July 28, 2023, respectively. For the trailing-twelve months
ended September 30, 2022, refer to “Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items” for the
three months ended December 31, 2021, March 31, 2022 and June 30,
2022 on the Company’s Forms 8-K furnished on February 10, 2023,
April 28, 2023 and July 28, 2023, respectively.
[3]
For the trailing-twelve months ended
September 30, 2023, normalized depreciation and amortization
excludes the following items: (a) acquisition amortization expense
of $73 million associated with intangible assets recognized in
purchase accounting; (b) $15 million of accelerated depreciation
costs associated with restructuring activities. Refer to
“Reconciliation of GAAP and Non-GAAP Information (Unaudited) -
Certain Line Items” for the three months ended December 31, 2022,
March 31, 2023 and June 30, 2023 on the Company’s Forms 8-K
furnished on February 10, 2023, April 28, 2023 and July 28, 2023,
respectively. For the trailing-twelve months ended September
30,2022 normalized depreciation and amortization excludes the
following items: (a) acquisition amortization expense of $70
million associated with intangible assets recognized in purchase
accounting; (b) $5 million of accelerated depreciation costs
associated with restructuring activities, refer to “Reconciliation
of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items”
for the three months ended December 31, 2021, March 31, 2022 and
June 30, 2022 on the Company’s Forms 8-K furnished on February 10,
2023, April 28, 2023 and July 28, 2023, respectively. Normalized
depreciation and amortization excludes from GAAP depreciation and
amortization for the twelve months ended December 31, 2022, the
following items: (a) acquisition amortization expense of $67
million associated with intangible assets recognized in purchase
accounting (b) accelerated depreciation and amortization costs of
$4 million associated with restructuring activities. Refer to
“Reconciliation of GAAP and Non-GAAP Information (Unaudited) -
Certain Line Items” for the twelve months ended December 31, 2022
on the Company’s Form 8-K furnished on February 10, 2023 for
further information.
[4]
Represents non-cash expense associated
with stock-based compensation.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES OUTLOOK
Three Months Ending
December 31, 2023
Twelve Months Ending
December 31, 2023
Estimated net sales change (GAAP)
(14
)%
to
(11
)%
(15
)%
to
(14
)%
Estimated currency impact [1] and
divestitures [2], net
~0%
~2%
Core sales change (NON-GAAP) [3]
(14
)%
to
(11
)%
~(13)%
[1]
“Currency Impact” represents the effect of
foreign currency on 2023 reported sales and is calculated by
applying the 2022 average monthly exchange rates to the current
year local currency sales amounts (excluding acquisitions and
divestitures) and comparing to 2023 reported sales.
[2]
Divestitures include the sale of the
Connected Home & Security business, certain market and category
exits and current and prior period net sales from retail store
closures (consistent with standard retail practice).
[3]
Totals may not add due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231027802126/en/
Investor Contact: Sofya
Tsinis VP, Investor Relations +1 (201) 610-6901
sofya.tsinis@newellco.com
Media Contact: Beth Stellato
Chief Communications Officer +1 (470) 580-1086
beth.stellato@newellco.com
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