Net Sales Decline 13%; Core Sales Decline 12%
Diluted EPS $0.04; Normalized Diluted EPS $0.24 Operating Cash Flow
Improves Significantly Versus Prior Year Updates Outlook for Full
Year 2023
Newell Brands (NASDAQ: NWL) today announced its second quarter
2023 financial results.
Chris Peterson, Newell Brands President and Chief Executive
Officer, said, "Since my appointment two months ago we have created
and deployed a new corporate strategy based on a comprehensive
company wide capability assessment. Building on the solid
operational foundation we have already put in place, we are now
focused on significantly strengthening the company’s
consumer-facing capabilities while prioritizing the top 10
countries and top 25 brands, which represent about 90% of sales.
Consistent with the new strategy, we are investing in consumer and
customer understanding, brand building, brand communication,
innovation and retail execution as part of our One Newell approach
to unlock the full power of our leading consumer brands, create and
leverage scale and drive operational excellence. While we have lots
of work to do, we are off to a great start, which is why I remain
confident in our ability to accelerate the company's financial
performance over the long term, while we continue to navigate
through a challenging macro-economic backdrop in the near
term."
Mark Erceg, Newell Brands Chief Financial Officer, said,
"Restoring strong operating cash flow and improving the underlying
structural economics of our business remains our primary financial
focus this year. Against those two measures, we were very pleased
with our second quarter results, with operating cash flow up over
$500 million dollars versus last year and normalized operating
margin ahead of expectations. As we look toward the balance of the
year, we expect top and bottom-line pressure to persist as
consumers continue to wrestle with elevated levels of core
inflation and the resumption of student loan repayments. Despite
these pressures, and because of the conviction we have behind our
new strategy, we have chosen to invest more behind capability
building and brand support during the second half of the year.
While some of these investments will lower near term earnings, we
remain confident in our operating cash flow guidance for the full
year and, just as importantly, because of the meaningful
interventions we are making across all facets of the business, we
expect second half normalized operating margin to be up
significantly versus both the first half of this year and the
second half of last year."
Second Quarter 2023 Executive
Summary
- Net sales were $2.2 billion, a decline of 13.0 percent compared
with the prior year period.
- Core sales declined 11.9 percent compared with the prior year
period.
- Reported operating margin was 5.4 percent compared with 12.9
percent in the prior year period.
- Normalized operating margin was 9.1 percent compared with 14.0
percent in the prior year period.
- Reported diluted earnings per share were $0.04 compared with
$0.48 in the prior year period.
- Normalized diluted earnings per share were $0.24 compared with
$0.56 per share in the prior year period.
- Year-to-date operating cash flow was $277 million compared with
outflow of $450 million in the prior year period.
- In May 2023, the company updated its capital allocation
framework and dividend policy, aligning them with the new corporate
strategy, which was rolled out in June 2023.
- In May 2023, the company announced the Network Optimization
Project, which aims to simplify and streamline its North American
distribution network.
- The company updated its full year 2023 outlook for net sales
and normalized earnings per share to $8.2 billion to $8.34 billion
and $0.80 to $0.90, respectively. The company's outlook for
operating cash flow remains unchanged.
Second Quarter 2023 Operating
Results
Net sales were $2.2 billion, a 13.0 percent decline compared to
the prior year period, largely reflecting a core sales decrease of
11.9 percent and the impact of unfavorable foreign exchange.
Reported gross margin was 28.5 percent compared with 33.0
percent in the prior year period, as the impact of fixed cost
deleveraging, inflation and higher restructuring-related charges
more than offset the benefits from pricing and FUEL productivity
savings. Normalized gross margin was 29.9 percent compared with
33.1 percent in the prior year period.
Reported operating income was $120 million compared with $328
million in the prior year period. Reported operating margin was 5.4
percent compared with 12.9 percent in the prior year period, as the
impact of lower net sales, lower gross margin, non-cash impairment
charges and an increase in restructuring and related costs more
than offset benefits from pricing, FUEL productivity savings and
Project Phoenix savings. Normalized operating income was $201
million, or 9.1 percent of sales, compared with $355 million, or
14.0 percent of sales, in the prior year period.
Net interest expense was $76 million compared with $55 million
in the prior year period.
Reported tax provision was $17 million compared with $53 million
in the prior year period. The normalized tax provision was $16
million compared with $44 million in the prior year period.
The company reported net income of $18 million, or $0.04 diluted
earnings per share, compared with $199 million, or $0.48 diluted
earnings per share, in the prior year period.
Normalized net income was $101 million, or $0.24 normalized
diluted earnings per share, compared with $232 million, or $0.56
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 was $277 million compared with
outflow of $450 million in the prior year period, with the
improvement primarily driven by working capital and a reduction in
incentive compensation payments, which more than offset a decline
in operating income and higher restructuring and related payments.
Inventories declined nearly $700 million versus the prior year
period and nearly $300 million versus the first quarter of 2023, as
the company continued to make progress on inventory reduction.
At the end of the second quarter, Newell Brands had cash and
cash equivalents of $317 million and net debt outstanding of $5.0
billion.
In May 2023, the company updated its capital allocation
framework and dividend policy, aligning them with the new corporate
strategy, which was rolled out in June 2023.
Second 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 13.1 percent, the impact
of unfavorable foreign exchange, as well as certain category exits.
Core sales declined in all three businesses: Kitchen, Home
Fragrance and Commercial. Reported operating loss was $21 million,
or negative 2.0 percent of sales, compared with operating income of
$74 million, or 6.0 percent of sales, in the prior year period.
Normalized operating income was $23 million, or 2.2 percent of
sales, versus $87 million, or 7.0 percent of sales, in the prior
year period.
The Learning & Development segment generated net sales of
$813 million compared with $865 million in the prior year period,
reflecting a core sales decline of 5.7 percent and the impact of
modestly unfavorable foreign exchange. Core sales growth in the
Writing business was more than offset by a decline in the Baby
business. Reported operating income was $188 million, or 23.1
percent of sales, compared with $245 million, or 28.3 percent of
sales, in the prior year period. Normalized operating income was
$199 million, or 24.5 percent of sales, compared with $248 million,
or 28.7 percent of sales, in the prior year period.
The Outdoor & Recreation segment generated net sales of $333
million compared with $427 million in the prior year period,
reflecting a core sales decline of 20.9 percent, as well as the
impact of unfavorable foreign exchange. Reported operating income
was $5 million, or 1.5 percent of sales, compared with $48 million,
or 11.2 percent of sales, in the prior year period. Normalized
operating income was $14 million, or 4.2 percent of sales, compared
with $54 million, or 12.6 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
second quarter 2023, the company incurred restructuring and related
charges of $63 million and realized savings of $52 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 expects 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. During the second quarter 2023, the
company incurred restructuring and related charges of $9 million
related to the Network Optimization Project.
Outlook for Third Quarter and Full Year
2023
The company initiated its outlook for third quarter 2023 and
updated its full year 2023 outlook.
Q3 2023
Outlook
Updated
Full Year 2023 Outlook
Net Sales
$2.11 to $2.16 billion
$8.2 to $8.34 billion
Core Sales
7% to 5% decline
12% to 10% decline
Normalized Operating Margin
8.5% to 9.4%
7.8% to 8.2%
Normalized EPS
$0.20 to $0.24
$0.80 to $0.90
For full year 2023, the company continues to expect to deliver
operating cash flow in the range of $700 million to $900 million,
including approximately $95 million to $120 million in cash
payments associated with Project Phoenix.
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’ second quarter 2023 earnings conference call will
be held today, July 28, at 11:00 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 and the additional financial
information 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 and current
portion of 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 to its most directly comparable
forward-looking GAAP financial measure 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 U.S. Private Securities Litigation Reform
Act of 1995. 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;
- 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;
- 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 the military conflict between
Russia and Ukraine;
- 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;
- risks related to our substantial indebtedness, potential
increases in interest rates or changes in our credit ratings;
- 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;
- 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 the Russia-Ukraine conflict, which has
required greater use of estimates and assumptions in the
preparation of our condensed consolidated financial statements.
Although we have made our best estimates based upon current
information, actual results could materially differ 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 June
30,
Six Months Ended June
30,
2023
2022
% Change
2023
2022
% Change
Net sales
$
2,204
$
2,534
(13.0
)%
$
4,009
$
4,922
(18.5
)%
Cost of products sold
1,575
1,698
2,898
3,346
Gross profit
629
836
(24.8
)%
1,111
1,576
(29.5
)%
Selling, general and administrative
expenses
476
504
(5.6
)%
956
1,022
(6.5
)%
Restructuring costs, net
22
4
60
9
Impairment of goodwill, intangibles and
other assets
11
—
11
—
Operating income
120
328
(63.4
)%
84
545
(84.6
)%
Non-operating expenses:
Interest expense, net
76
55
144
114
Other (income) expense, net
9
21
21
(97
)
Income (loss) before income
taxes
35
252
(86.1
)%
(81
)
528
NM
Income tax provision
17
53
3
101
Net income (loss)
$
18
$
199
(91.0
)%
$
(84
)
$
427
NM
Weighted average common shares
outstanding:
Basic
414.2
413.8
414.0
417.9
Diluted
415.3
415.7
414.0
420.2
Earnings (loss) per share:
Basic
$
0.04
$
0.48
$
(0.20
)
$
1.02
Diluted
$
0.04
$
0.48
$
(0.20
)
$
1.02
Dividends per share
$
0.07
$
0.23
$
0.30
$
0.46
* NM - NOT MEANINGFUL
NEWELL BRANDS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in millions)
June 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
317
$
287
Accounts receivable, net
1,285
1,250
Inventories
1,937
2,203
Prepaid expenses and other current
assets
300
312
Total current assets
3,839
4,052
Property, plant and equipment, net
1,207
1,184
Operating lease assets
550
578
Goodwill
3,310
3,298
Other intangible assets, net
2,612
2,649
Deferred income taxes
794
810
Other assets
708
691
TOTAL ASSETS
$
13,020
$
13,262
Liabilities and stockholders'
equity
Current liabilities
Accounts payable
$
1,013
$
1,062
Accrued compensation
128
123
Other accrued liabilities
1,322
1,272
Short-term debt and current portion of
long-term debt
597
621
Total current liabilities
3,060
3,078
Long-term debt
4,753
4,756
Deferred income taxes
479
520
Operating lease liabilities
482
512
Other noncurrent liabilities
931
877
Total liabilities
9,705
9,743
Total stockholders' equity
3,315
3,519
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
13,020
$
13,262
NEWELL BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
(Amounts in millions)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities:
Net income (loss)
$
(84
)
$
427
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
159
147
Impairment of goodwill, intangibles and
other assets
11
—
Gain from sale of business
—
(133
)
Deferred income taxes
4
312
Stock based compensation expense
20
23
Pension settlement charge
5
—
Other, net
(7
)
(1
)
Changes in operating accounts excluding
the effects of divestiture:
Accounts receivable
(14
)
(177
)
Inventories
282
(692
)
Accounts payable
(54
)
106
Accrued liabilities and other
(45
)
(462
)
Net cash provided by (used in)
operating activities
277
(450
)
Cash flows from investing
activities:
Proceeds from sale of divested
business
—
620
Capital expenditures
(142
)
(140
)
Other investing activities, net
48
19
Net cash provided by (used in)
investing activities
(94
)
499
Cash flows from financing
activities:
Short-term debt, net
(23
)
372
Payments on current portion of long-term
debt
(1
)
(2
)
Repurchase of shares of common stock
—
(325
)
Cash dividends
(126
)
(195
)
Equity compensation activity and other,
net
(8
)
(35
)
Net cash used in financing
activities
(158
)
(185
)
Exchange rate effect on cash, cash
equivalents and restricted cash
2
(3
)
Increase (decrease) in cash, cash
equivalents and restricted cash
27
(139
)
Cash, cash equivalents and restricted cash
at beginning of period
303
477
Cash, cash equivalents and restricted
cash at end of period
$
330
$
338
Supplemental disclosures:
Restricted cash at beginning of period
$
16
$
37
Restricted cash at end of period
13
15
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share amounts)
Three Months Ended June 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
$
2,204
$
—
$
—
$
—
$
2,204
Cost of products sold
1,575
(26
)
—
(3
)
1,546
Gross profit
629
26
—
3
658
28.5
%
29.9
%
Selling, general and administrative
expenses
476
9
(19
)
(9
)
457
21.6
%
20.7
%
Restructuring costs, net
22
(22
)
—
—
—
Impairment of goodwill, intangibles and
other assets
11
—
(11
)
—
—
Operating income
120
39
30
12
201
5.4
%
9.1
%
Non-operating (income) expense
85
—
—
(1
)
84
Income before income taxes
35
39
30
13
117
Income tax provision (benefit) [2]
17
9
6
(16
)
16
Net income
$
18
$
30
$
24
$
29
$
101
Diluted earnings per share **
$
0.04
$
0.07
$
0.06
$
0.07
$
0.24
*
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
415.3 million shares for the three months ended June 30, 2023.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $7
million of costs related to completed divestitures; $5 million
related to Argentina hyperinflationary adjustment; $5 million loss
on pension settlement; $2 million related to expenses for certain
legal proceedings; $4 million of fire-related recoveries and $2
million gain due to changes in fair market value of investments.
Includes $14 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 June 30,
2022
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
2,534
$
—
$
—
$
—
$
2,534
Cost of products sold
1,698
(3
)
—
(1
)
1,694
Gross profit
836
3
—
1
840
33.0
%
33.1
%
Selling, general and administrative
expenses
504
1
(17
)
(3
)
485
19.9
%
19.1
%
Restructuring costs, net
4
(4
)
—
—
—
Operating income
328
6
17
4
355
12.9
%
14.0
%
Non-operating expense
76
—
—
3
79
Income before income taxes
252
6
17
1
276
Income tax provision (benefit) [2]
53
2
3
(14
)
44
Net income
$
199
$
4
$
14
$
15
$
232
Diluted earnings per share **
$
0.48
$
0.01
$
0.03
$
0.04
$
0.56
*
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
415.7 million shares for the three months ended June 30, 2022.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $2
million related to expenses for certain legal proceedings; $1
million of costs related to completed divestitures; $2 million
related to Argentina hyperinflationary adjustment; $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)
Six Months Ended June 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
$
4,009
$
—
$
—
$
—
$
4,009
Cost of products sold
2,898
(31
)
—
(5
)
2,862
Gross profit
1,111
31
—
5
1,147
27.7
%
28.6
%
Selling, general and administrative
expenses
956
1
(38
)
(16
)
903
23.8
%
22.5
%
Restructuring costs, net
60
(60
)
—
—
—
Impairment of goodwill, intangibles and
other assets
11
—
(11
)
—
—
Operating income
84
90
49
21
244
2.1
%
6.1
%
Non-operating (income) expense
165
—
—
(11
)
154
Income (loss) before income
taxes
(81
)
90
49
32
90
Income tax provision (benefit) [2]
3
22
11
(21
)
15
Net income (loss)
$
(84
)
$
68
$
38
$
53
$
75
Diluted earnings (loss) per share **
$
(0.20
)
$
0.16
$
0.09
$
0.13
$
0.18
*
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
415.2 million shares for the six months ended June 30, 2023.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $10
million related to expenses for certain legal proceedings; $10
million related to Argentina hyperinflationary adjustment; $7
million of costs related to completed divestitures; $5 million loss
on pension settlement; $3 million of fire-related losses, net of
recoveries; $2 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 $23 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)
Six Months Ended June 30,
2022
GAAP
Restructuring and restructuring-
related costs
Acquisition amortization
Transaction costs and other
[1]
Non-GAAP
Measure
Measure
Reported
Normalized*
Net sales
$
4,922
$
—
$
—
$
—
$
4,922
Cost of products sold
3,346
(8
)
—
(2
)
3,336
Gross profit
1,576
8
—
2
1,586
32.0
%
32.2
%
Selling, general and administrative
expenses
1,022
—
(35
)
(10
)
977
20.8
%
19.8
%
Restructuring costs, net
9
(9
)
—
—
—
Operating income
545
17
35
12
609
11.1
%
12.4
%
Non-operating expense
17
—
—
132
149
Income (loss) before income
taxes
528
17
35
(120
)
460
Income tax provision (benefit) [2]
101
5
6
(33
)
79
Net income (loss)
$
427
$
12
$
29
$
(87
)
$
381
Diluted earnings (loss) per share **
$
1.02
$
0.03
$
0.07
$
(0.21
)
$
0.91
*
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
420.2 million shares for the six months ended June 30, 2022.
Totals may not add due to rounding.
[1]
Transaction costs and other includes $6
million related to expenses for certain legal proceedings; $4
million of costs related to completed divestitures; $4 million
related to Argentina hyperinflationary adjustment; $133 million
gain on disposition of business and $1 million gain due to changes
in fair market value of investments. Includes income tax expense of
$21 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 June 30,
2023
Three Months Ended June 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
$
1,058
$
(21
)
(2.0
)%
$
44
$
23
2.2
%
$
1,242
$
74
6.0
%
$
13
$
87
7.0
%
$
(184
)
(14.8
)%
$
(64
)
(73.6
)%
LEARNING AND DEVELOPMENT
813
188
23.1
%
11
199
24.5
%
865
245
28.3
%
3
248
28.7
%
(52
)
(6.0
)%
(49
)
(19.8
)%
OUTDOOR AND RECREATION
333
5
1.5
%
9
14
4.2
%
427
48
11.2
%
6
54
12.6
%
(94
)
(22.0
)%
(40
)
(74.1
)%
CORPORATE
—
(52
)
—
%
17
(35
)
—
%
—
(39
)
—
%
5
(34
)
—
%
—
—
%
(1
)
(2.9
)%
$
2,204
$
120
5.4
%
$
81
$
201
9.1
%
$
2,534
$
328
12.9
%
$
27
$
355
14.0
%
$
(330
)
(13.0
)%
$
(154
)
(43.4
)%
[1]
The three months ended June 30, 2023
normalized items consists of $39 million of restructuring and
restructuring-related charges; $19 million of acquisition
amortization costs; $11 million of impairment of intangible and
other assets; $7 million of costs related to completed
divestitures; $3 million Argentina hyperinflationary adjustment and
$2 million related to expenses for certain legal proceedings.
[2]
The three months ended June 30, 2022
normalized items consists of $17 million of acquisition
amortization; $6 million of restructuring and restructuring-related
costs; $2 million of expenses related to certain legal proceedings;
$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)
Six Months Ended June 30,
2023
Six Months Ended June 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
$
2,029
$
(58
)
(2.9
)%
$
77
$
19
0.9
%
$
2,592
$
163
6.3
%
$
32
$
195
7.5
%
$
(563
)
(21.7
)%
$
(176
)
(90.3
)%
LEARNING AND DEVELOPMENT
1,377
260
18.9
%
21
281
20.4
%
1,515
383
25.3
%
10
393
25.9
%
(138
)
(9.1
)%
(112
)
(28.5
)%
OUTDOOR AND RECREATION
603
4
0.7
%
23
27
4.5
%
815
94
11.5
%
10
104
12.8
%
(212
)
(26.0
)%
(77
)
(74.0
)%
CORPORATE
—
(122
)
—
%
39
(83
)
—
%
—
(95
)
—
%
12
(83
)
—
%
—
—
%
—
—
%
$
4,009
$
84
2.1
%
$
160
$
244
6.1
%
$
4,922
$
545
11.1
%
$
64
$
609
12.4
%
$
(913
)
(18.5
)%
$
(365
)
(59.9
)%
[1]
The six months ended June 30, 2023
normalized items consists of $90 million of restructuring and
restructuring-related charges; $38 million of acquisition
amortization costs; $11 million of impairment of intangible and
other assets; $10 million related to expenses for certain legal
proceedings; $7 million of costs related to completed divestitures;
$5 million Argentina hyperinflationary adjustment and reversal of
$1 million to true-up an indirect tax reserve for an international
entity.
[2]
The six months ended June 30, 2022
normalized items consists of $35 million of acquisition
amortization; $17 million of restructuring and
restructuring-related costs; $6 million of expenses related to
certain legal proceedings; $4 million of costs related to completed
divestitures and $2 million of Argentina hyperinflationary
adjustment.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES GROWTH BY
SEGMENT
Three Months Ended June 30,
2023
Six Months Ended June 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
(14.8
)%
0.9
%
0.8
%
(13.1
)%
(21.7
)%
4.5
%
1.3
%
(15.9
)%
LEARNING AND DEVELOPMENT
(6.0
)%
—
%
0.3
%
(5.7
)%
(9.1
)%
—
%
1.2
%
(7.9
)%
OUTDOOR AND RECREATION
(22.0
)%
—
%
1.1
%
(20.9
)%
(26.0
)%
—
%
2.0
%
(24.0
)%
TOTAL COMPANY
(13.0
)%
0.4
%
0.7
%
(11.9
)%
(18.5
)%
2.5
%
1.3
%
(14.7
)%
CORE SALES GROWTH BY
GEOGRAPHY
Three Months Ended June 30,
2023
Six Months Ended June 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
(14.8
)%
0.7
%
0.3
%
(13.8
)%
(21.4
)%
3.4
%
0.3
%
(17.7
)%
EUROPE, MIDDLE EAST, AFRICA
(10.1
)%
—
%
(1.3
)%
(11.4
)%
(11.4
)%
0.1
%
2.1
%
(9.2
)%
LATIN AMERICA
(0.2
)%
—
%
4.2
%
4.0
%
0.1
%
—
%
5.4
%
5.5
%
ASIA PACIFIC
(18.1
)%
—
%
4.5
%
(13.6
)%
(27.0
)%
—
%
5.4
%
(21.6
)%
TOTAL COMPANY
(13.0
)%
0.4
%
0.7
%
(11.9
)%
(18.5
)%
2.5
%
1.3
%
(14.7
)%
[1]
“Core Sales” provides a consistent basis
for year-over-year comparisons in sales as it excludes the impacts
of acquisitions, completed 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)
June 30, 2023
December 31, 2022 [1]
June 30, 2022
NET DEBT RECONCILIATION:
Short-term debt and current portion of
long-term debt
$
597
$
621
$
1,461
Long-term debt
4,753
4,756
3,793
Gross debt
5,350
5,377
5,254
Less: Cash and cash equivalents
317
287
323
NET DEBT
$
5,033
$
5,090
$
4,931
Net income (loss) [2]
$
(314
)
$
197
$
740
Normalized items [2]
662
457
81
NET INCOME
348
654
821
Normalized income tax [2]
(47
)
17
145
Interest expense, net [2]
265
235
238
Normalized depreciation and amortization
[2] [3]
226
225
230
Stock-based compensation [4]
9
12
49
NORMALIZED EBITDA
$
801
$
1,143
$
1,483
[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 June
30, 2023, refer to “Reconciliation of GAAP and Non-GAAP Information
(Unaudited) - Certain Line Items” for the three months ended
September 30, 2022, December 31, 2022 and March 31, 2023 on the
Company’s Forms 8-K furnished on October 28, 2022, February 10,
2023 and April 28, 2023, respectively. For the trailing-twelve
months ended June 30, 2022, refer to “Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items” for the
three months ended September 30, 2021, December 31, 2021 and March
31, 2022 on the Company’s Forms 8-K furnished on October 28, 2022,
February 10, 2023 and April 28, 2023, respectively.
[3]
For the trailing-twelve months ended June
30, 2023, normalized depreciation and amortization excludes the
following items: (a) acquisition amortization expense of $70
million associated with intangible assets recognized in purchase
accounting; (b) $12 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 September 30, 2022, December 31, 2022
and March 31, 2023 on the Company’s Forms 8-K furnished on October
28, 2022, February 10, 2023 and April 28, 2023, respectively. For
the trailing-twelve months ended June 30,2022 normalized
depreciation and amortization excludes the following items: (a)
acquisition amortization expense of $73 million associated with
intangible assets recognized in purchase accounting; (b) $3 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 September 30, 2021, December 31, 2021 and March 31, 2022 on
the Company’s Forms 8-K furnished on October 28, 2022, February 10,
2023 and April 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
September 30, 2023
Twelve Months Ending
December 31, 2023
Estimated net sales change (GAAP)
(6
)%
to
(4
)%
(13
)%
to
(12
)%
Estimated currency impact [1] and
divestitures [2], net
~(1)%
1% to 2%
Core sales change (NON-GAAP)
(7
)%
to
(5
)%
(12
)%
to
(10
)%
[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).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230728394066/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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